26 Mar Vancouver’s High-Tech Makeover
Content provided by Richard Littlemore from The Globe and Mail
When the guides of the future plan the itinerary for the walking tour dubbed “Vancouver: Tech City,” they’ll start in Railtown. After all, this is where the social media company Hootsuite emerged in 2008, amid the cheap, converted warehouses between the Downtown Eastside and the docks on Burrard Inlet. Back then, you called the neighbourhood “sketchy,” but that got you the stink eye from Bill Tam, president and CEO of the BC Technology Industry Association: “It’s edgy!”
The next stop on the tour will be Gastown, another old neighbourhood of small-footprint buildings full of walk-up offices, but one that was more gentrified in the early days—not “edgy” but “funky.” In 2015, this was the home of entrepreneurial hothouses like Launch Academy, where hopeful youngsters learned how to innovate—or how to fail quickly and start again before they dragged their friends and family members into an expensive mistake.
Following a semi-circle, the tour will run through downtown, where the high-tech industry suddenly became so dominant around 2015 that it outbid law firms and government ministries for the city’s most prestigious office space. And then it’s on to Yaletown, another converted warehouse district that, in the dawning era, bristled with clubs, cafés, spas and fitness emporiums—and high-tech offices brimming with thousands of hipster techies who could afford that kind of thing.
Then, down past the Telus World of Science, tourists on this outing will come to Mount Pleasant, where Hootsuite took over a snazzy space in a move facilitated by the always-accommodating Vancouver Economic Commission.
Finally, saving the best for last, it will be on to the SkyTrain for a quick trip to Burnaby and the 10-minute walk to The Company That Saved the World.
Every great tech scene has an origin story, complete with a ground zero, like the Palo Alto garage where Bill Hewlett and Dave Packard, late of Stanford, seeded Silicon Valley. In British Columbia, the point of genesis is in the Vancouver suburb of Richmond, in an old shed long since lost in the fog along the Fraser River delta. That’s where Professor John MacDonald and physics grad Vern Dettwiler headed on Feb. 3, 1969, after they walked out of the University of British Columbia to set up a little remote-sensing company. They thought that they had an interesting technology, and they were disappointed that the brilliant young scientists and engineers they’d seen go through UBC all seemed to be leaving town. The two men hoped they might be able to keep some of the more promising students employed. Now, 46 years later, MacDonald Dettwiler and Associates Ltd.—better known as MDA—is a communications and information company with more than 4,800 employees arrayed in plants and offices around the world, including 600 in its head office and still-leading research-and-development centre in Richmond. They build everything from black-box military communications systems to radar satellites. And in their benign shadow, the high-technology sector in B.C. now employs 84,000 people, more than the forestry, mining and oil and gas industries combined.
According to a recent KPMG report commissioned by the BC Technology Industry Association, B.C. boasts 9,000 high-tech companies that together generate more than $15 billion in direct economic impact—that’s 7.6% of provincial GDP. That sudden growth, in a province that still can’t shake the resource-industry self-image, has produced a buzz, and the buzz has turned to giddiness with the arrival and/or expansion in Vancouver of some major international players. Microsoft and Sony Pictures Imageworks have staked out huge footprints in what is arguably the highest-profile commercial space in downtown Vancouver—the redeveloped former Eaton’s (later Sears) department store that anchors Pacific Centre at 725 Granville St. Barely a block away, Amazon is installing 1,000 high-tech employees in the Telus Garden, a new head office for a telco that is, itself, a tech giant, with 7,000 employees in Metro Vancouver, including 1,200 in the downtown core; 700 of them will work at this new location.
The attendant pressure has changed the face of commercial real estate in Vancouver’s suddenly crowded downtown. Norm Taylor of commercial real estate firm CBRE says the market is set to absorb more than two million square feet of new office space in the next two years, the largest growth spurt in Vancouver’s history. As of late February, that space was more than 60% pre-leased. And in a central business district once reserved for head offices (or what small share Vancouver has of them), high-end law and accounting firms and government, high tech—growing at twice the speed of the rest of the B.C. economy—is generating more than 40% of the demand for office space.
It’s true, of course, that B.C.’s $15 billion in tech salaries, services, sales and exports pales next to California’s $275 billion. But it’s early days. “B.C. is in that adolescent growth stage when parts of you grow faster than others. It’s an awkward passage,” says Bill Tam.
The gawky phase has demonstrated three things, each of which bodes well for the future. First, tech is all about people, and every person interviewed for this story made some reference to B.C.’s research universities as a source of both tech geniuses and bold entrepreneurs. (Full disclosure: I have written for the presidents of UBC, Simon Fraser University and the University of Victoria.)
Second, tech is sticky. Sure, it’s not physically stuck to a resource like mining or forestry. But it’s surprisingly difficult to pick up and move an established tech company—especially the creative part.
