Tall poppy syndrome and the Canadian opportunity

By Gideon Hayden for Techcrunch.com

There’s an epidemic in Canada. That epidemic is a mentality that leaves top talent with no option but to flee the nation’s borders and take with them everything they’ve learned. It undervalues breakthroughs developed and paid for by Canadian taxpayers. It’s a mindset that resents the success of others. It’s a bad case of tall poppy syndrome.

I have deep pride in being Canadian; the quality of life is high, the public services and institutions for healthcare and education generally serve the nation well and we’re welcoming to people in need with open arms.

However, as a venture capitalist in the tech industry, I often come across incredibly talented individuals who either are thinking too small or have had their ambitious thoughts beaten out of them by their environment.

The World Economic Forum releases an annual global competitiveness index; Canadaconsistently performs well, largely driven by its strong performance in providing basic requirements and efficiency enhancers (see Canada’s report card here).

However, the nation underperforms in the categories of business sophistication and innovation. To be more specific, Canada doesn’t do well in:

• The nature of its competitive advantage globally (a disastrous run for oil has directly impacted the strength of the Canadian dollar).

• Value chain breadth (Canada is verging on a one-trick pony with its dependence on resources).

• Company spending on R&D (every major tech company has a sales office in Canada, but rarely an engineering office).

• Government procurement of advanced technology.

• Capacity for innovation.

Looking at these statistics, one might infer that there’s an innovation problem in Canada— and there is, but not in an immediately obvious way.

Canada’s problem isn’t lack of talent, or an inability to create innovative, world-changing technologies. In fact, Canada’s proven time and again that it can do that (Nortel, Blackberry, Shopify to name a few). Rather, it is Canada’s inability to support those innovative technologies locally, tell its stories globally and legitimize products and ideas in Canada first without needing the stamp of approval from our neighbour to the south.

I see us failing at this all the time.

One of the most recent examples is a company named Atomwise (f.k.a. Chematria). The company was born out of the Computer Science Machine Learning department at the University of Toronto with the audacious goal of better predicting which molecules have a higher probability of being developed into approved therapeutics and medicines, all using machine learning and big data techniques.

The company took full advantage of the R&D resources available in Canada (SRED and accessing the IBM Blue Gene supercomputer through Ontario Centres of Excellence), but when it came time to commercialize, it had a tough time raising money in Canada.

Atomwise was then accepted into Y Combinator, and later raised a large seed round from some of the world’s top investors (Khosla Ventures, Draper Fisher Jurvetson, andAME Cloud Ventures) on the condition the team move to California. They did just that.Canada’s institutions helped them develop the IP, only to lose them to the U.S. — along with the jobs and value creation that inevitably will come along with it.

This trend is similarly evident in the story of the National Microbiology Laboratory in Winnipeg. You may have heard that this institution was behind the creation of the world’s first Ebola vaccine.

What you didn’t see in the headlines was that the Canadian government funded the R&D for this vaccine, only to sell it in 2010 to American biotech company NewLink Geneticsfor $205,000 plus single-digit royalties. In 2014, Merck licensed this drug from NewLink for $50 million, plus royalty payments.

Although the lab needed to license the vaccine to bring it to market, no one will care or know that it was the Canadian government that funded the pioneers who made this breakthrough. It also appears that the Canadian government struck a deal that grossly undervalued the innovation it funded.

This is not to say that everything good leaves Canada, but there are certain realities about living here. We have a smaller population than the state of California, dispersed across a landmass that is 23.5 times the size. If any company or person wants to achieve something of global consequence, they cannot just be a Canadian story. They need to have a global context and traction to make it happen. However, too often that value leaves Canada because they don’t believe that is possible to create it here.

The good news is that Canada has the talent, the knowledge and the capability to develop world-leading technology. The Toronto-Waterloo corridor is emerging as one of the world’s leading tech clusters, and there are some exciting companies moving quickly toward IPOs. But to create serious momentum, it needs the gumption to double down when it counts and help Canadians bring their creations to the world as Canadiancreations.

The nation needs to have the confidence to tell its stories, the self-confidence to help others tell their stories and, collectively, we need to be bold enough to invest in the innovation happening in Canada now. We need to channel our inner Drake.

FEATURED IMAGE: RDONAR/SHUTTERSTOCK

First appeared at TC.com