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As someone who has worked in the Canadian tech scene for 25 years, and rode two startups all the way to exit (i.e. acquisition by US companies), in my opinion t

As someone who has worked in the Canadian tech scene for 25 years, and rode two startups all the way to exit (i.e. acquisition by US companies), in my opinion the problem has nothing to do with exit mindset, good angels, bad angels or SRED. It is all about talent retention. Up until early 2000, Canadian tech salaries at least somewhat kept pace with US salaries, albeit 20-30% lower. After the dot com crash, however, for some god-forsaken reason, the surviving tech companies decided that keeping salaries low was the new path to profitability. Every year the HR departments in Vancouver and Toronto do a hush-hush survey among each other and fix their salaries to the exact same level - maybe 2% but usually closer to 1% higher than the previous year. The result of 20 years of this is that Canadian tech salaries have fallen ridiculously behind those of US companies, resulting in a massive brain drain to the south. Now that Amazon, Microsoft and Google are setting up shop right here in Canada, the talent drain away from Canadian companies is only accelerating. I have no idea what it will take to make companies realize that long term success requires retention of top talent and that that in turn requires paying competitive salaries.

DaiPlusPlus 6y ago
> Every year the HR departments in Vancouver and Toronto do a hush-hush survey among each other and fix their salaries to the exact same level - maybe 2% but usually closer to 1% higher than the previous year. Collusion like that would almost certainly be illegal - do you have a source for that?
- dismayedjim 6y ago
  It is but it happens all the time. Google, Facebook, Amazon, and the rest all have been caught doing it on a large scale. Most of them even agreed not to hire from each others employee pool.
  - deleted 6y ago
    [deleted]
- wvenable 6y ago
  There is an entire industry around the collection of and aggregation of salary, benefits, and perk information. Every year your HR department pays a firm, fills out these surveys, and a few months later gets a report on salary ranges and perks for their industry. If you think about it then it makes perfect sense, how else do businesses know they're offering competitive salaries, benefits, and perks? Source: I consulted for a company that does these surveys and aggregates the results.
  - DaiPlusPlus 6y ago
    > how else do businesses know they're offering competitive salaries, benefits, and perks? I would assume from how many applicants negotiate - or outright reject - their job-offers But yeah - I forgot about the consulting companies that do the survey thing. But we have our own! https://www.levels.fyi/ https://www.levels.fyi/
    - pm90 6y ago
      Interestingly, I haven’t ever seen actual candidate data used to determine compensation. Ie companies almost never use a candidate demanding more to actually change anything. It’s all based on these “professional comp surveyors” as the parent has described.
      - DaiPlusPlus 6y ago
        Unrelated: I'm sure we have our own fantasies of potential employers (or past-employers) begging us to work for them with them increasing their offers or offering other benefits - but I'm curious if that's ever actually happened to anyone.
        freeone3000 6y ago
        You should absolutely negotiate salary. Saving a few ten thousands a year on salary for a department doesn't really mean that much to your manager or to the company, compared to filling that slot in the org chart.
DanHulton 6y ago
Literally just left a really enjoyable job with a Toronto company for a California company that pays 50% more. This is completely correct.
- usrusr 6y ago
  You consider "66% of California pay" low?
  - colordrops 6y ago
    They probably under-negotiated.
  - freeone3000 6y ago
    Wouldn't you, comparatively? It's not like your quality of work changed, it's solely location-based.
    - srtjstjsj 6y ago
      Purchasing Power Parity. The raise could end up entirely going to rent and healthcare
      - gabbo 6y ago
        Quite frankly the "all your money will go to healthcare" meme doesn't really apply to the kind of person who's leaving Canada for a much high-paying US tech job. A person like that will in all likelihood be working for an employer that offers access to equal or _better_ health insurance than they would have access to in Canada. If it's a big tech company the employer will pay virtually all of the premiums beyond some token amount, and out-of-pocket maximums are dramatically lower than the incremental pay raise. And even if the employer didn't pay that, the premiums would still be dwarfed by the pay raise. Rent is certainly higher in the Bay Area, though less higher now vs. a year ago, and even so, at the income levels we're talking here (especially if going to FAANG or a unicorn), there is very little chance you'll end up with less disposable income after rent and health care. If you want to buy a property, you have your work cut out for you since real estate is insanely expensive, though. It's not too hard if you're a dual-income high earner couple but very hard otherwise and will take a number of years of savings. This is worse than the Vancouver/Toronto housing markets, but it's less worse than you think given how crazy they are now.
