![Friuch Consulting home page [logo]](wp-content/themes/friuch-branded/images/friuchconsulting.jpg)
« Shift Happens: An Exercise in Imagination | Home | Don’t Burn Nanotechnology At The Stake »
Are Canadian Entrepreneurs Risk Averse?
By crooky | March 28, 2007
I’ve always said that Canadians are essentially more risk-averse than our American counterparts. I’m not going to do the Canadian thing and say this in a “sh*t sandwich” (a piece of bad news sandwiched between two good things) - it’s a failing of Canadian culture. We look at the US and say “oh, there’s no way we can be as competitive or an innovative as those guys - they’re ten times as big as us!” If that was the case, how do you explain small Northern European countries like Switzerland, Finland and Sweden who, as the following table illustrates, are comparable in many respects to Canada?
What does Canada have going against it? A higher than average population and GDP per capita for this list? For shame Canada. Seriously though - what does a global competitive index have to do with high tech startups?
“The top rankings of Switzerland and the Nordic countries show that good institutions and competent macroeconomic management, coupled with world-class educational attainment and a focus on technology and innovation, are a successful strategy for boosting competitiveness in an increasingly complex global economy.”
- Augusto Lopez-Claros, Chief Economist; Director, Global Competitiveness Network
Augusto seems to think that intelligence and focus, combined with good government is the path to competitive success. To me, intelligence and focus are the key things that small businesses and entrepreneurs bring to the economy. I can already hear some of you saying “It’s the (pick the Federal party you hate)’s fault!!!” Take a step back from that thought and think - is Canada’s government more incompetant than say… Japan’s government? Hasn’t their economy been in the toilet for about a decade, despite the best efforts of their government? Isn’t their current Prime Minister digging his country into deeper social/political/economic problems by pissing off China and the US in denying their war crimes during World War II? They’re ranked 7th in terms of competitiveness and are gaining on the lead.
How about Israel whose government has dropped significantly in Transparency International’s Corruption Perception Index. 85% of the population in Israel thinks the government is corrupt, they’re consistently on the verge of war with their neighbours and they’re still more competitive than Canada. Let’s drop the charade that the Government of Canada is to blame for our lack of enterpreneurial vigor and competitiveness.
Instead, I suggest that we as Canadians ask ourselves why we’re so risk averse. The graph I’ve posted shows that Canadians make a pretty comfortable living (as evidenced by GPD per capita), we’re ranked 17th in the world overall in terms of quality of life, we’re ranked 14th in the world on the corruption index, etc… That puts us at (or near) the bottom of the top 13th percentile globally in just about every metric we can measure.
Canada has been called “the best Second World country in the world”. I think that’s our problem as entrepreneurs and engines of innovation. It’s comfortable being better than Russia, Poland or Bulgaria in terms of key metrics. It still puts us below the countries we pretend to be like - Finland, Switzerland, Sweden, etc… It even puts us behind (gasp) the United States of America.
My challenge to Canadian entrepreneurs is to think more like American entrepreneurs. Paul Graham has some excellent pointers on how to be a hot-shot high tech entrepreneur. There are a lot of lessons in there for Canadians such as:
- Don’t get comfortable.
- Learn from your mistakes and take them to your next adventure. Don’t crumble under a barrage of criticism.
- Take risks while you’re young and can bounce back because you’re going to fail before you succeed.
I’m self-employed and I like to tell people it’s because I’m a lousy employee. The reason I’m a lousy employee is that I cannot settle for the status quo and have a hard time letting my employers do it. That’s why I keep getting drummed out of government agencies after being labelled a “misfit”. Ironically, 90% of my current work as a consultant is indirectly for the Federal Government. I’m an entrepreneur because I can’t get comfortable with being comfortable. That’s my takehome message to Canadian entrepreneurs - leave the womb of comfortable long-term employment, extended medical, cubicles and office politics behind you. It’s not a safety net - it’s a booby trap.
 |
Aaron “Crooky” Cruikshank is the Principal and Founder of Friuch Consulting. He has written professionally about science and technology for ten years. He’s a policy analyst, a communications professional and a competitive intelligence consultant. After work, he fancies himself a comedian of sorts. |
Topics: Technology |
Loading ...
