Transcript
Transcript: Innovation Accelerators: The Big Three
[00:00:00 Taki Sarantakis appears on screen.]
Taki Sarantakis (President, Canada School of Public Service): Welcome to the Canada School of Public Service. Today, we're going to spend the next hour or so talking about a chronic and a perpetual Canadian issue. It is not BeaverTails. It is not snow. It is not how cold it is in Ottawa. It's about innovation, it's about commercialization, and it's about productivity, and these are things that sometimes sound dry but they are incredibly important, and they are important not only to you, they are important to your children, and they are important to the quality of life of all Canadians. We have three experts in the room, and not only are they experts, they run organizations that are dedicated to innovation and diffusion which is also a big, big challenge.
[00:00:51 Grace Lee Reynolds, Sheldon McCormick, and Sonya Shorey are shown sitting next to Taki Sarantakis.]
So, I'm going to start. What we're going to do is I'm going to ask each of the panelists to talk for a moment to introduce themselves and then talk a little bit about their organization, and then we'll get into the conversation.
So, Grace, let's start with you.
Grace Lee Reynolds (Chief Executive Officer, MaRS): So, good morning. Thank you, so excited to be here today. My name is Grace Lee Reynolds. I'm the CEO of
[00:01:21 An image of MaRS Discovery District appears on screen.]
Grace Lee Reynolds: MaRS Discovery District which is, as we like to say, Canada's largest innovation hub, physically at least, certainly. We're located in Toronto at the heart of Toronto's Discovery District. So, there were one and a half million square feet, and what we do is we gather innovators every day who work in the centre, but not only that, is that our work is to both convene but to support entrepreneurs and ventures working to commercialize their discoveries into productive businesses in Canada.
Taki Sarantakis: Thank you. Sheldon.
Sheldon McCormick (Chief Executive Officer, Communitech): All right. Well, thank you for having me, representing Communitech. Communitech is,
[00:01:58 An image of Communitech's building appears on screen.]
Sheldon McCormick: I like to describe it as a collective of the entrepreneurs and founders in Waterloo Region. The mission at Communitech is the same today as it was in 1997 when we were founded, which is to help tech companies start, grow, and succeed. The vision that we have today is to further that mission and create a globally-competitive ecosystem in Waterloo Region that's anchored by local companies that start there, that scale there, and then stay there.
Taki Sarantakis: Sonya.
Sonya Shorey (President and Chief Executive Officer, Invest Ottawa): I'm Sonya Shorey, President and CEO of Invest Ottawa,
[00:02:31 An image of Invest Ottawa's building appears on screen.]
Sonya Shorey: lead economic development agency here in Canada's capital. We're a little bit unique from my friends at MaRS and Communitech. We're all about creating a hub of global opportunity and shared prosperity, and we do that in five key ways that I think is very complementary and enables us to collaborate beautifully with MaRS, Communitech, and many others. We support every step of the business journey for founders, business owners, and companies, both tech, which is our bread and butter, but as well main street companies. We help companies launch, grow, and scale from I-have-a-scribble-of-a-little-idea all the way up to 100 million in revenue. We help to attract companies and foreign direct investment in from around the world, primarily Asia-Pacific, European, and the Americas markets, and build up the multinationals that are major job creators here, many of which are headquartered and make decisions overseas. So, we want to keep those R&D mandates and those jobs here. Thirdly, we help to attract, retain, and cultivate top talent with a very big commitment to diversity, equity, and inclusion and building a robust talent pipeline. Fourthly, we facilitate innovation and collaboration. I say birds of an innovation feather flock together and pursue shared goals that no one could do in isolation, at places like Bayview Yards, our innovation hub. And lastly, we facilitate the commercialization of emerging technologies at Area X.O which is our R&D complex dedicated to helping innovators, founders, and companies get to market faster safely. All of this is dedicated to one thing, creating jobs, attracting investment, and building up the prosperity of Ottawa, supporting the founders, business owners, and companies we're honoured to serve.
Taki Sarantakis: That's a wonderful kind of introduction to a lot of the themes that we're going to talk about. I want to start by talking about why this matters, and we hear a lot from the Prime Minister that this is a generational moment, that this is a pivot moment, the world in 2025 and beyond is very different from the economic life that Canadians have lived and Canadians are used to.
So, Sheldon, let's start with you. Why does this matter so much? Why are we talking about it so much?
Sheldon McCormick: Well, I think this last couple of years has been a wake-up call for a lot of Canadians. I think we now, I hope, have an understanding that the strength of our technology sector, our domestic technology sector, the strength of our local companies, has a direct sort of causal path to the strength of our productivity and thus our sovereignty. And so, that's why it matters.
Taki Sarantakis: Talk to us a little bit, Grace, about the role that MaRS has played in this ecosystem, because, I might be wrong, I think MaRS and Communitech kind of came at the same time roughly in the nineties. Talk to us a little bit about the role that you see your organization playing in the ecosystem.
Grace Lee Reynolds: Well, I think this question about role and the things we do as incubators and accelerators, the role has evolved, right? So, I mean, you were signaling to me that I can say actually that next year is going to be MaRS' 25th anniversary from when the organization was it was incorporated.
[00:06:03 An article from Ontario Newsroon appears on screen. Title: Premier McGuinty Officially Opens Mars Discovery District.]
Grace Lee Reynolds: We opened, in 2005, the facility. So, it's been two decades of learning. And if we kind of go back and think about the original vision and the intent, there was a civic leader and his name was Dr. John Evans, and his view was that Canada wasn't doing well enough to commercialize these research discoveries.
Taki Sarantakis: And this is in the '90s.
Grace Lee Reynolds: This is in the '90s. So, this goes back then. And at the time, it was this view about, and it's a little bit of a life sciences anchoring but you can think broadly for all technology and scientific sectors, but why was Canada not flourishing when we had such amazing research assets at that time? So, the idea then was to, A, start with a physical hub, then develop programing that would ultimately help individuals, entrepreneurs, ventures who were seeking to commercialize being, how do I take these ideas and discoveries and turn them into products, into services that people will purchase? And furthermore, kind of this idea about, from a Canadian lens perspective, how can we have the commercialization that ultimately solves solutions that create positive societal impact, right? So, that was kind of the genesis 20 years ago. Where are we today? We think that this entire innovation economy has grown. But to bring it back to our current moment, it's lagging behind
[00:07:37 An article from University Affairs appears on screen. Title: Canada falling behind in R&D, report warns.]
