Q&A: Chris Albinson on why Canada's Waterloo Region could be the next Silicon Valley

Before Silicon Valley, there was Boston’s Route 128. The corridor was considered to be America’s technology highway, a global centre of tech innovation that housed a host of tech companies bolstered by talent emerging from Harvard and MIT. Many of those firms disappeared by the late 1990s, having become too large, risk averse and secretive to respond to a changing business environment. Although Boston still houses tech companies, it hasn't been able to match the dynamism and explosive growth of northern California’s innovation ecosystem since then.

Chris Albinson, the CEO of Waterloo-based Communitech, says he sees the same process happening in Silicon Valley today — and that Canada’s Waterloo Region is well-placed to become the technology hub to replace it. Albinson says he is confident enough in his diagnosis of Canada’s potential that he has returned to his home country to see it through.

After graduating from Western University’s Ivey School of Business, Albinson lived in California for two decades, where he built a mentorship network for Canadian entrepreneurs called C100. The entrepreneurs he mentored included Tobi Lütke, the CEO of Shopify, a company that's now worth more than $180 billion.

At Communitech, he hopes to do the same thing that he did in California: build networks, mentor entrepreneurs, and connect start-ups and scale-ups with potential investors. Research Money interviewed Albinson after three weeks on the job to ask him why he believes Canada will be the next global tech centre and how to solve the barriers facing Canadian technology companies.

You recently wrote that Canada could be in line to be the next Silicon Valley. What makes you say that? What are the indicators that you are seeing?

I actually wrote something about this almost two years ago. For those of us who've been around for a while and saw Silicon Valley displace Boston in the early 90s, a lot of the same things were happening in San Francisco that we saw in Boston, where you had a few very large tech companies suck up a lot of the oxygen.

Many people were making sort of similar observations about how things weren't working as well. Casting forward two years later, it's hard to get a moving truck out of California right now.

If you look at the movement of talent, that was a leading indicator — where the puck is going, where people are choosing to root their lives, and [how they are] making those decisions about where is the best place on the planet for them to not only work on their entrepreneurial endeavours, but also to have a great quality of life. Those things went together when people moved from Boston to San Francisco, just as much as they are going into their decisions now to move to Canada or move to Texas. And maybe to a lesser extent, move to New York.

If you look at the CBRE numbers, it looks pretty obvious. The Toronto and Waterloo corridor added 80,000 tech jobs over the last five years. If that wasn't a screaming, "pay attention" number, I don't know what is. I'd love to say I had something to do with it. But I absolutely had nothing to do with it.

But I think now 21 days on the job, we've seen announcements of 15 companies at billion dollar valuations plus. The Kitchener-Waterloo Region [on June 10] had two companies that have had half a billion of financings, which is the most the region has ever seen over the last 40 years, and if you look over the last 30 days to Waterloo Region, a billion dollars in total financings. I think the board is going to up my target, because that was the target they gave me for 2025.

There's a lot of momentum in the same way it did when the venture funds left Boston to go to the Valley following people. You're seeing the capital follow people now.

What opportunity did you see in the Bay Area when you left Canada to work there? And what has changed?

The gravity well that made Boston Boston, and the Bay Area the Bay Area, and that now extends to Canada, is: where's the place where there's the lowest amount of friction in terms of access to people, talent, capital, markets, and, most critically, ideas and information?

DEC [Digital Equipment Corporation] and EDS [Electronic Data Systems] and those then-giants in Boston — they took so much energy out of that ecosystem, and then intentionally closed themselves off from the ecosystem. It's really kind of fascinating to look at in hindsight.

It basically takes what was a very low friction environment and turns it into a very high friction environment for innovation. You're seeing the same sort of patterns with the Googles and the Facebooks and the Apples with closed campuses. They're trying to do everything they can to keep their people on campus and not interacting with others. It's got some societal stuff that's not great either...if you look at some of the dynamics in San Francisco around tech lash.

[In Boston] those big companies closed themselves off from the environment they were in, and ultimately killed it. And I saw that in Boston and [I am seeing] that in San Francisco.

One of the big issues that gets talked about is that Canadian start-ups are often acquired by US companies. If you’re a VC investor, why wouldn’t you be happy for a Canadian company to be acquired by a big US firm and cash out? How do you keep that from happening?

I think it's a bit of a false argument in the sense that, just like any ecosystem, there's this circulation that's really important to have a forest floor that allows big trees to grow. I saw this when I was starting C100 almost a decade ago and had the privilege to work with folks like...Mike Katchen at Wealthsimple, and Martin Basiri at ApplyBoard, and Jack [Newton] at Clio. What was clear to me was that their ambition was no different than some of the really best entrepreneurs I've seen around the planet.

What was different was that we lost a decade, really, from 2000 to 2010, when Nortel went bankrupt and Blackberry had its issues, and the private venture capital industry in Canada had a negative return on capital for that decade. There wasn't a problem with our entrepreneurs but there was a problem with our capital system.

I give multiple governments a lot of credit as well as the community raising themselves up from their bootstraps. If it wasn't for BDC, we wouldn't be having the conversation we're having now. They put the whole ecosystem on their back and put it on life support, they were basically the only ones in the game, and then strategically incentivized capital to start to come back.

