4 ms·

This isn't a uniquely Canadian problem at all, it's just Canada experiencing the pain of the wider tech sector. Ultimately, it's the same issue as what's happe

by mjr00 4y ago

This isn't a uniquely Canadian problem at all, it's just Canada experiencing the pain of the wider tech sector. Ultimately, it's the same issue as what's happened (and happening) in the US: the VC fun money dried up, and it's no longer cool to be an unprofitable business with a lot of "growth potential". Now tech leadership is being forced to balance a budget and figure out a path to profitability instead of just perpetually increasing revenues at negative margins.

Mikeb85 4y ago
Like many other things affecting western countries though, it's worse in Canada since we have lower investment rates, spend less on R&D, have an ultra-risk averse culture, extremely high costs, etc...
- throwawaylinux 4y ago
  > lower investment rates, spend less on R&D, have an ultra-risk averse culture Why do those make it worse? Lower investment rates means less money to lose, R&D is often trimmed first, and investment should go to lower risk in this kind of environment. And costs shouldn't be much higher than USA. I think the problem is actually the opposite. People say the US is willing to take risks which is why their tech and startup scene is so good. Among the complaints about all other countries trying to work out how to become the "next silicon valley", near the top is almost universally "risk adverse". I think that's backwards though, investments in Canada and other such places in tech startup are very high risk and speculative, because people are just closing their eyes and praying that these fanciful predictions about being the next silicon valley are true and they hit it big, rather than being based on any real evidence or logic. True it's often governments engaging in this reckless risky spending, which seems to make it appear to be "low risk" to other investors. That doesn't make it so though.
  - Mikeb85 4y ago
    Higher investment rate means when prices go down/a recession happens, people invest in new businesses which means a recovery happens quicker and is more robust. Just look at Canada's GDP per capita over time versus the US'. Or the fact our only job growth since the pandemic started has been in government jobs. Our private sector is dying because it's more profitable to simply move money to the US or to put it all into unproductive real estate.
    - throwawaylinux 4y ago
      > Higher investment rate means when prices go down/a recession happens, people invest in new businesses which means a recovery happens quicker and is more robust. I mean you have lower rates so the downturn will have a smaller impact in an absolute sense. > Just look at Canada's GDP per capita over time versus the US'. Or the fact our only job growth since the pandemic started has been in government jobs. Our private sector is dying because it's more profitable to simply move money to the US or to put it all into unproductive real estate. Sure. If the downturn has a disproportional impact despite the sector's small size (investment), then it's because it was a far riskier investment than others.
      - Mikeb85 4y ago
        > I mean you have lower rates ??? Ours is at the same as the US... > because it was a far riskier investment than others. Downturns are more about whether or not consumers still spend, which is based on their savings rate and willingness to invest.
        throwawaylinux 4y ago
        ??? Ours is at the same as the US... "lower investment rates," > Downturns are more about whether or not consumers still spend, which is based on their savings rate and willingness to invest. For tech startups focused on selling to the government, that doesn't really apply. And for those that aim to sell their product internationally it's not specific to the country they are based in.
        Mikeb85 4y ago
        > "lower investment rates," Higher investment is NEVER a bad thing. We're not talking putting money in the stock market, we're talking willingness to put money to use.
        throwawaylinux 4y ago
dehrmann 4y ago
Shopify is publicly traded and is an e-commerce platform. It isn't dependent on VC money to run, and neither are its customers. What happened was people shifted discretionary spending to e-commerce during covid, and between things reopening, having a fully-stocked home gym, and inflation, they cut back on buying stuff. Wealthsimple might have funding issues (I'm not sure), but it lost a lot of use because again, its growth was driven by people bored at home.
- kart23 4y ago
  …shopify is losing more than 1 billion a quarter.
  - hn_throwaway_99 4y ago
    That's a pretty lopsided characterization. Yes, they had big losses in Q1 and Q2 2022, but they had nearly 3 billion in earnings in 2021. Large companies will often swing to big losses from big profits when there is a big macro shift, which is exactly what happened to Shopify. That's meaningfully different from a company that has had a sea of losses since inception, especially when those losses grow proportionally with revenue increases.
  - dehrmann 4y ago
    My favorite apocryphal explanation for the origin of the term "black friday" is it's the first day in the year retailers are in the black. I wouldn't be surprised if Shopify follows this pattern, too. You really need to look at YoY numbers for them.
- unity1001 4y ago
  > Shopify is publicly traded and is an e-commerce platform. It isn't dependent on VC money to run But it still floats on the inflated stock values like a majority of the big tech companies.
  - dehrmann 4y ago
    The stock price is somewhat independent of the underlying business. The stock price is based on what investors think other investors will pay for it sometime in the future, weighted against other investments.
unity1001 4y ago
> the VC fun money dried up, and it's no longer cool to be an unprofitable business with a lot of "growth potential" Yep. Bye bye infinite cash injection to the economy without inflation.

