- Alberta should leverage its academic strengths and focus on research-led innovation with the goal of applying pure academia to its existing and emerging industries.
- Alberta’s wealth and quality of digital health records is a distinct advantage in terms of the potential creation of amazing innovations in health IT.
- Albertan and Canadian startups should take advantage of the lower costs available to them in order to compete with American players south of the border.
We need to celebrate moonshot thinking and we need to say it is okay to fail. Nobody succeeds in their first attempt. Canada needs to think of failures as small steps forward, and then relaunch our next moonshots, without hesitation.
What do you see as opportunities and challenges in Alberta’s effort to diversify its economy? How innovative and competitive is the province compared to other regions and jurisdictions?
First of all, it is really important to emphasize that every portfolio should be diversified. So, whether you are talking about Canada’s portfolio, Alberta’s portfolio or a personal portfolio, no investment advisor would ever advise you to be 100% in any one particular sector. In your personal portfolio, you should have some technology, some resources and real estate. But for too long, the Canadian economy, especially the Alberta economy, has been too focused and dependent on oil and gas and has not put enough effort into innovation. We have not thought enough about how we add value through our brains to the resources that we have in Alberta. Now we have to take some time and invest in our people in order to learn to use their knowledge and spirit.
Research-led innovation is a huge opportunity for Alberta. Pure academia can be applied to industry today; the Alberta Machine Intelligence Institute (Amii)’s research is a great example of work that was completely theoretical 10 years ago, but is now the hot topic in every new business. Another opportunity for Alberta is to rethink how to apply its great engineering talent from its traditional industries in the new economy.
“An opportunity for Alberta is to rethink how to apply its great engineering talent from its traditional industries in the new economy.”
In terms of innovation and competitiveness, you are innovative when you need to be. So when we are getting $100 or $150 for a barrel of oil, there is no massive need to be innovative. But Alberta’s true character shines through during this time of low oil prices.
Alberta is a relatively new economy and our successful entrepreneurs know what it is like to start from scratch. So, when a struggling entrepreneur calls them up and asks for 15 minutes of their time, chances are that they will oblige. That is what is amazing about Alberta, and I have heard these stories over and over again.
“Alberta is a relatively new economy and our successful entrepreneurs know what it is like to start from scratch.”
An economy is not only about attitude; it is about size. The one thing that is really challenging for Alberta is that we are just under a third of the size of Ontario. If Alberta’s population were three times larger, almost all of its economic issues would just go away. You hit a certain scale and the economy becomes self-sustaining. It is easier to be diversified if you are bigger. Because of our small size, we try to be extremely welcoming to new talent.
How does Alberta’s innovation and entrepreneurship ecosystem compare to more developed ones? What advantages is it leveraging to compete?
Silicon Valley investors like the ideas they see from Alberta, but they are too few and slow moving. In general, Silicon Valley investors are considering Canada because the valuations of their companies are out of hand and they need to find more value.
Nobody moves quite as fast as companies do in Silicon Valley in the technology and innovation space. There is much more money in the ecosystem there, and the investors are deploying it faster. In Canada, we tend to be a little conservative in our ambition. Resource-based economies do not require you to have moonshot thinking. We need to celebrate moonshot thinking and we need to say it is okay to fail. Canada needs to get comfortable with failure, we need to celebrate it and we need to move fast on it.
“The companies that we see scaling in Alberta can take advantage of lower costs and be able to get 65% or 70% of their sales south of the border.”
However, Canadian and Albertan startups have some advantages that they can make use of. They can start at a lower cost base because of access to cheaper resources. So, our cost of experimenting on wild experiments that sometimes turn into amazing businesses is lower as well. The companies that we see scaling in Alberta can take advantage of lower costs and be able to get 65% or 70% of their sales south of the border.
Could you highlight some of Panache Ventures’ own investments in the Albertan innovation ecosystem and explain what attracted you to them?
We have made a couple of bets in Alberta so far and we are looking at others. MobSquad is one example. They want to take advantage of the immigration policy in the US, which is challenging for international talent. They are looking at attracting significant numbers of highly skilled technical workers to be able to essentially sell that talent back to major technology firms in the US or abroad who need those technical resources. One obvious reason is the natural fit between Alberta’s time zone and those in the US. The other is leveraging Canada’s openness and capacity to attract thousands of immigrants from Brazil, India or China, as well as our ability to keep people happy and keep them thinking creatively and in innovative ways. It all comes down to what kind of community and environment we create for them, and I think that is one of Alberta’s and Canada’s strengths.
“Many founders can do stuff that nobody else can do or they know something that nobody else knows, so they have somewhat of an unfair advantage in this game. And we see a lot of that coming out of the Albertan ecosystem.”
Another company I am focused on is SCAN Health, which stands for Supply Chain Advancement Network in Health. One of the things we found is that Alberta has done a very good job of tracking the digital health records of the 4 million people in the province. Because the province laid down this really nice infrastructure, that now opens us up to creating all kinds of amazing innovations in health IT. So SCAN is looking at software that could enable us to make the healthcare system more efficient by reducing patient wait time, increasing patient satisfaction, generating better patient outcomes. Another company in the ecosystem is using AI to help doctors manage their patients in a much better way to minimize revenue losses.
Panache is also looking at how creative people in Alberta are. When people think about this economy they usually think we’re just a bunch of oil and gas people. So we have invested in another company called Communo, which is essentially a network of creative that seeks to address the challenge caused by the massive revenue and staff fluctuations employment agencies experience when they gain or lose a contract. The company’s founder has been running an agency for the last 15 years and basically said “there has to be a better way to do this.” He came up with a system, has raised $1 million, and he is now on his way to executing. We are super interested in this because ultimately, when we invest in companies, at least half or maybe more of the investment thesis is that these founders have a little bit of magic about them. They can do stuff that nobody else can do or they know something that nobody else knows, so they have somewhat of an unfair advantage in this game. And we see a lot of that coming out of the Albertan ecosystem.
What should the public sector be doing to improve Alberta’s competitiveness?
First of all, diversification is the right starting point. Alberta should consider putting a significant amount of money towards innovation. I do not think we put anywhere near 5% or 10% towards technological innovation, so it would be an achievement if we reached that scale.
“Spending money on innovation is a very tough bet because we do not see the results right away. We have to be extremely patient with returns and perhaps come up with a different metric to measure progress in innovation.”
Spending money on innovation is a very tough bet because we do not see the results right away. We have to be extremely patient with returns and perhaps come up with a different metric to measure progress in innovation. Our measure might be how many students we can train in math. The world is going to be run by math, engineering and analysis, so Alberta needs to focus on training more people in these areas. If we start at the elementary school level, it might take 10 or 12 years before we start seeing results.
How do you see the Albertan economy evolving over the next decade?
One of the things that I keep hearing about Alberta is that its economic recovery has been jobless. Even though the oil prices have gone up to a point where the industry looks sustainable, we have found how to run Albertan energy companies with 1/5ththe labour in an environment of $30 per barrel of oil. So, even though we can hire those four people that were laid off four years ago, we do not need to; the companies are running just fine. So there is going to be a massive paradigm shift going forward, and being able to do things 10 times more efficiently than we could 10 years ago is amazing. Right now, people in the technology sector and the investment sector are using this as an opportunity to create more discussion and to get more people involved in the community. So if we are successful, Alberta will have a very successful innovation ecosystem within the next 5 to 10 years.