March 29th, 2007 at 9:34 pm
One of the challenges for Canadian competitiveness is its vast size. Although Canada has many more people than the central European country of Switzerland and the northern European countries of Sweden and Finland, their population densities are factors of 55, 6.25, and 4.8 times greater than Canada’s, respectively http://en.wikipedia.org/wiki/List_of_countries_by_population_density. A more dense population spurs collaboration and competition between closely positioned businesses/universities. While advances in communications break down some barriers, the advantage of being able to meet face-to-face regularly is critical. The USA is much bigger than the European nations in question but its population density is also 10 times Canada’s. Setup of succesful innovation clusters in the model of Silicon Valley could help Canada overcome this challenge and increase its competitiveness.
March 29th, 2007 at 11:18 pm
Excellent, excellent point Mike. I’ve heard that in the Silicon Valley, they do a much better job of Business to Business networking. Not the kind of networking that we do here were we exchange business cards and size each other up. I’ve been told that in the Silicon Valley, they actually get together to problem solve and work together to leverage their expertise.
Eric Winsborrow, Vice President of product marketing at McAfee and the brains behind the McAfee Total Protection Suite, was speaking to a small group of us at a Rocket Builder’s event in Vancouver earlier this month and was discussing some of the intra-company synergies that develop amongst Silicon Valley entrepreneurs. He said that when they came across a problem that several entrepreneurs (with companies of their own) would delineate a market pain and would form a company around it to solve the problem.
That’s the point that I am trying to make. We are risk averse here in Canada so we don’t think to do things like throw together a company around a market pain. It’s risky. That’s why we trail the Silicon Valley.
Ps. Know your statistics. You talk about population density in Europe and then cite Silicon Valley as an example we should follow. The population density on the Vancouver downtown peninsula - where the majority of the big high tech successes in Vancouver have roosted, the population density is 24 times that of Silicon Valley. The entire City of Vancouver has 500,000 more people than the entire Santa Clara County and the population density of the city (including the downtown peninsula) is 10 times as high as the Silicon Valley so you’ll excuse me if I don’t buy into this theory that population density has anything to do with innovation.
Pps. Sorry. That last bit was a bit harsh. Call it an open-face sh*t sandwich. I just get tired of people citing the Silicon Valley as a model to follow. There is no magic bullet that they’ve discovered down there. My old friend Brendon Wilson thinks that population density (of smart people) is the key to Silicon Valley’s success. There may be a lot of smart people packed into Silicon Valley but I would argue that there are just as many smart people per hectare in the downtown peninsula than there is in Santa Clara County. A brain trust is like a highschool sock-hop without risky behaviour - nerds and dweebs all avoiding eye contact. Someone, even in the Silicon Valley where being a geek (like me) is like having a trust fund and rock-hard abs when you’re in your undergrad, has to get the ball rolling by suggesting some of these collaborative (and inherently risky) ventures that Eric Winsborrow has described. That’s the difference.
March 29th, 2007 at 11:55 pm
One more thing… here’s a handy chart to compare the population density of the Vancouver vs. Stockholm vs. Helsinki.
Population Density Statistics
You’ll notice that neither major city in either Finland or Sweden comes even close to the population density of Vancouver. Vancouver is more comparable to Mexico City.
Why isn’t Mexico City an engine of innovation with 24 times the population density of the Silicon Valley?
April 4th, 2007 at 9:39 pm
Good points.
I think my point was slightly misunderstood because of a lack of clarity on my part. I was trying to use the population density argument as a metric for the dispersity of Canada’s businesses and universities. This dispersity is a challenge potentially reducing Canada’s competiveness. I was suggesting that the model of innovation clusters similar to Silicon Valley is a potential solution that Canada can use to be more competitive because of its widely spread population. I was not suggesting that Silicon Valley’s population density is the source of its competitiveness. Of course Vancouver’s West End is more densely populated than Santa Clara. Over the many years I spent running on the Seawall (I heard it won’t be fixed until 2008…sad) when I lived on North False Creek it seemed like it was just getting more and more dense. Vancouver, being one of the more populous and well-educated regions of Canada, is naturally an example of one of Canada’s innovation clusters that must be nurtured. As you say, perhaps something in the culture of entrepreneurs must change to help fuel its development. I certainly agree with the lessons pointed out above.
