In Vancouver it's always been easy to find entrepreneurial greatness. We just drive a couple of hours south to Seattle, the planet's reigning capital of creative capitalism. Boeing, Costco, Microsoft, Amazon, Starbucks, Nordstrom: All of them grew up there. The Scots may have invented the modern world, as the book claims, but Seattleites were responsible for a big chunk of yours and mine.
For the longest time, the Canadian end of the cross-border commute was home to considerably less greatness, a circumstance that, as editor of Vancouver magazine in the 1990s, I could not fail to recognize. But something unexpected has been going on over the past few years, as I came to realize on a recent trip south. Commanding a prominent corner in downtown Seattle was a new outlet for Arc'teryx, the Vancouver-based manufacturer of ultra-technical outdoor clothing. There were three Lululemon shops, a location of its offshoot Kit and Ace, as well as two Aritzia stores and a Fluevog shop. Finally, that familiar sight, lots of weed stores. Along with Colorado, Washington was the first state to legalize marijuana, but our shops, whether purely legal or not, predate theirs by more than a decade.
It wasn't just the shops; it was also the restaurants. Earls, Joey, the Keg, Browns Socialhouse—Vancouver chains, all of them. And all those condo towers, boy, those sure looked familiar. Was Seattle following the Vancouver path toward downtown living and calling on Vancouver developers to help them do it?
Yes, precisely, the answer proved to be. Not only that, Seattle is one of many places across the continent and around the globe where Vancouver-based restaurant chains, apparel makers and developers are not only competing but winning. Please don't be jealous, rest of Canada, but the country's third-largest city seems to have figured out how to export things that aren't sold by the tonne.
That Seattle experience might shed some light on another question that has been perplexing everyone here, namely the roots of our recent prosperity. Historically dependent on badly sagging resource industries, Vancouver somehow led all Canadian metros with a 4% increase in GDP in 2015, and is projected to repeat the feat this year and beyond. During many recent months, more jobs were created in B.C. (overwhelmingly metro Vancouver) than in the rest of Canada combined. Even after allowing for a relatively steady forestry sector and a construction industry supercharged by crazy housing prices, explanations were elusive. Something to do with Chinese money or economic refugees from Alberta? Billions of dollars in consulting fees for pipeline and LNG projects that mostly aren't going to happen?
One way of thinking favoured the tech sector, which has been crying out for more workers. That's due to the arrival in force of companies like Facebook and Microsoft, and the rise of start-ups like D-Wave Systems and General Fusion, that had B.C. garnering 20% of Canada's venture capital funding in 2015. But the stats aren't convincing; the sector accounts for only about 7% of provincial GDP, which is around the Canadian average but lower than in most advanced economies.
Maybe the magic ingredient is film and video? More than $2 billion was spent in the sector in 2015, boosting Vancouver back into third place among North American production centres (ahead of Toronto), and 2016's numbers will be higher. But while the sector is very job-intensive, with as many as 20,000 B.C. workers touted during peak periods (2,000 on a big movie like Deadpool, for example), it remains an industry dependent on a low dollar and constantly changing tax credit regimes.
Realistically, there was no way to shuffle these together in a way that accounted for Vancouver's winning hand. Seattle, however, suggested another explanation, one that seems to have been overlooked: To a surprising degree, Vancouver is thriving because people around the world have decided that they want to live the way we do, and the city is prospering by helping them to accomplish that.
Canadians have a lot of strengths, but retailing in general—let alone retailing the fruits of our culture and style—has historically not been among them. What confluence of expertise and opportunity could be behind this? What has Vancouver suddenly got so right?
One clue probably lies in the city's singular setting and the outdoorsy lifestyle it enables. "I think for brands that are rooted in outdoor activity, in sport, there's not a better place in the world," says Jon Hoerauf, president and general manager of Arc'teryx. "We can take an idea from one of our designers, whip up a prototype, and two hours later take it up into the mountains." That version of Lotusland, fit and informal, gave birth to Arc'teryx, Mountain Equipment Co-op, Lululemon, Sugoi and more.
And those mountains are tall. A long day's drive from pretty much anywhere else in Canada, Vancouver has always been forced to make its way without much reference to the rest of the country. What it does reference is, of course, the Pacific—both the city's proximity to American coastal states and its openness to Asia. This combination of insular and cosmopolitan has given rise to a hardy, distinct entrepreneurial streak, one that is expressed particularly well within the hospitality industry. Restaurants owned by the Fuller family, along with their imitators, have long dominated Western Canada, and more recently have invaded Ontario. The Earls original has also settled in Seattle and several cities in the eastern U.S., a path being followed by Vancouver-based emulators of its "premium casual" style.
