What to do when the tool you need isn’t up to your standards? Build it yourself and then sell it to others in need. By Rosalind Stefanac
As one of the larger homegrown biotech companies, StemCell Technologies Inc. has managed to find long-term success in the health-tech industry at a time when many never make it past the startup phase. Since its inception in 1993, the Vancouver-based company has grown by at least 20% annually, and directly delivers its products and services to 22 countries and another 100 via distributors. But the company was founded because of a simple need: scientists needed better research tools.
As a scientist, and co-founder of the Terry Fox Laboratory at the BC Cancer Agency, Allen Eaves was becoming increasingly dissatisfied with the commercially available cell cultures used for cancer research. As a result, he and his team started developing their own cell culture media using stem cells and then sold them to other lab groups as well. Eventually, the demand got to be so big, it only made sense for Eaves to start a company.
Today, the company offers some 2,500 products and services used by scientists around the world for stem-cell, immunology, cancer, regenerative-medicine and other cell-therapy research. One of its latest products, a next-generation culture system that allows researchers to get a more consistent cell culture environment, is “flying off the shelves,” says Eaves, who serves as the company’s CEO and president. “We are always changing and improving products, and working with leaders in the field to get their feedback so we can keep improving.”
One of the reasons StemCell Technologies is able to steadily grow year after year is the lack of outside investors. “Investors want big clinical home runs that make them a lot of money — and take a long, long time,” Eaves says. “After seeing other companies eventually lose their investors, my lesson was to develop products that would support basic science researchers and didn’t require 58 approvals to make money.”
Helping spawn further growth is that StemCell goes where its customers are, with nine international offices in North America, Europe, Australia and Southeast Asia. Only 3-4% of its current sales are in Canada. Having an incredibly smart workforce to come up with innovative new product ideas helps, too. More than a third of the company’s employees hold a PhD or masters degree. Eaves says the company is committed to providing “meaningful, well-paid” jobs that keep some of the brightest scientists on Canadian soil. Some 900 of StemCell’s 1,200 employees worldwide reside in the Vancouver area and the company was named among Canada’s Best-Managed Companies this year.
“We do all the right things to attract and keep people, like fostering a culture of collaboration,” Eaves says. In an era when gender inequality is a big issue in STEM, 57% of the company’s scientists are women and the management team has an equal gender split. “It’s all about finding smart, young people who love science, and giving them a secure environment where they can be creative and not have to worry about competing with their neighbours on the next bench.”
This spring, with $45 million in financial support from the B.C. and federal governments, StemCell starts construction on a 200,000-square-foot campus and distribution centre in Burnaby B.C. With more and more of its cell cultures being used in large clinical trials, the new facility will enable the company to manufacture its products at the higher
regulatory compliance levels required to support such trials. “This way we can bring our stem-culture media production in the U.S. back to Canada where we can have full oversight,” Eaves says, noting that the hundreds of new, high-paying jobs in B.C. are a great side benefit. “We have been contracting out some of our culture media production, but it has been time-consuming and expensive because these companies don’t have the knowledge we have.”
Even though more regulation compliance issues loom, Eaves expects the pace of his company’s future growth won’t slow down. His goal is to hire another 4,000 people and reach global sales of more than $1 billion by 2029. “We really are a boutique operation making cell-culture media for all these tissue-specific research needs,” Eaves says. “The potential for this is huge and we’ve already covered a lot of ground.” <em>— Rosalind Stefanac</em>
Alberta company is cleaning up the air around the world and challenging Canada to clean up its carbon tax system. By Geoff Morgan
Questor Technology Inc. CEO and president Audrey Mascarenhas has helped industrial operations around the world reduce emissions by deploying systems that capture fugitive gases, combust those gases in an enclosed system that is 99.99% efficient and use ambient or wasted heat to generate electricity. Last year, Calgary-based Questor even installed its systems at a new LNG export facility in Egypt. As a result, you might expect her to be a fan of Canada’s carbon tax system. Instead, she’s an unlikely but harsh critic, calling it “bureaucratic and cumbersome.”
