Andrew Waitman has spent three decades working in Ottawa's local tech sector, and from his days as managing partner at Celtic House and dozens of board appointments to his present role as the CEO of Assent Compliance, Waitman has seen it all.
In the latest episode of Techopia Live, we peer into Waitman's crystal ball to predict what 2022 might bring for the local tech sector. We zoom out to look at the state of the sector, both globally and right here in Ottawa, with one of the most experienced tech CEOs in the city.
This is an edited transcript of OBJ publisher Michael Curran's conversation with Waitman.
OBJ: You know, Andrew, there are some great tech CEOs in Ottawa, but when I think of a CEO I want to speak with to zoom out, it really is you. You bring a wealth of knowledge across all sorts of sectors. So, Andrew, we're not too far away from a big, maybe an unfortunate milestone, which will be two years into a pandemic. What are some of your general observations two years into a pandemic for people operating businesses?
AW: Well, it's a tale of two cities, right? It's a Dickens world. It was the best of times. It was the worst of times. If you were in the right places, it's a staggering time. Asset evaluations have gone higher than they've ever been. Whether you're in real estate, even if you're in construction, but certainly if you're in digital, you've likely had extraordinary times. And equally, it's been very, very tough on the hospitality industry and several industries and people. When all is written, even at the global level, poverty has increased during this pandemic. It's going to have some de-stabilizing macro effects. The poorer countries have suffered while the richer countries have benefited. So, it's important that those of us who have done well think about this and how we can contribute to those who have not done so well.
OBJ: Andrew, we'll zoom back from that giant global perspective, zoom a little bit more in Ottawa. I think you started in the local tech sector, maybe around the late 1990s. You’ve watched the sector for a long time like me, through the dot-com and telecom boom, and then a little bit of a bust and then a shift in Ottawa. Assent Compliance is a giant example of that, as are Shopify and other players. So, what are your observations as we're beginning 2022 on the state of the local tech sector?
AW: You're right. It's three decades, and if you look at every single decade, the community has improved in a variety of ways. Whether we're talking about the size of the economy, the diversity of the economy, or the diversity of our tech sector. And the region has attracted a significant amount of capital. All those constituent parts are important to the success of the community. Assent is experiencing this as we used to be very headquarter-centric. Our mindset was that we dominated hiring in and around our headquarters. And now it is normalized and common for us to hire from New Brunswick to Vancouver. That will have derivative effects. There are a lot of factors. This is kind of a remaining gap. We saw $3 billion (in venture capital) come into the city between 1998 and 2001, but we didn't see a lot of success from that. We need to see more $25-million-, $50-million- and then the marker that I think that builds real community stability is a $100-million company. So, I think that's something all of us should be coaching and looking toward more is that resilience where companies have gone beyond.
OBJ: It's funny that number 100 million has been around for a long time. It's interesting you maintain that kind of milestone. When I asked you to think back a little bit in preparation for this interview on 2021 and where we're at, you used the phrase pirates and patriots. What do you mean by pirates and patriots?
AW: Well, I'm going to throw a few metaphors around. In any era of economic cycle, there are booms and busts. The pirates are also turkeys. They're going to raise money, but they're not playing the wealth generation game. They're playing the ego vanity game. It's like they're acting at being a CEO but they don't really have the understanding or the intention. Patriots are genuinely trying to build businesses and create wealth for all stakeholders. They're the eagles. They're the ones who build the oaks, not the willows. It's often difficult to tell which ones are the turkeys and which are the eagles. But when the wind stops, as you know it did in 2000 and 2008, the turkeys hit the ground pretty hard, but the eagles continue to soar. I mixed a few metaphors there.
OBJ: Let's count Assent as one of the eagles that are soaring to the light.
AW: And eagles are both people and contexts.
OBJ: We're going to talk a little bit, Andrew, about M&A, mergers and acquisitions activity, and maybe the two are connected. But I've been astounded at the number of companies being sold and purchased recently. Any observations? Is that just a factor that the valuation seems to be way up in the tech sector?
AW: The market cycles are a key part of that. But growth drives valuations, and growth sometimes needs to be non-organic. So, I think it's part of the cycle of the times, it's part of the abundance of capital. And it's just part of the abundance of innovation and creation that the companies are pursuing what would have been, for the last five years, phenomenal returns in certain sectors. The returns in SaaS have just been staggering. So, there's anticipatory energy to build bigger and better.
OBJ: On the venture capital side, it wasn't too many months ago when OBJ and Techopia were ringing alarm bells incorrectly, I guess, because we dropped off the top 10 list of VCs, and you've seen Toronto take it to a completely different level in terms of the venture capital that's going into that city. And then suddenly it's almost like 1999 again because we get Fullscript (which landed $300 million in fresh funding this fall, the biggest single VC haul in Ottawa in years). Is that the way you think it's going to go? Or is this just again a kind of a cyclical type thing where sometimes it's dry and then some companies are working up to it and then the deals just hit?
AW: I'll suggest a couple of dynamics. There is an enormous amount of capital, and capital gets drawn into high-return areas and technology is showing some incredible returns these last several years. So that draws in capital. But one of the things that people don't fully appreciate yet is that wealth in the world is being created at quite a rate in even dysfunctional countries like Russia and China. But what's happening, whether you go to Turkey, whether you go to China, or whether you go to Russia, is that money has fewer and fewer places to invest. So, the wealth is generated worldwide, but there are no safe places those people want to put their money. North America, because of its judicial, financial and political systems, is attracting a disproportionate (amount). Wealth is being created worldwide, but it's being concentrated in what I would call more stable democracies. And so that's why housing prices and real estate prices are being pushed up. Then those funds are deploying capital. So, there's just a lot of wealth that's being concentrated and you've got asset inflation going on in more trusted countries.
OBJ: Just to stick on that venture capital question again. We've seen Toronto kind of take it to a completely different level. Is that a useful metric for tech CEOs, or is it just so cyclical we should just move on?
AW: Well, it engenders an opportunity to create wealth because it takes wealth to create wealth. And it engenders innovation, and it engenders an educated, professional, digital workforce. I think we need to see more. Inputs are important, they absolutely are. But we probably don't spend enough time on how the outputs are looking. And the outputs for Ottawa and the country are more voluminous than they've been historically, but there's still a scarcity of those oak trees versus those willows.
OBJ: As we look forward to 2022, thinking about Ottawa's technology sector specifically, are you more optimistic or less optimistic in terms of our ability to continue, as you said, to grow companies to $25, $50, $75, $100 million in revenues?
AW: Far more. It's no longer about (talent) gene pools that are just in your neighbourhood, and it's been normalized now that teams are going to be hired throughout North America. Yes, it's going to be more competitive as well, but I do think that those who have that nugget of goodness, that founder team, that great innovative idea can now access talent virtually anywhere. Whether you're tiny and hiring people in Toronto or Vancouver, talent ultimately is what leads to success. Now, it is more competitive ,so that's a kind of counterpoint. But you know Ottawa, and you know this city has one of the best qualities of life in the world. So, I think we're going to get an influx of people here to live here, and I think we're going to get an influx of opportunity and innovation. And you know, I've always been an optimist, but I am more optimistic about Ottawa's ecosystem than I've ever been.