As we all know from Jim Collins' book Good to Great, we need to have the right people on the bus to run a successful company.
For IT companies in Vancouver, this has traditionally meant that talent is sourced from the U.S. market. When U.S. venture capital firms invest in British Columbia-based technology companies, they will often move a company's headquarters to the U.S (or open an office in the U.S.) and hire U.S.-based senior officers and sales and marketing personnel.
These changes are made for a couple of reasons.
First, many U.S. investors believe that the Vancouver market does not possess the management, sales and marketing talent to create a world-class company. While one might initially balk at this statement, it's a rational response from U.S. investors. The U.S. technology sector runs deep with talent, and it has historically been much easier to find management with the right skill set.
Second, U.S. investors believe that they need to be close to companies in their portfolio so that they can provide them with proper attention and guidance. Right or wrong, U.S. investors believe they can do a better job than B.C.-based venture capital investors.
Unfortunately, this has created a vicious cycle for the B.C. technology community. Because many of the best early-stage technology companies are using U.S. executives, B.C. has not fully developed its talent pool.
Also, talented executives often become restless as their companies grow and the initial entrepreneurial spirit fades. As a result, they leave to create new companies, leading to a downward cycle that feeds upon itself.
But B.C.'s cleantech sector has the potential to change these dynamics. First, the cleantech investor community in Vancouver is more sophisticated than its cross-border counterparts.
It is arguably more sophisticated than the Seattle cleantech investor community and as sophisticated as the community in Silicon Valley.
American venture capital companies are comfortable following their lead and believe that B.C. cleantech investors can provide companies with proper direction. Chrysalix and Yaletown Venture Partners are two Canadian firms leading the charge in this area.
Furthermore, there is no established network of cleantech executives in the U.S.
This makes the business case for hiring U.S.-based management and sales and marketing teams less persuasive. In fact, it can be argued that in certain subsectors, B.C. has the strongest and most established network of talent. Westport Innovations Inc. is an incubator of talent in the natural gas transportation sector. B.C. is also a leader in the fuel-cell sector and is recognized for its strong talent pool in this area.
Cleantech's ability to change the dynamics of the talent market will provide substantial benefit to B.C. Developing homegrown management talent will create new jobs in the region – from senior level roles to support and administration positions.
But perhaps more importantly, as the critical mass of executives and other key employees grows, many will leave to start their own companies, leading to a virtuous cycle of wealth creation.
While it might not appear evident on the surface, this approach also provides significant benefit to U.S.-based investors, because the U.S. cleantech sector is still nascent.
Investors have much left to learn and most industry pundits believe that the sector's growth is, in great part, dependent on its ability to attract quality human capital. It should not matter whether that human capital is based in the U.S. or B.C.
The B.C.-based cleantech community is positioned to get the right people on the bus and claim its place as a global leader in the sector.
Michael Butler is the chairman and CEO of Cascadia Capital (www.cascadiacapital.com), a Seattle-based boutique investment bank that serves domestic and global clients. Butler leads the firm's sustainable industries practice.
