Senior executives and CEOs of Canadian companies were relieved, but not surprised, after reading the Wall Street Journal’s rumoured report that Amazon’s HQ2 will not be in Toronto.
The Wall Street Journal report indicated that according to sources, the online commerce and cloud computing giant plans to split its second headquarters between two locations. Those locations could possibly be Dallas, New York City, or Crystal City in Northern Virginia.
Local entrepreneur Carl Rodrigues, president and CEO of enterprise mobility management firm SOTI Inc., said he was not surprised at all that Toronto was not in the running anymore.
“Jeff Bezos, [Amazon’s CEO], is the richest man in the world. He didn’t get there on his good looks. He knew exactly what he was doing and he already knew where he wanted to build his campuses and he was just trying to create a bidding war,” Rodrigues said. “He wanted a better deal. And what better way to do it than the game he played? And our politicians fell right into his trap. They were tripping themselves to really say, pick me, pick me.”
He noted that he didn’t understand why politicians catered to Amazon when that sentiment could be directed to support more homegrown firms.
“I don’t really understand why they don’t do that for Canadian companies. We have this idea sometimes that, you hear a politician say ‘We don’t want to pick winners,’…but they picked Amazon. They obviously thought Amazon was some sort of winner. So why not pick Canadian winners? Because that is what really brings a full value of the investment to Canada,” he said.
Amazon narrowed down its list of candidates cities from 238 applicants to a shortlist of 20, which included Toronto. At the time of applying, Toronto Mayor John Tory said Canadian lawmakers weren’t planning on giving Amazon incentives such as tax breaks to move its second headquarters north of the 49th parallel.
Canadian companies ‘fighting to be recognized’: Adam Froman
Adam Froman, CEO of digital services firm Delvinia, said it wasn’t a bad thing that Amazon wasn’t expected to come to Canada. Froman said he was never worried about Amazon coming into Canada and stealing talent, but rather was concerned about Canada giving unfair advantages to Amazon like tax breaks.
“We’re sort of fighting to be recognized and have a level playing field to compete as we go global, we’re all expanding globally now…so why would we be encouraging companies to come and giving them incentives to come to Toronto, when A, we have a shortage of talent already, and B, that a lot of great companies that are Canadian, they’re trying to stay and they’re trying to grow as Canadian companies globally. Give us the incentives to stay in Canada and not a sell-out.”
On Nov. 8, Mayor Tory said during a press conference that the city had not received any notification from Amazon that it was out of the race but said that he always “looked at this as something that was a huge feather in our cap to get into the list of the final 20.”
He said that whether or not Toronto was the location of Amazon’s new headquarters, the city’s bid book (which was put online shortly after Toronto put its name in the running) was downloaded 17,000 times and that was an accomplishment.
“The other 16,999 that read the book, beyond Amazon, are people that today are making decisions about coming to Toronto,” he said. “No matter what Amazon decides, the city right now is a beacon for investment.”
Time for Canada to build its own Amazon: Bruce Croxon
Bruce Croxon, a partner at Round13 Capital and a former Dragon from CBC’s Dragons’ Den, said he was relieved that Toronto was no longer on the list because there were already enough U.S. multinationals in Toronto already “scooping up our best and brightest engineering talent.”
“It’s never been a better time to be building our own Amazons. And the presence of such large and powerful employers does not make it easier to build our own Amazons. It makes it considerably harder,” Croxon said. “It’s hard enough as it is to build our own homegrown medium-sized companies. And this would have made it exponentially more expensive and harder.”
Though he added it was still a rumour that Toronto was off the list, and that “Bezos is unpredictable.”
“I know a lot of people said that it would be a really radical move for Amazon to come up here, but I mean, look at all the companies that are set up here now with branch plants that are here specifically for our engineering talents,” he said.
Canada needs to stop being a branch partner and become a leader: Lacavera
But it’s for that very reason of big multinationals coming into Canada and creating branch plants that Anthony Lacavera, founder and chairman of Globalive, said the news of Amazon going elsewhere was positive for Toronto.
“[Amazon coming to Canada] perpetuates and entrenches the branch plant mentality we have in Canada that we really have to get away from… the key for Canada to be a prosperous long term, in my opinion, is we need our own global winners,” he said, agreeing with Croxon in saying that Canada needs its own Amazons.
Lacavera added that Canada needs to pick two or three areas where it could win and build world-leading companies.
“Instead of doing that, what we’re doing is just trying to keep GM Canada, Ford Canada, Chrysler Canada, Toyota Canada, Hyundai Canada, all these multinationals that we’re branch plant operators for,” he said. “We’re not in a leadership position. We’re in a junior partner subordinate position.”
Soti said that when Canada invests in a company like Amazon, the total revenues, patents, and intellectual property goes back to the U.S., but if Canada invested in Canadian companies so it could scale up like Amazon, the revenue would come back directly to Canadians.
“If [the government] actually push Canadian scale-ups, the IP, the revenue, the jobs, the tax revenue generated from the sale of those products all come back to Canada,” he said. “I don’t really know why [politicians] can’t put the same kind of excitement into growing Canadian companies. It just really feels like, they’ve decided that Canadian companies can only play in the junior leagues. And that we’re not good enough to play in the NHL.”