From Google's Sidewalk Project to Toronto's thriving start-up tech scene, to rumours of Amazon's headquarters, Toronto-Waterloo is poised to become the next globally significant technology supercluster. But what private and public barriers need to be surmounted before Toronto can become the next Silicon Valley?
On November 23rd, Odgers Berndtson partnered with the Toronto Region Board of Trade to host a lunch-time panel discussion, focused on “Building the Toronto-Waterloo Tech Supercluster," featuring an expert line-up of leaders in Canadian technology and venture capital investment. The panel shared their insights on the current landscape, challenges and opportunities in building the Toronto region's tech sector to supercluster status.
Panelists included: John Ruffolo, CEO, OMERS Ventures; Sally J. Daub Founder & Managing Partner, Pool Global Partners and CEO of Enlitic; and Sean Silcoff, Business Reporter at the Globe & Mail and Author of Losing the Signal, The Untold Story Behind the Extraordinary Rise and Fall of Blackberry. Anthony Batchelor, Partner in Technology and Professional Services at Odgers Berndtson, moderated the event.
John Kelleher, RTS Partner at McKinsey & Company and Innovation Corridor expert kicked off the panel by introducing cluster theory, citing a McKinsey report he contributed to last year that examined the potential for the Toronto-Waterloo Innovation Corridor to become the world’s next technology supercluster.
Which factors will have the greatest impact on Toronto’s future as a tech supercluster?
The increasing amount of tech incubators. Plans for high-speed travel between Toronto and Waterloo. The appointment of Toronto's first Chief of Innovation. And many Silicon Valley players aggressively moving into the Toronto market. All agreed that these are signs that Toronto is poised to become the next tech supercluster. But when asked which factors would have the most significant impact on growth, panelists brought distinctly different perspectives to the table.
Brand yourself worldwide and attract capital
Sally Daub emphasized the importance of branding your city on the world stage to help attract capital. She feels that the most important thing is to get companies and venture capitalists to see Toronto as an attractive investment opportunity. And from her recent work in the Bay Area, she believes that this is what will make Toronto successful.
Back the big guns
Business reporter Sean Silcoff questioned whether or not the city should attempt to brand itself, asserting rather that clusters will organically grow around huge innovative companies who attract global capital and talent. “The big successes of this country--RIM, Hootsuite, Shopify--what do they all have in common? They emerged from an area from which there was no cluster and created a cluster around themselves."
Encourage collisions between people and ideas
John Ruffolo brought a third angle: As the leader of Omers Ventures, a few years ago he remembered experiencing frustration while visiting different portfolio companies in Oshawa, Burlington, Markham. He was stunned by the fact that no one knew each other and that he had to facilitate introductions between C-Suite leaders. As such, John feels that creating a tight geographic area for a super-cluster will be critical in expediting the "serendipitous collision of people and ideas" between companies and other hotbeds of innovation, like universities,
Are there lessons to be learned from successful superclusters around the world?
Toronto's potential as a technology supercluster is not a new idea. In the meantime, other cities around the globe have arguably leap-frogged over its growth, like Singapore, Boston and Sao Paulo. Anthony posed the question to the panel: Are there lessons we can learn from successful superclusters around the world?
Sally agreed that other cities are catalyzing notable growth, but noted that what might be effective for Sao Paulo will not necessarily work for Toronto. She feels that Canada needs to focus on the opportunities we can uniquely access as a country. As an example, she shared some thoughts on leveraging artificial intelligence in the healthcare industry. Canada's health care system is much less fragmented than the U.S., so there's a unique opportunity to aggregate and leverage our healthcare data. If this data could be pooled, organized and analyzed, it could help uncover business opportunities, drive start-up growth and as a result, could help us deliver value around the globe.
Citing examples from business travels John agreed that it's not about copying the strategy of other cities but rather finding individual opportunities for growth. The common thread in each country he has recently visited, he explained, is that they believe that " innovation is the future." But that's where the similarities end. Each nation also recognizes that, as a result of their unique political, economic and cultural circumstances, they have distinct opportunities to drive growth through innovation.
How much government influence is enough? Too much?
Another hotly debated discussion theme was the question of government influence. How much is too much?
Sean feels it's difficult to have the supercluster discussion at a city level when so much of the work needs to be done at the federal level. "Start-ups and scale-ups in Canada have a harder time selling to local companies and local governments than just about anywhere else. Our policymakers should be providing a test bed for new technologies and especially in those areas where we are global leaders." To create an environment that enables technology companies to thrive, he emphasized that the federal government needs to be engaged to help:
- Teach companies to become more sophisticated about leveraging global organizational standards
- Allocate more procurement dollars to start-ups
- Develop an intellectual property (IP) strategy
John offered up Singapore as a unique example of how a country's political policy can have a positive impact on cluster development. Singapore’s economy is tightly regulated by the government, and has essentially turned the country into a single Fintech cluster. Singapore's banks are forced to procure services from its start-ups and operate in a carefully designed governance and regulatory structure. Rather than letting start-ups scrape the bottom of the barrel for funding, the government also offers capital to the bank to buy from start-ups. "It's extremely innovative, " concluded John. "We talk about it, but they're doing it!"
But Sean raised the question: "Does that create sustainable start-ups? If you are forcing an industry group to buy from start-ups (and even subsidizing them to do so) are you creating a fake market?
John admitted that time will tell if this is the right strategy or not. But back on home soil, he emphasized that this would help combat the frustration that many Canadian start-ups are feeling when they can't access procurement dollars from their government and rather depend on US-based clients and government.
“Our medical budget in Ontario is 54 billion dollars. You’d think some of that could go to some life sciences companies? You’re paying somebody, why not our start-ups?”
Canada's federal government has, in fact, offered up 950 million dollars to drive the growth of 5 superclusters across Canada. But the question is--will this investment accelerate or slow down growth? John shared an apt analogy to illustrate his perspective: "The role of the government is to clear the field, get rid of the weeds, spread some fertilizer. But it's up to the entrepreneur to decide which seeds get planted. Once the government has removed whatever might prevent seeds from growing, their job is done."
Douglas Goold, Vice President, Policy at Toronto Region Board of Trade addresses the crowd.
John Kelleher introducing cluster economic theory to the crowd.
Sally Daub adding to the panel discussion.
Sean Silcoff and the other panelists having a laugh.
John Ruffolo making a point during the discussion next to Anthony Batchelor.
From left to right: Anthony Batchelor, John Ruffolo, Sean Silcoff and Sally Daub.
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