(Left to right) Stephen Lake of Thalmic Labs, Michael Litt of Vidyard and Mike McCauley of BufferBox at CDMN Canada 3.0 in Toronto (Communitech photo: Anthony Reinhart)
(Left to right) Stephen Lake of Thalmic Labs, Michael Litt of Vidyard and Mike McCauley of BufferBox at CDMN Canada 3.0 in Toronto (Communitech photo: Anthony Reinhart)

TORONTO

It’s been an interesting week in Toronto, centre of the country’s media universe, where the annual Canadian Digital Media Network (CDMN) hosted its annual Canada 3.0 event.

Speaker after speaker exuded confidence and optimism about Canada’s digital-media future, which the CDMN has been working aggressively to foster through links between the country’s technology hubs, Communitech among them.

They talked about how we’re a country of avid gamers and game developers, of voracious online video viewers, of fearless entrepreneurs with a global perspective and the confidence to exercise it from home bases in Canada.

‘Finally,’ I thought, ‘we’ve dropped the inferiority complex and stopped apologizing for being Canadian.’

Among those singing our virtues as prime soil for growing great companies were seasoned execs like Kobo CEO Michael Serbinis, whose Toronto-based e-reading platform has taken the world by storm, and Lane Merrifield, whose online environment for kids, Club Penguin, was acquired for $350 million by Disney in 2007.

At the early-stage end of the spectrum were three founders familiar to Communitech – Stephen Lake of Thalmic Labs, Michael Litt of Vidyard and Mike McCauley of BufferBox (now part of Google) – who spoke about why they returned to Waterloo Region to build their companies after successful stints at Silicon Valley’s Y Combinator, the most sought-after accelerator program in the startup world.

All three agreed their YC experience was extremely valuable as they laid the foundations of their fledgling companies – but they also agreed that Waterloo Region, and not California, has been the better place for them to dig in and grow.

As much as they revere Paul Graham, the Yoda-like YC founder who helped guide the likes of Reddit, Airbnb and Dropbox into existence, they also had the confidence to defy his warnings against moving back to Canada.

“He said, ‘Going back to Canada will be like climbing Mount Everest with a 10-pound weight on your back,” Litt recalled Graham telling him.

As Litt spoke, I thought, ‘Ten pounds? Is that all?’

My guess is that Graham has since realized, based on all three companies’ performance, that our entrepreneurs aren’t fazed by a little heavy lifting.

Sure, the Valley might boast sky-high valuations and venture rounds to match, but then, none of these three companies has had trouble getting investors’ attention, from the Valley or elsewhere. Even if they had, the life-skill called bootstrapping, familiar to many a Waterloo Region company, has its advantages.

So do public health insurance, employee loyalty, cheaper living costs, a steady supply of world-class engineering grads and salaries half of those in California.

“We knew retention was going to be an issue for us; were solving a very complex problem and we needed a lot of engineers,” Litt said of Vidyard’s analytics-rich video hosting platform.

“They said, ‘Where could you locate your business where you can hire the best engineers, and you can keep them?’” he continued. “So, we ran the same numbers that Steve (Lake) and Mike (McCauley) did, and realized there was no better location than Waterloo.”

As Litt pointed out, it worked for BlackBerry (formerly Research In Motion).

“We all forget that RIM was built in Waterloo; it wasn’t built anywhere else,” he said. “I mean, they invented the mobile internet; we wouldn’t be carrying these devices, potentially, if it wasn’t for them, and that was done locally, and they were worth $180 billion at some point.”

The company’s subsequent downsizing notwithstanding, its presence in Waterloo Region continues to enrich the soil of the local tech ecosystem with experience and talent, a significant amount of which is now benefiting smaller companies.

McCauley, whose company was acquired by Google and absorbed into its Kitchener-Waterloo development facility last November, said “it only made sense for us to come back…the ecosystem in Waterloo is very supportive; everything is in place to help people who want to start companies.”

Lake agreed. “The Waterloo ecosystem is very strong. It really makes it an easy choice to build a company there, because all the bits and pieces are already existing.”

Having taken all this in on Tuesday, I felt proud as I strolled back to my hotel near the Metro Toronto Convention Centre. It wasn’t until I got to my room and picked up the Globe and Mail, where I worked before I joined Communitech, that my pride turned to puzzlement.

In a piece titled “What Israel can teach Canada about education”, columnist Margaret Wente rightly applauds Israel’s Hemda Centre for Science Education for fuelling innovative entrepreneurship in that country – then suggests Canada isn’t doing anything similar.

I sent Wente an e-mail to point out that the same kind of activity is exploding just a 75-minute drive to her west in Waterloo Region (not to mention in Toronto), fuelled in large part by the University of Waterloo’s first-rate engineering programs. I invited her to come out and see for herself.

I haven’t heard back, but I suspect Wente was defaulting to the all-too-familiar practice of self-flagellation that Canadian commentators are known for. We’re our own easiest targets, it seems.

The next day, I popped into the Globe newsroom to visit friends and hear about the latest round of staff reductions in an industry shy of risk and slow to innovate – an atmosphere that seems utterly alien to the air of growth, innovation and dynamism at the Communitech Hub. I left wondering if it might help explain Wente’s negative view of Canada’s startup scene, if not Canadians’ negative view of themselves.

Meanwhile, back at the convention centre, Lane Merrifield was sharing his story with Canada 3.0 attendees, talking about the failures and successes and hard work that took him to a $350-million exit.

I interviewed Merrifield last month in the lead-up to the conference, and when I asked him about Canadian entrepreneurs’ new willingness to build their companies at home, something he said stuck with me.

It serves as a fitting, if unwitting, response to the likes of Wente.

“Sometimes you don’t know what’s under your own nose,” Merrifield said. “And I think, sadly, a lot of entrepreneurs might even waste a lot of time and a lot of resources trying to figure out how to relocate or how to find the ideal environment, when they might be living in it right now.”