Ontario's technology sector looks to model Silicon Valley for growth
The San Jose skyline is seen from City Hall in San Jose, Calif., Tuesday, Feb. 5, 2013. (AP / Jeff Chiu)
David Friend, The Canadian Press
Published Sunday, May 4, 2014 11:42AM EDT
Ask city officials in Kitchener and Waterloo, Ont., where the future of Canada's technology sector lies, and they'll show you a map of Silicon Valley.
The bustling stretch between sunny San Francisco and San Jose -- home to giants like Google and Apple -- has become the template for a new vision of Ontario's technology sector, which is redefining itself in the wake of BlackBerry's massive layoffs.
Instead of going it solo, Waterloo organizers hope to mimic Silicon Valley by strengthening ties to tech organizations in Toronto. The goal is creating a new technology "supercluster," said Iain Klugman, president and CEO of Communitech, a government-funded organization that rallies behind Waterloo technology firms.
"We need to gang up to take on the world," he said.
"Toronto and Waterloo are different enough that we each bring something significant to the table. It's a massive asset we've got."
In the past, complementary traits between the two cities were rarely synchronized, which left both isolated, even though together they employ more than 205,000 people in the tech sector.
Communitech estimates it worked with 802 active startups over the past year, with 464 of them putting roots down in Waterloo during the same period.
While numbers for Toronto are more fragmented, organizations there suggest about 1,500 active startups exist in the area.
Here's where the potential lies, said Rod Regier, executive director of economic development in Kitchener.
Waterloo, like San Jose, is widely regarded as the brain centre of Canada's tech talent, helped by the steady flow of graduates from the University of Waterloo. Toronto, like San Francisco, is an international travel hub with a large chunk of the country's venture capitalists located on Bay Stret in the downtown core.
"What I'm not saying is that we're trying to replicate Silicon Valley or anything like that," Regier said. "We just need to be more strategic."
Unlike Silicon Valley, where developed suburban communities fill in the gaps, the link between Waterloo and Toronto is tenuous. A journey down Highway 401 from Waterloo begins with mostly farmland and cement barriers until near Toronto when a concentration of industrial buildings eventually give way to the big city.
Silicon Valley could have been described in a similar way, but the presence of Stanford University and its graduates laid the foundation for a thriving community built decades ago -- first on silicon chip innovation and innovative companies like Hewlett-Packard and Xerox. Since then, the region has grown to include software and Internet giants such as Netflix, Amazon and Pixar.
Ontario has struggled to define itself as a technology centre. Ottawa thrived for years as Silicon Valley North, an epicentre of growth with companies such as Nortel Networks and JDS Uniphase Corp. employing thousands during the dot-com boom.
After the bust, BlackBerry emerged in Waterloo as a force to be reckoned with as smartphones became mainstream and international names like Huawei Technologies, Cisco Systems and Rockstar Games moved into the region.
While all of this happened, Toronto sat on the outskirts of the technology booms as more of an afterthought.
"One of the problems with Toronto is that the ecosystem is highly fragmented geographically," said John Ruffolo, CEO of the venture capital wing of the Ontario Municipal Employee Retirement System.
"A key ingredient is the physicality of people and ideas colliding with each other serendipitously. The next evolution is to connect the two dots."
Underdeveloped transit infrastructure may be the best place to start.
Last week, Ontario Transportation Minister Glen Murray unveiled plans to help bridge the gap that's hindered development in the region. The provincial government says it would consider a high-speed rail line between London, Kitchener-Waterloo and Toronto, as part of an environmental assessment scheduled for the fall.
The rail line would address persistent complaints that there's a lack of sufficient public transit between Waterloo and Toronto, and infrequent Go Train schedules that have left commuters frustrated and turning to the highway in droves.
Large companies, like Google and Open Text, have tried lighten the burden on employees with coach buses that ship them from Toronto to Waterloo for regular collaboration sessions with their colleagues.
Smaller companies don't necessarily have it so easy.
At startup Tulip Retail, employees have spent countless hours on Highway 401 as they frequently travel from the company's offices in downtown Toronto to an outpost in Waterloo.
Chief operating officer April Dunford says the drive, which is supposed to be 90 minutes, can turn into more than three hours on a bad traffic day. She remembers one instance when a jackknifed truck blocked the highway and nearly erased an entire day of work.
"We got there, worked for a few hours, and then we had to turn around and come back," Dunford said.
"There really is no substitute for a certain amount of physical face-to-face time, and that's the hardest part of this."
For organizations dedicated to growing the region, the challenge will be changing the way they think about Ontario's technology industry.
In recent years, several groups were founded to represent tech companies throughout the Greater Toronto Area. Each one aimed for development within their own municipalities as a priority, which meant they were all fending for themselves.
Communitech hopes to usher in change that will link with neighbouring cities to capitalize on the growing number of tech businesses in the area. Already the organizations have begun to strategize through co-ordination calls and referral programs designed to help companies in Waterloo connect with government funded organizations in other cities.
"They successfully built a culture in Waterloo," said Jeremy Laurin, CEO at VentureLAB, which represents the York region.
"So let's all grab an oar and row the boat together."
In the meantime, Ontario's technology sector continues to grow at a staggering pace.
Last week, software company Open Text pledged to create 1,200 jobs in the province over the next seven years with the help of a grant from the provincial government.
Google is expanding its presence too, moving from a small office to a 185,000 square foot space in Kitchener later this year that could mean further hiring is in the works.
"There's tremendous opportunity for us to continue that growth," said Salim Teja, managing director at the Mars centre, which helps startups get their footing in Toronto.
"It's not going to happen overnight."