jvergeldedios 6y ago
But doesn't what you're describing reinforce the author's point? Tech firms in Canada aren't paying high enough wages to keep talent in their pool in order satisfy profit milestones rather than pursuing growth. That's the exact difference in mindset the author points out.
forgingahead 6y ago
Thanks for sharing this. What is the solution though? "Paying salaries competitively" can also be rephrased as: "Raise as much money as you can and keep salaries on an upward trajectory". Optimising for profit is normally a good, healthy thing, but given the cheapness of capital (printing etc) sloshing about, how does one go about and build a profitable and steady company with good talent without getting yanked into this cycle? All companies want talent, and capital has been freely available for the past 15 years in amounts previously unimaginable. It doesn't seem like there is any way to avoid this treadmill. *Note, I am perfectly on board with paying competitive salaries, my point is that given the heavy market distortion because of all the VC money, that "competitive salary" isn't actually an accurate descriptor.
- ZephyrBlu 6y ago
  "Paying salaries competitively" can _also_ be rephrased as "valuing your engineers".
- Kalium 6y ago
  > how does one go about and build a profitable and steady company with good talent without getting yanked into this cycle? One approach might be to build a business by cleverly leveraging the value of competitively paid software engineers. You can accomplish quite a lot through focused effort. You shouldn't need fifty ICs to develop a profitable product. Paying professionals doesn't have to come from absurdly oversized VC rounds. Sometimes it comes from steady, profitable, sustainable growth. > *Note, I am perfectly on board with paying competitive salaries, my point is that given the heavy market distortion because of all the VC money, that "competitive salary" isn't actually an accurate descriptor. You're right. It isn't. We should ignore the VC funded companies, and talk instead about the big players: FAANGs. That is the new definition of a competitive salary. I suspect you'll find it dwarfs that of many VC-fuelled startups.
- pm90 6y ago
  You can use generous equity. By far this is the most powerful tool: you may not be a VC funded unicorn so you may have to grant more. You can be creative in the kind of perks you offer (4 hour workweek? More PTO than competitors etc). Note that there is some evidence to show that shorter work week may even result in better productivity.
throwawaysea 6y ago
The hush hush survey is something all tech companies do in the US as well. They report their salary information to a third party company who then shares industry data back with all participants. I am not sure how this is not an illegal price signaling scheme. I heard this from a person who worked in compensation at a FAANG company.
- pm90 6y ago
  This is true. It’s not illegal probably because why would it be? They’re “just taking surveys of aggregate salary data”.
- ChuckNorris89 6y ago
  This happens in EU as well. Wage suppression is real.
chrisdinn 6y ago
I agree 100%. It’s all about talent. The existence of the TN visa ensures this will continue to be a problem until founders/investors learn this lesson. Any Canadian university graduate can go work as a “computer system analyst” (but not a programmer wink wink) in the US at anytime. That means we are constantly competing with US startups for talent, any salary advantage you think you have is because your best team members haven’t realized that yet.
AzzieElbab 6y ago
Doesn’t Canadian tax system make higher salaries kind of pointless? Same with bonuses
- novok 6y ago
  Tax in BC is about the same as California. And you don't have to pay for people's healthcare, so it might be cheaper from a 'total cost' perspective. Sales tax is a few % points more, property tax is actually less in general for new buyers unless you've owned a place for +15 years in CA. You don't get a mortgage interest tax deduction, but you have an UNLIMITED cap gains exemption on the house you live in that you sell in Canada, while the USA has a limit. The tax system is overall more straightforward and not a pile of fade outs and patches like the US tax system is. Compare Canadian RRSPs & TFSAs to the entire 401k, IRA, Roth IRA, mega backdoor roth 401k, etc mess that they have in the US. There isn't a penalty to withdrawing from your RRSP so there really isn't much of a loan concept for them either. I don't think something like AMT exists in Canada. Cost of goods in Canada are overall more expensive than the USA.
- raverbashing 6y ago
  Do you think Californians or NYkers pay that much less tax?
