Canada’s Competitive Advantages w/ Chris Albinson

ACME General: My guest today is Chris Albinson, a visionary investor with an eye for impact. He was one of the first to invest in Pinterest, DocuSign and many other startups, and now serves as the CEO and president of Communitech, an organization that helps tech companies in Canada start and scale. One of the impact areas Communitech has focused on is national defense. That’s defense with a C, right, Chris?

Chris Albinson: We do spell things correctly up here, yes.

ACME General: Welcome to Accelerate Defense with an S. You have a unique perspective as someone who can observe American innovation culture, both as an outsider Canadian, but also someone who has been a key player inside America’s innovation economy. If you had to characterize the most important differences between our approaches to innovation, how would you do it?

CA: I think there’s a lot to be learned both ways. Early in my career started working on startups up here, and I’m going to date myself now, so forgive me on this one. Back in the early ’90s, and despite what Al Gore claimed, we were actually building the internet with our equipment, but we partnered pretty closely with DARPA at the time, building the global infrastructure. I would say there are some differences to be sure, but I think there’s a lot more in common and the cooperation really goes back decades and continues.

ACME General: I want to talk about that commonality. Obviously, we have strategic alignment, the longest undefended border in the world, and that alliance makes sense from economic and security standpoints, but I want to talk about the moral dimensions of it, because we’re in a new world today, where values are again at the forefront. How do you think about that alignment between our two countries?

CA: Yeah, as you point out, the strategic partnership’s been there for a long time, and as you and I’ve often talked about, I think from a value’s point of view, we think about, especially the Midwest as part of Greater Canada, just the common sense approach to getting things done, looking after your family. My family’s gone back and forth across the border over multiple generations, so there’s a lot of commonality there. But to take your point, from a global point of view, having spent a lot of time outside North America myself, we’re in a pretty dangerous time, just stating the obvious, and that’s when you want to have your friends and your close friends very, very close.

So, post February 24th, almost a year ago now, I think our two countries have collaborated more strategically and more closely than they ever have out of necessity. Our deputy prime minister coined the phrase friendshoring, going back, I guess, a couple years now in early COVID, and sort of the reorientation of supply chains, the reorientation and reinforcement of close relationships and alliances based on a values-based approach and world outlook. I think that work continues. I think it continues to be really critical. I was on the phone with colleagues in Kiev yesterday. You’re probably aware the single largest population of Ukrainians outside of Ukraine is in Canada. We feel very directly what’s going on there and reaching out and trying to support. I think collectively we really need to come together. It’s a pretty dangerous time in the world and working really closely with our friends and allies is more critical than ever.

ACME General: February 24th, you referenced that of course being the anniversary of the unprovoked Russian invasion of Ukraine. I’ve been reading your writing on innovation for a while, and a few years ago, you weren’t writing much about defense, if at all, and that has changed especially very recently with assuming the leadership role at Communitech. I mea n, you have a former Canadian Chief of Defence on the board of advisors. Communitech sees the importance of tech in defense innovation in Canada. Was that an intellectual pivot for you or just a pivot in terms of presentation? Did you wake up on February 24th, like a lot of us, and realize, “Oh my God, the world is going to be fundamentally different from here on out”? Or is it something that, as a Canadian, you just kept defense in the back of your mind, but you didn’t really put it front and center?

CA: Yeah, I think the genesis for it was different for us, just speaking frankly, it actually happened during COVID. You may recall when the CFO for Chinese company, Huawei, was detained at the US request in Canada.

ACME General: I remember, yeah.

CA: And China had, with no rationale whatsoever, detained two Canadians known as the two Michaels without cause. I think that was a wake-up call for us about a rules-based order not necessarily being in place around the planet and how we needed to think about it. It accelerated for me personally pretty quickly, we’ve had, continue to have our Air Force, RCAF, embedded with us in our hub. During COVID, one of the interesting things for me was a number of the officers, really coast to coast, you got to really build a relationship with as they were seconded to us.

