Philip Cross of the Macdonald-Laurier Institute in Ottawa recently wrote in these pages about the lack of entrepreneurial culture and innovation in the Maritimes. Clearly, he needs to read Gordon Pitts’s new book “Unicorn in the Woods: How East Coast Geeks and Dreamers Are Changing the Game.”
Pitts tells the stories of Q1 Labs and Radian6, which combined are the New Brunswick information technology “unicorn,” a term for a privately held startup company that is valued at over $1 billion. Almost a decade ago, in contrast to Philip Cross’s view, The Globe and Mail reported that “The deals, for Radian6 Technologies and Q1 Labs, are transforming the image of New Brunswick from a have-not province dominated by pulp, petroleum and potato barons to an innovation hotbed populated by smart young techies and risk-embracing investors.”
Gordon Pitts has written a remarkable, readable book on a nerdy subject. And I have to admit, despite all that I have heard about Q1 Labs and Radian6, and having met many of the key figures in the story, the book still surprised me and changed my thinking about what it takes for New Brunswick to be a place where entrepreneurs can succeed.
You need to read the book to get the full and accurate picture of Q1 Labs and Radian6. With my limited space I will oversimplify the story, and the author and many of the people he has written about may take issue with my interpretation of the story. Details aside, my takeaway is that success in developing innovation into industrial opportunities does not take any one person or organization. It takes a coordinated commitment from a wide array of people, institutions and government who understand who should lead, how to support, when to step up and, sometimes, when to step aside. Most importantly, it takes entrepreneurs and investor who are committed to success in New Brunswick, rather than setting out to be celebrated business successes from New Brunswick.
Pitts tells a story of when things all came together in New Brunswick for a perfect storm of business success. Investments in telecommunications infrastructure created a competitive advantage for the province – New Brunswick was one of the first provinces to have fibre optic cables available in its cities’ homes. An innovative large company, NBTel, provided support, mentorship and a culture for commercializing ideas. The University of New Brunswick had engineering and computer science programs producing graduates with in-demand skills, and oriented toward business through its highly regarded Technology, Management and Entrepreneurship program. The provincial government’s balance sheet was remarkably healthy, affording opportunities to strategically invest in high-tech startups through bodies like the New Brunswick Innovation Foundation. Government did not lead, but it was important for financing the project, particularly in the early stages. Consider this to be a broad picture of the provincial “ecosystem” for entrepreneurs and innovators circa 2000.
At this point, Chris Newton, Sandy Bird and Dwight Spencer enter the story with what turns out to be a great idea for how to help networked computer systems deal with challenges like cybersecurity attacks. The three UNB students developed the idea that would become Q1 Labs as staff working at UNB. They were able to use the UNB computer network to develop, test and demonstrate what became their product. UNB also had Professors Ali Ghorbani and Jane Fritz as “knowledge assets” for the project. David Foord, in his role as the technology-transfer officer for UNB, organized the event where Chris Newton presented his work in front of prospective investors. Foord also developed the approach to address the tricky intellectual property considerations for startups coming out of the university.
What I think is not appreciated enough is what else happened to take a great idea and turn it into a tech “unicorn” in the unlikeliest of provinces. The better known part of the story is the critical role Gerry Pond, who was leaving NBTel when Q1 Labs was starting up, played in bringing aboard the managerial talent for developing and commercializing innovative ideas. This managerial and business capacity complemented the technical and design efforts of the UNB-based team. Without this capacity it would seem impossible for the Q1 Labs project to attract the level of investment required to move from a good idea to generating revenue.
The part of the story I did not know or understand is the critical role of Brian Flood, who in the story comes across for his personal zeal to sell the Q1 product to get the revenue that would make this project a unicorn. Sandy Bird was the founder who lasted the longest with Q1 labs because of his ability to support sales and communicate the technical engineering aspects of the product to the business interests. We need people who not only know how to sell, but who understand the level of commitment it takes to make a sale in a hyper-competitive, high-risk, high-return market.
For innovation skeptics reading this commentary, you should consider “Unicorn in the Woods” as the origin story of the province’s cybersecurity industrial development opportunity. Q1 Labs was working in market segments considered part of cybersecurity and Chris Newton’s follow-up idea, which led to Radian6, was in social media monitoring. Add the UNB academic strength in the area, and you can see that the province was positioned to be a leader in cybersecurity by 2011. Despite the new building ready to house the startups and companies in Fredericton, it feels like the lead has been lost. Yet it’s not clear how or why that was allowed to happen. A big lesson from “Unicorn in the Woods” is that you should never give up the lead.
Many of the pieces of the ecosystem remain in New Brunswick today, including the key players – with the exception of NBTel, which was absorbed into Bell Canada over a decade ago. The province no longer has a lead in backbone infrastructure like broadband and there is still not an airport with close connections to venture capital centres in the U.S.
Too often it seems that governments of the more recent past have sought to lead the initiative and been too involved in the process. Government is ill-suited to being an entrepreneur. Brian Gallant and Blaine Higgs could not bring to the table anything close to the personal commitment of a Brian Flood or Gerry Pond.
UNB still has David Foord, Ali Ghorbani and other great faculty members, but UNB has also failed to keep pace with engineering and computer science program expansions seen in other provinces. These provinces are able to attract global talent into their programs, which raises the odds of finding the good ideas that might become something great. And when those ideas come, UNB has Dhirendra Shukla, with his startup accelerator Energia Ventures, and Karina Leblanc at Pond-Deshpande, to take the next step. But it might be too much to expect another unicorn to be spotted in the woods if the number of ideas we see come at a slower rate when student enrolments are not growing.
As Pitts notes, New Brunswick continues to produce some impressive startup companies, but in true New Brunswick fashion, these successes are often cast as disappointing when they don’t immediately become the next unicorn. As a result, pessimism around opportunities such as cybersecurity has smothered the optimism and hope for innovation needed to transform the economy. That is a culture that can drive any prospective unicorns to extinction.
Herb Emery is a Brunswick News columnist and the Vaughan Chair in Regional Economics at the University of New Brunswick.
This article first appeared in a Brunswick News publication - Sept. 23, 2020.
The JDI Roundtable on Manufacturing Competitiveness in New Brunswick is an independent research program made possible through the generosity of J.D. Irving, Ltd. The funding supports arms-length research conducted at UNB.