Given Questor’s position as one of the country’s top clean-tech companies, Mascarenhas had high hopes for carbon taxes and emission-reducing plans in the company’s home province and across Canada. But her 15-year-old company’s domestic business has shrunk to the point where she is considering moving to the U.S., where she says better regulations are in force in multiple states. “The carbon tax has created mass confusion,” she says. “We’ve set up a system that’s bureaucratic and cumbersome and you have to write protocols to figure out what your reductions are.”
Specifically, Mascarenhas says, the system won’t make a meaningful impact on the “low hanging fruit” of methane emissions, which are 86 times more greenhouse-gas intensive than carbon dioxide. Canada aims to reduce methane emissions below a 2012 baseline by 2025, but she says that won’t be accomplished because installing pneumatic devices, compressor seals and other emissions-limiting equipment doesn’t have to be done until 2023. In addition, proper metering equipment is still being installed, so companies will not be able to reduce their emissions enough by the deadline.
A report released by the C.D. Howe Institute in early March also noticed this problem and recommended the government set requirements for strict measurements and develop measurements for methane vented from leaky infrastructure because “what gets measured gets managed.” The report also called on various levels of Canadian governments to follow “best-in-class regulations that have been implemented in other jurisdictions.”
Similarly, Mascarenhas says Canada needs to be more innovative and “agile” in how it writes regulations. She says jurisdictions in the U.S. and Mexico are making meaningful reductions in methane emissions — as well as hydrogen sulphide, nitrous oxide, sulphurous oxide, benzene and volatile organic compound emissions — through clearer regulations that have performance standards and real punishments if those standards aren’t met.
Questor has grown in part by selling technology in those other regions. In 2013, half its revenues originated in Canada and half in the U.S. The company has since moved the vast majority of its equipment to Colorado and generated close to 98% of its revenues outside Canada in the fourth quarter of 2018. Part of the reason for the dramatic shift is that ConocoPhillips Co. moved some of Questor’s equipment to Colorado from Alberta to comply with new regulations in the state, where flaring and venting of gas from oilfield sites have been banned. Following that move and new regulations coming into force, Mascarenhas in 2016 packed up Questor’s fleet of enclosed combustion units and moved them to Colorado from Alberta. She also switched the company’s focus from selling the units to renting them to oil and gas producers in the state.
The regulations passed in Colorado, which produces 4% of the total oil and gas output in the U.S., are among the most stringent on the continent and have since been copied by other states and, last November, by Mexico, where Questor is working at three oilfield sites, curbing emissions by 700,000 tonnes at each site at a cost of 10 cents per tonne. Mascarenhas says Mexico’s simple, clear regulations have allowed it to leapfrog Canada’s emissions-reduction stringency.
At the beginning of March, the Alberta government released a progress report on the first full year of the carbon tax coming into force in the province. It shows an emissions reduction in the electricity sector of 7 million tonnes in 2018, in large part due to coal-fired power plants being retired. The report also forecasts Alberta’s total emissions are expected to reach 263 million tonnes in 2030, compared with 314 million tonnes without the province’s climate plan and, its feature aspect, the carbon tax.
Mascarenhas says politicians who champion emissions reduction also need to change the way they debate the topic and focus on improving air quality rather than a nebulous and vague concept such as climate change. “The beauty of structuring everything on air quality is nobody is going to argue with you on air quality,” she says. “Communities aren’t going to say, ‘I don’t mind breathing dirty, polluted air.’ Industry does not want to be on the side of saying, ‘We don’t want any rules because we want to pollute the air and harm everyone around us.’” <em>— Geoff Morgan</em>
Hundreds of companies make beer in Canada, but this Hamilton brewer uses the arts to stand out from the crowd — oh, the beer is great, too. By Jake Edmiston
A colleague in the beer industry didn’t expect Matt Johnston’s decision in 2012 to leave Moosehead Breweries Ltd. and open his own brewery to work out. “When you’re done with your art student project, come find us,” the friend said. “Maybe we’ll have a job for you.”