Grace Lee Reynolds: all the other, like many, many other, global jurisdictions. And when you look at all of these productivity stats and you look at how much is invested in R&D, in kind of the intangibles economy, Canada versus other developed nations, we are lagging. So, even though we started on this journey 20 years ago, 25 years ago, we've not quite kept pace. And so, that's why the urgency here is at this moment, and how do we actually bolster that?
Taki Sarantakis: Wonderful. Sonya, here at the School, we've been kind of telling people, for as long as I've been here, we're kind of lagging as a country, our productivity is not where it should be, our innovation is not where it should be, our stock of IP is not where it should be, yet people kind of don't feel that in their bones. Do you have any theories as to this lag of, we have, again, the Prime Minister is saying urgency, the Minister of Finance is saying urgency,
[00:08:42 An article from Cision appears on screen. Title: Canadian business leaders call on government to 'act with urgency' to avoid a recession and help them invest for growth: KPMG survey.]
Taki Sarantakis: Businesss leaders are saying urgency, yet a lot of people kind of look around and go, I don't sense urgency.
Sonya Shorey: So, I actually do sense urgency and I'm going to bring it right down into Canada's capital region. I think that we harness our strengths here. We're a top tech global hub. That's something that's little known. We have a top tech talent concentration here in the city of Ottawa. And when we take the incredible startups and scale-ups, the IP, our post-secondary institutions producing 160,000 students, 28,000 in STEM, the 1800 companies are here, we are looking, together with our Mayor, our city, our partners like FedDev Ontario and the province, and of course our partners to my left and many others about how we can harness all of those strengths and do something we have never done before to generate disproportionate GDP impact, disproportionate opportunity for our founders, for our companies. Right now, if you live in the city, you will have heard our very big campaign and strategy to establish Canada's capital region as a
[00:09:45 An article from Invest Ottawa appears on screen. Title: Canada's Capital Region Mobilizes to Lead as a Global Defence Innovation Hub.]
Sonya Shorey: national global defence innovation hub, serving our country, forces, and allies. We are harnessing every strength we have in this city, including our startups and scale-ups, those that are producing innovation, very early stage, right up to multinationals where we can bridge collaborations to create new supply chain opportunities, procurement opportunities domestically, internationally, together with those multinationals.
And it is very by Canadian, pro-Canadian, and I of course am very, very anchored on that, but there is a role for everyone. And if we don't harness the entire ecosystem, we won't generate the kind of change that you're speaking about. I feel and I see that urgency every day from our elected officials and policymakers, from our startups and scale-ups, and our partners in the post-secondary and the economic ecosystem, and I think that's just one example. My colleagues to the left are doing very similar things. It's building on your strengths, pooling them and harnessing them, and putting them to work in a different way at a moment in time where that 5% GDP is on the table to drive up the defence innovation that we need, the spending that's needed to stay in NATO. And here in the city, we have huge challenges with respect to the public sector layoffs that are coming, that are already started. We can counteract, here in Ottawa, the impact that that's going to have by seizing new opportunities and driving hard on our ten-point strategy which I was really privileged to work with our Mayor and all kinds of partners across industry on, one example.
Taki Sarantakis: Sheldon, you're head of an organization in an area that is often called Canada's Silicon Valley. You're anchored by an incredible world-class university in math and engineering and machine-learning, University of Waterloo,
[00:11:24 An image of the University of Waterloo appears on screen.]
Taki Sarantakis: I think a university that kind of got this earlier than a lot of people. When I was going to school, the notion of kind of doing a co-op of kind of going into industry and coming back and then going into industry and coming back to your school was something that kind of nobody thought about other than the University of Waterloo. Now, it seems like everybody is kind of going, no, you have to go out, you have to come back. Talk to us a little bit about the unique ecosystem of the Kitchener-Waterloo area, because really, the reason why I say this is it really began with a couple of people making conscious decisions. If you go to Kitchener-Waterloo today, you see a lot of things, but if you went to Kitchener-Waterloo 30, 40 years ago, you saw a lot of land and a lot of cows.
Sheldon McCormick: You still see those things, still have the cows, still have a lot of land. You might see some robots in the fields with those cows. So, it is evolving. It's an incredibly special ecosystem, and no doubt, the University of Waterloo is the wellspring of innovation in that community. When I think about that university, 10,000 engineers graduating every year, it is in the top of the top globally in terms of the number of engineers coming out of that university, 25,000 students in co-op at any given time. So, the raw material that powers the innovation economy, and that I think is the key to getting us out of this productivity funk, largely it's the students that are graduating from our universities and those that are in our co-op programs today, and I'll be provocative because you asked us to be. Given it's a cold Friday morning, I'd say as we think about the age of A.I. that we are in today, I think we have to confront the fact that we as a country have the imperative to do an entire A.I. retrofit of our economy, every sector.
Not just the tech startup sector has to go through that retrofit but every sector of our economy has to go through an A.I. retrofit, because if we don't, then we're actively falling behind the other economies globally that are pursuing that retrofit faster than ever. And so, I along with my colleagues at the University of Waterloo, at Communitech, we're sort of asking ourselves, to what extent can we accelerate that retrofit and to what extent is there an opportunity for us to leverage our students, our co-op students, 25,000 of them each year, to diffuse them into parts of the economy that otherwise wouldn't necessarily be the natural receptors of them, and I believe, and we can talk about this later to the degree there's interest, I believe that those students could massively accelerate the rate at which we diffuse A.I. through all the different sectors of our economy.