It takes but a minute in any of these restaurants to recognize that they are distinct from chains based elsewhere. Their menus are more adventurous, with influences from many different cuisines, in keeping with the ethnic makeup and collective palate of Vancouverites, who have been shifting away from the North American diet for half a century.
Let's allow too that being so isolated has also played a role in our approach to drugs. Statistically speaking, Vancouverites aren't the potheads that everyone assumes, but marijuana has been largely tolerated since the 1970s, which has affected its social acceptance and led to the development of a sophisticated industry with annual revenues estimated at $6 billion. How this will fare in a legalized and regulated environment is yet to be seen, but meantime many players aren't sitting around waiting: A big chunk of the 100-plus cannabis dispensaries recently opened in Toronto are B.C.-based.
Finally, the mountains are not only tall but close: Along with the ocean, they hem in the city, making it hard to know where to put people. The city's unique approach to this problem came to be known, not surprisingly, as Vancouverism. Now Seattle and a whole bunch of other places around the world are facing similar challenges, and to solve them, many have been using Vancouver developers, planners and designers. In fact, this may be Vancouver's sphere of greatest influence and one of its most lucrative export industries.
An obvious line can be drawn connecting the above dots: the effect of geography. But it would be wrong to chalk it all up to the rocks and water. It required some smarts, too—a lot of them.
In the 1980s, B.C.'s forest industry crashed hard, leaving Vancouver in dire economic straits. "We realized that selling resources wasn't the answer," recalls Larry Beasley, who was in charge of downtown planning and development management at city hall through 2006. "Ideas, creativity, services—that's where the future lay."
The process that led to Vancouverism involved a lot of ad-mirable public consultation and public/private co-operation, but also some tidy geopolitical luck. Back then, most of the land surrounding the tight core of office buildings on Vancouver's downtown peninsula was given over to industrial and commercial uses. Then, on June 4, 1989—the day of the Tiananmen Square massacre—realtors' phones began to ring: People from Hong Kong and Taiwan wanted to purchase property here. That wave tapered off in the mid-1990s, but was soon followed by another from China itself, continuing a diaspora of generally well-off Asians that has ensured an almost uninterrupted demand for places to live.
That could have been a problem because there wasn't a lot of land to build on—a rare exception being the under-utilized downtown fringe. That land wasn't zoned for residences, however, and the City proved to be very clever when dealing with rezoning requests, demanding steep ransoms in the form of parks, daycares, public art and such, while also dictating the forms that developments could take. Among other things, city hall insisted that the new condo buildings be tall and thin, so that population density and profit margins could be achieved, while still ensuring that everybody got a slice of scenery without blocking the views of others. At the same time, the towers had to be built on two- or three-storey bases reaching all the way out to the street. From sidewalk level, this created the illusion that Vancouver wasn't a high-rise city like Hong Kong but more human in scale, as typically seen in Europe.
Meantime, all those civic shakedowns, combined with the city's natural charms, made for an overflowing basket of public amenities that helped compensate for reduced private square-footage. Before long, other cities started to notice Vancouver's success in turning its central core into a residential neighbourhood and wondered how they could replicate that. And just like that, Vancouverism became an export industry, with the "point-and-podium" tower as its signature.
The problem-solving spirit that birthed Vancouverism shows up elsewhere too: The companies selling their made-in-Vancouver wares, menus and ideas are nothing if not innovative. Arc'teryx owes much of its success to its development of heat-sealed seams and waterproof zippers, and its early licensing of Gore-Tex. Beyond conceiving the idea of good-looking yoga wear, Lululemon perfected the fabrics that would make that possible. And, especially during its first couple of decades, Earls was far ahead of the curve: craft beer, small plates, a focus on ingredients, wood-fired ovens and more were all on the menu well before the turn of the millennium. "Innovative, entrepre-neurial, open to new ideas," is the description of Vancouver offered by Jon Hoerauf, a transplanted American.
Beasley sees the current official quest to make Vancouver the world's greenest city as a logical extension of the original Vancouverism impulse, and one that will lead to further commercial advantages. Research indicates that Vancouverites have long been Canada's most environmentally conscious citizens—but, still, can consciousness be a jobs engine? For more than two decades, the city has been a global leader in the development of hydrogen fuel cells, but that has yet to mean a whole lot. Maybe wooden skyscrapers and nuclear fusion (leading current preoccupations that aren't as far-fetched as they sound) will pan out better. And who knows what spinoffs will stem from Vancouver's green push, with initiatives such as the recent recommendation that by 2030 all new buildings be emissions-free. In any case, the city's relatively pristine environment is both cherished and considered an economic boon, which helps to explain the depth and breadth of opposition to LNG and pipeline projects.