I was talking to the chief of the base at CFB Halifax out on the East Coast, talking to the guy who’s weapons officer for the Calgary in his basement. Everyone was in their basement during COVID, including your president. But yeah, talking to him in his basement on the West Coast and the Calgary was set on mission to go through South China Sea. Talking to him and just realizing they didn’t have the stuff they needed to complete that mission. We were setting them into a very dangerous place, where they just didn’t have what they needed to keep us safe. I’ve had pretty close collaboration with different branches of the US Forces, as you know, through my career, 20 years in the Valley and worked very closely with Southern Command throughout one of the associates that I trained at a former firm in the Valley, started in In-Q-Tel.

This idea of the connectivity between our defense and technology and how that relationship really needs to be very intentionally tight, and there needs to be a lot of interactivity there, has always been part of my career going all the way back to the work with DARPA in the early ’90s. To see the state where we’ve gotten on the Canadian side, where Canada’s now the second-largest innovation hub in the world and the fastest growing. We’ll pass Silicon Valley probably in the next 18 months having more tech workers. Canada now has more tech workers than California. That’s a big sea change from a capacity point of view that we bring to the global alliance.

But the fact that it wasn’t really connected in a systemic way to our defense was a big problem. It was clear when I was referencing the Huawei example and the challenges there around communications infrastructure, and really pleased to see the Canadian government decision not to have that company’s equipment in our infrastructure, but also was very clear talking to those officers that were being asked to carry out missions and worried about their teams knowing that they were going into some pretty hostile situations where they didn’t have what they needed.

Obviously, that accelerated pretty dramatically February 24th in two ways. One was we were really in a global hot situation that we felt very directly, Canada was one of the first to come to Ukraine’s defense, I think, as recently as last week, we’re the first ones to deliver a main battle tank to the Ukrainians. That relationship is very clear to us in terms of what we need to do. But I think also out of those conversations, and again, I was talking to my counterpart in Kiev quite recently, the nature of warfare’s changed pretty dramatically. Things like autonomous, things like AI, things like crypto, things like quantum, that we thought used to be in the realm of civilian innovation are very much front and center in terms of the needs of the Ukrainian forces today. So, we’re looking to try to bridge that gap as fast as we can.

We’re actually working on a joint challenge driven by the Ukrainian forces. What are the things that they require a little bit over the horizon, and then can we use the second-largest innovation hub in the world up here in Canada to try to bring that capacity to bear? Won’t use names specifically, for obvious reasons, but there’s quite a lot of the Canadian tech ecosystem already deployed on the ground in Ukraine right now doing active support on a number of fronts. We’re looking to continue that work. Long way to answer your question, buddy, but it’s pretty important to us and it’s been building in an accelerating pace over the last 36 months.

ACME General: Well, that pace of acceleration has been astonishing considering just a few years ago how far behind Canada’s innovation economy was and now you’re set to leapfrog Silicon Valley. I want to dive deep into that in a second. But the criticism of Canada’s national security posture and preparedness has been really scathing of late. There is a lot of ground to make up. I mean, one of your advisors, Brigadier General Chris Ayotte, retired, former Chief of Staff of Army Strategy said, and I’m quoting him directly here, “Canada is no longer a serious nation when it comes to national security.” He said that at a Communitech round table. I mean, I hope that is more an attempt to light a fire than to demoralize. It seems that that’s how it’s been received, right?

CA: That was the intent. Yeah, no question about it. Chris is a very, very strong patriot, great friend of Canadian Forces as well as increasingly a bridge between this large tech capacity. Again, we’ve got over 300,000 tech workers that we haven’t really plugged in directly. This notion of plugging in I think becomes a metaphor that we’re increasingly focused on. There was a pretty significant announcement, I think right after Chris had made that comment, so not to connect them, but Canada announced that it’s purchasing the F-35 and this idea for the allies to work effectively, we need to have a technical capacity to be interoperable, to actually plug in and be effective. The F-35 was a very big decision for Canada to move that forward. As you know, that’s really a pretty massive computing platform in the sky.

