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Why more Silicon Valley startups will find their way to Waterloo

Why more Silicon Valley startups will find their way to Waterloo

Posted by PanamericanWorld on February 16, 2016

On Feb. 4, San Francisco-based Everalbum — a photo storage app maker — announced its purchase of Waterloo, Ont.’s Pout, a two-person startup that developed a photo-sharing app for fashion enthusiasts.

Although the purchase price was not released, it was presumably a relatively small transaction. Still, it marks the second move in Everalbum’s recent push into the Kitchener-Waterloo region — one the company’s co-founder, Andrew Dudum, said could lead to half his employees working in Canada.

Pout’s two co-founders will join Everalbum’s 26-person team. But the pair won’t be moving to San Francisco. They’ll work in Everalbum’s Waterloo office, which opened last year. “The people we’ve hired in Waterloo are incredibly talented, incredibly disciplined professionals,” Dudum said.

The mayors of Toronto and Kitchener are also recognizing the value of the talent in this pocket of Ontario. On Feb. 11, John Tory, mayor of Toronto, and Berry Vrbanovic, mayor of Kitchener, announced their cities would partner in promoting the area as an international innovation corridor. They plan to promote the Toronto-Waterloo corridor in San Francisco in April.

 

The arrival of Everalbum, however, shows the message has already arrived in that city.

Iain Klugman, CEO of Waterloo’s Communitech, an industry-led innovation centre, said Everalbum’s push into the region is part of larger trend of U.S. companies and startups seeking talented tech workers in Waterloo. He says it started many years back with big companies such as Google. Since then, Electronic Arts, Intel Security, AGFA and SAP (two European companies) have come to Waterloo. And Square, in its early days, arrived a little later in Waterloo.

“That was a turning point because it was the first time a small global brand decided to come here and set up shop,” Klugman said. Everalbum is the most recent arrival. “It’s growing recognition of the fact that we’re producing talent on par with anywhere in the world,” he added.

Handout/ Everalbum

Handout/ EveralbumEveralbum's co-founder Andrew Dudum, is quick to say that his moves in Waterloo have everything to do with the incredible talent available in the region. But he is all to aware more Valley startups will find their way there.

 

In Waterloo, Dudum discovered a remedy to Everalbum’s hiring challenge. San Francisco’s talent pool is deep, but it’s spread over many companies and startups and, as Dudum notes, Silicon Valley tech workers hop often between gigs. There are just so many companies to choose from. “There’s a really unfortunate dispersion of phenomenal talent,” he said.

The talent in the Waterloo region is world-class, he said. Plus, the workers are less inclined to depart after a few months.

Eight of Everalbum’s 26 employees now work in Waterloo and Dudum said that could double in the next few months. Dudum wouldn’t say how much his company is investing in Waterloo. He offered only that having half his employees in Canada is “a pretty big investment for us.”

In addition to being less prone to flight, Canadian engineers, designers, and computer scientists cost less to employ, especially with the recent drop in the Canadian dollar. “Is it cheaper? It definitely is. Is it 50 per cent cheaper? Probably not,” Dudum said, estimating Waterloo salaries are 10 to 15 per cent less than in San Francisco. But he argued other expenses offset those savings, including the cost of flying employees between the two locations.

“The talent is really what’s brought us to (Waterloo),” he said, dismissing the idea of major savings. “If you can find a high concentration of amazing people, you have a really good shot at building something great.”

Dudum said, the University of Waterloo is viewed in Silicon Valley as the Stanford of Canada. “The talent in Waterloo is just as good as the talent in San Francisco and in the Valley — from a design standpoint, from an engineering standpoint — on all fronts,” he said.

Last year, New York Times columnist Frank Bruni asked Sam Altman, the president of Y Combinator (the Mountain View, Calif.-based startup funding organization) if any one university stood out in terms of students and graduates whose ideas took off. “Yes,” responded Altman, who attended Stanford. “The University of Waterloo.”

As Bruni informed his readers: “It’s a public school in the Canadian province of Ontario, and as of last summer, it was the source of eight proud ventures that Y Combinator had helped along.”

Communitech’s Klugman goes further: “We’re not the Stanford of Canada. We’re kicking Stanford’s ass.”

Everalbum’s Waterloo connection began with Fravic Fernando, the company’s founding designer and a University of Waterloo graduate. Dudum said he was “blown away” by Fernando’s ability.

Since 2013, Everalbum has accepted a steady rotation of University of Waterloo co-op students. Frequent recruiting trips to Waterloo exposed Dudum to the “talent and the energy emanating from the university.

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