How the B.C. tech sector suffers from ‘pattern recognition’ deficit

Industry lacks the successes needed to spawn anchor companies, sector leader warns

Jeff Booth was the founding CEO of Vancouver e-commerce company BuildDirect Technologies Inc. | Photo: Chung Chow

Has the B.C. technology sector been through the ringer enough to know what it takes to succeed?

There have been success stories, for sure, with the likes of Avigilon Corp. exiting the market in a $1 billion sale to Motorola Solutions Inc. (Nasdaq:MSI) in 2018.

But Jeff Booth, who was the founding CEO of Vancouver-based e-commerce company BuildDirect Technologies Inc., says Canada’s West Coast has not yet developed the necessary “pattern recognition” for identifying paths to success the same way tech hubs like Silicon Valley and Seattle have.

That is to say, B.C. might be emerging as a hotbed for tech talent but its firms are at risk of being swallowed up prematurely before emerging as true anchor companies.

“That race for talent pushes up the cost of business starting here,” said Booth, author of the newly released book The Price of Tomorrow: Why Deflation Is the Key to an Abundant Future.

“And it ties into another trend that’s happening: there haven’t been enough successes here for the capital here to … also have the pattern recognition for what it takes to have success.”

Local tech darling Hootsuite Inc. was once thought to be courting an initial public offering that would put its valuation near that of Avigilon’s.

Founding CEO Ryan Holmes, however, announced last November he would be stepping down from the top job and clearing the way for a successor.

And Booth’s own BuildDirect, now led by Dan Park, found itself in dire financial straits in October 2017 before emerging from creditor protection in March 2018.

Booth is now using his own experiences – or “scars,” as he calls them – to offer help to the tech community as it strives to develop anchor companies.

He remains worried that, with companies like Microsoft Corp. (Nasdaq:MSFT) and Inc. (Nasdaq:AMZN) expanding their local footprints, Vancouver may simply drift into the role of a support ecosystem for global tech giants instead of becoming a hub for entrepreneurship.

“It’s a question of balance,” said Jill Tipping, CEO of the BC Tech Association.

“I do think it’s a really good thing when we attract foreign direct investment.”

The danger comes, though, if it becomes apparent local companies are being squeezed out of the market, she said.

Her organization offers three programs – HyperGrowth, HyperScale and HyperGlobal – aimed at turning the province’s tech companies into bigger players.

The HyperGrowth program offers training to executive teams to help boost annual revenues from $1 million or more to $10 million or more, and HyperScale is focused on companies looking to boost revenue from $10 million or more to $50 million or more.

The HyperGlobal program helps West Coast companies with entering new global markets.

“Generally within about 12 months of attending one of those [HyperGlobal] courses, somebody tends to have a purchase order from a new customer. That’s very competitive in the industry,” Tipping said.

Last August, the federal government committed $2.25 million to BC Tech’s programming and facilities.

Those funds will keep it running through much of 2020, but Tipping said the return on investment should justify further investment from federal and provincial coffers.

“We found that for every dollar invested in our programs and activities, we delivered $10 in tax revenues to the province and $14 in GDP,” she said, citing an independent audit for BC Tech’s programs and activities over the past year.

Booth, meanwhile, said it might take the emergence of a new technology before Vancouver can finally come into its own on the global tech scene.

“Let’s say virtual reality was the next big thing or quantum computers was the next big thing,” he said.

“If we could own one of those next big [technologies] … Vancouver could become a major player.”