Taki Sarantakis: All right. Did anybody have 14 minutes? Because that was the first mention of A.I. So, we went 14 minutes without mentioning A.I. Since we did open the A.I. box, I want to talk a little bit about A.I. because Canada has a very particular and unique, and in some cases, bizarre relationship with A.I. So, we are amongst the world's very best research centres for A.I. We punch tremendously above our weight in A.I. If you go to Google, if you go to Facebook or Meta, if you go to Amazon, if you go to Apple, Microsoft, a lot, a disproportionate number of their people, their A.I. people, are actually Canadians, trained in Canada, world-class researchers, very often, including at OpenAI which you know as ChatGPT. A lot of that input, a lot of that kind of foundational knowledge is from Canadians, yet the flipside of that is a lot of that value is not being captured by Canada. It's not being captured by Canadians. It's being captured by Google and Facebook and Amazon and on and on and on, which leads to a type of a paradox which is, why are we so good at the fundamental thing but nowhere near where we should be of capturing the value of the fundamental thing? Who wants to maybe start our conversation on that?
Grace Lee Reynolds: I can take a stab. There's so much to say about this.
Sonya Shorey: I know.
Grace Lee Reynolds: We know Canada is rich, right? In research, and how is that? It's this question, it always ends up being a question of resource allocation too. And I think for many decades, public dollars, and I would say kind of rightly so, have made important investments into foundational research, right? It got us to where we are today, as an example. It goes way back in history. And even if you think about the fact that, yes, the godfather of A.I.,
[00:17:22 An image of Geoffrey Hinton appears on screen.]
Grace Lee Reynolds: out of the University of Toronto, and Nobel Prize winner, that's all a result of that culture of really elevating basic research. When you get into that translational piece which is the gap we're at, this is what everyone calls and speaks to as the commercialization gap, A, it's culture, right? How do we actually think about these things and stretch beyond the importance of fundamental research, but how do you actually get out there and try to make it something that someone's going to buy and purchase? And which is actually a whole different question when you think about the valuation of A.I., etc. How is that actually going to be? Another time, right? For another discussion.
But as it stands right now, why can't we move that extra step? A lot of it also kind of connects to challenges with scaling up companies then. It's the matter of whether or not companies are able, these early stage companies who are trying to advance these technologies, is there capital to be able to support that work, right? Are there customers who are going to adopt that? And that's what, Sheldon, you were touching on too. And then, that's where that gap is. That's where Canadians, with talent and opportunity, it's so hard to be able to develop, or in this market here. Our market here in Canada, widely known, we're a tenth of the size of the U.S., we're a marginal piece of the size of the EU and globally as well. We actually advise our companies as they're starting out to think globally from day one, that's the only way that you can actually grow your business is to look at external markets. So, it's an A.I. question but it's also kind of this broader, why can't companies scale from here in Canada?
Taki Sarantakis: So, you see it as kind of a modern whither Canadian commercialization. A.I. is just the latest version of kind of trees, water, oil.
Sheldon, what's your perspective on this issue at the high level? And then, we'll dig into a few of the things after you answer.
Sheldon McCormick: How much time do we have, looking at the clock? Okay, first, I think we are world-class at producing research, subsidizing research. We're not world-class at buying and adopting technologies. So, confronting the reality, thinking about, what were all the steps, the strategies, the learnings that we have, all of the compounding gains that went into building up world-class research capabilities? To what extent do we apply that same sort of rigor and urgency to the question of, why do Canadian companies from the middle market through to the enterprise adopt so slowly? And to what extent do we have world-class capabilities in helping those companies adopt? So, let's take today, in the age of A.I. I've been talking about this A.I. retrofit that we have to pursue. In the middle market, speaking about our region, Waterloo, where you have a wide diversity of services companies, agriculture, insurance, advanced manufacturing, logistics, health care, to what extent does that middle market have the capability to absorb A.I.?
Most of the operators who are running those companies today do not have the time or the resources to do the type of thing that we're doing today on this stage, right? They're too busy running very complex operating companies that are very short on resources. And so, I think we should start, to some extent, by asking the question, to what extent could we be very deliberate and build world-class capabilities as a country in helping our middle market to adopt technology? And I think at this particular moment with A.I., particularly with agents which we can talk about, there is an opportunity for us to become world-class, building the capability in Canada of creating and orchestrating agentic workflows in the middle market. Nobody globally owns that capability today. It's there for the taking. But if we want to compete, we have to do it with intention.
Taki Sarantakis: Sonya, your thoughts before we dig into some of these.
Sonya Shorey: There are four words that come to mind, so the business environment, capabilities, collaboration, and democratization to everyone in Canada to make sure that every single person has the opportunity to leverage A.I., learn and create and contribute to our economy, optimizing the business environment. So, just building on what Grace and Sheldon have shared, the more competitive our business environment, the better, and that takes all kinds of those different levers from policies that we're seeing starting to change. We have an A.I. Minister who's leaning in on these fronts. Procurement reform is absolutely critical. We see the overreliance that we've had as a nation on the U.S. market and then that has put us in a place of dire jeopardy, and gratefully, we're seeing that diversification strategy coming to light, but it takes time. I know in Ottawa, our companies have naturally sold very regularly and consistently to the U.S. And now, we're making that shift and encouraging and working with them into the European and Asia-Pacific markets, but it takes a lot of effort and it takes a lot of work. So, how do we optimize further the business environment for homegrown Canadian startups and scale-ups? Secondly, the right types of capabilities. We're thrilled to see the types of sovereign A.I. capability that is currently under discussion because we know that's essential, keeping IP here in Canada, growing and adding value. I just facilitated a panel on defence IP with members of the ElevateIP program, the IAC, thankful that the Government of Canada has doubled down because that IP is what's going to unlock our future and really build up the opportunity for us to continue growing and scaling the type of companies that we need that are going to charge and change that productivity gap.
Sheldon talked a lot about adoption so I won't repeat that, but the opportunity to ensure that we're making it available and helping to educate and sharing best practices and learnings, that concept of collaboration, every part of this country is doing something in A.I. Imagine if we harnessed all that brain trust and brainpower and all the lessons learned and made it something that was available to everyone so that our main street companies, our resource sector, as well as the technology companies that all three of us serve, that we're equipping them to be faster to get over those hurdles more quickly and accelerating their growth, and I am a huge passionate champion. If we don't look at making sure marginalized communities have the opportunity to learn A.I., children, K-12, they need to be learning about A.I., women, marginalized communities. We need to show people that if you can be her, you can see her, that you're actually realizing that those career opportunities to build companies, to take charge, to be in STEM fields, we need to make that something that is commonplace and consistent through our K-12 all the way up so that those career opportunities are known, so that next generation that Sheldon was just talking about is diversified and that everyone has that opportunity to support our country. 44 million people, we can't afford to leave any talent on the table.
