Shopify's president and DavidsTea founder are urging founders to resist pressure to relocate and make Canada their launch pad.
Since moving to Montreal two years ago, Shopify President Harley Finkelstein did IIt's clear that he believes entrepreneurship runs in the veins of the city.
“We have to be force multipliers for Montreal. We have a legacy to live up to.”
Harley Finkelstein,
Shopify
Last night at HEC Montréal, joined by his friend and DavidsTea co-founder David Segal, Finkelstein took the stage to teach the 600 attendees (mostly entrepreneurs) lessons on building a global company from anywhere in the world, including Canada.
The talk took place as part of the “Made in Montreal: From Bagels to Billion Dollar Ideas” event, organized by TechTO in partnership with HEC Montréal La base entrepreneurship incubator and Sage Canada as part of Montreal Open Week. BetaKit acted as a media partner.
Finkelstein says he wants Montreal to become a “mecca” for entrepreneurship, thanks to its rich history of global immigrant-founded companies that have their roots in the city's garment sector on Rue Chabanel. He argued that the founders had a responsibility to be guides and protectors of the city.
“We have to be force multipliers for Montreal,” Finkelstein said. “There’s a legacy to live up to.”
Finkelstein said his grandfather, when he came to Canada in the 1950s, opened an egg stand at the Jean-Talon market in Montreal (it's still there and is now his online store runs on Shopify).
Segal, who co-founded DavidsTea with his cousin and took the retail company public in 2015, argues that the “best concepts in retail” come from Montreal, not Toronto, despite its status as an economic hub.
Together with Finkelstein, Segal again entered the tea business. In 2021, they teamed up to launch Firebelly Tea, which they called “the tea company of the 21st century.” It sells luxury loose-leaf teas and accessories, including a car whisk that Segal has “perfected over the years.”
Next to “Buy Canadian” movement, patriotic sentiment in the Canadian tech sector has boiled over this year. trade war continues with the United States. At Toronto Tech Week in June, Cohere CEO Aidan Gomez encouraged founders to say no investors who advised them to move to the United States. At the ALL IN conference in Montreal, a group of venture capital investors declared that Canada is best place build a business.
“People will tell you you need to move somewhere else,” Finkelstein said. “You don't.”
While Segal and Finkelstein made the defense of Montreal the highlight of the evening, they said location was no longer a limiting factor in starting a company. They encouraged the crowd to build a company anywhere and hire and sell employees around the world.
“You don't have to go to a local venture capitalist or a local angel investor. You don't have to hire a CFO or general counsel here, you can hire them anywhere,” Finkelstein said. “This means you can live wherever you want and operate at any scale.”
Finkelstein's Hope for SR&ED Reform
Finkelstein championed reform of the Scientific Research and Experimental Development (SR&ED) tax credit. He said consulting fees take away much of the $4.7 billion in government tax breaks from businesses. Referring to note he sent to Build CanadaHe argued that reforming the program to eliminate expensive consultants from the process could benefit entrepreneurs.
Finkelstein said the new government marks a change in engagement from what he has seen in the past. He said that 10 days ago he transmitted a version of the memorandum containing his proposed changes to the SR&ED directly to Finance Minister Francois-Philippe Champagne.
“I have felt more involved in the last six months than I have in the last 16 years when it comes to government,” Finkelstein said.
Proposed Changes The R&D program in the upcoming Budget will include reintroducing capital expenditure as claimable and making public companies eligible for a preferential rate of tax credit.
“When Nobody's Looking”
According to Finkelstein, what defines a company's culture is “what you do when no one is looking.” He encouraged founders to follow Shopify's lead in hiring entrepreneurs with a devil-may-care approach to lead various parts of the business.
“If you look at each of Shopify's product lines… the people running each of those businesses are founders, in some cases founders that we acquired,” Finkelstein said. “This was our best way to keep our company culture as strong as possible.”
He said that seeing more large-scale projects with founders at the helm is “wonderful.”
“No one is the custodian of a company’s culture like its founders,” he said. “It’s impossible for a McKinsey hire to care more about Shopify’s culture than Toby and I do.”
Segal said company culture, especially in consumer-facing businesses, should empower people working on the front lines, such as customer service representatives. A brand's values should never change, he said, but the way a company operates should never stop changing. “The important thing is that you don't confuse the two,” he said.
Disclosure: Good Future, the majority owner of BetaKit, is the family office of two former Shopify leaders, Arati Sharma and Satish Kanwar.
All images courtesy of TechTO.
