Why Calgary will never land an Amazon — unless it's built from the bottom up
Entrepreneur says city can't land whale but can grow healthy tech sector by focusing on smaller fish
When news broke that Calgary had failed in its bid to make Amazon's shortlist for its coveted second headquarters, some people were surprised to see their city couldn't even crack the top 20.
Not Wayne Sim.
"Fundamentally, Calgary is not a tech centre," Sim said.
"From an economic perspective, for the individual and the company, it makes no sense to be in this town."
However, Sim believes Calgary can build a high-tech future if people are prepared to do the hard work — something he knows about firsthand.
During his nearly four decades in the industry, Sim helped build a small local firm, Hyprotech, into an international brand on the strength of its process simulation software.
The company sold in 2002 for $106 million US.
Sim is now CEO of 3esi-Enersight, a Calgary-based software firm with 120 local staff and another 80 spread over 11 countries.
CBC News asked Sim for his thoughts on the Amazon decision and what Calgary needs to do if it wants to develop its high tech sector. He also has several suggestions he believes would help.
This interview has been edited for length and clarity.
Q: Amazon's decision to leave Calgary off of its shortlist didn't surprise you. Why?
A: I didn't even see Calgary as a potential option for Amazon. When you look at what their key drivers are, we don't have sufficient resources or infrastructure or ecosystem to support a company like Amazon.
Q: What do you mean by ecosystem? Why is that important?
A: Think of it as an ocean. You need to have plankton to feed fish, you need to have small fish to feed big fish and so on. Whales cannot survive without an ecosystem. So you have to have, as part of the ecosystem, educational institutions, access to resources from educational institutions, [and] smaller companies that are going to take people out of those educational systems and move from two-year developers to five-year developers or seven-year developers. Amazon, or larger companies, hire a certain type of tech resource. A lot of those don't come out of the schools. It's not like they can take and hire 50,000 new graduates. It doesn't work that way.
Q: So if building an ecosystem is the long-term goal, what does Calgary do to get into the tech game?
A: You have to start at the bottom, and one of the things that Canadians are very good at, I mean some of the best in the world, [is] Canada is very innovative. What Canada is not good at, it's not really good at the commercialization of that innovation. If you look … at mid-cap companies in the technology sector between $200 million and $400 million … it's a desert. And it is, again, the entire ecosystem.
A: There is no other way to do it. You will never get an Amazon or Microsoft or any large company ever to move into Calgary. Vancouver has got a stronger technical ecosystem than we've got here; Toronto is stronger yet. And, again, [both have] a much larger resource pool. But you need to build that.
I think a perfect example where it's been built out of the box is in Austin. They put in an incubator system. They attracted small companies. You can't attract big fish without a small fish to feed them, and Austin did a great job, but it takes 15 years. This doesn't happen in one year or two years. It literally is a 15-year process to make this happen and you start at the bottom and you build it up.
Q: Are you hopeful that we can get there in 15 years?
A: It can happen over time. It would happen much quicker if the government can participate in that and get aligned, but can it get there? Yeah, it just depends. Are there sufficient entrepreneurs here in town and in Edmonton and Alberta that are willing to be philanthropic and support these young entrepreneurs in terms of funding, advice and so on? It's not a shortage of ideas. I've been to just about every country and every city in the world and the one thing that Canada has a huge advantage on is innovation.
You see lots of technology that's created here that matures outside of [Canada]. We need infrastructure and ecosystem to allow that maturity. And that really creates a self-fulfilling destiny in terms of, if you've got that, the companies grow bigger. If we had half a dozen companies here in town that were in the $400-million or $500-million revenue range, we could have had a different conversation with Amazon because they would have seen there is a supply of resources, there is a way to mature those resources, which we don't have today.
Sim isn't short of ideas for helping the high tech sector. Here are five of his suggestions:
- Formalize a business mentorship program for young entrepreneurs, integrate with the current MBA programs at the University of Calgary and University of Alberta.
- Introduce more practical business education into the current engineering and computer science, like MIT or Stanford.
- Update the current student loan and bursary programs to encourage students to stay in province, loan forgiveness, etc.
- Lobby the federal government to change Canada's immigration program to make it easier to bring technical talent from other countries.
- Urge the federal government to update the mandate of the Business Development Bank of Canada (BDC) and Export Development Canada (EDC) to work with Canadian lenders to reduce their risk profile so they are able to free up more capital for small and start-up businesses.
Calgary: The Road Ahead is CBC Calgary's special focus on our city as we build the city we want — the city we need. It's the place for possibilities. A marketplace of ideas. So. Have an idea? Email us at [email protected].
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