Third, tech is all about critical mass. Once you have the above-mentioned talent pool, you get networking and creative cross-pollination. And you get spinoffs minted by people with serious industry experience. While no one is bold enough to say Vancouver has reached critical mass, the success of homegrown heavyweights like Hootsuite, and the arrival or expanding presence of international anchors, indicates a sector heading toward maturity.
Actually, “sector” isn’t the right word to describe this phenomenon any more. In a time and place where a surprising number of people subscribe to both Greenpeace and Harvard Business Review, we talk about the tech “ecosystem” and its “biodiversity.” Tech is no longer as sterile as a lab. It’s a forest of interaction where little things feed big things and big things, in turn, seed new little things.
The best illustration of this is the BC Techmap, an interactive visual history compiled by PricewaterhouseCoopers over the last 18 years. The map shows thick bundles of connections emanating from the research universities. In a 2013 report on some 220 UBC spinoffs and affiliated companies, Colliers International calculated total market capitalization of $2.5 billion and total annual revenue of $400 million. SFU says that it has “spun out, mentored, incubated and assisted over 200 companies, adding more than 2,400 jobs to our economy and contributing an estimated $186 million in annual tax revenues.” That’s just direct economic activity driven from university labs—everything from biotech contenders like QLT Inc. to cleaner-energy industries like Westport Innovations. The universities, with help from institutions such as the British Columbia Institute of Technology and Emily Carr University of Art + Design, also spawn the engineers, scientists and technicians in clean tech, the health professionals and researchers in biotech, the computer and electrical engineers in web tech, and the designers, artists and storyboard writers in gaming and computer animation. Oh yes, and the business people.
Once in the tech sector, few of those people sit still. One of the next biggest tentacle bundles on the Techmap runs from MDA to the many dozens of other companies that have benefited over the years from lessons learned at the knee of MDA’s masters. Another bundle emanates from Ballard Power Systems, the once-ballyhooed fuel-cell innovator whose biggest actual output to date may be counted in talent that it has trained and sent on to other enterprises.
Consider Mossadiq Umedaly, who was Ballard’s chief financial officer in its mid-’90s heyday when Ballard, Daimler-Benz and Ford together looked like they might seize the whole burgeoning market for no-emission vehicles (said market imploded when regulatory leader California decided that hybrids were a more practical alternative). Umedaly says that Ballard’s chairman at the time, the late Fraser Mustard, used to divide the tech world into “doers” and “thinkers,” and then, à la Rumsfeld, into “doers who think” and “thinkers who do.” Umedaly, a doer who thinks, left Ballard before its slide and, in 1999, assumed the presidency (and later the chair) of Xantrex, a power electronics company that had been working on unsexy but practical power inverters since 1983. Umedaly saw the potential to scale up the Xantrex operation, especially in an age when inverters were becoming essential to managing intermittent power from renewable sources like wind and solar. He found a first round of financing and then floated an IPO in 2004, and by the time he sold the company in two pieces to Ametek and Schneider Electric, Xantrex was “the biggest clean-tech company in B.C.,” with annual revenues of $250 million.
Schneider is huge; “it’s the French Siemens,” says Schneider’s VP operations and CFO for solar, Jill Tipping. With 150,000 employees around the world and 3,000 in Canada, the company had the capacity to relocate its 200 new Burnaby employees, specialists in solar power, pretty much anywhere—a thought that Tipping says never came up. Instead, the company’s global solar business unit is headquartered in Burnaby.
Although Xantrex had no manufacturing here, almost no sales and—given the low cost of B.C.’s hydroelectric power—no market, “this is the brain trust; it’s the gold mine. The risk of moving it and disrupting it accidentally is too high,” Tipping says. In the tech world, “you do the things that are smart to do in the places that are smart to do them,” she adds, pointing to Apple, which designs in California and manufactures in China. Tipping’s only reservation about Metro Vancouver is that question of critical mass. There is great local talent, but Schneider still has to recruit mid-career managers and senior engineers from elsewhere. So, Tipping says, Schneider is delighted to see companies like Microsoft upping their Vancouver presence. “Even if they’re not directly in our space, it still creates a cluster effect that’s good for us.”
The story is similar at the Vancouver operations of what is now SAP, the world leader in enterprise software and software-related services, with 130 offices around the world and 74,000 employees. The 1,200-person Vancouver operation began in the 1980s as a local start-up called Crystal Services. Owing to a succession of takeovers, it was later known as Seagate Software, Crystal Decisions and Business Objects before being acquired by SAP in 2008. Again, SAP has the global capacity to shift or absorb smaller operations, but in Vancouver, it chose to consolidate and expand. Kirsten Sutton, managing director for SAP Labs Canada, says this location is now the SAP Canadian Centre of Excellence for Analytics—the largest software development employer in B.C., it’s SAP’s locus for innovation in some of its most important product lines. As with Schneider and Xantrex, Sutton says, moving was never an option. “The DNA is what SAP needed,” and that DNA is peculiar to Vancouver. “It’s the culture, the work-life balance. People who work here love it here and it comes through in their work.”
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