Taki Sarantakis: So, now, I'm going to be provocative, because we always have real conversations here, and I'm going to metaphorically poke each of you based on something that you said. Who wants to go first? Who wants to be metaphorically poked first?
Sonya Shorey: Sheldon.
Taki Sarantakis: Sheldon. So, Sheldon, you talk about this middle market, which I think for those in the room, let's translate, and online, let's kind of change that to kind of non-tech entities, banks, grocery stores, insurance companies, snow truck drivers, garbage collectors, anything you can imagine that's non-tech. Despite the fact that we in Canada have been one of the kind of founders of A.I., we seem to have this, again, very weird state of affairs where we don't have an A.I.-first bank, we don't have an A.I.-first grocery store, we don't have an A.I.-first insurance company, we don't have an A.I.-first garbage truck, and the way that kind of the economy works is you kind of have a choice. You can either keep buying better and better fax machines, faster than the version before, you don't have to load the tray anymore, better and better fax machines, or you can say, you know what? We're going to pivot to the internet, we're going to start using e-mail, on and on. How come? How come we haven't been able as a country to stop the mindset of, I just bought a bigger and better fax machine, what do you want from me?
Sheldon McCormick: We could really use a little greater efficiency on those snow removal trucks today, right? Across Ottawa and Southwestern Ontario today of all days. If I take a step back, let me answer the question but in terms of framing the opportunity that's in front of us in terms of A.I. adoption and diffusion. For the last, let's call it 40 years, there has been an enormous amount of outsourcing of very particular type of roles. I'll use an example, there are probably others we could talk about. Let's use call centres as an example, huge proliferation of call centre activity over the course of the last 40 years and a huge amount of outsourcing. That type of sales and support role in the call centre, broadly, that type of activity, that type of role, A.I. is coming for that quickly. In fact, you could argue it's already there. There is, I believe, and we'll see if this prediction comes to fruition over time, there is a once in a generational opportunity to reshore that type of activity today but not the way it looked, what it left. It's reshoring.
I mean, building the capability of creating agentic workflows and learning how to orchestrate those agentic workflows, that's a whole new capability, a whole new class of job, a whole new class of startup that is about to become an absolute tidal wave of activity. We have an opportunity as a country to seize that now. So, as companies think about, how do I create an agentic workflow for what once was my call centre? That capability, that's an opportunity for Canada to seize that and really build global capability there. And so, I think the question is, what would it take for us to seize the opportunity that's there? There's no country in the world that has a lead at this time. And so, that's the focus that I have today in terms of A.I. adoption in the middle market, how do we get our Canadian students, entrepreneurs, middle market companies but also the enterprise, to be thinking about this opportunity that's right there for the taking?
Sonya Shorey: Can I build on that?
Taki Sarantakis: Hold for a second.
Sonya Shorey: (laughs)
Taki Sarantakis: Grace, you talked about Canada being small. Let me flip it around. Let me challenge you and, again, metaphorically poke you. Singapore is a lot smaller than we are. Taiwan is a lot smaller than we are. Israel is a lot smaller than we are. Switzerland is a lot smaller than we are. Denmark is a lot smaller than we are. They are doing things with A.I. in terms of actual applications, in terms of going around the world. They're skating circles around us, in many cases with our own technology. We talk about, for example, five, six years ago, we were talking about Estonia. Almost all of the tech in Estonia in terms of connecting is Canadian. It's not magical tech. So, how come it seems to me that in some cases, smaller is better? We'll talk about scale in a moment, but smaller is better.
Grace Lee Reynolds: So, I don't know for a fact with all of those nations, but I think generally, it's coordinated industrial policy.
Taki Sarantakis: This is interesting. So, let's pause. Put that in your mind, coordinated industrial policy. We might come back to that, but keep going.
Grace Lee Reynolds: So, Singapore is the example, I know more but I think when they built their innovation platform, their innovation economy, heavily supported by government, right? A real intentionality. And I think you're right, because they're smaller, it's easier to coordinate, I suspect in the same cases with all the other jurisdictions as well. And so, I mean, you're really poking right now.
Taki Sarantakis: Yeah.
Grace Lee Reynolds: Yeah.
Taki Sarantakis: More metaphorical.
Grace Lee Reynolds: We're more metaphorical. I mean, we kind of know this about Canada, and maybe this is the flip side around kind of inclusivity, which is then, okay, if we want to be able to lift all of Canada, we tend to have a peanut butter approach to a lot of things, right? And so, that's what we've done. So, again, it's A.I. now, right? But it's really just about kind of, how do we think about commercializing technology, right? So, lots of different, I'll say, pilots and tests, right? It's a very complicated issue too. So, what we've done in this, I'll say this kind of chapter, say, over the last 25 years, is that as a country, we've tried different interventions. We are an example of that type of intervention. Every single province has different types of interventions, and some concentrated, not as concentrated, and I think that's one of the starting points that needs to happen, is how do we as different groups aggregate together? And whether or not it's a little more top-down from a government mandate.
And we're hearing the language now already, right? Around how we kind of coordinate top-down, but I think it's also necessary bottom-up, and we're an example. The three of us are sitting and smiling but we do, we collaborate regularly. We're all together, part of an important program called the Scale-up FedDev Funding Program,
[00:32:18 An article from MaRs Discovery District appears on screen. Title: FedDev Ontario Scale-Up Platform.]
and that's sort of the basis for that. We're very conscientious as MaRS, as an example. We recently launched a group called Life Sciences Central which is a collaboration with different life sciences, incubator organizations as well, where a few years ago, everyone would have been doing good work but separately, right? So, coordination on the ground, listening to maybe a bit more of a coordinated top-down imperative, and I think then if we can kind of align around those types of priorities, we might see the same type of success than some of these other places.