  - deleted 6y ago
    [deleted]
somerandomqaguy 6y ago
>Now that Amazon, Microsoft and Google are setting up shop right here in Canada, the talent drain away from Canadian companies is only accelerating. Maybe. Canada is bringing 400,000+ new immigrants per year until 2023 for permanent residence status, most of which are skilled workers of some kind. Probably a safe bet between that those three are setting up shop here in part because they can bring in international talent into North America more easily then with the US cracking down on it's immigration policies. No idea on what effect it will have on salaries here though.
- blueblisters 6y ago
  > Canada is bringing 400,000+ new immigrants per year until 2023 for permanent residence status Canada is adding > 1% of its population in immigrants every year? I am curious if that is sustainable politically and economically. I suspect this will only drive down tech wages even further and put pressure on local housing markets, utilities, healthcare and social programs.
  - raverbashing 6y ago
    The number is probably lower but still the bar is high for qualified immigrants (then there's the familiar reunion/refugees/etc) Too bad Canada treats most of them like they came in a dinghy from some weird 3rd world country and leaves some of them in survival jobs (especially in a certain big eastern province)
  - srtjstjsj 6y ago
    Canada also adds 1% to its population in babies, who can't work at all, and are fully dependent on others for housing, healthcare, and social programs.
    - slothtrop 6y ago
      This is also a product of immigration. The fertility rate is otherwise stagnant.
    - deleted 6y ago
jariel 6y ago
It's not Canadian companies that are 'keeping salaries' low, it's Valley Companies (and to some extent, American companies) that are paying a lot. Also - the USD varies at 1 to 1.5 CDN that has tremendous comparable effects. The 'reason' is that a vastly disproportionate amount of the surpluses go to the winners. '2cnd place is for chumps' - at least in the context of 'winner takes all' games. Everywhere outside of the Valley is 'second place' and it's going to be hard to compete otherwise. Another way of looking at it: The market does not want Canada to be 1st place. Canada is literally designing itself in every way to be a 'suburb' (i.e. as 'second place' country) - no specific identity (i.e. Post-Nation-Nation), high basic standard of living, high levels of material consumption, but no innovation, leadership or otherwise. The 'town square' is a shopping mall full of products and services designed elsewhere. In crude market terms it's 'more efficient' to close the local coffee shop, put up a Starbucks and have workers take marching orders from Seattle where they can concentrate Product Innovation and R&D. Canada used to have a few automakers - but with 'consolidation' they were all bought by US firms - which in raw market terms, makes some sense. The same would happen to all protected industries: Bell/Telus, CTV/Global, CIBC/BMO - all of it them be snapped up instantly if they were not protected. It doesn't matter if AT&T/Verizon are 'well managed' or 'poorly managed' relative to Bell/Telus - the fact is they are 15x bigger and that's that. 'Headquarters' will be in Virginia, not Toronto. And that's where the surpluses will go. Canada brings in tons of 'educated workers' and then sends the best and brightest of them right away to the US (I've seen this happen time and time again). Who can blame anyone with 'no ties' to Canada moving on for 2x salary? So Canada gets 'good workers' ... and the US gets 'the talent'. An Ontario MP, trying to attract Cisco to Toronto indicated that Canadians work for less salary than Americans and that he would do everything within his power to keep it that way. So there you have literally the leadership trying to do what they can to keep salaries low, to keep the system firmly in '2cnd place', by design. This is the Canadian National Strategy. If you want to do something exceptional, go to specific places in the US where systems are designed for that. The theory being that it's better than being in a left out US state like Arkansas, West Virginia etc.. In some ways, it's commendable, because Canada relative to the world has a really high standard of living, stable 'everything', good basic rights etc.. But of course, there is not a lot meaningful to do. That's the deal.
- 6y ago
sershe 6y ago
I can confirm that.. In 2010 I was looking for jobs in Vancouver after working for a US company there for the US-level salary, and the salaries in local companies were sorta ridiculous. I moved to the USA. Btw, it was also really difficult to find a primary care doctor in Vancouver at the time, when I finally found one taking patients after a while, he (an older guy who I assume just like living where he grew up) told me that the reason is that all the doctors move to the USA if they can.
ghosty-discord 6y ago
why would big companies setting up shops there in Canada would increase draining away talent

