Capital West Partner’s Brent Holliday breaks down the history of tech in Vancouver. While Lotusland has enjoyed its share of innovation and leadership in the space, Holliday argues that the lack of a clear heavyweight champion, such as a Research in Motion, means tech heads here have had to be content with being a mere piece of the puzzle that is Vancouver’s exceptionally diverse economy.
When you think of Ottawa and technology, you think telecommunications. When you think of Waterloo and technology, you think RIM. When you think of Vancouver and technology, you think… umm… well lots of things. That is the problem and the opportunity with Vancouver’s high technology industry: Jack of all trades, master of none.
If we step into the Way Back Machine for a minute, I will take you to the roots of technology in Vancouver. A BC Tel incubator with the catchy name of MPR Teltech and a company that still leads all others locally in terms of revenue: McDonald Dettwiler & Associates or MDA. These two companies were the source of much of what we have today in Vancouver’s technology scene. MDA has morphed over the years from a space research company into a software and services company with a space research company that they can’t get rid of. Engineers who worked on satellite technology in the 70’s and 80’s at MDA became the foundation of a wireless data strength that has seen Glenayre, MDI (which was bought by Motorola) and now Sierra Wireless emerge as top companies in their space. Two engineers from MDA started one of Vancouver’s biggest success stories, Creo which sold to Kodak six years ago for over a billion dollars.
MPR Teltech was our version of Bell Northern Labs that helped Ottawa define itself as a telecommunications hub. BC Tel broke it up in the early 90’s and sold it off in one of the worst examples of foresight in telecommunications history. Newbridge scooped up a very valuable product line from MPR for chump change and a California semiconductor company called Sierra, bought the PMC group from MPR. Voila, PMC-Sierra emerged, still one of the top companies locally. Another group out of MPR created Abatis Systems (bought by Redback for US$680 million in 2000) and that same group of entrepreneurs started Octiga Bay systems that sold to Cray Computers in 2005. That same group is going for success number three in a stealth start-up today.
While all of this activity at MDA and MPR was happening in the late 80’s, a teenage son of Burnaby truck driver created a video game for the Apple II computer, called Evolution. Don Mattrick went on to build Distinctive Games until he sold to Electronic Arts in 1991. Seeing the potential of the creative class of film, TV and video production in Vancouver, EA made a big bet on a massive Vancouver studio, EA Canada. The single largest video game studio location in the world now operates in Burnaby, about 3 km from where Don mashed together his first game. The digital media industry is my pick for one of the sectors that emerges as a defining industry for Vancouver. From the dozens of video game studios operating in EA Canada’s shadow, Vancouver has also seen a tremendous rise in consumer focused Internet media. Exactly eight of the top eight Internet media companies in Canada by traffic are based in Vancouver, according to the Peer 1 Canada Start-Up Index. For some reason, the left coast has figured out how to attract millions of eyeballs to content on the Internet better than any other region. A couple more successful exits such as Super Rewards ($50 million) and Now Public ($25 million) in Internet media will spur further activity.
The software industry has been difficult to establish with that large talent-sucking monster to the south in Redmond, WA. Yes, a small company called Microsoft is only a two hour drive away. Despite that challenge, Vancouver has been home to leading global software innovations like AccPac, Crystal Reports and Pivotal CRM. Crystal Decisions became Business Objects, which became SAP and still employs over 1,000 engineers and sales people locally. Emerging stars in software such as Elastic Path, Absolute Software and Faronics have benefitted from the critical mass of great software developers.
Another industry sector that I believe will emerge to define Vancouver is clean technology. We had the world beating company in the late 1990’s in Ballard Power Systems, but the bloom has certainly fallen off the fuel cell rose. Despite that fall from grace, Ballard has a bright future, just not in the automobile. Many other companies are rising to take the mantle from Ballard. Westport Innovations with its efficient diesel technology. Delta-Q Technologies makes chargers for the new electric cars. Azure Dynamics makes the electric systems for next generation electric buses and trucks. Pulse Energy helps buildings manage and optimize energy consumption. Tantalus Systems makes the smart meters that will change residential energy management. The list goes on. And what fits the stereotype of Vancouver better than clean and green? We Birkenstock wearing, bike riding, pot smoking hippies love a green industry, so that we can feel better about making money…
If I haven’t convinced you that Vancouver’s technology scene has no defining industry or company yet, consider the current associations that “govern” and represent the industry, all based in Vancouver: BC Life Sciences, BC Innovation Council, BC Technology Industry Association, DigiBC (wireless and digital media) and the Premier’s Technology Council. I think you see the point. Lots of activity and excitement, but still lacking a clear personality. That is Vancouver’s technology scene in a nutshell.
Brent Holliday is an M&A specialist in technology with Capital West
Partners, Western Canada’s largest independent corporate finance advisory
firm. He started in the Vancouver technology industry in 1994 as general
manager of the Internet group of Multiactive (now Maximizer) Technologies.
For a dozen years starting in 1997, Brent was an early stage technology
venture capitalist with BDC and then Greenstone Venture Partners, a $40
million cross-border venture fund he founded with two partners. Since 1998,
Brent has been a writer on technology and early stage finance and is
currently a featured columnist with BC Business magazine as well as his own
blog at TechnicallyHip.ca.