We've worked on this both at C100 and Communitech, with both the current government and the previous government to do it, and credit to both of them for implementing it. But it allowed the biggest issues in terms of the flow of people, and then the flow of capital, to get unblocked such that a foundation could be built.

And if along the way, if some Wattpads and other companies are sold after 10 years of toiling hard to build their businesses and that capital gets refreshed back into the community, that's just an indicator that things are going the right way. And I think we're starting to see that now. I remember the days when people said you couldn't build a billion dollar revenue business, in Canada, in the early 2010–2015 time-frame.

And I remember distinctly a C100 event where the Canadian entrepreneurs, you could see the hair get on the back of their necks and basically say, "Hell no. We're gonna go do this." And that was a really exciting moment to see. And then Shopify got to a billion in revenue faster than any company anywhere on the planet before or since. And then I think, once that happened, you know, for me, that was a little bit like the gold medal in women's hockey in 2002.

You’ve mentored a lot of entrepreneurs. Is there a particular culture kind of way of thinking you've tried to encourage?

It's a growth mindset. One of the reasons why immigrants disproportionately have success is because they've done a very hard thing. They've uprooted themselves from an environment where they knew everything, knew everyone — everything was comfortable  — and they made a conscious decision, as Toby and Martin Bashir did, to uproot themselves and go to a strange land called Canada, without knowing anyone.

There's a risk-taking part of that, which has been well talked about and well documented. But I think the other thing is there's an opportunity growth mindset that they bring, where really big things seem possible to them.

I remember standing ankle deep in mud in a marsh in Kanata and standing beside Terry Matthews when we were building Newbridge, and Terry [says] "in 90 days, we're gonna have two ten-storey buildings, and they're going to be full of engineers in six months." If you've never thought that way, or thought thinking that way was possible, and then you experience it, as so many people have now, in their experience at Shopify, or at ApplyBoard, or Vidyard — that growth mindset, it is something you can coach and it's something that you can support.

Canada isn't usually associated with that kind of risk taking or focus on growth, especially in government policy, which often seems less risk taking than other countries. What are your thoughts on that? Do you think that's an unfair characterization?

As it relates to culture, we have superpowers. The openness to the world is an absolute superpower, relative to who we are competing with, and we shouldn't lose sight of that. It's well cultivated, and we invest in our culture, and it matters to us collectively. So that's awesome. And you see that with the people who are willing to uproot their lives and take a chance on Canada. So I think that shouldn't be lost.

And then again, talking about BDC and what the government did from 2000 to 2010, when there was a negative return on venture capital and no private money there. And now, you scan forward, to last year, we were very close to US returns in venture capital in Canada, and I predict we will pass the US this year.

And we're going to be the third most productive ecosystem from return on venture capital to the second. I think that is likely the results when we look back to 2021. In that sense, we've got to acknowledge the successes of this government, and the previous ones, and everything from the municipal to the provincial, with the knowledge of the things that have been done over the last 10 years to allow us to be talking about the things that we're talking about now.

Unfortunately, there's also another side of that, which is risk taking inherently means that you have probability of failure. So if you have probability of failure, and [if] the way the system deals with failure, is of retrench, re-calibrate, reduce risk, then you've got the opposite problem.

Even if you look at Own the Podium — and I really think we're at that 2002 Salt Lake games moment right now — Own the Podium didn't come from the government. It came from Canadian athletes in that Olympic world. They started saying, why are we not winning all the time? And then the athletes influenced the Olympic Committee.

Cathy Priestner, who was a former Olympian silver medalist in speed skating, in Munich games, was on the Olympic Committee in Salt Lake. And she really correctly not only heard the same thing so many of us were hearing from the athletes, but she took the next step and said, yeah, why are we not winning all the time? And what does it take?

And we changed the system. It was born of the athletes for the athletes. They said we want to compete with the best in the world, and resources need to be concentrated. We're a 40 million [person] country on a planet of 7 billion, and we're going to need to focus our resources if we're gonna have success. We all experienced the success of that at the Vancouver games.

I sense that same ethos, that same ambition, that same hunger in the Canadian entrepreneur community that I sensed in that Olympic village in 2002. So it's on us to organize around them and support them so they can compete. And I believe they will successfully. I'm voting with my feet on this one.

So you think our friendliness to newcomers and immigrants will be a key strength.

If you look at our relative competitive advantages of the nation, that's it. It's people. You look at places like University of Waterloo — there's a reason why it's the number one recruiting school for Microsoft or Google, for Facebook, for Twitter, Foursquare, you go down the list.

It's a very special place in terms of the pedagogy of how learning is applied and through the co-op mechanism, there's this constant refresh between industry and the school so everyone gets better. That's a really unique asset.

It would be great if we could clone it. There are some attempts to duplicate parts of it, but [I’d like to] really clone it across the country. You walk that campus, the University of Waterloo campus, and it's different from the Stanford campus or the MIT campus. The world is there. The world is literally on campus. I think that is our big superpower that we need to cherish and reinvest in. If we do a good job of that, we're going to see great results for a long time.

This interview has been edited and condensed for clarity.

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