One reason for skepticism was that Johnston was breaking simple marketing rules, rules he had followed for much of his career as a marketing executive at major national brands, including Tim Hortons Inc., all with prominent well-known logos. His brewery’s packaging was going to feature a constantly changing selection of art by emerging artists that would dwarf the company logo.
But in the six years since founding Collective Arts Brewing Ltd. in Hamilton, Johnston’s “art student project” has become one of the province’s most successful craft breweries, expanding nationally and into the United States, with growing cider and gin divisions and plans to enter the cannabis beverage category as soon as federal regulations allow.
It’s the art, however, that gets much of the attention. The brewery puts out a quarterly call for artwork, then a volunteer panel selects the winning artists from an average submission pool of more than 2,000. It pays these artists to feature their art on its labels, changing the art on each of its core beer offerings four times a year. Collective Arts also hosts festivals to showcase artists and musicians.
The concept is neither cheap nor easy, as Johnston notes. But it has proven to be an innovation in an industry that rarely sees much at all. “A lot of what appears as innovation in brewing is more just kind of bullshit,” says Stephen Beaumont, a well-known Canadian authority on beer whose most recent book, Will Travel for Beer, was published last year. “Cloudy beers are all the rage. You get a cloudier beer by literally adding flour to it. And that is presented as, ‘The hazy IPA is a new innovation.’ It’s not. It’s putting flour in your beer.”
Collective Arts, on the other hand, has actually pulled off true innovation, Beaumont says, which is driving its growth from a contract brewery “to a major force” in the industry with a presence in 13 states, including major markets such as New York, Boston and Chicago. “It’s been impressive, quite frankly,” he says. Aside from Quebec’s Unibroue (owned by industry giant Sapporo Breweries since 2006), Beaumont says “the history of craft beer is littered with failures of Canadian craft brewers going into the U.S. market.” But Collective Arts is “behaving like they’ve been there all along,” he says. “It’s a ballsy way of going into a market that’s already pretty saturated.”
Since its beginnings in 2013, Collective Arts has tried to be “locally relevant, globally.” That, Johnston says, means avoiding the classic craft brewery trope of naming the beer after the town or neighbourhood where the brewery is based. (Hamilton has heartily embraced the company anyway.) It’s part of the vision set out by brainstorming sessions with his co-founder and creative director, Bob Russell. “We wanted to be founded not on where we’re from, but more what we stood for,” Johnston says.
In Boston, Collective Arts partnered with the Boston Tattoo Convention and produced labels with works from four major tattoo artists. The company is able to do that quickly, Johnston says, partly because it prints labels that wrap around blank cans, rather than printing it directly on the steel. That way, it isn’t required to place orders for truckloads of printed cans, which need to be ordered months in advance and just don’t look as nice.
At the Hamilton brewery — formerly owned by now-defunct Lakeport Brewing — massive colourful spools of labels sit close to the line where the cans are labelled and filled. It is exhausting and disorienting to walk through the 50,000-square-foot facility with Johnston. Every part of the place requires explanation, each hinting at some major endeavour the brewery is undertaking. He points to bourbon barrels for imperial stout, born of a collaboration with breweries around the world. And the orange oil drums are filled with guava for a guava beer.
“There’s a little baby still in here,” he says, gesturing to some place out of view where a gin still is “actually tucked in someone’s office.” Then, he launches into Collective Arts’ foray into distilling gin, which hadn’t yet been publicly announced. “Shit,” he says a little later, “I don’t even know if I was supposed to talk to you about gin.”
Passing through pallets of blank, silver cans — rows and rows of them, stacked up to the warehouse ceiling — Johnston shrugs. “There was a can shortage,” he says. “So we grabbed whatever we could at one point. We way overbought, which is okay.”
