We don't want no Silicon Valley – the Canadian city fighting for a new kind of tech hub

Toronto is being upstaged in the tech world by a sprightly little neighbour upstream: Kitchener-Waterloo. Image: Benson Kua

Last year, the mayors of Toronto and Kitchener, Ontario, shook hands over plans to develop new transit infrastructure connecting the big city and the little town.

One of many reasons was to facilitate the movement of high-skill, enterprising workers expected to cluster in the region over the next few years. The province has high hopes for the up-and-coming Innovation Corridor, calling it the next Silicon Valley, or rather Silicon Valley North.

But it’s not big-city Toronto at the heart of the region, but Kitchener-Waterloo (KW), Canada’s start-up city and the birthplace of smartphones.

Ever heard of Research in Motion, now renamed BlackBerry? It was homegrown by Jim Balsillie, a business grad, and Mike Lazaridis, an engineering student at the University of Waterloo.


This is important: KW’s success as a hi-tech hub is largely attributed to Waterloo’s international co-op program. Founded in the late 1950s, it built ties between the university and industry, transitioning the region from traditional textiles to technology manufacturing in the 1970s.

Professional scientific, tech and educational services were gradually booming, and academics were researching Canada’s Tech Triangle by the early 1990s. Fast-forward to 2017, and KW unveiled a new economic development strategy (Make it Kitchener), wooing tech leviathans – Google opened its regional headquarters in downtown Kitchener – and revamping its city core to attract and retain talent. It’s working.

BlackBerry is long gone, but against all expectations, the entrepreneurial spirit remains in KW. Lazaridis continues to invest in quantum computing, nanotech and engineering at Waterloo, and is the force behind Perimeter, a research institute devoted to theoretical physics.

Balsillie directs his efforts towards international affairs, and founded the Balsillie School of International Affairs and the Centre for International Governance Innovation with a special focus in international law. With the support of the provincial government, the international law research program hosts legal clinics, offering advice on intellectual property to start-ups in the region.

The revamped Walper Hotel in downtown Kitchener-Waterloo. Image: Filipa Pajevic

Balsillie is also behind Communitech, an incubator devoted to building and supporting the regional tech community. Former BlackBerry employees kick-started their own businesses, or were snatched up by other tech companies in KW. The city of Kitchener was adamant on keeping people around, offering space and a metaphorical shoulder to cry on until they could stand on their own feet again.

That’s what distinguishes KW from other tech hubs: it’s a community, a family that has your back no matter what. And they’re happy with that – they really don’t want to be another Silicon Valley Why? Because they see how detrimental a hi-tech super-cluster, like Silicon Valley, can be.

Sure, techies are stereotypically inward-looking, and millennials are more often than not considered – perhaps erroneously – selfish and apathetic. But these kids are more concerned with making KW proud than profitable. Even academics recognize that it is the community networks more than business networks that make for an interesting business climate in the region.

Vidyard’s CEO, a millennial, who grew up in Kitchener and has benefited from its community services, feels that the hip and upbeat internal culture of the tech community ought to extend outward to include other sectors and people. He wants KW to improve while avoiding the negative effects of gentrification.   

It may be a tech hub but it still looks incredibly dull from above. Image: Tom1973 via Wikimedia Commons

Likeminded individuals are working closely with local charities, getting involved politically and discussing affordable housing, re-defining volunteerism by offering their skills to the community. Furthermore, they talk to newcomers about homelessness and mental health issues, and the need to address both. When a business comes knocking at the door, the answer is not “what can I do for you”, but “what can you do for me?”

Still, inequality is hard to fix. Kitchener is not problem-free. Developers are building condos that are unlikely to cater to polarizing incomes, and the projected influx of people (especially given the change in political climate south of the border) will rock the boat some.

If all goes to plan, the tight-knit, locals-for-locals community of Kitchener-Waterloo may be the first of its kind – a tech hub that develops its brain without losing its heart.

Filipa Pajević researches urban planning at McGill University, Montréal, and is on Twitter as @filipouris

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“Stop worrying about hairdressers”: The UK government has misdiagnosed its productivity problem

We’re going as fast as we can, here. Image: Getty.