That said, if we maintain our focus on Vancouver, I feel that the businesses that may spawn from its universities and entrepreneurs still have a significant disadvantage because of their proximity to similar competitive businesses. For instance, on a small scale, if I drove an hour from Robson street in downtown Vancouver I could get to Hope or Squamish and have access to about 2.2 million people.
By comparison, if you are sitting on Santana Row in Santa Clara you can drive to San Francisco or Berkeley/Oakland in half an hour. The entire Bay Area population of ~6.7 million people is an hour drive away from each other. Even a lesser known area of the Bay area, the Tri-Valley (where I live now), houses companies like Sybase, Oracle, a >7000 employee National research laboratory and Applied Biosystems. This is all 35 minutes from Santana Row. It is this proximity that helps competitiveness thrive here. No one can argue that the combined competitive contributions of businesses in Hope and Squamish to Vancouver match those of San Francisco and Oakland (and UC Berkeley/San Francisco) to Silicon Valley. One of the key advantages to all of these businesses in close proximity down here was hinted at in a response to Brendon’s blog-there are forums, conferences, and workshops every week that are directly related to your work. You can never attend everything you would like to. This is definitely a great source of collaborations.
On a larger scale we can take Toronto as an example. With a population much closer to the Bay Area, Toronto’s ~5.5 million people are arguably the primary source of Canada’s competitiveness (hard to say for a BC kid) and they have to drive ~550km to the next major competitive center in Montreal or Ottawa. By comparison, driving 550 km south of Silicon Valley takes you to Los Angeles-a metropolitan area with a third of the population of Canada. Now of course there are complexities of cross-border competitiveness that are not taken into account here.
So lets take this even bigger still and turn to Europe. For instance, the distance between Vancouver (~2.2 million people) and Toronto (~5.5 million) is ridiculously huge on a European scale. Having ridden the train from Vancouver to Halifax and back (3 days straight from Toronto to Vancouver), circled almost the entire country of Switzerland by train in a day (Zurich-Luzern-Bern-Lausanne-Geneva-Basel-Zurich), and taken the 7hr train from Paris to Hamburg via Brussels (which passes through 4 countries), it is clear to me that Canada is on a very different scale. (That said, France doesn’t even show up on the list above…so this argument certainly has its weaknesses) An interesting aspect in the argument for European competitiveness is that the cross-border impediments are being dissolved by the ability of any EU passport holder to work in any EU country. Notably, the most competitive country is in the center of Europe but not part of the EU…however their competitive prowess is understandable if the Swiss colleague on my team is any indication of the average Swiss employee.
Back to Canada’s challenge. Unfortunately, by nuturing innovation clusters in larger cities like Vancouver you alienate the rest of the rural population. It is compromises like positioning the Canadian Light Source in Saskatoon that may impact Canada’s competitiveness. But clearly the people of Saskatoon deserve a chance too.
So why is Mexico City not an engine of innovation? This is a great question. I think the answer lies in why Finland, Sweden, and Denmark sit in spots 2-4. Having a family member live in Iceland (2 spots above Canada) for 4 years the answer is clear…all there is to do for 8 months is work or drink inside and they clearly do both very well. In Mexico there is clearly ample opportunity to sit in the sun and drink Tequila. Maybe the question we should ponder is whether there is a correlation between a country’s competitiveness index score and its position on the world’s beer consumption list http://en.wikipedia.org/wiki/Beer_consumption_by_country
Cultural, geographical, demographical-obviously the factors are complex but having left Canada to work in the US I can agree that there are some cultural differences, though I am not completely convinced that risk aversion is the major factor. Nonetheless, we need to continue to foster Canadian innovation and competitiveness to stop people like me (and my many Canadian co-workers…) from leaving for opportunities not available in Canada and to increase the repatriation rates of those who have left, integrating their new skillsets into the mix.
April 5th, 2007 at 9:57 am
Aha! I finally figured out which “mike” you are. Good to hear from you.
I agree with you that regular events for entrepreneurs and innovators are key. I just don’t think population density has anything to do with it.
I’ve seen many attempts over the past 8 years to get events like you’ve described going here in Vancouver and they just haven’t taken off. Not sure why.