The coronavirus may be devastating the global economy, but the crisis is catapulting Shopify to new heights. The Ottawa-based ecommerce platform’s stock has soared, more than doubling the company’s valuation to $90 billion US between mid-March and June. That’s made it more valuable than e-commerce headliners eBay or Etsy have ever been, and the second-most valuable Canadian business behind RBC Royal Bank.
Are we ready to capitalize on this new normal ushered in by COVID-19, and can we take the steps now.
Shopify had been building towards becoming a disruptive force before lockdowns pushed more shoppers online; now, it’s poised to emerge even stronger when the pandemic abates. But how did it accomplish that, and how can other Canadian companies follow the same path?
Critically, Shopify sits at the crux of what World Economic Forum founder Klaus Schwab christened the Fourth Industrial Revolution, or 4IR — the oncoming wave of global change driven by the fusion of digital, mechanical, and biological technologies. From artificial intelligence and augmented reality to biotech and the Internet of Things, tech is converging in increasingly powerful ways, transforming how we live and work. Anyone who’s had a conversation with Siri or Alexa, used Uber or DoorDash, or experienced augmented reality on their phone has seen these impacts up close.
The good news is Canada was well-poised to seize its share of future 4IR winnings before the crisis, thanks to everything from progressive government policy prioritizing innovation superclusters to an upswing in international investment. From ecommerce heavyweights like Shopify to homegrown AI, social media, and remote learning, Canadian tech has been surging at a crucial moment.
The question now is: are we ready to capitalize on this new normal ushered in by COVID-19, and can we take the steps now to lay the foundation to sustain this in the future?
A Canadian edge sharpened by the crisis
Canada’s tech advantages are well known by now, but they’re even more salient in the post-pandemic race for innovation, especially when juxtaposed against conditions south of the border.
Take recruiting. US News & World Report recently ranked Canada second overall in its 2020 list of best countries. On three key measures that help attract and retain top talent — quality of life, citizenship, and openness for business — Canada ranked 1st, 2nd, and 3rd respectively.
It’s hard for innovative companies to attract and retain talent when workers fear they might be turned away or targeted.
The US, on the other hand, has seen the pandemic spur nativist and anti-immigrant goals. President Donald Trump’s new executive order blocks the entry of any new foreign workers on H-1B visas, cutting off a critical pipeline of talent for the tech sector there. He also tweeted he would “suspend immigration,” before blocking his government from issuing green cards. It’s hard for innovative companies to attract and retain talent when workers fear they might be turned away or targeted.
Meanwhile, Canada’s stodgy national motto, “peace, order and good government,” suddenly looks like a recipe for success. Robust oversight and regulation, sometimes seen as antithetical to innovation, has been proven otherwise by recent events.
Canada’s fiscal responsibility during the Great Recession averted a catastrophic mortgage crisis. Today, our country’s steady response to the coronavirus pandemic stands in stark contrast to conditions south of the border. Canadian leaders and the public have leaned on scientific expertise, with government and an empowered public health system coming together to limit the impact.
In the US, by contrast, politicians have turned a health crisis into a partisan battle, with the general population bearing the brunt of the power vacuum. Federal leadership has abdicated, leaving state and local officials to fend for themselves, with damage that may last many years.
More worrying still is an attitude of growing hostility to science and innovation. At the highest levels, US leaders have alternated between denying the crisis, disavowing basic preventative measures like social distancing, and pushing unproven methods for fighting COVID-19, such as Trump suggesting people inject disinfectants instead. The result is an erosion of trust in experts and the scientific method — a cultural shift that doesn’t augur well for the future of innovation.
Driving home our advantages
But this is hardly the time to take a victory lap. Canada has a window of opportunity when it comes to seizing an innovation advantage, but we still have challenges to overcome. We’re a small country and need talent and investment to come to us.
Silicon Valley’s magnetic pull and high salaries continue to lure skilled workers from countries including ours, so we need to keep building on proactive immigration policies like the Global Talent Stream program that expedites visas for in-demand tech talent. Likewise, too many big US companies treat Canada as a development league — we need to figure out how to keep the people we’ve home-grown at great expense.
Lack of investment had long stifled innovation in Canada. Thankfully, we’ve seen growing interest from foreign VCs since 2010, and a record year for VC investment in Canada in 2019. Canadians are creating attractive technology, and our company valuations are competitively priced compared to the astronomical sums Silicon Valley firms are fetching. It’s important to continue projecting Canada as a place to build not just startups but legacy companies with global reach.
But what’s most critical is mindset. Can Canada truly embrace an investor mentality at this key juncture? Rather than retrenching in the face of adversity, can we double down on our national advantages? Warren Buffet is famous for imploring investors to “be fearful when others are greedy and greedy when others are fearful.” In our own prudent, balanced Canadian way, can we take that advice and — like Shopify — seize the disruptive moment?
One thing is for sure: countries focused on getting back to “business as usual” once the crisis concludes won’t be the ones that win. Rather, it’s those who can use this reset to establish a new national baseline for innovation who will thrive in the decades to come. The Fourth Industrial Revolution was on its way before, but the pandemic has fast-forwarded demand for new technology — and Canada has a chance to lead the way.
Image source CSA Transportation via Flickr