The old tannery building in the heart of Waterloo still looks like a weather-worn industrial site, but is packed with dozens of startups.Peter Power/The Globe and Mail
Omar Qureshi makes software in the building where his father once bought shoe leather.
The old tannery in the heart of Waterloo's twin city Kitchener still looks like a weather-worn industrial site, but is packed with dozens of startups such as Mr. Qureshi's Planleaf, an online project management tool. It's not just home to new IT entrepreneurs, either. Google Inc., BlackBerry Ltd. and Canadian Tire Corp. Ltd. have all clustered in the space run by an economic development agency tasked with expanding the city's already sizable technology industry.
Whatever BlackBerry's fate following its failure to mount a comeback in the smartphone space, the situation is certain to compound reductions in research and development among Canada's technology giants, threatening what is often referred to as Canada's Silicon Valley. On the ground in Kitchener-Waterloo, though, entrepreneurs like Mr. Qureshi seem too engaged in their high-tech ambitions to fret about the demise of the company that has nurtured them in one way or another.
"You can go to a big company and be proud you worked there for 20 years," says the 30-year-old University of Toronto graduate. "But there's a special prestige behind being a startup now. If you're a smart guy, what are you doing at Google and IBM? Do your own thing."
To start his company, Mr. Qureshi left his job at Medicalis Corp., a San Francisco-based tech company with a sizable presence in Kitchener-Waterloo, after five years of steady employment. Planleaf has offices in the Communitech hub and is receiving funding and office space until it starts making sales. Communitech, founded in 1997, has helped more than 1,000 firms of varying sizes in the region by offering space, funding and support.
Communitech's CEO Iain Klugman has seen a lot of change in the industry since Communitech threw open its doors at the height of the last technology boom. In that era, companies based on little more than impulsive concepts were flush with millions of dollars of venture capital funding and little-to-no expectation that they would ever get a product to market.
"People used to come up with ideas and hope to eventually find a market," he says. "Nobody works that way any more. People are finding a market first, and then building something that solves a problem. That's a fundamental difference that leads to real products being developed quickly."
Kitchener-Waterloo hosts about 30,000 tech jobs spread across some 1,000 companies, and 6,000 of those jobs are within the sprawling BlackBerry complex that has driven innovation in the community for the better part of a decade. But Michael Litt, who worked briefly at the company and now runs a rapidly expanding software company called Vidyard, said a parallel tech community is now firmly rooted that owes its existence to the handset maker but is now largely separate from the company.
"We all owe BlackBerry a lot," he says. "But there are other things going on."
Two of the more prominent examples are Thalmic Labs, which just secured $14.5-million to make a "Jedi" wristband that allows muscle movement to control digital devices, and education software company Desire2Learn. Both have expanded rapidly, capitalizing on a wealth of students graduating from the University of Waterloo and a steady stream of former BlackBerry employees looking for their next job.
But it's not just young kids out of school who are powering the city's culture of innovation. David Beaton spent decades teaching local high-school students math before deciding to put the security of a school board job aside and start his own tech company called Formulating Change.
The company wants to partner with banks and credit unions willing to implement a system that allows debit card users to make automatic donations to charities with each purchase. Mr. Beaton's company has seven employees now, but he hopes to add quickly if he lands a major bank as a customer.
"I really don't think we'd be where we are today if we were in another community," he says. "Everyone here understands that a rising tide lifts all ships.
Christine Bird would agree – she moved to the city specifically to take advantage of the supports and staffing available to new companies that set up in the region. She's from Philadelphia, but met business partners from Canada while living in San Francisco.
Ms. Bird's startup venture – Cream HR – helps companies screen job applicants through a series of online questions based on research into how different personality types perform in different jobs.
"I moved up and we decided on Waterloo because we were able to be accepted into a community very quickly because it's such an innovative tech hub," she says. "So neither of us are from here but it's been great. We are liking being part of a community where people really respect what we're doing."
There are signs the city can withstand any weakness at BlackBerry, but that doesn't mean its politicians and promoters are blind to the dangers of a tech-based economy. Everyone knows what happened when Nortel Networks began its slide and returned Ottawa to its long-time status as a sleepy government town after a short detour as a tech hub. But as Mr. Qureshi gets his company ready for its beta launch, he's not particularly worried about having to abandon the tech industry and take up a job at a bank or insurance company.
"The value system has changed and I think it's changed for good," he says. "Having a startup signifies you're courageous, that you're brave, and that you're smart. That's where we all want to be, and this is the place where it can happen."
Editor's note: The location of the old tannery has been corrected in the online version of this story.