Taki Sarantakis: Sonya, I'm going to give you your metaphorical poke and then you'll start our next round of conversation. So, you said it takes time. It takes time. Do we have time?
Sonya Shorey: We don't have time, and I'm going to echo the urgency and the type of action that's being taken, whether it's through the FedDev-supported scale-up platform and the way we're collaborating and pivoting, the way we're building our strategic plan. I can tell you right now, at Invest Ottawa, we're doing our five-year plan and pivots are planned every single year. We now have a different way and approach where we're looking at all the environmental conditions, what's happening globally, in the markets, within our companies. Those needs are changing and helping our companies to pivot literally sometimes every week, every month, to ensure that they're capitalizing on the A.I. opportunity, the defence opportunity. I want to emphasize, what Grace just said was exactly where I was going to go. This concept of coordinated industrial policy with critical mass focus, intentionality, and execution, we're trying it here in Ottawa right now.
I can't wait to see where it yields because I can't recall in the 35 years I've lived here where our region has ever come together and said, we're going to go get that defence opportunity and leverage every technology, strength, policy strength, our diplomatic community, and everything we have to offer to build up our local economy and contribute something meaningful to Canada and to our allies. I can't wait. Imagine if we did that in A.I. and harnessed all of the strengths with intention-focused prioritization. I feel the A.I. Minister
[00:34:23 An article from L'actualité appears on screen. Title: Former journalist Evan Solomon becomes Canada's first-ever Minister of AI.]
Sonya Shorey: that's been created is doing that with the strategy decisions that we have never made. We don't have time, and I see Canada taking action right now and I see FedDev investing in us in ways that are allowing us to bring that vision to life and do things that we would never otherwise have been able to. For companies that are pursuing that right now, we're here to remove roadblocks and help accelerate that growth.
Taki Sarantakis: Sheldon, do you agree with the coordinated industrial policy approach as one of the things that has maybe been something that we haven't had in a long time in Canada?
Sheldon McCormick: I think that there would be a lot of benefit from embracing the fact that even calling it industrial policy is interesting, because it evokes an image, right? Of resource extraction, manufacturing. Industrial policy invokes probably an image in our head of mechanics, mechatronics, engineering in the physical sense, and that's not the economy that we have globally pertaining to power, right? And that's the wake-up call that I think we're all living through, is the world is really competitive, and very quickly, uncertainty moved from being an abstract and intellectual concept to being a very practical one that we live with every day. And so, I think when I think about strategy, economic strategy in the current moment, I'd be asking myself questions around, in the context of A.I., digital, quantum computing, where do we need to totally rethink some of the assumptions that would be underpinning the way we make choices as a country?
Taki Sarantakis: Exactly, and you brought up a good point about industrial strategy sometimes being understood in different ways. In this room, in kind of the Government of Canada, it's understood as what you were talking about, Sonya, which is coordination, which is kind of picking sectors, in some cases even picking companies as kind of flag-bearers for the domestic sector to then kind of leapfrog and grow out of that outside of Canada. That kind of though raises an interesting philosophical question. If we have been putting virtually all of our money on the research invention side, and we do, we put a lot of money into that, depending how you count, it's $5-10 billion a year in a regular year, and not just kind of all the additional things that we're seeing kind of going forward today, does that mean we've been doing it wrong for 30, 40 years? Does that mean that instead of investing in research, we should have been investing in harvesting the outcomes of research?
And this is about as provocative as it gets in this space. So, I don't know if any of you want to lose your jobs. I'm very close to retirement so I don't care, but is there something that we've been doing fundamentally wrong? Because the way the system is now, it's a feature, not a bug. We made these decisions a long time ago in the nineties and the 2000s, and we said, you know what? We're not going to play in this space, we're going to give money to U of T, we're going to give money to McGill, we're going to create the Canadian Innovation for Advanced Research, we're going to create Canada Research Chairs, and then if somebody were to ask what's going to happen with all that stuff, we would have said, as policymakers we would have said, well, that's the market, that's not my problem. Who wants to tackle that or start us off?
Sonya Shorey: I think it's about how you harness the strengths and the outcomes that you have in an era where there's all kinds of other factors. So, you're looking just at the investment that's been made in research. We have a much broader business environment, all kinds of policy levers, all kinds of other opportunities that sit within that ecosystem. And if we take an ecosystem view and we look at our strengths and how we can harness them in this moment in time, responding to challenges and opportunities, we build on those investments. We put them to work in different ways that are very relevant right now, that address this moment that Canada has where we are at a huge inflection point. A.I. is the most revolutionary technology ever. We have multiple challenges geopolitically and economically. And I feel like right now, we have woken up as a country and we're taking action. I see it as building on it.
Grace Lee Reynolds: Same, same. I think it's not worrying about a job, it's actually leaning into that, there's more opportunities.
Sonya Shorey: (laughs)
Grace Lee Reynolds: Same as Sonya. We've built this bunch of strengths. Hindsight, should we have maybe seen things a little bit differently to be able to kind of bridge that commercialization gap? It doesn't matter. We're here where we are right now and everyone's very focused on it. So, I think it's a very positive moment and built on the urgency.
Sheldon McCormick: Yeah, I would say, on the one hand, you don't want to throw the baby out with the bathwater. There's a lot to be very proud of and there's a lot of strength to build off of. And at the same time, we can recognize that we have to evolve.
Taki Sarantakis: All right, one of the underlying themes we've been talking about is the importance of Canadian companies, the importance of sovereignty, which is a very old-fashioned word that suddenly has come back into ordinary nomenclature. Talk to us a little bit about the importance or the lack of importance of Canadian companies, companies that play not just big roles in Canada but roles on the global stage. Who wants to kick us off?