Gonna level with you here, I have mixed feelings about this one. On the one hand, I’m a huge fan of schadenfreude, so learning that it the government has messed up in a previously unsuspected way gives me this sort of warm glow inside. On the other hand, the way it’s been screwing up is probably making the country poorer, and exacerbating the north south divide. So, mixed reviews really.

Here’s the story. This week the Centre for Cities (CfC) published a major report on Britain’s productivity problem. For the last 200 years, ever since the industrial revolution, this country has got steadily richer. Since the financial crash, though, that seems to have stopped.

The standard narrative on this has it that the problem lies in the ‘long tail’ of unproductive businesses – that is, those that produce less value per hour. Get those guys humming, the thinking goes, and the productivity problem is sorted.

But the CfC’s new report says that this is exactly wrong. The wrong tail: Why Britain’s ‘long tail’ is not the cause of its productivity problems (excellent pun, there) delves into the data on productivity in different types of businesses and different cities, to demonstrate two big points.

The first is that the long tail is the wrong place to look for productivity gains. Many low productivity businesses are low productivity for a reason:

The ability of manufacturing to automate certain processes, or the development of ever more sophisticated computer software in information and communications have greatly increased the output that a worker produces in these industries. But while a fitness instructor may use a smartphone today in place of a ghetto blaster in 1990, he or she can still only instruct one class at a time. And a waiter or waitress can only serve so many tables. Of course, improvements such as the introduction of handheld electronic devices allow orders to be sent to the kitchen more efficiently, will bring benefits, but this improvements won’t radically increase the output of the waiter.

I’d add to that: there is only so fast that people want to eat. There’s a physical limit on the number of diners any restaurant can actually feed.

At any rate, the result of this is that it’s stupid to expect local service businesses to make step changes in productivity. If we actually want to improve productivity we should focus on those which are exporting services to a bigger market.  There are fewer of these, but the potential gains are much bigger. Here’s a chart:

The y-axis reflects number of businesses at different productivities, shown on the x-axis. So bigger numbers on the left are bad; bigger numbers on the right are good. 

The question of which exporting businesses are struggling to expand productivity is what leads to the report’s second insight:

Specifically it is the underperformance of exporting businesses in cities outside of the Greater South East that causes not only divergences across the country in wages and standards of living, but also hampers national productivity. These cities in particular should be of greatest concern to policy makers attempting to improve UK productivity overall.

In other words, it turned out, again, to the north-south divide that did it. I’m shocked. Are you shocked? This is my shocked face.

The best way to demonstrate this shocking insight is with some more graphs. This first one shows the distribution of productivity in local services business in four different types of place: cities in the south east (GSE) in light green, cities in the rest of the country (RoGB) in dark green, non-urban areas in the south east in purple, non-urban areas everywhere else in turquoise.

The four lines are fairly consistent. The light green, representing south eastern cities has a lower peak on the left, meaning slightly fewer low productivity businesses, but is slightly higher on the right, meaning slightly more high productivity businesses. In other words, local services businesses in the south eastern cities are more productive than those elsewhere – but the gap is pretty narrow. 

Now check out the same graph for exporting businesses:

The differences are much more pronounced. Areas outside those south eastern cities have many more lower productivity businesses (the peaks on the left) and significantly fewer high productivity ones (the lower numbers on the right).

In fact, outside the south east, cities are actually less productive than non-urban areas. This is really not what you’d expect to see, and no a good sign for the health of the economy:

The report also uses a few specific examples to illustrate this point. Compare Reading, one of Britain’s richest medium sized cities, with Hull, one of its poorest:

Or, looking to bigger cities, here’s Bristol and Sheffield:

In both cases, the poorer northern cities are clearly lacking in high-value exporting businesses. This is a problem because these don’t just provide well-paying jobs now: they’re also the ones that have the potential to make productivity gains that can lead to even better jobs. The report concludes:

This is a major cause for concern for the national economy – the underperformance of these cities goes a long way to explain both why the rest of Britain lags behind the Greater South East and why it performs poorly on a

European level. To illustrate the impact, if all cities were as productive as those in the Greater South East, the British economy would be 15 per cent more productive and £225bn larger. This is equivalent to Britain being home to four extra city economies the size of Birmingham.

In other words, the lesson here is: stop worrying about the productivity of hairdressers. Start worrying about the productivity of Hull.


You can read the Centre for Cities’ full report here.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

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