Canada has only one Unicorn, compared to over 150 in the US, and new research published by the Impact Centre at the University of Toronto reveals why.
There are 28M businesses in the US, and 150 are Unicorns. By comparison, Canada has 1.17M registered businesses and only 1 Unicorn — suggesting that the US is 5x’s more likely to have a Unicorn than Canada.
This research, championed by Charles Plant outlines that the challenge might not be more research and development and patents, but actually the ability to build and scale companies.
This lack of scale means Canadian companies are not able to attract large amounts of late-stage capital, and are often sold before they can scale to world class size — see most recently Wave Financial.
Why is that?
We believe that a critical challenge is our inability to scale companies to a world-class size. Larger companies boast several advantages. They have greater revenue per employee, pay better salaries, undertake more R&D, and take out more patents. Few tech companies in Canada grow large enough to go public. This means less R&D, fewer patents, and, ultimately, lower income per capita and productivity. — The Narwhal Project
- Few Canadian companies are founded in large consumer markets capable of generating the desired scale.
- We invest less per company relative to the US.
- Canadian firms spend less on marketing and sales activities that are critical to building the customer base.
- We have fewer qualified people in marketing functions.
Ryan Holmes, CEO of Hootsuite has been outspoken about the sales talent shortage in Canada, and the Lazaradis Institute at Laurier found that 7 out of ten high-growth tech companies in Canada struggle to obtain executive-level sales and marketing talent.
Our success as an “Innovation Nation” will depend not only on our ability to come up with novel ideas or inventions but also on our ability to market and sell those ideas. — The Narwhal Project
Plant found that mid-sized US software companies spend 34% of their revenue on marketing and sales, compared to Canadian firms allocating 20%.
This should be no surprise.
With government-sponsored programs like SRED, the focus (and money) goes to R&D activities, not sales and marketing activities during the scaling phase. The leading American firms have 40% of employees dedicated to marketing and sales, vs. ~30% in leading Canadian companies.
This means less relative time and effort spent on market intelligence, product marketing, and sales.
So what now?
Sales has both a top-of-the-funnel and bottom-of-the-funnel problem.
Not enough young people are choosing sales as a career option, and I’m not entirely sure why.
I believe that in early and growth-stage companies there are two things that matter most: building and selling.
We’ve got no shortage of companies teaching builders how to build (Zero to Mastery, Canada Learning Code, HackerYou (now Juno), but who’s getting people excited about the other side of the equation? Who’s teaching the sellers how to sell?
Sales is a hugely valuable, in-demand, and lucrative skillset to master. In fact, nearly one quarter of all CEOs have a sales or marketing background — including some of the more well-known ones like Gary Vaynerchuk, Mark Cuban, Howard Schultz, and Warren Buffet.
Professor Scott Galloway from NYU Stern talks about the word ‘entrepreneur’ being a synonym for ‘salesperson’. You are constantly selling people to join your company, stay at your company, selling investors, and (of course) talking to customers.
It doesn’t matter if you’re running a corner store or starting the next Facebook — you’d better be damn good at selling if you plan to start a business. The good news is that if you like to sell and are good at it, you’ll always make more money relative to how hard you work.
Kenny Goldman’s work with SalesTO, the community to meet and learn from Toronto sales experts is making great strides here. He’s building a community, and it’s always great to see younger faces in the crowd who are just getting started in their sales careers and are hungry to learn.
Among the other notable programs to launch lately are:
- AJ Tibando and the team at Palette are approaching the challenge from a different angle with their SalesCamp Program. The (partly) government-funded program introduces B2B sales skills to mid-career professionals in need of a change.
- Emily Lonetto and Jenna Kellner Izraelski are building up a huge Canadian community of growth practitioners in GrowthTO.
- Radz Mpofu and team have launched BlueBird to raise awareness of opportunities in technology to women and minority communities.
But, we still have plenty of work to do.
Two years ago I had a conversation with Canadian entrepreneur Gerry Pond (~$1B in exits) who was notably upset by the fact that in most parts of the world you can’t get a degree in sales.
You may get course credit, you can get a certificate from a college, but sales is not yet recognized by academia as a skillset worthy of a degree.
This is part of the reason I joined the team at Ivey — to get a practical, evidence-based sales program started.
In addition to getting more ambitious, smart people into the sales profession, we need to set them up for success in senior sales, and managerial roles — the bottom of the funnel.
Typically, you earn a management role because you’ve proven to be a great individual contributor. The challenge here is that you’ve likely never received any management training whatsoever. Companies that quickly promote individual contributors are likely growing so quickly that they often don’t have the internal structures, training platform, or resources (time or money) to invest in a thorough development and training process. The result is new managers left to fend for themselves —therefore, it’s no surprise that the average tenure of a VP Sales is now at 19 months.
Programs like Raw Signal Group in Toronto have emerged to address this broader management gap. Websites like Manager Tools have a ton of online resources and a podcast to help address these issues, and when I was the Chief Revenue Officer at Intellitix, I turned to Sales Benchmark Index which catered more to senior software executives.
I was recently introduced to an organization called the Revenue Collective (based out of New York) founded by Sam Jacobs. I spoke with Sam and learned that the organization is aiming to provide sales executives a community to tap into in order to learn best practices, find new career opportunities, and support one another.
While we continue to build up a cohort of sales and marketing experts, companies need to be comfortable recruiting, training, and supporting a remote-workforce.
I was invited to speak at Indeed Interactive in Austin, TX on the topic of leveraging a remote workforce. Jacqueline Loreto hosted the panel discussion and we dove deep into remote work being an expectation among a new millennial workforce.
To scale, companies need to hire marketing and sales personnel in markets they serve, not only stationing them in Canada.
Presently, Canada is challenged at creating large world-class technology companies, and the Narwhal Project has shed light directly on an opportunity:
We can either agree that Canada has too many structural challenges to contemplate a substantial increase in the number of world-class companies. We can agree that this is a great place to live and that we should not be too concerned about lower productivity, patenting, and income. If that is indeed the case, then perhaps we should not be spending so much on government programs to boost the innovation economy.
However, if we choose to improve R&D, patenting, productivity and income per capita then we need to create faster growing, more attractive tech companies. — The Narwhal Project
To do this we must:
- Be willing to fuel the growth of these companies with more aggressive sales and marketing spend in their early and growth stages.
- Grow the sales profession at the top of the funnel by encouraging more people to choose sales and growth marketing as a career.
- Support sales and marketing talent with the tools, training, and community support to make them thrive as individual contributors and grow into well-trained managers.
- Embrace remote work to hire sales and marketing talent in the markets that we serve.
Fundamentally, we need a renewed conversation about growth and globally competitive companies, if we are to be successful as a nation in the innovation economy. — The Narwhal Project
By Eric Janssen
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I teach sales skills for work and life. My mailing list at Hustle & Grit is for those who want to sell more, or learn to apply sales tactics to their everyday lives.