9 Waterloo lessons

Here is another article about how the K-W area became successful.

As for Windsor, we are very, very concerned about egg salad sandwiches--or not.

Lessons from Kitchener-Waterloo
GORDON PITTS

1. Be entrepreneurial

German immigrants created a New Berlin of hard work and self-reliance out of the Southwestern Ontario countryside of the late 19th and early 20th centuries. "The early history of Berlin was all entrepreneurial," says Charles Greb, whose second-generation immigrant grandfather started a shoe-making business in 1910 — just before Berlin's name was changed to Kitchener during the First World War. Successive waves of immigrants built on this pro-business foundation, even as the old family companies closed down or evolved into something new. Mr. Greb, 76, was once operations boss at the family shoe company, whose products included Kodiak boots, Hush Puppies and Bauer skates. Today, shoe making is gone from Waterloo Region, and Mr. Greb, an investor and corporate director, has gone through several careers since the family company was sold in 1975. But he has few regrets about the loss of the family's manufacturing legacy. The entrepreneurial spirit lives on — in son Ross's services company, Greb Tele-Data, which sells telephone systems from an office on Shoemaker Street in Kitchener. "Things evolve," says Mr. Greb, who sees shoe making as an ideal industry for low-wage developing countries. As for Ross, 52, his only disappointment is that the family surrendered its skate business. He figures he is a salesman at heart, and could have made a nice career out of selling skates to Canada's hockey addicts.

2. Innovate

Brad Siim, 38, is poster boy for the Waterloo Way. He is one of five co-founders of Sandvine, a five-year-old tech startup that has just gone public on the London Stock Exchange, raising $37-million. This is actually Mr. Siim's second foray into high-tech moguldom since graduating from the University of Waterloo almost 15 years ago. The computer engineer was co-founder of PixStream, a Waterloo venture that he and an earlier configuration of partners sold to Cisco Systems for $369-million (U.S.) in 1999. (It was closed down two years later when Cisco retrenched.) PixStream spawned a spinoff of its own, called Kaparel. In each case, Mr. Siim surrounded himself with the classic recipe: Tech brains from the computer-mad University of Waterloo and business smarts from Wilfrid Laurier University, which sports a large commerce program. (The other key ingredient in each case was a timely investment by Sir Terence Mathews, Canada's telecom billionaire.) Unlike many Waterloo startups, Sandvine's network intelligence products are not the direct result of research undertaken at the University of Waterloo. But Mr. Siim is convinced that the university, along with WLU and Conestoga College, lie at the heart of why people build companies here. He is a serial entrepreneur who has been in on the start of three companies, and will be involved in more. The educational institutions are like anchor tenants in a shopping mall of creativity, he says — they are magnets for new ideas and new ventures.

3. Network business and educators

In the 1950s, there was Gerald Hagey. In the 2000s, there is Mike Lazaridis. You can draw a straight line between these two business leaders who pulled together public-private collaborations with the dream of putting Waterloo on the intellectual map. The late Mr. Hagey was a sales manager for Goodrich who, along with other local business leaders, conceived of a new-style Canadian university founded on engineering and math. He was the first president of the new University of Waterloo in the late 1950s and 1960s, and the key figure in breeding 250 to 300 spinoff companies that in their current variations, generate almost $1-billion in annual revenue. The university evolved into a computer science powerhouse, which attracted bright young people. One of those was Mr. Lazaridis, who dropped out of school in the 1980s just shy of graduation to run his own company, Research In Motion. But he had soaked up all the computing tools the university offered, including a precursor of today's e-mail. Years later, Mr. Lazaridis hit on a gadget called the BlackBerry that provides wireless e-mail — and it changed the world. Now, he is tackling something even more ambitious — a Waterloo big-idea complex that can predict "the science of the future." Working with governments, he has given $100-million to the new Perimeter Institute for Theoretical Physics and $50-million to the Institute for Quantum Computing. "We have passionately invested personal money into it," Mr. Lazaridis says of his science dream. As with Mr. Hagey's university, it could be the seed of Waterloo's next flowering of wealth creation.

