“We must cultivate a new wave of Quebec companies that will be headquartered in Montreal”, recently declared Alexandre Taillefer, entrepreneur and investor at XPND Capital, during his opening address at the Salon des Entrepreneurs organized by the Jeune Chambre de Commerce de Montreal.
This declaration was like a small revolution for me.
Since my youth, I had heard about the exodus of various corporate headquarters from Montreal. One after another, newscasts announced the departures or significant downsizing of various head offices, including Provigo, Bauer, Microcell, Alcan and RBC. According to a report by KPMG-Secor, between 1990 and 2011, Montreal lost 20% of head offices found in the Canadian Top 500. Whether for business reasons or socio-political ones, our head offices were relocated in great numbers. These departures seemed to me irreversible and unavoidable, an untreatable woundthat would have long-term impacts on Quebec’s economic fabric.
We know that corporate headquarters are especially vital for a province’s economic ecosystem. They are the heart of the business community, as well as the lifeblood for a broad network of employees, customers, partners, service suppliers and even the charitable organizations they support.
However, it appears that head offices are in fact a renewable resource. It is possible to grow new ones, and moreover, faster than ever.
At the beginning of the 20th century, it could take many decades before a company gained enough critical mass to build a head office of any significance. In Quebec, it took large corporations like Desjardins, Jean Coutu Group, Bombardier, Quebecor and Power Corporation many decades to develop themselves. Today, our largest employers in Quebec are mostly banks, financial companies, retailers, natural resource operators and telecommunications companies.
With the Internet, new technologies, online collaboration tools, easier access to capital and the opening of international markets, it is now possible to grow large companies more quickly than ever before.Technology now enables more accelerated growth of organisms, in particular with stem cells and agriculture. This also applies to businesses.
In 20 years, Amazon has created 100,000 jobs from its headquarters in Seattle. In 15 years, Google created 50,000 from Palo Alto. During this same period, the Chinese company Baidu created 35,000 from Beijing. In 10 years, Facebook created 7000 jobs and Twitter, 3000. In Canada, Shopify created 400 jobs in Ottawa over the last 10 years and Hootsuite, 400 jobs in the last five years in Vancouver. A few years before, these companies were considered start-ups.
It’s not only the quantity of jobs created that is important, but also the quality of employees, their cutting edge expertise and their halo effect in the community. These new businesses, often present in e-commerce, web software, biotechnology or renewable energies, become a true nexus of innovation for their cities.
In retrospect, it is easy to see the significance that RIM/BlackBerry had on Waterloo’s ecosystem, stimulating innovation and being an anchor in that community. A little like PayPal in California, RIM’s presence in Waterloo attracted and employed thousands of highly talented individuals to the region, who in turn launched a new generation of businesses. Similarly, the presence of Softimage in Montreal in the 1990s attracted many people skilled in special effects and 3D modelling, which played a major role in the creation of our current cluster of video games and multimedia.
In Montreal, we now find many companies that are rapidly growing in their industry, like Moment Factory, Lumenpulse, Luxury Retreats and LightSpeed. Online merchant Beyond the Rack now employs 400 people in Saint Laurent, while Frank & Oak has more than 100 employees in Mile End. These two companies didn’t exist five years ago.
Our technology start-ups are our next great flagships. We must support the growth of these young companies that have the potential to become important drivers in our economy.
To ensure Quebec’s future economic vitality and to support the Quebec social model, we mustcontinually renew our pool of large companies establishing their head offices in Quebec, and especially in Montreal. Montreal has many benefits for builders of businesses: A high quality of life, reasonable rents, the second highest student population density in North America (after Boston), and a vast amount of creativity. We must continue to work to create the best business platform for our local entrepreneurs.
So what more can we do to promote entrepreneurship in Quebec? In my opinion, the three key ingredients are to guide our best talent toward our best start-ups, to encourage our local entrepreneurs to spread their wings internationally and tocultivate a more entrepreneurial business culture in Quebec. These strategies will each be the subjects of my next three columns.
[Note: This article was originally published as a guest editorial in La Presse.]
Read the other articles in this 4-part series: