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Jim Balsillie criticizes Canada’s ‘incubator-accelerator industrial complex’

Jim Balsillie, Council of Canadian Innovators, arrives to appear as a witness at a Commons privacy and ethics committee in Ottawa on Thursday, May 10, 2018, hearing witnesses on the breach of personal information involving Cambridge Analytica and Facebook. THE CANADIAN PRESS/Sean Kilpatrick
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Jim Balsillie called on the federal government to place domestic entrepreneurs at the head of innovation policy development and to stop listening to the “incubator-accelerator industrial complex” during a keynote speech at the 2019 Cantech Investment Conference on Tuesday.

“Retired bankers, retired civil servants, retired journalists, current and retired university administrators, alongside the incubator administrators … have together proliferated opinions that are outdated, misguided and often just made up,” he said, according to a prepared copy of his remarks.

The former co-CEO of Research In Motion (now BlackBerry) also offered pointed criticism of several prominent figures in Canada’s innovation scene, whom he described as “non-experts.”

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Balsillie particularly objected to recent statements made by Ed Clark, chair of the Vector Institute, and by Yung Wu, CEO of MaRS.

Balsillie took aim at Wu for touting the idea that Canada is reversing its brain drain, a conclusion he said Wu arrived at through an internal MaRS survey of 55 respondents, who reported that they hired a total of nine Americans in 2017. Balsillie also challenged Clark’s claim that the Pan-Canadian Artificial Intelligence Strategy is a “great success.” Two-thirds of Canada’s intellectual property (IP) on artificial intelligence (AI) is owned by foreign firms, Balsillie noted.

“The government cannot be expected to deal with the very real issue of brain drain if we have incubator administrators claiming there is no brain drain,” said Balsillie. “Nor can they design an AI strategy when non-experts claim we already have one and … it has been completed ahead of schedule. Evidence-based policy-making needs to be rooted in actual evidence.”

Karen Mazurkewich, a spokesperson for MaRS, reiterated the findings of the organization’s report in a statement. She said government data showing more than 3,000 applications from the U.S. for the fast-track Global Skills Strategy immigration program between June 2017 and June 2018 “supports our early survey work.”  The Vector Institute didn’t comment in time for publication.

Balsillie has spent several years raising concerns about foreign-based tech firms getting government money and hiring talent away from domestic competitors. Over the past year, he’s been particularly critical of the proposed smart-city development on Toronto’s waterfront by Sidewalk Labs, Google’s sister company. In October, he called it “a colonizing experiment in surveillance capitalism.”

In Tuesday’s speech, Balsillie raised particular concerns about IP. He pointed to reports from the 152-country Patent Cooperation Treaty, which found that while global PCT filings of patents have grown by 14 per cent, filings from Canada actually shrank by over 22 per cent.

Talking Point

Jim Balsillie criticized Canada’s “incubator-accelerator industrial complex” and called on the government to prioritize domestic entrepreneurs over foreign firms in a speech Tuesday. The former co-CEO of BlackBerry said the government needs to stop listening to “non-experts” and put Canadian tech CEOs front and centre when it comes to policy-making.

Balsillie argued that in today’s knowledge-based economy, owning IP is the most meaningful way to generate revenue. However, Canada’s policies are built for what he called a “tangible economy,” which objectivizes producing and selling physical goods. “The way you generate revenue in today’s knowledge-based economy is by restricting access to your amassed IP and then have people pay you ‘economic rents,’” said Balsillie, noting that intangibles like IP currently represent 90 per cent of the total value on the S&P 500 Index, compared to 17 per cent in 1975.

In terms of IP, Balsillie singled out two industries: cannabis, in which he said there is currently a “scramble” to own patents, trademarks and plant breeder’s rights; and AI, in which Canada is far behind.

“AI and machine learning are areas the government continues to invest hundreds of millions of taxpayer dollars into, yet Microsoft owns 1,030 machine-learning patents, while all of Canada owns only 48,” said Balsillie.

Speaking with David Skok—The Logic’s editor-in-chief—following the remarks, Balsillie pushed back against the idea of welcoming foreign tech companies to Canada as a means of boosting the country’s foreign direct investment, which has plummeted in recent years. “I’m not saying close to foreign direct investment, but it’s nonsensical to make it your policy priority and call it innovation,” said Balsillie. “It actually undermines your innovation because you’re focusing on driving innovation outcomes for foreign countries, not for Canada, and any form of economic analysis will confirm that.”

Balsillie was, however, optimistic about the government’s awareness of the problem’s depths, citing an internal government report summarizing the issue.

“Canada’s tech sector is falling behind the rest of the world and a key challenge is ‘the outsized role of subsidiaries of foreign companies in Canada’s tech sector.’ This was reported in the exclusive story by The Logic this past summer,” Balsillie noted. “It sounds dire, but it suggests to me there is an opening to create a real change.”

Balsillie’s solution is to stop listening to the people he describes as non-experts, which also included Meric Gertler, president of the University of Toronto, and Ilse Treurnicht, former CEO of MaRS.

“I don’t have any comment on the general theme of the speech, or the specific reference by Mr. Balsillie. I’ll stick to the cancer project we announced at MaRS this morning for today,” said Treurnicht, referring to a $1-billion deal for a preclinical blood cancer drug announced today at MaRS. Gertler didn’t immediately reply to a request for comment.

Balsillie said, “My message to the entrepreneurs and key investors here today is this: you must reclaim this space and in the process ensure that firm-level input is at the centre of Canada’s innovation strategies.”

 

With files from Jessica Galang