It’s a fundamentally different warplane than we’ve ever seen before. These things that we talk about in terms of drone swarms and autonomous AI, what’s going on in cyber, there’s a whole new pretty massive sea change in technology that’s coming together pretty much in real time in Ukraine, that one of the interesting parts of that is CAF, which is the Canadian Forces, working so closely with the Ukrainians, and we have been doing that for decades in partnership with them both in training and in other areas. What our forces are learning in real time by supporting Ukrainians is really propelling us to go a lot faster on multiple fronts in terms of closing the gap. But there’s a gap to be closed, to be clear.

ACME General: That partnership between CAF and the Ukrainians is a great example of the importance of allies. But can you talk about that on a larger scale? The partnership with the US, with the Aussies, with the Brits, especially in the context of Canada’s contribution warfare approach, which by the way is not a term I was especially familiar with until reading some of Brigadier General Ayotte’s writings and learning about how Communitech is bringing all these partners together.

CA: I had a really fascinating conversation with actually a dear friend of yours, General Petraeus, last fall about how’s the alliance reforming and reshaping in the face of some pretty significant different kinds of threats. I break it down in a couple of areas. One that we just talked about, which is Canada’s got to have an ability to actually plug in, to be fully interoperable across The Five Eyes. I think that’s a foundation stone that we had a gap to close and still have a gap to close, but very earnestly working on it.

The second piece, from a contribution perspective, I think the Canadians were really brought in with high degree of competence, but really more tactically than strategically just to be straightforward about it. There’s an understanding of that gap. Our current Defence Minister, she was in our building just a couple weeks ago, Anita Anand, she was with us and then two days later was in Kiev herself. I think there’s an understanding directly of what the gap is and how quickly we need to go after it, and doing that in a degree of seriousness,

I don’t think we’ve really shown, as a country, for a long time before. Canada had this fifth-largest standing army at the end of Second World War, some people forget about it. We were in early, we had a lot of gap to close, but we did it in a pretty quick period of time. I think that energy again is clear in terms of the need and the seriousness.

I think the other area that’s a big area of focus and the last one to highlight is what we’re doing jointly on NORAD, which I think was recently very much in the news in terms of, hey, again, the threats are changing pretty dynamically and it’s really your ability to adapt tech quickly is the thing that’s going to allow us to have success or not. Again, that strategic flexibility and leveraging that 300,000 plus tech workers, second-largest hub in the world and bringing that in a very serious way into the defense conversation and into actually practice is the thing we’re focused on.

Just a quick aside for you on the F-35, the first simulator, F-35 sim, where the commander of our Air Force flew it was in our building and the first time the Defence Minister flew the F-35 sim was in our building a couple weeks ago. So, we’re really proud of this ability to be strategically nimble, move quickly and have high results and we’re very focused on it. But again, we’ve got a gap to close and we’re focused on closing it, too.

ACME General: Well, I saw those photos of the Defense Minister flying the sim. That’s very, very cool. I want to talk about those 300,000 tech workers, because when you talk about contribution warfare, one of the unfair advantages, and I am saying that in a positive way, of Canada’s contribution is that innovation culture, that pool of tech workers. You have a unique ability to draw them and you’ve described trust as your unfair advantage. How is that playing out in Canada, especially when you have to compete with Silicon Valley and other tech centers across the border? You’re able to do it in a unique way and not always by paying the talent more.

CA: Yeah. There’s a really interesting dynamic that’s happening globally right now, where some of the same threats we were talking about earlier, as you’d expect, also drive opportunity. So, for Canada, it’s actually pretty uniquely positioned here on three fronts. I’ll talk about each one. One’s on talent. In a world where big tech is not trusted out of China anymore and, just speaking frankly, it’s not always trusted out of the United States, there’s a reason why when Americans go into Europe and they’re backpacking, they sometimes sew that Canadian flag on the back of that backpack. It’s just because there’s been a brand of trust, people trust Canadians globally, and it’s something that we take pretty seriously and it’s starting to be very evident also on the technology front.

So, when we had The Five Eyes in our building last fall, there was a, hey, you’ve got the second-largest innovation capacity in the world. The Brits wanted to buy Canadian tech, as did the Kiwis, as did the Aussies. They don’t want to buy Chinese solutions right now for obvious reasons. As we’re a place where trust is the brand, increasingly we’re the place where trust is being built right into technology as a core competence and economic advantage for the country.

