Thank you, Mr. Chair.
Good afternoon. I am honoured to have the opportunity to participate in this committee meeting. My name is Chad Bayne. I am a partner at Osler, Hoskin and Harcourt LLP, a national business law firm with its headquarters in Toronto. I also founded and co-chair the firm's emerging and high-growth companies practice, where we work with start-up and scale-up companies from the ideation stage to the late stage and everything in between.
Please note that I am appearing in front of this committee in my personal capacity, and the views I express here today are my own and do not necessarily reflect the views of my firm.
Before becoming a lawyer, I was a computer engineer. I graduated from the University of Waterloo and worked primarily for Newbridge Networks in Kanata doing a combination of software, hardware and chip design. Between that and my current career as a lawyer, I have been involved in Canada's tech sector for over 30 years.
Growing up in Kanata, just a stone's throw from here, in the 1980s and 1990s, I witnessed the true potential of the Canadian tech sector with global giants like my employer, Newbridge, as well as Nortel, Cognos, Corel and JDS, to name a few. In fact, growing up in Kanata was a key factor in my desire to be a part of the Canadian tech sector.
Ottawa's hi-tech cluster's birth, which arguably rivalled that of Silicon Valley during the 1980s and 1990s, when Ottawa was commonly referred to as Silicon Valley North, can be traced back to Northern Electric, the formation of Bell-Northern Research and the foundation of Microsystems International—BNR's chip factory—all occurring from the late 1950s to the late 1960s, a generation prior to the beginning of Ottawa's tech boom. The Government of Canada played a pivotal role in the genesis of the Ottawa tech sector by helping Northern Electric build research labs in Ottawa, heavily subsidizing Northern's digital telephony strategy and assisting with the foundation of Microsystems International. This helped catalyze the local industry by yielding such breakthroughs as the Meridian SL-1, the world's first all-digital private automatic branch exchange, and the MIL MF7114, one of the world's first microprocessors.
What Microsystems International could be most famous for is creating the environment for a young Sir Terence Matthews and a young Michael Cowpland to meet. It's worth noting that both of them are immigrants to this country. As many will know, they left Microsystems and founded Mitel together, and the first product that Mitel created was based on Michael Cowpland's Ph.D. thesis. After Mitel, Terry founded Newbridge and Michael founded Corel. The birth of the Kanata tech corridor can largely be attributed to the two of them.
Dick Foss and Bob Harland met at Microsystems International as well and went on to found MOSAID, another Ottawa-area tech leader and a key player in the computer memory market globally. In addition to Mitel, Newbridge, Corel and MOSAID, other companies, such as Chipworks, JDS, Tundra, Cadence Computer Corporation, Calian and CrossKeys—all headquartered in the Ottawa area—can trace their founding teams or first employees to Microsystems International. Many of the early venture capital investments in Canada were into companies started by former Microsystems International employees, and many of the first angel networks in Canada can be traced to former Microsystems International employees.
Microsystems International ultimately became part of Bell-Northern Research, which then became part of Nortel. At the time, if people remember, Nortel was the most valuable company in Canada and one of the 10 most valuable companies on Earth. Until Nortel's demise in 2009, the Microsystems International semiconductor lab in Ottawa was the largest of its kind in Canada. For that generation, Canada was considered a world leader in the areas of digital telephony, semiconductors and optics, all of which can be traced to BNR and MIL, which the Government of Canada helped to catalyze.
Looking at our neighbours to the south, the most significant expansion of technology in human history can be attributed to three key events—the Manhattan Project, the space race and the Cold War—all funded through U.S. government spending. Silicon Valley can trace its birth ultimately to U.S. defence spending, as can the Internet, which can trace its birth to the Pentagon through its predecessor, ARPANET.
The World Wide Web came out of the CERN in Switzerland, another government-funded entity. The entire Israeli tech sector, arguably the second-most successful tech ecosystem in the world, is a direct by-product of Israeli defence spending and government-funded research. Without government funding of significant primary technology research, many of the most important technology hubs on Earth and their output may never have existed. This cause-and-effect relationship is quite self-evident based on recent history.
Innovation ultimately drives the domestic economy through the commercialization of primary research by entrepreneurs, which leads to the creation of jobs, which then leads to the creation of wealth and ultimately creates a virtuous cycle. It is worth noting that, of the top 10 public companies by market capitalization in the U.S., the first eight are either technology companies or technology-adjacent: Nvidia, Microsoft, Apple, Google, Amazon, Meta, Broadcom and Tesla. By contrast, five of the top 10 Canadian public companies are banks—RBC, TD, BMO, Scotiabank and CIBC—and two are related asset managers, Brookfield and Brookfield Asset Management.
Only one company in the top 10 in Canada is a true technology company: Shopify. As a side note, it's interesting to point out that Shopify was founded in Ottawa—the home of the last great Canadian tech ecosystem. It is arguable that Ottawa was the only place in Canada that at the time had the muscle memory necessary to build a tech company like Shopify.