Is Amazon coming to Toronto really a good thing? Mike Silagadze, co-founder and CEO of Toronto tech company Top Hat, says so. In fact, Toronto needs more Amazons coming to town in order to truly become a world class technology hub.
While cities across North America are doing backflips in order to draw Amazon’s attention, the online retailer whose latest stunt has been to collect bids on where to set up its second headquarters, some are saying that having the company’s HQ2 in Toronto may not be the great boon it’s thought to be. Particularly when it comes to nurturing a vibrant, home-grown startup culture, some say, installing a behemoth like Amazon would effectively soak up all the local talent and create more of a tech vacuum than a burgeoning scene.
But Silagadze, whose company provides digital solutions for post-secondary students and educators, says there’s no problem with his and other companies like it competing with an Amazon in town. Instead, the real issue is the macro one of home-grown talent continuing to vacate Canada for richer pastures in the US.
“Amazon would be entirely a good thing for Toronto,” says Silagadze in conversation with Cantech Letter. “To take one example, 60 to 70 per cent of the University of Waterloo’s engineers end up moving to the US after graduating. Having Amazon and others like it in Toronto is the only way that we’ll be able to retain that talent.”
But along with attracting big-market companies, Toronto —and all of Canada, for that matter— needs to be more encouraging of tech entrepreneurship, particularly with reference to tax policies, which Silagadze says have been taking a worrying turn of late. Not just the federal government’s currently proposed changes to small- and medium-sized business taxation (against which members of the tech community have strongly voiced their opposition) but also the Liberals’ earlier plans to set much lower limits on the amount of stock options that can be claimed at a lower tax rate.
“That would be extremely detrimental to startup companies,” says Silagadze. “The current system is very entrepreneur-friendly, encouraging people to start small businesses and scale them up,” he says. “Changing that is the exact opposite direction of where we should be going.”
As well, senior tech talent needs to be pulled back to Canada, says Silagadze, who favours government incentive programs to help level the drastic pay scale imbalances at the executive level between Canada and the United States.
“We’re at a moment in time now where there’s an opportunity to bring back Canadians who’ve moved to the US and there’s enough of an ecosystem that offer similar types of career opportunities,” says Silagadze. “There needs to be a hundred more companies like Top Hat, giving people the opportunity for really high-paying jobs at the forefront of technology. We need to show people that that can happen.”
So, is Toronto going to win the Amazon sweepstakes? We’ll all have to wait a few months to find out, but Silagadze says that Amazon would definitely be picking Toronto — if it weren’t for that cross-border problem. “Toronto’s got a lot of advantages,” says Silagadze. “We’ve got tonnes of talent, lots of potential acquisitions for a company like Amazon. But bringing all those jobs to Canada, the one thing I think that’s holding us back is the political situation with the current US administration. That’s likely the issue.”