Sonya Shorey: I would love to share a little bit about the scale-up platform and its genesis because this is exactly why it was created. So, together with FedDev Ontario who put a lot of faith and vision in our three hubs, we had identified big challenges. We don't have enough hundred-million-dollar anchor tech companies here in this country. We know that they are a generator of disproportionate GDP, job creation, investment attraction. That lifts the whole. And so, they put their faith in us and they enabled us to work together with our clients to identify the key gaps, the key opportunities and challenges, and 2019 was a very different era but we started on this journey to say each of our three jurisdictions has all kinds of incredible founders. We each have unique sector strengths and resources that we can bring to bear. How do we, with intention and prioritization and disproportionate investment, work together to drive the growth, the anchoring, those companies that build deep roots and grow and anchor here and stay here? Here in Ottawa, one would be Ascent as an example that we had supported during that journey. And fast forward, we're now in our second iteration of that scale-up platform, very grateful for the faith and the investment
[00:41:57 A news release from the Federal Economic Development Agency for Southern Ontario appears on screen. Text: New Growth and Innovation Network to Support Scale Ups in Ontario. $52,4 million to position southern Ontario as global tech leader and help generate 18,000 jobs]
Sonya Shorey: that FedDev Ontario has made in us, in helping to create this opportunity.
The first project, I'm going to work with my memory here, we supported 3,000 companies. We collectively either enabled, created, and supported the maintenance of 69,000 jobs. We helped those companies to attract 22 billion in investment and generate 16 billion in revenue, and I memorize those numbers because they're important, because that's what came out of that investment of 50 million from FedDev and matching contributions from our three hubs and a variety of industry partners. That's huge. And I can say here in Ottawa, we have seen an incredible flourishing of our entrepreneurship sector of ventures in tech, I know, in MaRS and Communitech, they have as well, and we had targeted, and the Prime Minister stood up and said there'll be 30 $100 million companies at the end. We got to 26. We got to 26. We had 10 that we were working with at the beginning of the journey, and there were 16, and I'm the only dinosaur among the three of us here that was a part of that journey all the way back, and I feel it's important to say those investments were made and they have paid dividends. And now, we're building on the learnings and the collaboration that is rock solid amongst our three organizations. We trust each other, we collaborate in ways, and we support our clients holistically and collectively. So, whether you're in Toronto, Waterloo, Ottawa, Kingston, one of the surrounding areas, we're here to support the companies that are Canadian and make sure that we're building those sovereign capabilities and those sovereign companies here.
Taki Sarantakis: So, that was kind of the, how do we start getting them? But is it important that we have them? Is it important that we have airplanes that are made by Canadian companies? Is it important that my insurance is underwritten by a Canadian company? Is it important that my word processing system is made by a Canadian company?
Grace Lee Reynolds: I think those are all important. If you want to anchor a strong economy broadly, I think it is key to economic development, right? That you have key Canadian anchors in a series of domains and sectors, and I think what also is more so is that you are always growing that pipeline of strong early stage companies that will grow into SMEs that will then become Canadian anchors. And so, I'll just give a bit of a variation on that, important to have Canadian anchors because they mean something globally, right? They represent us as leaders globally, but I think Canada has a very strong middle economy too. So, the analogy is us being a little bit more like Germany, right? Which is very kind of called out in the recent budget. Having the strong bench of SMEs that thrive, Sheldon, you've been talking a lot about how we want to be able to bolster that. There's these layers. It's not just sort of a one versus the other but thinking about that entire continuum. That's my perspective.
Taki Sarantakis: So, Sheldon, I'm going to introduce the variant of the question to you. You come from an area where you've actually seen the importance of having a Canadian anchor company, a bunch of Canadian anchor companies actually if you think about, Research in Motion, BlackBerry, if you think about OpenText. If you think about some of the people that have played on the global scale, and it's really, really hard to play on the global scale, really hard, what has that meant for the broader ecosystem in your area that you had at Research in Motion, that you had in OpenText? Here in Ottawa, we had Nortel that was playing on the global stage.
Sheldon McCormick: Let's talk about OpenText for a moment,
[00:45:52 An image of the OpenText website appears on screen. Text: Source: OpenText.com]
Sheldon McCormick: one of the largest enterprise software application companies in the world. It's a public company, so you can look it up, multiple billion dollars of free cash flow per year, billions of dollars poured into R&D. Two-and-a-half percent of its revenues are in Canada.
Taki Sarantakis: Pause. Two-and-a-half percent.
Sheldon McCormick: 97 to 98% of its revenues global, over half from Europe. There are 15% in Asia. So, OpenText is an incredible asset. It's rare to compete at that scale and to look at the growth trajectory of that company, 35, 40 years of compounding up into the right in terms of revenue-free cash flow. The somewhat un-Canadian thing to do that we have to do is recognize that the number of companies like that with local offices, local management teams, there's now, I think, an apparent obvious connection between the amount of power that we have globally, the number of those companies and the power and the sovereignty that exists, right? So, why is it important to have local companies? Because local companies drive productivity, drive political power, and drive sovereignty. It's helpful to have global companies participating in our ecosystems. For example, in Waterloo Region, we have Google.
[00:47:36 An image of Google's building in Waterloo appears on screen.]
Sheldon McCormick: There are 2100 engineers working in Waterloo Region at Google, but in the ecosystem that I at Communitech am trying to build today, there's an ecosystem with a hierarchy, and in that hierarchy, at the top of the food chain has to be the local companies. Because at the end of the day, as wonderful as it is to have Google in our ecosystem, and they are a critical contributor, at the end of the day, the IP, the strategy, the decisions that are most fundamental towards the future of that office are not being made in Kitchener-Waterloo.
Taki Sarantakis: Exactly, and there's replications of this all over the world where a global player that maybe has 2% of their market in their home country, that's their sales, but the other stuff, the importance of having that home player is that they induce the local university to kind of shift its focus on this. They induce kind of the marketplace to attract people who want to play on the global stage to that country.
Now, I want to talk a little bit about scale. One of the things is we're really, really good at generating ideas. We're really, really good at starting little companies that might become SMEs. We're not as good at scaling. We seem to kind of fall off the cliff at a few certain points. $10 million in revenue seems to be one of these areas, another is $100 million of revenues. Talk to us about the importance of scaling in today's world.
Grace Lee Reynolds: The importance of scaling. Scaling is important but I guess it's the how to scale and how to scale in Canada.
