Last week I had the chance to attend the C100 Summit on the chilly shores of Half Moon Bay outside San Francisco. The annual get-together hosts Canadian founders, tech executives, VCs and fund managers working at home and abroad for a day and a half of networking, benchmarking and gut-checking on the state of the world—and of each other.
The Logic was the media partner for the summit. That means we have a commercial relationship, but it doesn’t mean we promise any editorial coverage of the event—and it absolutely doesn’t mean our partner has any influence over anything we do decide to write about it. (If you’re interested in more detail on how we manage our editorial independence and our commercial relationships, we’ve made public our internal rules for advertising, sponsorships and partnerships.)
But the summit gave me the chance to talk to many of the most thoughtful people in Canada’s business community, and as was the case last year, I came home energized—and with the urge to write.
I was expecting the mood at the event to be doom and gloom, given the thousands of layoffs taking place in the Bay Area and north of the border, but the overall tone was optimistic.
With the caveat that the summit took place under Chatham House Rule, so I can’t identify who said what, here are some of my key takeaways:
Corrections happen for a reason
Many attendees I spoke with seemed relieved that startup valuations had come back to earth, and agreed that focusing on business fundamentals and profitability instead of growth is a net positive for Canada’s tech sector. Some expressed excitement that newer companies were going to be able to grow without the pressures following a frothy valuation—a sentiment that seemed to be confirmed by data the Canadian Venture Capital & Private Equity Association released this week showing an uptick in early-stage investing at the end of 2022. Mind you, hindsight is 20/20. While there was plenty of finger-pointing for whipping up that frothiness, very few fessed up to any way they might have contributed.
The downturn isn’t hitting evenly
Consumer-facing enterprises and those in marketing and advertising are clearly facing challenges. Other attendees from enterprise and/or non-SaaS businesses said they’re still seeing growth. One interesting anecdote: financial institutions are still seeing low levels of personal insolvency, because many people built up their savings in the first years of the COVID-19 pandemic. This may also explain why inflation hasn’t cooled spending to the extent everyone anticipated.
Not yet a buyer’s talent market
The consensus at Half Moon Bay was that the big tech firms grew too quickly, and most of their cuts that have taken place so far have targeted low performers. As one attendee told me, if these companies cut 15 per cent of their workforces, roughly two-thirds of those cuts was probably desirable, and so the companies are really only feeling pain from cutting the other third. (Of course, many of those who lost their jobs are feeling some pain.)
Despite the large number of layoffs, tech companies still face challenges acquiring talent. Substantial severance payments mean laid-off workers aren’t yet keen to reenter the job market. And with stock options not looking as attractive as they once were, companies are having to get creative in their recruiting by increasing equity offers and folding cash bonuses into base pay.
The allure of the water cooler
Those at the summit mostly shared a strong desire to get people back into the office.
They believe productivity from remote work has waned and that, three years into the shift, more employees are feeling isolated from their teams, which in turn has eroded solidarity.
Having spent the Tuesday before the conference in downtown San Francisco, I can attest that despite reports to the contrary, the city is not dead. There seemed to be more people moving around on the streets and in the bustling office towers I visited than I’d seen recently in Calgary, Ottawa or Toronto.
The hockey stick on ice
The downturn has made a lot of very successful people very introspective. After a decade of nothing but hockey-stick growth curves—which made a lot of the C100 Summit crowd extremely wealthy—the adversity they’re now facing is giving them cause to reflect on the rapid rise of Canadian tech over the past decade, and providing a sense of gratitude and even humility.
As one executive put it, “Sure, times are hard, but I’m staying at the Ritz this weekend. How lucky am I to even be here?”
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These Canadian tech leaders have a firm belief that from this challenging period, another wave of great companies will be born. So overall, a week full of optimism. One question I’m left with: If the slowdown continues for a few more quarters, will that optimism still hold?