Then there's the matter of style. Perhaps more than anywhere else in Canada, Vancouver-based businesses have proven willing and able to merge art and commerce, developing, in the process, something of a distinct design language. Earls CEO Stan Fuller makes the uncontroversial point that businesses based in Vancouver had a head start on others in comprehending a world that works to live, rather than the other way around. But, less obviously, he adds, "It affects the aesthetic."
Finally, it would be a mistake to ignore the Seattle Effect. For many of these companies, the easiest road to expansion was not the Trans-Canada Highway but the I-5. It was a route that led away from provincialism.
In 1985 John Fluevog sold his shoes from three stores, all of them in Vancouver. One was failing so disastrously amid the city's horrendous economy that in desperation he rented a Seattle storefront and trucked his stock south. American ways were a little different, he discovered. But on the cusp of its grunge heyday, Seattle was eager for the kind of footwear that Fluevog had to offer, and the shop there outgrossed the two remaining Vancouver locations combined. Not atypically for a Vancouver-based retailer, further expansion to a current store count of 20 took Fluevog only occasionally eastward into the rest of Canada and more often south down the U.S. west coast and toward the glowing beacon of New York City—a game changer that brought Fluevog's outré wares to the attention of American and Eastern Canadian media. Otherwise, cracking the Big Apple was no big deal: "Yes, there are super-hip people there, but not that many compared to the amount of other people," Fluevog says, before dropping this bomb. "Vancouver is a much more fashionable city."
Fluevog's take may help explain why B.C.'s apparel industry is so desperate for skilled labour that companies are recruiting internationally, if not, like Lululemon, threatening to leave. And while none of the companies flies the Vancouver flag above its door, almost all trade on West Coast culture.
In some cases, there's an unapologetic fleece and Gore-Tex connection. Founded by local climbers in 1989, Arc'teryx is owned by Finland-based Amer Sports, but maintains more than 800 employees here. Sugoi was likewise bought out—in 2008, by Montreal-based Dorel. But Dorel bases the design, development and marketing of not just Sugoi but also other apparel lines in Vancouver.
As for Mountain Equipment Co-op, sales will tickle $400 million this year. The chain has been notching annual growth approaching 10%, and it dominates its sector. Also founded by climbers, MEC may be Vancouver's most conspicuously Left Coast export (along with another co-operative, credit union Vancity).
But Vancouver's coin is not just about outdoor exertions. Chip Wilson's Lululemon invented the concept of yoga wear and is now stretching, so to speak, into others. Some 1,200 local employees and $3 billion in projected 2016 sales top all but a handful of B.C.'s resource firms. The Wilson family offshoot Kit and Ace is trying to follow in Lulu's footsteps with cashmere instead of spandex. It has opened more than 50 stores on four continents in less than three years, but not without hiccups, including September layoffs.
For other brands, the Vancouver DNA is less obvious. Herschel Supply sells a lot of backpacks, but other things too, especially since the acquisition in September of Seattle-based luxury goods retailer Totokaelo. Even here, there's something Vancouver about the way that the designers strip down (and render waterproof) bags that might otherwise verge on kitschy Americana. Herschel numbers its local employees in the hundreds. Vancouver is also home to the continent's leading online bespoke suit-maker, Indochino. There's speculation about an IPO; the company itself foresees a half-billion dollars in annual sales by 2020. "The roots of made to measure are in Asia," CEO Drew Green explains, "and Vancouver is a recognized retail hotbed."
Similarly, it could be argued that
Aritzia's ascent stems from Vancouver's tilt toward generally more fashionable Asians, whether residents or tourists. That chain, whose October IPO raised $400 million, has 75 stores and annual sales of $540 million. Projecting a doubling of revenues by 2021, it thrives by matching the pace of fast fashion, but with higher-quality goods commanding higher prices, a formula followed by many a Vancouver enterprise.
Vancouver developers learned a lot while helping to solve the puzzle of growth in a limited space, says Larry Beasley, former co-head of planning for downtown Vancouver. And the knowledge they gained (not to mention the profits) gave them a leg up as other cities came around to the idea of condo towers. Toronto's condo boom has been pushed along by Vancouver developers including Concord Pacific (Concord CityPlace), the Onni Group (projects including towers at Fort York) and Westbank Projects (the redevelopment of the Honest Ed's/Mirvish Village site). Edmonton's and Calgary's recent turn toward condo living was facilitated in large part by Concord, Onni and Anthem Properties Group. Meanwhile, developers like Cressey Development Group and Onni have built residential towers in such American cities as Seattle, Los Angeles, Chicago and Phoenix.