Taki Sarantakis: Well, first, talk to us about the importance of scaling because it seems to me that the world is very different than it was before in the sense of in the past, you would have Labatts and Molsons and they would be really good in Canada, and you would have CN and CP, although a different business because its hard to export railways. Talk to us about the importance of playing on a global scale or scaling to an $8 billion market as opposed to scaling to a $42, $43, $44 million market, people market.
Grace Lee Reynolds: People market, this question about kind of, do we have these anchor companies in Canada? How do you grow global companies? Scaling is really kind of about kind of accessing markets and accessing customers. The market in Canada itself, right? Isn't large enough. If you were to only sell in Canada, you can't become an anchor company in the same way. So, just by definition, you have to be able to think about how you enter the U.S. market or enter the European markets. Can I diverge a little bit here? Just because maybe it's just a seed for another question later then, but when we think about these companies and the importance of, why is it important to scale and then how can we scale? Getting those first customers, and in particular, in the domains that we work in, right? When it's about novel idea, new technology, who's going to be able to kind of be that first customer that will probably do a little bit of de-risking of your product. And so, here's the question around procurements, right? And whether or not then as a nation, as probably the largest procurer en masse in the country, how can government help play a role then to be able to help companies scale, help de-risk these companies to be able to enter foreign markets by being a procurement partner?
Taki Sarantakis: And no disrespect to my colleagues elsewhere, we're particularly bad at that, particularly bad at that. The amount of kind of hurdles we put relative to outcomes, the amount of things that other countries do to help their domestic industries in procurement, we might be amongst the worst in the world at that. Even if you go to the United States, which is the land of the free and the home of the brave and free market, they have all kinds, and it's not just Donald Trump. They have all kinds of kind of buy America first programs, all kinds of defence procurement that provides benefits to domestic companies. They have all kinds of imports and export restrictions of technology that help make sure that they scale it properly. Sheldon, I want you to chime in on this.
Sheldon McCormick: I want to tell the story of two companies right now, okay? Two different stories.
Taki Sarantakis: Company A and Company B.
Sheldon McCormick: Company A and Company B, okay? Company A calls me a few weeks ago. This is a company based in Kitchener-Waterloo that we should be very proud of, over $100 million of revenue. And by the way, I come at this from the perspective of a former entrepreneur. So, you can be an entrepreneur in the tech industry, an operator, an investor, a founder. I've worn those three hats. This is actually very new territory for me. So, I'm going to tell the story that I had talking to an entrepreneur a few weeks ago. The dynamic is they manufacture a fairly advanced product, a combination of hardware and software out of Kitchener, exactly the kind of thing we should be proud of, and this has taken 15 years of compounding to get to this point. Because of Buy America, or BABA essentially, Buy America, Build America, it's making it very difficult for this entrepreneur who manufactures as well as creates software in Kitchener, employs hundreds of people, does over 100 million in revenue, it's very, very difficult now for this company to keep its manufacturing capability in Kitchener because of the BABA legislation, right? So, putting aside tariffs, just the dynamics of the legislative framework is making it incredibly difficult for this entrepreneur to sell in the U.S.
How this entrepreneur has relayed frustration to me is what he perceives as a series of policy interventions to make him more efficient as a manufacturer. So, we've got subsidies and programs to improve your R&D, to make you more productive, and his frustration is, I don't need to be more productive, even if I was more productive, they're not going to buy it if it's manufactured here, the only thing that can keep my manufacturing in Kitchener right now is if Canadians buy my product, that will keep me going, right? That'll keep us growing, but he can't get a meeting, a serious meeting, with buyers at the provincial level and at the federal level for this particular product, and the frustration is that he hears everybody talking about procurement and yet, this is a live example, someone calling me and saying, I don't need another grant on the supply side to make me more efficient, I need somebody to step up and actually have a serious conversation about purchasing the product. The alternative is we shrink or we move manufacturing and build something in the U.S. So, that's one story.
Taki Sarantakis: Company B.
Sheldon McCormick: What's that?
Taki Sarantakis: Company B.
Sheldon McCormick: Company B is OpenText. Since it's a public company, I'm going to go back to OpenText.
Taki Sarantakis: Are you on the board?
Sheldon McCormick: I am not on the board of OpenText, although if they need a board member, I'm available. Company B is OpenText and the reason I'll say it publicly is it's a public company and it's a much greater scale, and it's not the first time in this conversation we've talked about them, lots of conversation about sovereignty and the sovereign cloud, right? And I'm actually very enthusiastic and I see a lot of positive steps, the Minister of A.I. and Digital Adoption as well as the Prime Minister and this government's commitment to building a sovereign cloud. Okay, we want to build a sovereign cloud. Who are we going to call?
Unidentified Speaker: Ghostbusters.
Taki Sarantakis: (laughs)
Sheldon McCormick: Thank goodness we have OpenText, right? As I'll call a general contractor of that sovereign cloud. Who are you going to call? We have a company who has global competitiveness capability, who has presence and selling and competitive globally, who has that world-class IP and the depth of capacity. That's the benefit of having that global champion who's local. Because if we do want to build a sovereign capability, we're going to need help and we're going to need to pick up the phone and collaborate with the private sector. And so, that's the benefit of having those local champions. And of course, OpenText is just one example, right? I use Cohere as another example,
[00:57:01 An image of the Cohere website appears on screen. Text: Source: Cohere.com]
Sheldon McCormick: a much newer company, but as we think about foundational capabilities and large language models, I'm really happy that we have Cohere's capabilities. The fact that we have OpenText and Cohere in Canada actually gives me a lot of hope that with collaboration between layers of government and those two organizations, there's an opportunity to be globally competitive, but that's the benefit of having those local companies. So, that's the tale of two companies. Hopefully that's helpful, right? As we think about the ability for our public service to think about policies, how do we think through the optimization for those two different dynamics?