The office equipment cost $500 at a government auction and all the office workers are crammed into a single room on the top floor of the brewery, tight enough that Johnston can’t have a conversation without being overheard. But he seems content with that. “There’s a lot of people who come into [the industry] with the intention of having the neighbourhood brewery,” he says. “Some days I wish that was our intention. But we for some reason have a thirst for, a love for chaos.” — <em>Jake Edmiston</em>
Long-established companies can always push the envelope if they are willing to adapt to changing business conditions. By Rosalind Stefanac
Even with more than six decades of success in developing and implementing innovative solutions in mining, energy and infrastructure, Hatch Ltd. may still be one of Canada’s best-kept secrets. Founded in 1955, the company has more than 9,000 employees globally and provides consulting, project management and operations support from 60 permanent offices on six continents. It’s also lauded as one of the mining industry’s top technical suppliers in the world. Yet, here at home, the Mississauga, Ont.-based company prefers to let its technologies and client successes speak for themselves.
One of its local achievements was designing Toronto’s first downtown transit system tunnels, which are still in use today. Another was developing the technology for extracting titanium dioxide, which is a thriving industry in Quebec. “It’s a technology that our company developed in the ’50s, but we continue to expand and make it more efficient and sustainable, to a point where it is a core part of our economy even today,” says CEO John Bianchini, who has led Hatch since 2012.
More recently, Bianchini points to Hatch-inspired designs such as the Keeyask Generating Station in Manitoba, an expansion of a hydro-electric power plant that will service some 400,000 homes when complete in 2021. “Projects like this continue to solve Canada’s energy issues and help to build long-term sustainable solutions for the nation,” he says.
This marriage of technical skill and business savvy has kept Hatch at the forefront of innovation 64 years after its founding. Back then, Gerry Hatch recognized the need for a new corporate engineering model that combined technology and business, so he assembled a group of like-minded engineers, project managers and construction experts to make it happen. “Our founder understood that you can’t just have a good idea, you have to solve a need and be able to commercialize it,” Bianchini says, adding that the need still exists, maybe more so than ever.
Bianchini says the world has some significant challenges ahead, with climate change and digital technology producing volumes of data no one quite knows how to harness. “There is this need to provide sustainable cities around the world, but our clients want holistic solutions that make financial sense while being acceptable to the communities they create,” he says. “We can help them find those solutions.”
Sure enough, Hatch has been entrusted to help Australia develop a sustainable power supply and road system, and is working with China to improve its energy efficiencies and reduce its environmental impact. The engineer is also collaborating with the Port Authority of New York and New Jersey on a long-term plan to address climate change, rising sea levels and emissions reduction regulations. “The U.S. and China, especially, are suffering from a lack of holistic solutions and we’re being drawn there more and more to address that,” Bianchini says.
Hatch’s manifesto — to be passionately committed to the pursuit of a better world through positive change — isn’t just corporate lip service either, Bianchini says. “That seriously is a key part of our culture; we stay close to our clients and are immersed in the communities they operate in so we’re deeply connected and able to help them” he says, noting that his executive team spends 50% of their time in the air to visit clients around the world. Recruiting the right kind of people has been essential in Hatch staying on top of its game as well. “We know hiring from the best STEM systems around the world gives us better ideas,” Bianchini says. “We now realize we need economists, environmentalists and psychologists, in addition to engineers.”
That’s not to say Hatch is overlooking the wealth of research and development talent in its own backyard. This year, Mediacorp named Hatch one of Canada’s top employers for young people and Canadians over 40. The company has also been named one of Canada’s Best Managed Companies for 11 years running.
After keeping a low profile for decades, Hatch plans to take a more public role in the future, which means engaging more with governments on long-lasting solutions. “We have all the elements to tackle the world’s biggest sustainability issues with innovative ideas,” Bianchini says. “But we have to get better at working together to create the ecosystems needed to build them.” <em>— Rosalind Stefanac</em>
Out of work and in need of money, this Halifax couple took their knowledge of advertising and struck out on their own. By Katie Ingram
A bit more than six years ago, JT and Jodi Manning learned the online advertising company they worked for was folding. At the same time, they were also working on their house and raising two small children. “Our biggest concern was we had no livelihood and we just needed work,” Jodi says.