San Diego is particularly striking for its Vancouverism (the subject of a 2015 exhibit there). Bosa Development has built nine towers in the city, with six more to come, several of them in the Vancouver point-and-podium style. There, the Vancouverism includes the practice of having developers contribute public amenities in return for zoning changes and higher densities.
It's not just the developers. Planners, designers and consultants have also made the rest of the world a little more like Vancouver. One bunch headed to Dubai, where they presided over the building of a neighbourhood, Dubai Marina, that aped Vancouver's False Creek. Beasley presided over the reshaping of Abu Dhabi. His work is beginning to be reflected in a shift toward fewer freeways, less sprawl, and human-scale boulevards reminiscent of Vancouver's downtown peninsula. Beasley has also worked in Dallas, Australia and even cities in the Netherlands and Scandinavia that would hardly seem to need New World help. "These are very livable cities," Beasley allows. "But I can't tell you how passionate they are about Vancouver as a model for things they believe in."
Scattered around the rest of the world are many other projects echoing such West Coast fixtures as Granville Island and Whistler. In China, there are numerous Vancouver-themed developments, in some cases complete with replicas of landmarks like the Gastown steam clock. Nowhere is the admiration for Vancouver more explicit than in the 900-home neighbourhood called Vancouver Forest, located just outside of Beijing.
In the early '80s, when the first Earls opened in Edmonton, Calgary and Vancouver, they were just mildly elevated burger joints. But, within a decade, they had become full-on dining experiences, with menus that borrowed from cuisines around the world. Offerings headed toward Asian noodle bowls and craft beers, and started focusing on freshness and ingredient quality in the 1990s, because those were preoccupations at the independent restaurants that dominated the landscape in Vancouver. A big part of Earls' subsequent success lay in translating that forward-looking scene for, first, Western Canada, and then the rest of the country and continent. (Disclosure: The writer recently contributed to an Earls cookbook.)
When competitors began to copy the lucrative formula, it came to be regarded as a distinct category: premium casual. A couple of eastern-based chains have belatedly edged in a similar direction, but the westerners dominate. Earls, owned by the Fuller family, grosses an estimated $250 million annually from about 70 restaurants scattered around the continent.
In addition to the menu edge, Vancouver-style restaurants tend to be adult-oriented. In other words: attractive young servers, and lots and lots to drink. In large part, that's the legacy of century-old B.C. liquor laws that stifled the development of bars; restaurants like these filled the gap.
The serving of more alcohol—accounting for, say, 30% to 40% of sales rather than 10% or 20%—had knock-on effects, mainly due to the higher revenues and better margins that drinks deliver. One was the ability (and need) to invest more in decor and square footage. The newest Joey or Cactus Club Cafe locations might cost $10 million to open, and can seat 300 or 400.
Earls' major thrust is now in the eastern U.S. Chefs come up with a handful of local specialties, but mostly the menu is the tried-and-true Vancouver version, complete with smaller portions and larger prices than Americans will otherwise find.
In part, Earls headed to the U.S. because the Fullers and others were tapping out the local market. The Fuller-owned Joey Restaurants number about 40 in places like Ontario and the U.S. west coast. Cactus Club Cafe, owned by co-founder Richard Jaffray and the Fuller family, has about 30 locations, generally large and a little more upscale. Jaffray's co-founder, Scott Morison, went on to launch Browns Socialhouse, which counts about 60 restaurants. Moxie's Grill & Bar, owned by the Gaglardi family, is a half-notch below premium casual. It has about 70 locations.
The Keg Steakhouse and Boston Pizza have their own formulas, but like their premium-casual kin, they focus on younger adults and strive to be sexy. In 2014 David Aisenstat sold a 51% share of the Keg to Toronto-based Fairfax Financial (there's also an income fund); it has about 100 locations, including a concentration in the U.S. Southwest, grossing about $600 million annually.
Boston Pizza is owned by Jim Treliving and George Melville's T&M Group. It operates about 325 locations, making it Canada's largest full-service chain, as well as some 50 locations in the U.S. It's something of an outlier to be sure, but nevertheless a product of Western Canada's unique restaurant ecosystem, with annual revenues close to $1 billion.