DaiPlusPlus 6y ago

> Every year the HR departments in Vancouver and Toronto do a hush-hush survey among each other and fix their salaries to the exact same level - maybe 2% but usually closer to 1% higher than the previous year. Collusion like that would almost certainly be illegal - do you have a source for that?

dismayedjim 6y ago
It is but it happens all the time. Google, Facebook, Amazon, and the rest all have been caught doing it on a large scale. Most of them even agreed not to hire from each others employee pool.
- deleted 6y ago
  [deleted]
wvenable 6y ago
There is an entire industry around the collection of and aggregation of salary, benefits, and perk information. Every year your HR department pays a firm, fills out these surveys, and a few months later gets a report on salary ranges and perks for their industry. If you think about it then it makes perfect sense, how else do businesses know they're offering competitive salaries, benefits, and perks? Source: I consulted for a company that does these surveys and aggregates the results.
- DaiPlusPlus 6y ago
  > how else do businesses know they're offering competitive salaries, benefits, and perks? I would assume from how many applicants negotiate - or outright reject - their job-offers But yeah - I forgot about the consulting companies that do the survey thing. But we have our own! https://www.levels.fyi/ https://www.levels.fyi/
  - pm90 6y ago
    Interestingly, I haven’t ever seen actual candidate data used to determine compensation. Ie companies almost never use a candidate demanding more to actually change anything. It’s all based on these “professional comp surveyors” as the parent has described.
    - DaiPlusPlus 6y ago
      Unrelated: I'm sure we have our own fantasies of potential employers (or past-employers) begging us to work for them with them increasing their offers or offering other benefits - but I'm curious if that's ever actually happened to anyone.
      - freeone3000 6y ago
        You should absolutely negotiate salary. Saving a few ten thousands a year on salary for a department doesn't really mean that much to your manager or to the company, compared to filling that slot in the org chart.

DanHulton 6y ago

Literally just left a really enjoyable job with a Toronto company for a California company that pays 50% more. This is completely correct.

usrusr 6y ago
You consider "66% of California pay" low?
- colordrops 6y ago
  They probably under-negotiated.
- freeone3000 6y ago
  Wouldn't you, comparatively? It's not like your quality of work changed, it's solely location-based.
  - srtjstjsj 6y ago
    Purchasing Power Parity. The raise could end up entirely going to rent and healthcare
    - gabbo 6y ago
      Quite frankly the "all your money will go to healthcare" meme doesn't really apply to the kind of person who's leaving Canada for a much high-paying US tech job. A person like that will in all likelihood be working for an employer that offers access to equal or _better_ health insurance than they would have access to in Canada. If it's a big tech company the employer will pay virtually all of the premiums beyond some token amount, and out-of-pocket maximums are dramatically lower than the incremental pay raise. And even if the employer didn't pay that, the premiums would still be dwarfed by the pay raise. Rent is certainly higher in the Bay Area, though less higher now vs. a year ago, and even so, at the income levels we're talking here (especially if going to FAANG or a unicorn), there is very little chance you'll end up with less disposable income after rent and health care. If you want to buy a property, you have your work cut out for you since real estate is insanely expensive, though. It's not too hard if you're a dual-income high earner couple but very hard otherwise and will take a number of years of savings. This is worse than the Vancouver/Toronto housing markets, but it's less worse than you think given how crazy they are now.

