News

David MacDonald is a man on a mission - to save the Canadian high-technology industry. The president and chief executive officer of Softchoice Corp., a Toronto technology distribution company, is alarmed at the lack of large, internationally active Canadian tech firms. As chairman of the Information Technology Association of Canada, Mr. MacDonald, 52, is spearheading a conference in Toronto this week that focuses on the growth challenges of tech entrepreneurs.

Is the problem that Canada doesn't have enough technology entrepreneurs?

We don't have enough in terms of being successful in growing their companies. We risk having Canada becoming a resource-based economy again. We're not growing enough of our information technology industry; we're not growing enough of our knowledge industries. The strong growth in the resource industry is outweighing our ability to compete on a worldwide basis in a sustained way.

I thought there were great technological things going on in the energy industry.

I think you're right. This time around, the Albertans seem to be very focused on taking this to the next level. That is a very good thing. But we need to take this into products and strategies that become global companies. Too often Canadians sell out before they become titans.

So the problem is we can't grow to any scale?

We clearly are struggling with that. How many billion-dollar technology companies are there in Canada? Obviously, we have Nortel but other than that, the only one growing at any pace at all is RIM. It's a great success story, but we used to have a strong group of technology companies growing very successfully in Ottawa. We just don't have that any more. We're struggling both in the software sector and the microelectronics sector to grow companies with worldwide brand names.

Canadians have a tremendous advantage because we have the most diverse population in the world. But we seem to sell out before we create the kind of companies that have worldwide impact.

We just need to block these sellouts, don't we?

That would be the wrong way. What we need to do is look at the venture capital community, at the tax structures, at the business community in general, and how we provide the environment to support the development of titans.

I think it is within our own capacity to do that.

So why aren't you off running your company, instead of working for other people?

I view myself as a leader of a company that is growing in a very entrepreneurial way. We've gone from $250-million in revenue to $1.2-billion in seven years and we think we can be a dominant company in our space in North America.

Is there enough venture capital in Canada?

In the U.S., there are way more venture capitalists coming out of the technology industry. If you look at the Silicon Valley venture capitalists, they have been involved with many, many successful startups, and they continue to be involved. We in Canada tend to have venture capitalists who are mostly bankers and they generally have not had the experience driving the growth of entrepreneurial companies.

So we need venture capitalists with a lot of money from selling their own companies?

That would be one source of candidates. In the conference, we will focus on the model in Silicon Valley. Take the guys who started [online payments company] PayPal. The web of companies they've started subsequent to PayPal has been fantastic. They keep going on and on. We need to build that kind of culture into the Canadian economy so people don't go to the beach once they've sold out.

Have we seen the hollowing out of the tech sector?

That's one of the things that keeps me focused on this issue - such as, most recently, the takeover of ATI Technologies Inc. and Cognos Inc. The jobs that come from strategy planning, from real heavy R&D, are in risk of vacating the Canadian marketplace unless we really create the next ATI, the next Cognos. Those companies were founded by people who focused on one thing, and they stayed with it over the long term and through the tough times. That's what we really need to do in Canada because those are the jobs that really create long-term economic benefits.

But a lot of people do what you did for a while - they head south.

If you look at Cisco and IBM, those companies are full of executive top-level Canadians. That's evidence that the capabilities are there. Some of the top guys from Cisco are from here, so we need to think of a strategy to get them back here and working on Canadian growth companies.

Isn't it just a matter of being able to get very rich in the U.S.? That's harder to do in Canada.

The economy and the economic structure of the U.S. mean that money is more available but I don't think that is the only thing entrepreneurs look for. They look for a great environment and they look for the kinds of opportunities to grow global companies. I think we have to create that environment and that will help us get those people into that focus here.

What is the first thing you would do?

Eliminate capital gains tax on people who buy shares in Canadian high-tech companies.

That doesn't sound very equitable?

Well, everyone has a chance to do that.

Are your own kids going to be entrepreneurs?

That's a good question. I have two out in Alberta right now and two young ones. I got one working in Banff and one working in the oil industry in Fort McMurray.

How much is that kid in Fort Mac making?

He's 24. I'm not sure exactly how much he's making. He just got into working in the oil rigs.

So you have to go where the money is?

But that doesn't last long term. That's something you can only do for a short period of time, and the challenge for the next generation is create productivity and growth that is sustainable. The risk we run is that once the oil is gone, Canadians have a lower standard of living because we are only surviving on the resource base.

How did you get fixated on this issue?

My view is we are in a critical time in the history of the country and its economic development. We've been known as hewers of wood and drawers of water. But the fact is that after developing manufacturing and secondary and tertiary industries, it is all coming back again to the oil and resource-based industries - because of the Asian countries growing and needing all those raw materials, and the price of oil.

I don't believe the environmental aspects of a resource-based economy will be acceptable 30 years from now, when our kids are grown up. When 500 ducks died in an oil sands pond, [Alberta Premier] Stelmach was on TV and Syncrude took a full page newspaper ad to apologize. This is just a symbol of the kind of sensitivity that is growing in our society about the environment. If we are left only with resource-based industries, we are going to continue to be a second-class growth country.