Taki Sarantakis: So, what Sheldon said at the beginning is very important because in kind of Ottawa public service talk, public administration talk, he's talking about policy instruments, and our policy instruments in this area have generally been spending on research and have generally been subsidizing companies episodically through one of our 879 innovation programs, or maybe it's 294 now, I've lost track, but there are other policy instruments, taxation, capital cost write-offs. The biggest one, and you've both kind of touched upon it, is procurement. If we think about that as one of the biggest buyers in the country, and I think we are the biggest buyer in the country on the federal government side, but then that cascades down to provinces, territories, municipalities, there is a whole public sector moment that potentially is shifting a policy instrument to a different lens. Now, I want to close on policy, and each of you, you don't work in policy but you kind of do work in policy. So, talk to us a little bit and we'll go this way this time.
[00:59:07 Taki Sarantakis points in the direction from Sonya Shorey to Sheldon McCormick to Grace Lee Reynolds.]
Taki Sarantakis: Sonya, talk to us a little bit about some of the things that you think from your vantage point would be helpful for public policy people to understand and to maybe start tweaking towards in this area.
Sonya Shorey: So, I might start off with some guiding principles. We say here in Ottawa we see founders helping founders. If policymakers are listening to founders and entrepreneurs and companies, and taking the time to understand the needs, the challenges, the opportunities, and integrating them in holistically into all facets of business policy, the environment, the levers, the instruments that are available, I think that would springboard us forward so significantly. We have done so many roundtables on procurement challenges, on investment challenges, bootstrapping versus increasing and building up our capital environment, how we protect more sovereign IP and leverage it internationally to be able to drive more impact back into our environment. I see us on a path and I see that dialogue. We need to translate that into action, keeping founders and companies at the heart and actually listening and understanding their context and what matters and how they work and what they truly need. If we can marry that up with the policy instruments and the decisions that are being made, I am heartened. I am definitely a glass half full girl and I'm hopeful that right now, in this moment in time, out of necessity and urgency and the state that we are currently in in our world and in our country economically from a productivity challenge perspective and all of the issues that we have with our neighbour to the south and the very genuine risks that we face geopolitically with the threat of war and the economic uncertainty, that we're now doing things differently in Canada, and I hope founders can stay at the heart of it.
Taki Sarantakis: Sheldon, your kind of policy thoughts.
Sheldon McCormick: I'm still immersed in the policy learning curve, so by no means do I have the answers. I suppose two questions that I'd leave the group with, one is, to what extent do we really embrace the notion that in this kind of new digital era, to what extent have we embraced that there's just new policy strategies that are required, given the difference between the economy that existed globally kind of 30 years ago to where we have now? The compounding of the digital economy, it's really incredible, right? To look at the S&P, to look at the concentration of the S&P 500, for example, and to look at who is at the top of that list. The concentration of economic power in the digital and software, A.I., as well as in kind of the hardware stack today in computing, it's incredible. And so, I guess I'd be asking myself, to what extent do we really need to re-examine some of the fundamental assumptions that we have pertaining to what our economy is and what it will be in 20 years?
Taki Sarantakis: Grace.
Grace Lee Reynolds: I think similar, building off of what both my friends here are saying, and it's stemming from this idea around kind of what we represent, or we see people on the ground and the challenge is particularly around founders, so really understanding those needs, and an invitation then to be able to say, how can we increase the level of dialogue? And we're going to enable this type of change. You touched on culture earlier, right? It comes through dialogue. So, I think that's what I'm leaving all with is an open invitation to say we're here to help further learning. When you speak to founders and understand their challenges, that's when it becomes very real, and these are people on the ground kind of building up their businesses. It always links back, and the very simple way is thinking about the needs are always around capital, right? How do we make that accessible to early stage companies around procurement, around customers? We talked about that too, and being able to have that free flow of talent, so customers, capital talent.
Taki Sarantakis: So, I want to close by making an invitation from each of you. So, I'm going to put each of you on the spot, and you can actually say no, I'm not interested in doing that invitation. So, each of you have really, really cool facilities that are energetic and dynamic and full of people who have ideas. Grace, yours is in downtown Toronto, beautiful, beautiful facility. It's particularly close to my heart because I was born in it. It used to be the old Toronto General Hospital, which was the anchor.
Grace Lee Reynolds: That's right.
Taki Sarantakis: And on my birth certificate, it says Toronto General Hospital.
Grace Lee Reynolds: He was not born in the new wet lab incubator (laughs).
Taki Sarantakis: So, in one of those corridors, a crying, obnoxious young Greek boy was born, but I think you would invite everybody next time they're in Toronto to come and take a look.
Sheldon, in Kitchener-Waterloo, you have a remarkable facility. I think if I remember correctly, it's an old distillery or an old barn or something, but really, really cool, again, full of energy, full of life. I remember one time when I was there years ago, there was a company that at the time had created something magic that today probably still is magic but less magical. You would walk into their little thing, and you were buying a house or a condo, and as part of the pre-sale you would go, well, I want the counter to be like this, and it was virtual and digital, and I want the light switch not to be here, I want it to be here, and it would do it all in real time, but what was also fascinating was it would price it for you. So, you would go, the electrical cord. I don't want it here, I want it here, and it'd go, that's great, that's only $800, and you would go, no, no, put it back, put it back. So, do you still have the cool slide?
Sheldon McCormick: We do.
Taki Sarantakis: So, this is one of the greatest things ever. They have a slide that's not a slide, because if you have a slide, you need a permit and you need an amusement license. So, in front of the slide, they have a sign that a lawyer wrote that said, "This is not a slide" which I love because it kind of gets at like fixing things.
Sonya, you're down the street at Bayview Yards which is an old brick something or other, brickyards?
Sonya Shorey: It's a former municipal garage that's been transformed into an innovation hub.
Taki Sarantakis: Yeah, it is stunningly beautiful. Again, on behalf of Grace, I invite you to go take a look, lots of energy, etc.
Sonya Shorey: And Area X.O. You can't leave out Area X.O.
Taki Sarantakis: Yeah, and that's kind of where I live, out in the boonies. Sorry, and I can say that because I live out there. So, I want to thank you, Grace, coming from Toronto. Sheldon, I want to thank you for coming from a blizzard. And Sonya, I want to thank you for coming from Hintonburg. I know it's not easy to get to the market from Hintonburg in late November with the snow. And so, please join me thanking our three guests today.
(Applause)