jvergeldedios 6y ago

But doesn't what you're describing reinforce the author's point? Tech firms in Canada aren't paying high enough wages to keep talent in their pool in order satisfy profit milestones rather than pursuing growth. That's the exact difference in mindset the author points out.

forgingahead 6y ago

Thanks for sharing this. What is the solution though? "Paying salaries competitively" can also be rephrased as: "Raise as much money as you can and keep salaries on an upward trajectory". Optimising for profit is normally a good, healthy thing, but given the cheapness of capital (printing etc) sloshing about, how does one go about and build a profitable and steady company with good talent without getting yanked into this cycle? All companies want talent, and capital has been freely available for the past 15 years in amounts previously unimaginable. It doesn't seem like there is any way to avoid this treadmill. *Note, I am perfectly on board with paying competitive salaries, my point is that given the heavy market distortion because of all the VC money, that "competitive salary" isn't actually an accurate descriptor.

ZephyrBlu 6y ago
"Paying salaries competitively" can _also_ be rephrased as "valuing your engineers".
Kalium 6y ago
> how does one go about and build a profitable and steady company with good talent without getting yanked into this cycle? One approach might be to build a business by cleverly leveraging the value of competitively paid software engineers. You can accomplish quite a lot through focused effort. You shouldn't need fifty ICs to develop a profitable product. Paying professionals doesn't have to come from absurdly oversized VC rounds. Sometimes it comes from steady, profitable, sustainable growth. > *Note, I am perfectly on board with paying competitive salaries, my point is that given the heavy market distortion because of all the VC money, that "competitive salary" isn't actually an accurate descriptor. You're right. It isn't. We should ignore the VC funded companies, and talk instead about the big players: FAANGs. That is the new definition of a competitive salary. I suspect you'll find it dwarfs that of many VC-fuelled startups.
pm90 6y ago
You can use generous equity. By far this is the most powerful tool: you may not be a VC funded unicorn so you may have to grant more. You can be creative in the kind of perks you offer (4 hour workweek? More PTO than competitors etc). Note that there is some evidence to show that shorter work week may even result in better productivity.

throwawaysea 6y ago

The hush hush survey is something all tech companies do in the US as well. They report their salary information to a third party company who then shares industry data back with all participants. I am not sure how this is not an illegal price signaling scheme. I heard this from a person who worked in compensation at a FAANG company.

pm90 6y ago
This is true. It’s not illegal probably because why would it be? They’re “just taking surveys of aggregate salary data”.
ChuckNorris89 6y ago
This happens in EU as well. Wage suppression is real.

chrisdinn 6y ago

I agree 100%. It’s all about talent. The existence of the TN visa ensures this will continue to be a problem until founders/investors learn this lesson. Any Canadian university graduate can go work as a “computer system analyst” (but not a programmer wink wink) in the US at anytime. That means we are constantly competing with US startups for talent, any salary advantage you think you have is because your best team members haven’t realized that yet.

AzzieElbab 6y ago

Doesn’t Canadian tax system make higher salaries kind of pointless? Same with bonuses

novok 6y ago
Tax in BC is about the same as California. And you don't have to pay for people's healthcare, so it might be cheaper from a 'total cost' perspective. Sales tax is a few % points more, property tax is actually less in general for new buyers unless you've owned a place for +15 years in CA. You don't get a mortgage interest tax deduction, but you have an UNLIMITED cap gains exemption on the house you live in that you sell in Canada, while the USA has a limit. The tax system is overall more straightforward and not a pile of fade outs and patches like the US tax system is. Compare Canadian RRSPs & TFSAs to the entire 401k, IRA, Roth IRA, mega backdoor roth 401k, etc mess that they have in the US. There isn't a penalty to withdrawing from your RRSP so there really isn't much of a loan concept for them either. I don't think something like AMT exists in Canada. Cost of goods in Canada are overall more expensive than the USA.
raverbashing 6y ago
Do you think Californians or NYkers pay that much less tax?
- deleted 6y ago
  [deleted]

somerandomqaguy 6y ago

>Now that Amazon, Microsoft and Google are setting up shop right here in Canada, the talent drain away from Canadian companies is only accelerating. Maybe. Canada is bringing 400,000+ new immigrants per year until 2023 for permanent residence status, most of which are skilled workers of some kind. Probably a safe bet between that those three are setting up shop here in part because they can bring in international talent into North America more easily then with the US cracking down on it's immigration policies. No idea on what effect it will have on salaries here though.