The other opportunity that’s related to that on the talent side is Canada’s really the only place that has a Global Skills immigration policy right now. What does that mean? If you’re a known-good technical talent, going to work for a known-good Canadian company, you can come from anywhere in the world and be on the ground and working in two weeks. There’s no other country on the planet that can take the smartest woman out of Bangladesh and take the smartest guy out of France and have them working on a team together on the ground in two weeks or less.

So, that Global Skills immigration policy right now, because, as you know, tech is really about people, fundamentally, and that really drives all things. One of the interesting things is there’s a number of things that are kind of fracturing Silicon Valley’s supremacy as the leading innovation hub. I’m old enough to remember when Boston used to be the center of innovation, and that left somewhere in the mid-’90s, it hasn’t moved since like ’94, ’95 timeframe. It’s moving again and it’s really about the flow of people.

Canada’s really the only place where those people can go. I think there’s been a lot written separately about the tech layoffs in the Valley of note, and there’s roughly about 40,000 tech workers that are on H-1Bs that have 90 days or less to find another job or going to be forced to leave the United States. Do we really want them going back to China, Iran, Russia? We don’t. I just don’t think that makes any sense for anybody. The fact that Canada can be a place where those highly educated, went to US grad schools, worked at Google or Facebook or Twitter or wherever for the last six years, highly-skilled technical folks, we want to keep them in North America and Canada’s really the only place that they can go and be welcomed in pretty quickly.

We’re also a pretty damn multicultural place. Just going back to your point on talent advantages. In the province of Ontario, just a little bit North of where you’re sitting right now, fully 50% of the population is foreign born. It’s a city, third-largest city in North America, that’s very, very diverse, very, very multicultural. For that woman coming from Bangladesh, she can find her people, she can find her place to worship, she can find her food. The same thing for that kid coming from France. It’s a place that really welcomes people from all over the world and that used to be one of the big advantages of the Valley. Right now, it’s Canada’s advantage. We’re leaning in on it, just to say that out loud.

Quickly, on the other two advantages, Canada’s the only G7 country that has a trade agreement with all other G7 countries. If you’re looking for a place to go build a company from, to go serve global markets, which most tech entrepreneurs do, Canada’s the only place where you can start that company and then go serve all the other G7 nations under a free trade agreement. So, another big, systemic advantage.

Then, lastly, on capital, we’ve worked really hard to make sure that we’re a really attractive place for investment, for global tech investment. Investment went up from 4 billion a year, roughly three years ago, is now over $17 billion a year up for 100%, fully 74% of that’s US-domiciled capital. So, US venture capitalists are basically saying, “Hey, look, there’s great people up in Canada, they’re building really large, impactful companies. We should invest there. In point of fact, Canadian venture capital returns are now better than US venture capital returns for the first time in history.

It kind of follows, if you look at all the best companies in the Valley, over 50% of them were founded by immigrants to the US. If those immigrants can’t come to the US right now, or can’t stay in the US right now, and they’re coming to Canada, and they’re building those companies. And I’ll give you three examples of companies that just crossed a billion dollars in revenue in Canada. Shopify founded by Tobi Lütke. Tobi’s from Germany. Faire founded by Marcelo Cortes, who’s from Brazil. And ApplyBoard founded by Martin Basiri from Iran. We’re seeing that same pattern that built the Valley of the smartest people in the world coming. They have very high aspiration, want to build global companies, and the country’s kind of uniquely set up right now to support them.

I guess the last one to leave you with is just the fundamental technology. I think there’s been a lot written about this in the press, but we were really seeing this for the last 20 years. Canada leads the world in AI and has for over 40 years. The fundamental technology was done by Geoff Hinton at University of Toronto, at University of Waterloo. Core teams on AI from Google and others are all based up here. Probably no surprise, if you look at 60% of our highest performing companies, AI is the core fundamental technology, whether or not that’s in EdTech or that’s in autonomous systems around mobility or if it’s in cyber, that core technology that’s sitting underneath that, that’s really allowing these companies to grow really quickly is AI.

