COMMENTARY Latest tech boom brings wealth – and a wealth of optimism In his latest column, Jeffrey Dale traces the history of Ottawa’s ups and downs as a technology hub – and explains what makes this growth cycle different from those in the past
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ach spring, Invest Ottawa brings the capital’s innovators, creators and inventors together for a oneday conference called AccelerateOTT. This event is both inspiring and introspective, and this year’s edition was no exception. The audience heard from Ottawa’s newest generation of entrepreneurs and business leaders – people like Klipfolio’s Allan Wille and Harley Finkelstein of Shopify fame – about their successes and how the world of business is changing. Speakers also talked about the local tech renaissance that has been fuelled by firms such as Mr. Wille’s and Mr. Finkelstein’s. It made me think about the previous cycles of booms and busts I’ve witnessed in Ottawa’s tech sector – how highs just as dramatic as the one we’re experiencing today were followed by some tough reality checks. Upon the recent death of Antoine Paquin, a star of the previous tech boom in the 1990s, I remembered him as the “it” guy of that growth cycle. I then thought back to legendary entrepreneurs such as Mitel founders Terry Matthews and Michael Cowpland, who were the poster boys of the first tech boom I witnessed in the late ’70s and early ’80s. It got me to wondering if the current surge is different from those previous ones in any way. Ottawa has had three big boom cycles in the span of my career. I graduated from university in the early ’80s and joined an environment in which industry was adapting world-changing new technology in a massive way. Mini- and microcomputers were changing how companies were managed and operated. The Nortel/BNR digital switch was globally transforming voice and data networks. Ottawa was well-positioned to thrive in this context, with its growing base of researchers from the private sector, federal labs such as the National Research Council and our academic institutions. That environment spawned a wave of new tech companies such as Mitel, Cognos, Jetform and Systemhouse. These firms created thousands of jobs, but more significantly, they created wealth by being publicly traded. The bust did come eventually, but luckily for Ottawa, the underlying demand for
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Shopify’s hugely successful 2015 IPO helped usher in a new era of wealth for the city. FILE PHOTO
these companies’ products and services remained. So while their stocks took a beating, most of the companies rode out the bust cycle. This was the foundation upon which Ottawa’s tech sector was built. The next growth cycle was what became universally known as the “dotcom” boom of the late 1990s. However, if you lived and worked in Ottawa, it was really the “telecom” boom. After the United States deregulated its telecom monopolies in the 1980s, the demand for new equipment and services in the sector exploded. This period featured some incredible successes for Ottawa firms, including the late Mr. Paquin’s Skystone Systems, which he sold to Cisco for $87 million US in 1997. This was also the era of Newbridge, Tundra, JDS and Nortel. Those who worked in the tech sector at that time could hardly believe the growth, the salary raises, the job offers and the availability of investment capital. Between 1998 and 2001, more than $2 billion in venture capital was poured into Ottawa startups such as Zenastra, Innovance, Liquid Computing and other long-forgotten flash-in-the-pans. The subsequent bust happened before most of these ventures were able to monetize their businesses. The difference between this boom and
the previous one was that while we had some incredible early entrepreneurial successes and a massive inflow of VC dollars that created tens of thousands of jobs, the underlying business opportunities evaporated around 2001. HARD CRASH The subsequent crash was hard. Thousands of jobs disappeared over a period of just six to 18 months, and the city lost companies such as Nortel and JDS that had anchored the tech sector. Without a successful exit through a merger or IPO, Ottawa’s startups did not generate much lasting wealth in our city. Still, was that ever a fun time to be in Ottawa. (Now I sound like my parents remembering the good old days.) Which brings us to today – the mobile-enabled, shared-economy world. AccelerateOTT showcased the new talent and ideas that are propelling our current local boom. Hundreds of new companies are being launched in Ottawa every year by a new generation of entrepreneurs. Their excitement and enthusiasm is inspiring, with Shopify this boom cycle’s shining star. Shopify has been able to create a large number of jobs and a supporting ecosystem, but it is the company’s hugely successful 2015 public offering that is
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