Over a brainstorming session at their kitchen counter, they decided that rather than look for another business to work for, they would start their own: Blender Networks Inc. “We saw there was still an opportunity in the space to shift and start our own business,” JT says. “We felt strongly that we could make it work right here in Atlantic Canada.”
More specifically, the Mannings started a Halifax-based comparison-shopping company that initially started out of their home, with Jodi serving as CEO and JT as president, positions they still maintain. After two years, it moved into its first office space. It has since expanded into a larger office and has a second branch located in the U.S.
Originally, Blender focused on contacting brick-and-mortar businesses listed in the Yellow Pages, but it moved into e-commerce and comparison shopping, whereby people use tools such as a website, pricing analysis or search engine to filter and compare products based on certain features like price or consumer reviews. As a small company, Blender Networks also made sure to focus on large clients to help itself grow more easily. “It’s a focus on whales, essentially, instead of trying to catch thousands of minnows,” JT says.
Today, its clients are internationally based and include industry giants such as Walmart Inc., Target Corp., eBay Inc., Nordstrom Inc. and Macy’s Inc. It also has sites tailored to specific products, like instylerooms.com and cartageous.com, which are promoted using its in-house content team. “They’re looking at trends, not just from celebrities … but trends that are in hot spot markets, like Los Angeles, for example, and showcasing in our content how you can create that look,” JT says. “That has strong SEO value, or search engine optimization; it’s evergreen content, so once it’s out there on the web, [it’s there].”
As being innovative is their business model, it is a strong part of Blender Networks’ mandate. The company has to continually “evolve,” Jodi says. Her husband agrees. “The sentence, ‘We’ve always done it this way,’ is the most dangerous sentence in business,” JT says. “We are always looking at ways to evolve every aspect of our own business, whether it’s HR policies or optimization strategies.”
In about a month, Blender Networks is planning to evolve again with a new product, Added Influence, designed for nano- or micro-social media influencers, or influencers who have a smaller number of followers. “Whether they know it or not, when they take a picture or their meal or something, they are influencing their friends and followers,” JT says. He says Blender Networks chose to work with this group because, despite their size, they are powerful. “You’re far more likely to go out and buy a coffee cup or a scarf if it’s from someone you know and you respect their opinion,” he says. “That’s why we thought it would be a good opportunity to go after that niche.”
Fundamentally, Added Influence helps users earn extra income since it facilitates the negotiation process when they are contacted by brands and companies with promotional opportunities. “It’s like Uber for your Instagram,” JT says, adding that the basis is to improve on something that already exists. “The idea is to look at the shortcomings in an industry and do it better than anyone else,” he says. “Coming back to the idea of Uber, people have been taking taxi rides forever, but there was a shortcoming and they were able to do it in a more efficient and effective manner.”
As for Blender Networks, Jodi says work sometimes still comes back to its roots: the couple’s home. “We have couch sessions now and then and throw things back and forth, and then we’ll have a new idea ready,” she says. Although they try to separate the two whenever possible, “Sometimes, an idea will pop into my head and I need to tell her right now and she’s reading a book or making supper or something,” JT says, laughing. “And she’s like, not now, not now.” <em>— Katie Ingram</em>
<em>Editor’s Note: Financial Post started its Innovation Nation series in November with the goal of putting a spotlight on what Canadian companies need to survive and prosper in the cutthroat global ideas economy — and why it’s essential the country and its companies, entrepreneurs and universities get it right. Along the way, we made a list of companies culled from various sources, such as the Council of Canadian Innovators and Communitech, two prominent organizations involved in innovation, who were willing to share what they do along with revenue and staffing numbers. Is it a definitive list? Happily, no, but it provides a good jumping-off point for further discussion and analysis, something the Financial Post will continue to explore in its pages and online. The five companies profiled represent activity from across the country.</em>
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