ACME General: Your championing of the Canadian innovation culture, especially your very forward-thinking approach to immigration carries, gosh, a barely implicit, borderline explicit critique of the US. As someone who has spent decades in Silicon Valley seeing the changes happen, I mean, just give it to us straight, how has America become so unwelcoming compared to Canada? I mean, that is basically what it boils down to. You have this great quote that these immigrants and, these are your words now, in short, “They found the place where nice is a global competitive advantage.” People are going to Canada because it’s a nice place to be an innovator, an immigrant, somebody with big ideas, America, less so these days.

CA: Yeah, I think a lot of these things come over time and sadly is more about politics in substance. When I was in DC in the spring, there’s a lot of appreciation for Canada’s approach to immigration. I think actually the US Labor Secretary was in Davos recently and saying, I think the almost direct quote was, “US should control, alt, delete its immigration policy and control C copy Canada’s, and insert here.” So, I think there’s an understanding of, hey, look, US used to add around 2.2 million new Americans every 12 months, legal immigration, people that were willing to work hard, build a new life, 2.2 million every 12 months. Last year the United States added 105,000 green cards. So, it’s literally choking itself off from this critical lifeblood of intelligent labor that wants to work hard. I can’t explain it. There’s no rational explanation.

When I was in DC talking to multiple policymakers, everyone agrees it needs to be fixed and yet everyone says there’s no way to fix it. That’s from the Labor Secretary through to Senator Marsha Blackburn from Tennessee, really strong, thoughtful senator on the innovation file. The US has got its gears all in muck on a pretty critical factor. By contrast, Canada’s now having this biggest single immigration flow it’s had since 1914. We went from adding about 200,000 new Canadians every 12 months to over 500,000 new Canadians every 12 months. So, you just look at that dichotomy, US adding 105,000, Canada’s adding 500,000 new Canadians every 12 months and fully 50% of them have STEM degrees. So, it is a very thoughtful skills-based immigration policy. To give you a sense of impact, Canada will increase its overall population by about 15% over the course of five years.

ACME General: That’s incredible.

CA: Yeah. But it has other challenges, to be clear, when you add that many newcomers. But so far we’ve been able to absorb them pretty effectively.

ACME General: Well, let’s talk about, because I don’t think we’re going to solve our backwardness on immigration in the next, what, 18 minutes, but there are ways Canada’s innovation economy, especially as it applies to defense, can help us down here. I mean, the example is one thing, and I love that you put a billboard in Times Square drawing talent northward. Is it true that there were congressional investigations about that? Can you give us the short version of that story? This is the healthy competition among brotherly competition, right?

CA: Yeah. Austin is going after talent in the Valley and Florida’s going after talent from the Valley. One of the advantages we’ve got is if you’re not born in the US, you can come to Canada and there’s a place for your family. You’re welcomed with open arms. And you can feel great about your status long-term. So, you’re not feeling like, “Hey, if I lose my job in a year and a half, do I have to take my family out of my community and the schools my kids are in and my kids are going to be thrust back into a country where they don’t speak the language and they’ve never lived?” That’s one of our advantages. As you’d expect, you press your advantages.

So, yeah, I did buy a billboard in the middle of Times Square during COVID, didn’t cost me anything, because there was nobody in Times Square. Then Ken’s probably going like, “What? Okay, nice that you bought a billboard, buddy, but there was nobody there, so who cared?” It got 42 million media impressions across the United States. So, it had the desired effect and it basically just said, “Hey, you got an H-1B problem? Come to Canada, that simple.” Just trying to get that message across. I wouldn’t say they were investigations per se by Congress, but they did take note and there were hearings on what’s Canada up to going after all this skilled labor?

ACME General: Yeah. All right. So, you’re clearly on a roll, attracting talent, building these innovation partnerships. What is your stretch goal? What would you like to see in terms of the cross-border coordination between the Canadian military and innovation ecosystem and DoD and our comparables, Silicon Valley, Austin, the innovation hubs in our country?

