Gerry Remers retired last month from the position of president and chief operating officer at Christie Digital Systems Canada in Kitchener, Ont
The World Bank rates Canada the third-easiest place in the world to start a business. We're good at creating new companies and our startup ecosystem is robust: Toronto, Montreal and Vancouver are all ranked in the top 20 global startup ecosystems.
But we have a huge scale-up problem.
For years, our startups grew as fast as those in cities like Berlin, Bangalore and Sao Paulo. But our position is eroding and if we don't take steps now, we'll soon fall off the top-20 list. In fact, less than 5 per cent of our small businesses can claim to have grown by 20 per cent a year for three years in a row (the definition of fast growth). And because they fail to grow, they also fail to exit.
How bad is it? In 2014-15, Canada had no growth in sales or mergers of companies funded by venture capital. One big implication of this is that we have only a small pool of experienced managers who can mentor the next cohort of startups, especially leaders who have grown companies to $100-million from $10-million.
It's not technological talent they lack. As a Lazaridis Institute study revealed last year, the talent gaps are in sales, marketing and product management – the very skills needed to take a small company with a great idea to where it can really experience fast growth – beyond Canada's small domestic market and into the global arena.
The company I've led for 16 years, Christie Digital Systems Canada Inc., of Kitchener, has more than 700 employees and is the headquarters for Christie's global R&D operations. Fully 95 per cent of our $450-million in sales this year are exported to over 100 countries. Each of these markets has a unique culture, regulatory requirements, logistics challenges, tariffs, duties and other barriers to entry. So we set up sales offices in 20 countries and have grown organically, one hard-won lesson and one market at a time.
This makes Christie highly entrepreneurial, which makes it natural for us to foster startups under our corporate umbrella – akin to Google's Alphabet strategy.
One of these startups is our medical venture, which is the size of many small startups in Canada.
When we set up Christie Medical in 2010, we focused our engineering, operations and product management in Canada. But right from Day 1, we also established a strong sales presence in the United States, the largest market for medical devices in the world.
Our product projects your veins onto your body in real time to assist in veinous access. (Have you ever been stuck multiple times by a well-intentioned nurse trying to find a vein?) We wrestled with issues around setting up direct sales channels, distribution models, mining big data, leveraging opinion leaders and the hundreds of other decisions you need to get right before stepping into such a huge and sophisticated market. If we hadn't become expert at U.S. Food and Drug Administration rules and purchasing justifications, we would have been lost from the start. Fortunately, we knew from our main business that local knowledge is the best knowledge of all – and critical to the fast growth that young Canadian businesses so desperately need.
Today, Christie Medical qualifies as a fast-growth company – enjoying the 20-per-cent growth rate that's table stakes for scaling up.
But just because failure to scale up is a chronic and growing problem for Canadian business at large, that doesn't mean the situation's irreversible.
What we need is greater opportunities to help startups access the talent they need to help them scale up:
- Allow easier immigration of experienced scale-up leaders into Canada. The existing process to import talent from elsewhere is onerous and our personal tax rates are punitive for them.
- Support high-level professional education to create executives who are fluent in the practicalities of scaling-up by going global. The Lazaridus Institute for the Management of Technology Enterprises was set up last year to do this very thing.
- Encourage startups to create advisory boards to assist them in expanding globally.
- Identify and parachute in experienced tech leaders who will mentor others with a specific focus on global sales, marketing and product management.
If we want our startups to become grownups, we need to realize that the issue isn't lack of creativity or technical talent – it's lack of expertise in scaling up.