Vantage points: Serial entrepreneur Ali Asaria on the Canadian tech “bubble” and how to beat the US

Ali Asaria, BetaKit Town Hall
Tulip co-founder thinks Canada can be a global “startup amongst incumbents.”

Having founded two companies and currently building his third, Transformer Lab, veteran entrepreneur Ali Asaria’s experience offers a unique perspective on what issues Canadian tech should be fighting to solve.

At the BetaKit Town Hall, Asaria held court on a variety of topics, from Canada’s competitive landscape to its chances on the world’s stage, and whether or not the nation’s entrepreneurs have lost touch with the struggles of everyday Canadians. 

The following Q&A contains Asaria’s responses from the vantage points panel at the BetaKit Town Hall and a separate interview. Responses have been edited for length and clarity.

At this moment in time, what challenges and opportunities are you seeing the ecosystem face?

I think the biggest thing I’m seeing when I talk to this next generation of Canadian entrepreneurs is that they’re less worried about all the tools that are required to fund a startup, get hiring support, or international support. They’re actually just fundamentally worried about how they and their staff can afford to live in Canada and have a good life here. And it seems like it’s worse than it’s ever been before.

So then what opportunities are you seeing out there?

Well, the whole world is changing, right? For the longest time, it felt like the only country that could win in tech was the US. Then, all of a sudden, with the Trump presidency and COVID and the polarization that’s happening in the US right now, it feels like there’s an opening. It feels like the world is looking for a potential new leader and that leader could potentially be Canada if we do the right things.

I’m optimistic in the sense that I’m betting my career on this country and the startup ecosystem. It never even crossed my mind to start a company anywhere else but here. I want to raise my kids here. I love this country. I’m not a hundred percent sure, though, how I would feel if I was graduating today, and that, I think, is the big question.

Why do you say that?

I left school about 25 years ago. I had a computer engineering degree. I remember I paid maybe $200 or $300 in rent a month. Life seemed quite simple back then. Groceries were cheaper. Housing was cheaper. And it felt like we lived in a world where you could take those risks and if things didn’t work out, there were a whole bunch of backup plans. 

When I talk to young people who are graduating now, they don’t feel that way. They feel like the job market is tight, housing is expensive, food is hard to pay for. And so all the signs are just pointing that this is not a good time to take a risk. And when you have that feeling, it’s really hard to start a company and make that kind of bold move.

Canadian tech is constantly comparing itself to the US and you seem to want to go a different way. So what does that look like?

I think the first thing we have to answer is: “Are we in it to win?” because if we’re going for gold, or we’re just going for second place, there’s a very different way to play that game. If we’re not trying to win this opportunity, look, I’ll go home and everyone else can continue to do what they’re doing. 

But if we’re trying to win, then the way you have to do it is with this force and this fearlessness that I think that we’re not seeing from Canada and even the entrepreneurial community. What that means is we have to be willing to take risks and break things and change policy that seems like it should be set in stone.

We should pick the things that we know the US is not willing to do and we will look like, from the entire world’s perspective, the one country that’s willing to be the startup amongst incumbents. And that’s how I think you win this game. 

How does founding a new company in 2024 feel relative to your previous two?

When I started my first company, it was 2007, and I started Tulip, my second company, literally 24 hours after. So I didn’t even have a moment to think. This time I got to be a little more thoughtful. 

And you know the big thing that changed for me? People have noticed I look different, and that’s because I’m hanging out with people that I didn’t used to hang out with before. I spent so much of my career hanging out with startups who wanted to raise their next round of capital. They would tell me their valuation and in my head, I was like, “That’s my benchmark. I need to raise that much money too.”

And now I’ve started hanging out with people—just had lunch with one guy who sold his company recently and he’s a happy guy—and now I’m jealous of that. Everybody’s talking about the challenge of building a Canadian startup and also winning, and I also want to build a company that’s bigger than Nvidia, plus Apple, plus Google, combined, but I also want my kids to think I’m an awesome dad and be a good Canadian. I think I have the starting of that formula.

You have notably been apart from those publicly vocal in calling for changes to the capital gains tax increase. A lot of those people are in the room at the BetaKit Town Hall. Can you share your perspective with them on how you feel about this? 

I’ll tell you a story. I had the honour of selling my first company. The wires get transferred. You meet with your accountants and you have to quickly plan how to allocate. They [asked] me, “Okay, first of all, you know about the capital gains exemption.”

“We’re not understanding what’s happening to the average Canadian and how they’re feeling about what’s happening in their lives.”

I was like, “Yeah, I know everybody gets $500,000 of lifetime capital gains tax exemption. Cool, I’ll take that.”

They were like, “No, no, no. There’s that and then 50 percent of your proceeds also get set aside. You only pay on the other half.”

And I was like, “Oh yeah, I knew that.” I had no idea. I started a company. I went to exit. I had no idea that you pay tax on half of that. 

I’m partly biased because I can imagine when I started my first company, I wasn’t thinking about what percentage of capital gains was going to be exempted from tax. To be honest, I felt a little guilty when I actually found out. 

But I think there’s a bigger story. I’ve been part of this entrepreneurial tech community for 25 years and I’ve never seen the community come together in such cohesion—like the signatures on that petition, the articles that came out every day. To the lobbyists behind that: paycheque earned.

I think 94 percent of the people in this room are on the side of “Kill the change. We don’t want any change to the capital gains exemption.” But when you see the survey of Canadians, the greater majority of Canadians support the change, and that’s across party lines, across ages, across urban and rural. So I think the part that the tech entrepreneurial community might not know is that, in our co-ordinated effort to say we’re all against this thing, we also presented ourselves like we’re in a bubble and that we’re not understanding what’s happening to the average Canadian and how they’re feeling about what’s happening in their lives and their grocery bills. 

We came together, for the first time, in the strongest way I’ve ever seen us do, but we only did it on this one thing that seems so self-serving. I don’t know if we all know how people perceive us when we act this way and we don’t say anything about anything else. I just think there’s an opportunity for us to talk about issues that are more important. 

What would help you build your third company?

I have the honour now of having run three companies where, literally when I announced I was leaving my last company, a VC flew from San Francisco and said, “Can I wire you a cheque for your next thing?”

I was like, “Do you want to see a pitch deck?”

He was like, “No, no. It’s cool.” 

It was amazing, it’s incredible. So I can raise capital. I can hire great talent. I know how to build a team. I know how to sell. So I don’t need a lot of the things I remember asking for when I started my first two companies. But you know what I want to do? I, and a lot of folks in this room, have this entrepreneurial ambition which isn’t just, “I want to build a big company, but I want to tear down all the old companies too. I want to build the next Rogers. I want to build the next Loblaws.”

I can’t do that in this regulatory environment. The best thing that this country could do for me is get out of my way and change the way the competitive environment is here so we can rebuild this country and tear down the old guard.

Feature image courtesy Mauricio J Calero for BetaKit.

On May 7, The BetaKit Town Hall provided a pulse check on Canadian innovation, policy, and optimism.

Please enjoy this selection of highlights and insights from the town hall:

Bianca Bharti

Bianca Bharti

Bianca Bharti is the newsletter editor at BetaKit, where she spearheads coverage and analysis of tech news in related products. Before BetaKit, Bianca covered the nexus of markets, industries and policy in a variety of formats as a reporter for the Financial Post. There, she won silver in SABEW's 2021 Best in Business Journalism Awards in the personal finance category for one of her pieces. In her free time, she enjoys swapping her reporter hat for a baseball cap to hit up some hiking trails with her dog. She also weirdly loves debating monetary policy.

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