4. Build on strength

By rights, Joseph Fung should be living in Markham. That's where he grew up, it's close to where his family lives, and there are plenty of high-tech companies in the Toronto suburb to employ a 25-year-old computer engineer. Instead, Mr. Fung owns and runs Lewis Media, a five-year-old Kitchener company that develops software for powering websites. One reason for choosing Kitchener is that he co-founded the company while studying at the University of Waterloo — and he still hasn't found time to graduate. But the main factor is the support and networking for startups like his — not only through the university but through organizations such as Communitech, the 350-company non-profit group that knits the tech community together, and Canada's Technology Triangle, the local economic development bureau. That support system keeps drawing people back. Randall Howard recently moved his firm, Software Innovations Inc., and its 30-plus jobs, to Kitchener from downtown Toronto. In the 1980s, he had founded MKS Inc., a Waterloo high-tech hopeful that hit a bump in the downturn of 2000. MKS is back on track, but Mr. Howard has moved on — to another company, if not another region. Although his new company is now based in Kitchener, he tells international contacts that its home is a "suburb" of Waterloo — the Waterloo brand is that strong.

5. Diversify

Old Order Mennonites, who have traditionally shunned electricity, cars and insurance, would not seem the kind of folks who would foster financial services innovation. But the Mennonites are also believers in community co-operation, which retired life insurance executive John Panabaker believes has driven the growth of a financial cluster that employs about 12,000 people in the region. The Mennonites' sharing culture helped breed Waterloo's mutual insurance companies in the 19th and early 20th century. It inspired the founding of policyholder-owned Mutual Life in 1869, which grew into a national force and employed Mr. Panabaker for almost 40 years, including tenures as president and chairman. In the 1990s, it demutualized, changed its name to Clarica and was absorbed by Toronto-based Sun Life Financial in 2002. But the legacy lives on in a body of insurance expertise and a talent pool that continues to be tapped by Sun Life and other companies from outside the region. Manulife Financial has its Canadian headquarters with almost 4,000 employees here; Equitable Life is based in the region, as is Lutheran Life (known as FaithLife). The general insurer, Economical Insurance, now 135 years old, is locally based. The financial sector provides a steady balance to cyclical manufacturing. "Over the years, financial services have provided stable employment when breweries, distilleries and furniture companies shut down," Mr. Panabaker says.

6. Attract smart people

David Chilton is a financial guru, author of the phenomenally successful Wealthy Barber book and head of a publishing venture. But he has never dreamed of leaving Kitchener-Waterloo, which has been home for all his 44 years. "People who live here really like it," he says. "They don't move." Waterloo Region is home to a cluster of seminar leaders, consultants and speakers who appreciate the combination of small-city feel with proximity to major population centres. Mr. Chilton runs his international business within a stone's throw of farmers' markets and rural life around St. Jacobs and Elmira. Others point to the region's symphony orchestra and growing theatre scene. The Perimeter Institute for Applied Physics has an outreach program with speakers and concerts. But there are gaps — no five-star hotel, for example, and a small airport, although Toronto's Pearson International Airport is less than an hour away. Wilfrid Laurier University business dean Scott Carson says the region has developed almost overnight "from a collection of small Ontario towns to a collection of large Ontario towns." The next step is a social and arts infrastructure that will retain senior executives and head offices, even after the companies have outgrown their rustic roots.

7. Built an outsider mentality

Historian John English says the economic prosperity of Kitchener-Waterloo was built by people operating outside the mainstream of Canadian business and society. Prof. English, who heads Waterloo's Centre for International Governance Innovation, says the early business families — shoe makers, furniture makers and food producers — were German-Canadians and often evangelical Christians whose education and beliefs took them outside Ontario establishment thinking, often moulded at the University of Toronto. In the same way, University of Waterloo was founded by unconventional academics who saw engineering, not arts, as the core discipline. That maverick thinking has carried over into the era of RIM, ATS, DALSA, and Open Text. The region is far enough away from Toronto that it sees itself not as an outpost but an economic hub of its own. But Kitchener-Waterloo knows it is tied, for better or worse, to the global economy — as home to manufacturers such as Toyota, ATS, Com Dev and the auto parts companies, linked by highways to large U.S. cities, and connected through its major university and tech wizards to Silicon Valley and the U.S. Pacific Northwest.

8. Get on with it.

When companies are under pressure, there is a Waterloo tradition of just adapting and surviving. The business culture is action-oriented, which means not just talking about change — and not waiting for massive handouts. One example is Canadian General-Tower, a family-owned company in Cambridge that has evolved over the past century from making wagon wheels to the manufacture of plastic auto parts and pool liners. The secret, CGT president Jan Chaplin says, is to attract, develop and hold on to good people who can take a company forward, in whatever form it takes.

9.: Generate venture capital

Proximity to Toronto has historically given Waterloo good access to capital sources, but it is far enough away to avoid being unduly influenced by Bay Street's short-term thinking. In recent years, the region has tried to develop its own financing pool — it has developed a locally based $100-million venture capital fund called Tech Capital Partners. Now, it is also beginning to develop its own corps of serial entrepreneurs — company builders who reinvest their wins as they move from startup to startup.