OMERS’ John Ruffolo talks Canada’s new startup lobby group and using the government for leverage

John Ruffolo

Earlier this week, it was revealed that some of Canada’s tech elite have come together to help shape the future of our nation’s innovation economy. The Canadian Council of Innovators is a coalition of 20 Canadian tech companies, with a mandate to lobby the federal government in the interest of Canadian startups looking to scale globally.

Shopify, Hootsuite, Wattpad, D2L, InteraXon, Hatch, eSentire, and Global Relay are all confirmed companies in the initial coalition, with the rest expected to be announced in the coming weeks. According to a report in The Globe and Mail, membership of about 50 tech firms is expected. Each member company must be Canadian-based, show rapidly increasing revenues through organic growth with annual sales of at least $15 million USD, and be looking to scale globally.

The Council will be chaired by former BlackBerry CEO, Jim Balsillie, well-known for his opinions on the need for Canadian companies to be globally competitive, and OMERS Ventures CEO, John Ruffolo, who recently shared an op-ed in BetaKit on the need for a single voice in the Canadian startup community.

BetaKit caught up with Mr. Ruffolo during a break at CIX to speak more about the goals and the impetus behind the Canadian Council of Innovators.

Can you explain the specific issues that really spurred you to create this council?

The United States has this, the EU has this, Israel has this. The one major innovation country that doesn’t have this is Canada.

When you look at the issues… right now I believe that as we’re growing these companies, it should always be the private sector leading this stuff we should not be seeking the government to lead us. That’s a big mistake. The government should be used for leverage.

“It’s not about R&D tax credits or angel tax credits. This is about whether we can compete against Google, Amazon.”

We have a problem with startups at really early stages. So what we did is we’d go back to the government to ask them to help with that early stage formation and so many of the policies that we have are very much geared to those small companies at the very front end. And they’re good policies, and there’s lots of people who are pushing the government to do it.

My question is, when you’re going to be globally competitive, it’s not about R&D tax credits or angel tax credits. This is about whether we can compete against Google, Amazon. This is about trade negotiation, intellectual property, and how you fight this on a global basis. This is about regulation.

Big issues that really require governments getting in the front to actually negotiate. There’s nothing of that in the entire country. So the question is, how do you take the now $100 million companies, the Shopify, the Hootsuite, the D2L, and make a billion dollar company? One guy has done that really: Jim Balsillie.

And this is the biggest thing. When Jim was fighting the other handset makers, he thought he was fighting Samsung. Then he realized, oh my god, I’m fighting South Korea. Very different fight. And we’re not fighting on a different playing field and what we’re trying to do is get those CEOs, who are trying to get the truly billion dollar companies, bringing them together to help them with the government on a partnerial basis, and how do you really negotiate these big, big policy things that are macro and complicated. It’s not about, here’s a few dollars. That’s fine. So we don’t want money. We want true policy-making. That’s what we’re trying to focus on.

Do you think that startups have traditionally seen themselves as separate from politics?

Canadian companies haven’t. It’s kinda funny because if you ask the US this, they’ll say, ‘yes, private sector led… we don’t believe in government intervention’. Then you look to see, who are the biggest lobbyists in the US? Google, Facebook, Amazon… they’re all lobbying hard. They’re all lobbying the US government.

We went to the Canadian register, they’re in Canada on average once a week. Lobbying our government against us. The Americans are great at this and they say ‘yeah, we believe in an equal playing field as long as we control the field’. And we say, ‘what? I didn’t realize those were your rules. I thought we’re not supposed to have rules’. But there’s rules out there and we’re just shifting and saying, no longer are we going to play by your rules. At least we’re gonna say, here’s what our rules are.

We may still lose on a global basis, but at least we’re playing the game of the rules. That’s the difference. Who are the ones funding all the pacts in the US? Silicon Valley. They are funding billions, and they are realizing, we need to be part of shaping how IP is managed.

And we ask, who’s the poster child? Uber. What’s Uber’s greatest innovation? Effective global lobbying. And what they’ve done, Uber lobbied the city of Toronto. And they went that way against our own taxi companies, and pretty much won. That’s probably the most vivid example of how to use it effectively.

They have a great product but then they saw the value of how to effectively partner with governments in order to create the new standard. They’ve in essence become the global standard. The US government supported them from an export perspective and basically said, this is the company we support.

What are some of the specific issues you’re hoping to bring to the forefront?

Some examples: right now we have a trade agreement, the Trans-Pacific Partnership. It negotiated away Canadian rights on innovation. So if there’s patent disputes for example, it forces the adjudication of the patent dispute over into the US automatically. Their rules, not ours. And even though it might be a patent in Canada, we might be giving that away.

We said, hold on a minute. What are we actually doing here? We’re giving it away for nothing. So IP, and immigration reform. One of the biggest problems is the temporary foreign worker program, it’s killing the innovation industry. Who got hit on it was RBC. Because people said ‘you’re using foreign workers and taking away Canadian jobs’. Yet the innovation industry was using it immensely to get coders that we can’t find in Canada. No one spoke for the innovation industry.

There’s some issue with stock options. That applies whether you’re small or large in that case. So I would say, the biggest things are revenue-generating things and talent things. Not just access to capital. Other revenue generating things include government procurement policy. So if you go to the government saying, ‘we have some spectacular companies that you should be using in the federal government’. Our federal government says, ‘no, we have World GATT (General Agreement on Tariffs and Trade, ed.) issues’.

You know what the US says? Those are our companies. Buy America. Buy America is against World GATT. Yet they do it.

Do you think the hype around the federal election kind of got startups interested in this? Also, in a country that is so traditionally very focused on oil and gas and manufacturing, how can we suddenly make the change to an innovation economy?

It’s a big public policy issue. The noise is getting louder but still, the general public doesn’t really appreciate this industry is and how important to the future it is.

“No money is coming to us, we’re going to keep it mean and lean. No money is going to have golf tournaments or that stuff.”

What it forces you to do, is while it’s nice to have these good stories, the people around here are already sold. But the auto worker or the average oil and gas worker isn’t. So you have two choices: you can either go grassroots-up and convince them, or you go to the government folks and say we need your help in really pushing down how important this is.

So we’ve chosen, largely, the innovation sector strategy of going to government and trying to push some policies forward. Part of the challenge is that there are lots of small voices that on many occasions contradict one another. I think we need to ask, ‘what is it exactly that you really want?’

By the way, stop asking always for money. Because at the end of the day, you’re asking for money all the time, and for what purpose? Is it really for the company? Or maybe you wanna run a nice incubator or accelerator and you wanna have a job for the next five years. What is it really? And I think, what we’re doing on this lobby group, it’s by the CEOs for the CEOs. It’s basically them, we’re just building for the CEOs.

And no money is coming to us, we’re going to keep it mean and lean, and it’s 100% member-financed. They’re paying the fee to basically share the resources amongst each other. And I think that’s the big difference, no money is going to have golf tournaments or that stuff.

All I can say is that the receptivity of the companies has been unbelievable. I think it’s something that we’re addressing as a whole that the CEOs want. I just got an email from some very, very senior Liberal politicians asking when we want to meet! Here’s the big thing: it’s not about them. The real issue, I find, is the innovation sector hasn’t said what it is they want. So how do you expect a politician to figure it out, when they don’t know our industry? So shame on us. So let’s correct that.

Related: A single voice for the startup community

Jessica Galang contributed significantly to the reporting of this article.

Douglas Soltys

Douglas Soltys

Douglas Soltys is the Editor-in-Chief of BetaKit and founder of BetaKit Incorporated. He has worked for a few failed companies and written about many more. He spends too much time on the Internet.