Each week, we seek out expert advice to help a small or medium-sized firm overcome a key issue.
Quin Sandler wants to stay one step ahead.
Mr. Sandler is co-founder and chief executive officer of Plantiga Technologies Inc., a Vancouver startup that has come up with a new kind of smart and adaptive footwear.
Plantiga first set out to build a shoe that reduces the pain some people feel while walking, Mr. Sandler explains. He compares the resulting product to a car chassis and its tires: The shoe has a floating cradle that suspends the foot, surrounded by a perimeter sole. Plantiga went on to turn it into a wearable computer by embedding sensors in it.
“What we then will be able to do is generate real-time weight distribution and pressure mapping patterns, which is really quite exciting,” says Mr. Sandler, who notes that the potential applications include gaming, sports performance and biometrics.
Launched six years ago, Plantiga is at the prototype stage. In addition to developing its footwear, the five-employee company has worked on software that analyzes data output from the shoe, Mr. Sandler says.
But Mr. Sandler faces a dilemma. So far, he has found venture capitalists in the United States to be much more enthusiastic than their Canadian counterparts. He has enjoyed an equally warm reception in Asia, where Plantiga has a small office in Singapore.
He and his team want to stay in Canada and manufacture their product here, expand the Singapore office and possibly open a European outpost.
“I’ve connected with VC firms here in Vancouver, and consumer products and hardware don’t fall into their range,” Mr. Sandler says. “I’ve been talking to some of the most dynamic and innovative VC funds in San Francisco, and the conversations are going very well.”
After being repeatedly asked if he would move Plantiga to Silicon Valley, Mr. Sandler is giving it some serious thought.
Besides the promise of capital, the tendency of U.S. investors to take a chance on new and disruptive technologies is a big draw, Mr. Sandler says. He also thinks it would be more convenient to launch Plantiga from what he calls its ideal market.
Finally, California offers better access to talent, Mr. Sandler contends. “I feel as though the talent pool down there, there’s a lot more A players.”
THE CHALLENGE: Should Plantiga stay in Canada or move to the U.S.?
THE EXPERTS WEIGH IN
Tahir Ayub, private company services leader, PricewaterhouseCoopers LLP, Vancouver
There are usually three key reasons that most companies would make such a move. The first is significant tax advantages. The second is that there’s a better labour play, and the third is you’re moving to be closer to critical markets.
From a corporate tax perspective, the U.S. actually has higher corporate taxes than Canada. From a labour arbitrage perspective [the ability to find lower-cost workers], the most critical place that these guys would want to relocate in the U.S. is Silicon Valley, and there is no labour arbitrage in Silicon Valley because you’re looking at high-end talent.
As for markets, the U.S. would probably be one of the most interesting and defined markets for what they’re trying to do.
But moving from one country to another is actually pretty costly, time-consuming and complicated. Smaller companies probably take their eye off the ball in terms of their business while they try to figure out how to set up in the U.S.
What Mr. Sandler should really focus on is raising the profile for his business. Then he’ll get interest, because there is money in the [Canadian] VC funding space today. He probably just hasn’t got to all the right people yet.
Cheryl Lockhart, partner, Omni Management Consulting Alliance, Edmonton
I would encourage them to take a hard look at why these venture capital firms want them to be in the United States. Ask whether it’s because they don’t have a comfort level with the depth of the management team.
What Plantiga could do if they want to work with an American venture capital firm is come at them with a couple of different things. Reach out and say: “If you think our team needs to be stronger, what areas do you think we should be recruiting for?”
They probably need to come more armed with project plans and be able to demonstrate their accountability. And perhaps use this as a bit of honeymoon period. So, say, six months: “This is what we’re going to do; this is who we’re going to hire; let’s re-evaluate moving in six months.” And then be able to demonstrate that they can work remotely. Vancouver and San Francisco are not that far apart.
Randy Marsden, CEO of Cleankeys Inc., which makes easy-to-clean computer keyboards and mice for the health-care industry, Edmonton and Menlo Park, Calif.
No doubt, there is a buzz in Silicon Valley. Business deals get done quicker; it’s all about networking and knowing people and so on. Until you actually go there and experience that, you don’t know what you’re missing.
Does that mean we should all just pack up and move to Silicon Valley? I don’t think that’s the case. What I’m doing is putting a foot in both places, and I think that’s the answer. If Plantiga wants to stay in Vancouver, sure, they can. But those venture capitalists are asking them to come down for a reason; it’s not just for their own convenience. They know about the business opportunities that happen, if you have a presence there, that are much harder to make happen if you don’t.
So I believe the answer is not to uproot and leave the country, or try to slug it out and show those Silicon Valley guys that you can do it without them. I think you try to do both. Get a presence in the Valley; hire a person down there. Meet down there; that’s what I’m doing right now. About half of the time I’m on an airplane. And so you keep the Canadian content and your home where you want it to be, but you’re hustling and you’re down there and you’re having the meetings and you’re doing what you’ve got to do to be successful.
THREE THINGS THE COMPANY COULD DO NOW
Raise its profile
A publicity campaign could yield financing at home.
Stay put for six months
Before you pack up and move, try working with a U.S. venture capital firm from here.
Establish a foothold in Silicon Valley
By straddling Canada and the U.S., you can enjoy the advantages of both countries.
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Interviews have been edited and condensed.