CA: Yeah. I think, to state hopefully the obvious, there’s been a lot of collaboration over a long period of time. These two ecosystems have been really built in parallel for almost 30 years. I think what’s happened was Boston used to be the main hub in North America that moved to the Valley in the late ’90s. It’s now moving to what we affectionately call up here The Six, doing the hashtag for the kids listening out there, but Drake, for those that don’t know the reference, so that’s the Waterloo-Toronto Corridor. So, we’re very proud of our rappers. So, we’re number two to the Valley and we’re closing very fast. We’re growing 350% faster than any other hub at scale. Like I said, we should probably cross the Valley in the next 18 to 24 months to be the largest hub in North America.

So, if you stepped back from that, and I put we were with the Deputy Commander for NORAD recently, in the fall, and said, “Look, if you look at those over-the-horizon challenges, if you look at things like supersonic, if you look at over-the-horizon radar, if you look at AI, if you look at changing cyber threats, if you look at quantum and quantum computing, all of those capacities exist in the Canadian hub, which is about the same size as Silicon Valley’s hub. The Silicon Valley hub is really well and systemically connected into our defense infrastructure.

When I was working as a venture capitalist in the Valley for 20 years, we talked to Southern Command on a pretty regular basis. We worked with In-Q-Tel on investments on a pretty regular basis. My thought is like, “Hey, we’ve got these two assets from an ally point of view, we’re only using one of them. It doesn’t really make much sense. How do we really plug this second asset fully in?”

We’re very privileged, again, in the fall to have a lot of those decision-makers from the US, senior policy and defense folks come up and visit, see what’s happening in our quantum labs, see what’s happening in our AI labs, talk to the companies up here just from an awareness of the capacity perspective. Again, Deputy Commander of NORAD, well-informed about that, and connecting that directly in. I think increasingly and sort of interestingly through a bank shot, the work that we’re doing with Ukrainians together. We’re saying, “Hey, look, we need AI systems to actually triangulate smart munitions.” One of the big challenges is you don’t can’t afford to waste munitions, using AI is actually happening in the battlefield in Ukraine today-

ACME General: Wow.

CA: … to take information from drones, connect that to forward-deployed, to dynamic response, to basically say, “Okay, how do you in real time have smart munition use?” So, that’s happening. That is mostly a tip of the hat to the Ukrainians. Let me just say that out loud. They’re the ones that are out front identifying the problems and putting that technology into the battlefield literally on a daily basis and learning really quickly. Very proud that there’s a lot of the Canadian tech infrastructure and teams on the ground in Ukraine right now. That surface area and that connectivity, going back to the earlier notion, the conversation of being plugged in, that’s actually happening in Ukraine faster than anywhere else. So, Canadian CAF, Canadian tech companies connected directly to Ukrainian forces dealing with dynamic challenges and trying to find solutions and get them to where they’re needed as fast as possible.

ACME General: What are the biggest barriers to cross-border defense innovation between the US and Canada?

CA: I think the biggest one, General Ayotte probably alluded to, we have a deficit in the CAF, again, just stating that out loud, in terms of being able to systemically plug in, that is being closed. But if you look at all these challenges that I’m talking about, things like AI, things like cyber, things like quantum, things like autonomous systems and how do they inter-operate, a lot of that skillset is not in uniform right now. That’s definitely true I think in the US, I think there’s a realization that the nature of how that battlefield is, the reality of it is very different than what people thought might be the case. So, there’s a lot of recalibration in a very sophisticated, from a technology point of view, US defense point of view, for the Canadians.

On the one hand, the gap is much bigger. On the other hand, they don’t have as many legacy systems to have to worry about, so they can kind of jump and actually leapfrog. So, that’s the thing I’m really encouraged about is the collaboration between the CAF and the Ukrainians is saying, “Hey, look, if we agree that, from a Canadian point of view, our tech is way too old and we don’t have the competence in place to leverage it, let’s just throw it away and let’s actually see what the Ukrainians are actually using and needing and just leapfrog an entire generation.” So, that collaboration between the CAF and Canadian tech ecosystem working to solve Ukrainian problems in real time, I think that’s the real opportunity for us.

ACME General: Well, I think that’s a great note to end on, Chris. Hopefully, much more of that to come, much more cooperation between our two countries. Thanks so much for joining us on Accelerate Defense.

CA: Always fun to talk to you, my friend.