Is Vancouver a Legitimate Tech Hub?

[casper]

Originally Posted by Alpine

Vancouver's startup scene has been getting a lot of press as of late: A Betakit podcast, A Globe and Mail story on NYC VC firms looking at Vancouver ventures, A HuffPo story on CommandWear, Shoes.ca as one of Canada's five startups to watch in 2016, 1QBit's "quantum computers" (you can only do classical computations with them) in BC Business, tech hubs in Mount Pleasant (Hootsuite funded) and the DTES, plus the $100 million VC fund. (Christy Clark is willing to spend billion on LNG and mining, but only $150 million on tech? I digress...) I was talking to one of my professors at school today and when I mentioned the BC Tech Fund, she said she heard on the radio that General Fusion (nuclear fusion reactors) has receiving funding through that fund.

I think startups are Vancouver's strength. The startup ecosystem is much more intimate than in Seattle, although it can't beat the Bay. With the loonie remaining low for the foreseeable future (offering incentives to both US firms expanding in Canada as well as US venture capitalists to fund Canadian ventures), a glut of office space downtown, tech hubs popping up all over the place, possible IPOs thanks to the weak loonie, and (finally!) daily YVR-SJC flights, I would say that the startup tech scene in Vancouver is nothing but promising. Especially as rents in SF and Seattle skyrocket (and I could talk at length about the political dysfunction at the local/county/state level in California and Washington that have led to this mess) but rents in Vancouver stay comparatively rock-bottom. Entry-level and new grad positions will increase in salary, definitely. Zenefits has an office here, Tableau Software is hiring, Zillow will soon open an office in Vancouver.

It's the heavy hitters, like Google and Facebook, and attracting senior management, that could be a problem. Vancouver doesn't have the critical mass of tech companies like US tech hubs do. If someone relocates to Vancouver, perhaps with his family, but the startup that recruited him folds, there aren't many blue chip tech companies around for him to go to. The startups are hot, but for blue chips that aren't Amazon or Microsoft, all we have are MDA, EA, CA Technologies (I think), Salesforce, Fortinet, then the union shops (e.g. BC Hydro, TELUS, etc.) However, for executives with families, the overheated residential property market in Vancouver could make relocation expensive. I've even heard that because property values are going up so fast, MNCs can't relocate foreign talent and as such can't commit to the amount of office space they bought, leading to 10% vacancies (an 11 year low).

Justin Trudeau and the Liberals promised to do something about Vancouver's real estate market. From remarks he made two weeks ago, I'm not so sure. Sky-high property values indirectly hamper industry and commerce. The weird thing is, some LPC MPs in Metro have pointed out that high property prices make it difficult to attract workers.

LeftCoaster if you want to prove me wrong, I'm all ears. I admit this isn't my area of expertise.

Two points:

The provincial government is not investing billions in LNG. The billions are coming from the oil companies (to the extent that it actually does come). The government is investing in LNG but it is more on back-end infrastructure (skills training for trades, roads, transmission lines, etc) and what looks like a lot of support for the local PR/advertising industry. I am all for the infrastructure expenditures. If we are creating more Journeyman trades qualified individuals it does not matter at the end of the day if they end up working in LNG or some other industry we are filling a gap and raising the skills of people in BC to. The same for improving infrastructure into the north, it is needed to support mining forestry and shipping.

The real-estate market in Vancouver is hot but if you are comparing it to places like San Francisco, San Antonio, New York or Seattle I don't think it is that far out the norm. It is likely still a pretty good deal coming to Vancouver. I think most of the complaints about Vancouver housing costs are relative to the rest of Canada. That is a concern if your trying to compete with Ottawa or Waterloo or even a place like Saskatoon. There is a role for the federal government to help make Vancouver competitive to the US but relative to the rest of Canada it just needs to let the market be the market.

Ottawa is a good example for Vancouver. Nortel grew and then self destructed. When it did a number of senior people from Nortel did their own startups. Same for Digital Corporation, JDS, Mitel, Corel. Having the big Blue Chip companies blow-up or downsize periodically is good for creating new startups that are lead by people with experience.

Recruiting tech-workers from other places, I don't think having the "Plan-B job" is going to drive decision making all that much. What will drive decision making is the ability of their spouse to also advance their career. I have some first hand experience in the Saskatoon context. It is not enough that you can create a great opportunity for that target employee, if their spouse does not see a similar opportunity in there area your stuck. That is why a highly diversified economy is the way to go.