blueblisters 6y ago
> Canada is bringing 400,000+ new immigrants per year until 2023 for permanent residence status Canada is adding > 1% of its population in immigrants every year? I am curious if that is sustainable politically and economically. I suspect this will only drive down tech wages even further and put pressure on local housing markets, utilities, healthcare and social programs.
- raverbashing 6y ago
  The number is probably lower but still the bar is high for qualified immigrants (then there's the familiar reunion/refugees/etc) Too bad Canada treats most of them like they came in a dinghy from some weird 3rd world country and leaves some of them in survival jobs (especially in a certain big eastern province)
- srtjstjsj 6y ago
  Canada also adds 1% to its population in babies, who can't work at all, and are fully dependent on others for housing, healthcare, and social programs.
  - slothtrop 6y ago
    This is also a product of immigration. The fertility rate is otherwise stagnant.
  - deleted 6y ago

jariel 6y ago

It's not Canadian companies that are 'keeping salaries' low, it's Valley Companies (and to some extent, American companies) that are paying a lot. Also - the USD varies at 1 to 1.5 CDN that has tremendous comparable effects. The 'reason' is that a vastly disproportionate amount of the surpluses go to the winners. '2cnd place is for chumps' - at least in the context of 'winner takes all' games. Everywhere outside of the Valley is 'second place' and it's going to be hard to compete otherwise. Another way of looking at it: The market does not want Canada to be 1st place. Canada is literally designing itself in every way to be a 'suburb' (i.e. as 'second place' country) - no specific identity (i.e. Post-Nation-Nation), high basic standard of living, high levels of material consumption, but no innovation, leadership or otherwise. The 'town square' is a shopping mall full of products and services designed elsewhere. In crude market terms it's 'more efficient' to close the local coffee shop, put up a Starbucks and have workers take marching orders from Seattle where they can concentrate Product Innovation and R&D. Canada used to have a few automakers - but with 'consolidation' they were all bought by US firms - which in raw market terms, makes some sense. The same would happen to all protected industries: Bell/Telus, CTV/Global, CIBC/BMO - all of it them be snapped up instantly if they were not protected. It doesn't matter if AT&T/Verizon are 'well managed' or 'poorly managed' relative to Bell/Telus - the fact is they are 15x bigger and that's that. 'Headquarters' will be in Virginia, not Toronto. And that's where the surpluses will go. Canada brings in tons of 'educated workers' and then sends the best and brightest of them right away to the US (I've seen this happen time and time again). Who can blame anyone with 'no ties' to Canada moving on for 2x salary? So Canada gets 'good workers' ... and the US gets 'the talent'. An Ontario MP, trying to attract Cisco to Toronto indicated that Canadians work for less salary than Americans and that he would do everything within his power to keep it that way. So there you have literally the leadership trying to do what they can to keep salaries low, to keep the system firmly in '2cnd place', by design. This is the Canadian National Strategy. If you want to do something exceptional, go to specific places in the US where systems are designed for that. The theory being that it's better than being in a left out US state like Arkansas, West Virginia etc.. In some ways, it's commendable, because Canada relative to the world has a really high standard of living, stable 'everything', good basic rights etc.. But of course, there is not a lot meaningful to do. That's the deal.

6y ago

sershe 6y ago

I can confirm that.. In 2010 I was looking for jobs in Vancouver after working for a US company there for the US-level salary, and the salaries in local companies were sorta ridiculous. I moved to the USA. Btw, it was also really difficult to find a primary care doctor in Vancouver at the time, when I finally found one taking patients after a while, he (an older guy who I assume just like living where he grew up) told me that the reason is that all the doctors move to the USA if they can.

ghosty-discord 6y ago

why would big companies setting up shops there in Canada would increase draining away talent