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Managing Balsillie urges Canadian tech firms to step up lobbying efforts

Jim Balsillie warns that Canadian tech companies will be outmanoeuvred by global firms if they don't start making their needs known to Ottawa.

Fred Lum/The Globe and Mail

Jim Balsillie, one of the architects of the global smartphone revolution, has issued a blistering call to arms to Canada's emerging tech companies: If you don't start working the halls of government to advance your interests, you will be outmanoeuvred by global tech giants and their powerful lobbying machines. And he's offering to help set up an "innovation lobby" in response.

The former BlackBerry Ltd. co-chief executive officer has pushed his concerns for months that Canadian firms have to guard against becoming trampled by the likes of Google and Amazon as they grow. But his message finally resonated last week when he spoke to about 40 leaders of many of Canada's most promising tech companies, including Shopify, Hootsuite, Vision Critical, D2L, Wattpad and Vidyard. The meeting, hosted last Tuesday by OMERS Ventures at Toronto's Drake Hotel, has been the talk of the startup sector since.

In his talk and a subsequent editorial, Mr. Balsillie rejected conventionally held views that Canadian tech entrepreneurs can't compete globally because they are too timid, complacent or lack leadership skills. Rather, he argued, global giants are far more effective at influencing the competitive dynamics of their sector. It is a marketplace shaped by "judges, legislators and agency heads" and "frequently based on aggressive lobbying by interested parties [which] are usually tech companies with broad swaths of intellectual property and strategies for capturing more wealth from them," he wrote.

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For example, transportation software company Uber has effectively lobbied municipal governments in the face of stiff opposition from taxi drivers, and subsequently had a hand in shaping policies that enable it to keep operating. Meanwhile, Mr. Balsillie pointed out that Google, Microsoft, Amazon and eBay lobbied Canadian officials more than once a week over the past two years on such topics as copyright law, broadcast policy and data protection. By contrast, Canada's most promising tech startups, Shopify and Hootsuite, had no registered lobbying meetings.

"We have great entrepreneurs in Canada, but we don't protect [them] like they do in the U.S.," Mr. Balsillie said in an interview. "It's part the government's fault, and part the fault of entrepreneurs for not telling government" what they want. "The market for ideas is totally different than the market for tangible goods. It is created and kept alive only by active involvement by governments … by laws, courts and administrative processes. … If you're the smartest entrepreneur with the greatest product, and if they change the standards, you're out. If you own the standards, you win."

Mr. Balsillie said that, while at BlackBerry, he lobbied politicians regularly in the U.S. and abroad on topics such as the America Invents Act and "content-blocking" rules, and he ensured BlackBerry joined key wireless standards committees.

"I'm not a dream killer," he added. "I'm a delusion killer."

Mr. Balsillie's talk affected many in the room. "They all left [saying] 'holy crap,'" said OMERS Ventures CEO John Ruffolo. "The shocking point was, it's the foreigners who are lobbying our governments, not Canadians. That distressed a lot of people."

"We have to get our act together," said attendee Allen Lau, CEO of Wattpad, an online platform for authors and readers.

"If you asked people in Parliament to raise their hands if they've run Internet companies, nobody would. There's a mismatch in knowledge. It's our responsibility to help them bridge the gap."

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John Baker, CEO of education software firm D2L Corp., said "It was an important speech. He gave us good insight on how we'll have to compete and grow. [As a startup CEO] you don't appreciate the larger war waging beyond your view."

Following Mr. Balsillie's speech, Mr. Ruffolo publicly supported in a blog post the creation of a "clear, singular" innovation lobby. He said he realized the need when no single organization decried an election pledge by the New Democratic Party to fully tax stock options gains. It wasn't until The Globe and Mail quoted two startup CEOs opposed to the scheme that the party partly retreated.

"We really haven't told the government what it is that we want from them, and how on earth is [government] supposed to respond when we haven't really told them," Mr. Ruffolo said.

Mr. Balsillie added that public servants he's spoken with "continue to lament there are no domestic voices to step in and help the government craft smart policies" that advance their interests, unlike assertive foreign companies.

Mr. Ruffolo said Canadian government policy is typically focused on showering money on the sector, notably young firms. "I'm getting tired of the handouts," he said. 'That's not what's going to make us great."

Talks are under way to form an innovation lobby, and Mr. Balsillie said he's ready to act as its first chairman. "I realize if I don't help them … it will be a year [later] and nothing will happen," he said.

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Editor's note: Due to an editing error, a previous version of this story incorrectly attributed a quote to John Baker, rather than Allen Lau.

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