Oh Canada: Why Can’t Canadian Tech Companies Compete Internationally?
December 24, 1993 and my father’s phone was ringing off the hook. And it was not the ring of holiday well-wishers. Major American retailers like K-Mart could not stop complaining that the cotton candy bags that our company produced were 0.008-0.010 ounces off weight limit. You see, my dad and I just expanded our cotton candy business (I was seven years old at the time) to the United States. Meant for immediate consumption, cotton candy is plagued by shelf-life issues. This was not a deterrent to my dad who patented a special plastic bag formula thereby keeping the product fresh for three months. Can you say unfair competitive advantage? After an enormously successful run in Canada, we decided to expand to the United States. We knew our product would work. And it did! We starting raking up orders until we started seeing disturbing signs. Our product was being pulled from shelves. Entire displays were robbed. Bags were popped to let air in and ruin the product. “Complaints” were lodged about bag weight.
All of a sudden, we were fielding calls and fighting for our lives.
We had hit what is seemingly the Canadian competitive wall. We had the innovation but not the competitive instincts. We did not anticipate the predatory business environment of the United States with its multiplicity of non-simplified factors. It’s not a bad thing. It’s just fact. most talented mobile developers looking for a new benefactor. Most likely, this talent will depart to wherever there is opportunity. Most likely, that will not be Waterloo, ON.
Nortel and Corel, two other Canadian tech darlings from the not-too distant past were no different. Once accounting for over a third of the Toronto Stock Exchange’s total valuation, Nortel gained international fame for its innovation and sales of fiber optic network and optical equipment. And yet, at its height in 1999, Nortel faced serious competition stateside from down-pricing as well as poor management decisions to saddle the company with debt. After limping for a decade, Nortel was liquidated in 2009. Similarly, Corel, acquired Novell’s WordPerfect in 1996 and attempted to compete with Microsoft for the word processing market. Admittedly a better product, Corel’s WordPerfect gained some momentum but failed to burst Microsoft’s still dominant monopoly. That, coupled with an insider trading scandal for then CEO Michael Cowpland sent the company reeling in the early 2000’s. Corel is still alive but a ghost of its former self.
I know Canada’s mobile and tech leaders (as well as my own company) failed due to a myriad of factors that cannot be easily encapsulated in one answer. Global supply chains. Cost of talent. Product focus. But for some reason, I believe there is a simplistic undercurrent if not theme in each of these stories that is thought provoking if not ever discussed: the Canadian failure to grasp the predatory nature of international business. But why? Why? That is the real question.