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Advantage, Waterloo Add to ...

It was a valiant attempt to get the world's attention: 1,623 guitarists in Yonge-Dundas Square, backed by a band called Heartbroken, strumming Neil Young's Helpless in a failed bid to set a world record.

As the final notes of Mr. Young's analog classic floated skyward, Toronto's digitally minded neighbours down the 401 in Waterloo were preparing to take yet another leap into the future, in nearby Stratford, at a conference called Canada 3.0.

It was a coincidence, but one that symbolized an inconvenient truth for Toronto - that when it comes to smart-city prestige, little Waterloo has been eating the big city's lunch. And if that lunch had a name, it would be Startup Salad with BlackBerry Vinaigrette.

Sure, some of the world's best biomedical minds work in Toronto's MaRS Centre and hospitals. But wee Waterloo, with both feet planted on Earth, is getting better public traction with 500 tech companies, led by global juggernaut Research In Motion and its high-minded institutional spinoffs.

On the Waterloo corner where Seagram's once made whisky, RIM co-chief executive officer Jim Balsillie is building a sober new School of International Affairs behind his seven-year-old Centre for International Governance Innovation. Across the street is the world-class Perimeter Institute for Theoretical Physics, endowed by RIM president and co-CEO Mike Lazaridis, who also helped fund the University of Waterloo's new Institute for Quantum Computing.

Down the road in Kitchener, meanwhile, on a corner where Uniroyal made tires, UW's new school of pharmacy anchors a health sciences campus that will train medical students from Hamilton's McMaster University.

How could this be? Here's what the experts said.

Waterloo = Avis, Toronto = Hertz

"If you're already the best, you don't have to work hard," Thomas Homer-Dixon, an author and academic formerly of the University of Toronto, wrote in an e-mail. He now teaches at UW and occupies a research chair at the new Balsillie School.

The tale of the Toronto-Waterloo difference, he said, can be told by its universities. "The University of Toronto's biggest handicap is that it believes it's the best. The result is pervasive complacency and flabbiness," Dr. Homer-Dixon wrote. "UW has, in contrast, an 'Avis complex': it doesn't believe it's the best, so it's constantly trying harder, and the results are visible every day."

Roger Martin, dean of U of T's Rotman School of Management, agreed there's something to this.

"I think it gets back to 'That which doesn't kill you makes you stronger,'" said Mr. Martin, a product of rural Regional Municipality of Waterloowith 10 generations of Mennonite blood behind him. "Having to fight hard for your place in the world has a benefit."

Statistics confirm Waterloo's underdog status, at least when paired with its twin city, Kitchener. By his Rotman colleague Richard Florida's definition, 34.3 per cent of Torontonians belong to the "creative class," while just 27.9 per cent of Kitchener-Waterloo residents do. Also, Toronto has more university grads, at 30 per cent to K-W's 21.

"However, there's an interesting counter to that," Mr. Martin said. "If you ask about patents per 10,000 employees, Toronto is 1.09, and guess what? K-W is 2.50." This "ridiculous gap" suggests "there's something in the water in Waterloo that causes them to make much more of much less."

Smells like old spirits

"What's in the water in Waterloo is whisky," said UW president David Johnston. He's only half-joking. When the university opened in 1957, Seagram's had been pumping out booze for 100 years, having survived Prohibition (they happily supplied bootleggers). It was the world's largest distillery and Waterloo's biggest business. A brewery sat nearby.

Unlike others across Ontario, residents here solidly opposed Prohibition, and not merely to protect jobs. "They're different kind of people; they don't fit into the kind of profile you would expect of, say, Toronto or the other Anglo-Canadian cities," said John English, a historian, author and executive director of the Centre for International Governance Innovation. The evidence is all around him: CIGI sits in the former Seagram Museum, amid old barrels and racks.

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