by mjr00 4y ago

Mikeb85 4y ago

Like many other things affecting western countries though, it's worse in Canada since we have lower investment rates, spend less on R&D, have an ultra-risk averse culture, extremely high costs, etc...

throwawaylinux 4y ago
> lower investment rates, spend less on R&D, have an ultra-risk averse culture Why do those make it worse? Lower investment rates means less money to lose, R&D is often trimmed first, and investment should go to lower risk in this kind of environment. And costs shouldn't be much higher than USA. I think the problem is actually the opposite. People say the US is willing to take risks which is why their tech and startup scene is so good. Among the complaints about all other countries trying to work out how to become the "next silicon valley", near the top is almost universally "risk adverse". I think that's backwards though, investments in Canada and other such places in tech startup are very high risk and speculative, because people are just closing their eyes and praying that these fanciful predictions about being the next silicon valley are true and they hit it big, rather than being based on any real evidence or logic. True it's often governments engaging in this reckless risky spending, which seems to make it appear to be "low risk" to other investors. That doesn't make it so though.
- Mikeb85 4y ago
  Higher investment rate means when prices go down/a recession happens, people invest in new businesses which means a recovery happens quicker and is more robust. Just look at Canada's GDP per capita over time versus the US'. Or the fact our only job growth since the pandemic started has been in government jobs. Our private sector is dying because it's more profitable to simply move money to the US or to put it all into unproductive real estate.
  - throwawaylinux 4y ago
    > Higher investment rate means when prices go down/a recession happens, people invest in new businesses which means a recovery happens quicker and is more robust. I mean you have lower rates so the downturn will have a smaller impact in an absolute sense. > Just look at Canada's GDP per capita over time versus the US'. Or the fact our only job growth since the pandemic started has been in government jobs. Our private sector is dying because it's more profitable to simply move money to the US or to put it all into unproductive real estate. Sure. If the downturn has a disproportional impact despite the sector's small size (investment), then it's because it was a far riskier investment than others.
    - Mikeb85 4y ago
      > I mean you have lower rates ??? Ours is at the same as the US... > because it was a far riskier investment than others. Downturns are more about whether or not consumers still spend, which is based on their savings rate and willingness to invest.
      - throwawaylinux 4y ago
        ??? Ours is at the same as the US... "lower investment rates," > Downturns are more about whether or not consumers still spend, which is based on their savings rate and willingness to invest. For tech startups focused on selling to the government, that doesn't really apply. And for those that aim to sell their product internationally it's not specific to the country they are based in.
        Mikeb85 4y ago
        > "lower investment rates," Higher investment is NEVER a bad thing. We're not talking putting money in the stock market, we're talking willingness to put money to use.
        throwawaylinux 4y ago

dehrmann 4y ago

Shopify is publicly traded and is an e-commerce platform. It isn't dependent on VC money to run, and neither are its customers. What happened was people shifted discretionary spending to e-commerce during covid, and between things reopening, having a fully-stocked home gym, and inflation, they cut back on buying stuff. Wealthsimple might have funding issues (I'm not sure), but it lost a lot of use because again, its growth was driven by people bored at home.

kart23 4y ago
…shopify is losing more than 1 billion a quarter.
- hn_throwaway_99 4y ago
  That's a pretty lopsided characterization. Yes, they had big losses in Q1 and Q2 2022, but they had nearly 3 billion in earnings in 2021. Large companies will often swing to big losses from big profits when there is a big macro shift, which is exactly what happened to Shopify. That's meaningfully different from a company that has had a sea of losses since inception, especially when those losses grow proportionally with revenue increases.
- dehrmann 4y ago
  My favorite apocryphal explanation for the origin of the term "black friday" is it's the first day in the year retailers are in the black. I wouldn't be surprised if Shopify follows this pattern, too. You really need to look at YoY numbers for them.
unity1001 4y ago
> Shopify is publicly traded and is an e-commerce platform. It isn't dependent on VC money to run But it still floats on the inflated stock values like a majority of the big tech companies.
- dehrmann 4y ago
  The stock price is somewhat independent of the underlying business. The stock price is based on what investors think other investors will pay for it sometime in the future, weighted against other investments.

unity1001 4y ago

> the VC fun money dried up, and it's no longer cool to be an unprofitable business with a lot of "growth potential" Yep. Bye bye infinite cash injection to the economy without inflation.