Podcast Transcript - California: a golden state of opportunity

Host: Michael Mancini

Hello and welcome to the first podcast edition of CanadExport, the government of Canada's magazine for entrepreneurs who want to compete, partner and prosper in the global market place. I'm Michael Mancini, editor of CanadExport. You can find us online by visiting CanadExport and following the link on the right side of your screen. I'll give this information to you again at the end of the show.

Canadian companies are doing more international business than ever before and Canada's exports to the state of California in particular, at almost 26 billion, total more than Canada's exports to the next three largest export markets combined, the U.K., China and Japan. My co-host for today is Barbara Giacomin, Senior Trade Commissioner with the Canadian Consulate General in San Francisco. Hi Barbara, thanks for joining me.

Barbara Giacomin: I’m very happy to be here Michael.

Michael Mancini: So Barbara, what is the Trade Commissioner Service and what do you do for entrepreneurs looking to do business abroad?

Barbara Giacomin: Think of the Canadian Trade Commissioner Service as a team of International business development experts who can save a company time and money as they grow their businesses overseas. There are 12 regional offices in Canada, and 150 offices in key markets around the world. Basically, Michael, we can help Canadian businesses that are looking to expand by providing business intelligence, general information and the all important introductions to key contacts in our territories. Specifically in California, we have Trade Commissioners in four offices and with us on the line is Alain Dudoit Canada’s Consul General in Los Angeles who's also responsible for our trade office in San Diego.

Michael Mancini: Thank you for joining us Alain.

Alain Dudoit: Thank you very much Michael

Michael Mancini: Let’s start with why you think California would be an attractive market for Canadians.

Alain Dudoit: This is a very dynamic, diverse economy which is experiencing solid economic growth. It is also the home to world class institutions, research centres, the U.C. system with which 10 campuses is already larger than our 10 most important Canadian Universities. You have Stanford, you have Cal-Tech and you have three national laboratories placed in California. California is already a major market for Canadian goods, energy, all gas and electricity and increasingly new energy technologies: forest, building products, high-grade food products, services and a list can be built on and on. As a global centre for innovation and research and development activity, California is also an important partner for Canada in research and increasingly in the commercialisation of technology.

Michael Mancini: Alain what advice would you offer Canadian companies on how to approach this market?

Alain Dudoit: First and foremost, put California on your radar screen. And the reason I say that, if you look at market economic growth in the south-west U.S, California is turning out as the global power of the south-west U.S. We need to acknowledge and we need to take into account that California is directly relevant to our competitiveness.

Michael Mancini: Alain what are some of the challenges that Canadian companies might face in doing business in California?

Alain Dudoit: Competition. What has made the strength of California is the risk culture, the capacity to innovate and to move innovation to the market place. So I would say that how to best characterise the California market and the California business culture is that capacity to take risks. To assume risk and to be ready to invest in new technologies and assume the risks attached to that.

Michael Mancini: Thank you very much, Alain, for your time.

Alain Dudoit: Thank you very much it was good talking to you.

Michael Mancini: Likewise, goodbye.

Alain Dudoit: Goodbye.

Michael Mancini: Alain Dudoit is Canada's Consul General in Los Angeles.

Barbara we know from talking to Alain that California and Canada have a strong trade relationship, but I think it's fair to say that Canadians, when they think of doing business in the United States, many states come to mind. What makes California stand out in particular?

Barbara Giacomin: Michael, if you think of California as a separate nation, its economy would rank 8th in the world, outranking even Canada which ranked in 9th place by 2005 stats. California, in particular the Bay area which encompasses Silicone Valley, is renowned for having three things: firstly, a strong entrepreneurial culture; secondly, research and development expertise; and lastly, more venture capital than anywhere else in the world. All of these factors combine to make this area a hotbed for innovation and the creation of new companies. Trends start in California. It's a huge and dynamic market, both for traditional and new economy exports. And last year, two-way trade between Canada and California exceeded 37 billion dollars.

Michael Mancini: Those are impressive numbers. It's easy to see why Canadian businesses would want to tap into that economic strength. And when growing a business into a new market one of the best ways to find important information is to talk to someone who's already done it. Zymeworks is a Vancouver based bio-technology company started in 2004. Doctor Ali Tehrani is CEO of Zymeworks. Welcome Doctor Tehrani.

Ali Tehrani: Thank you very much, thank you for having me.

Michael Mancini: Oh, it’s a pleasure. Tell me about your company.

Ali Tehrani: We research and develop industrial enzymes, and the best way of thinking bout enzymes is that they’re naturally occurring proteins that catalyze chemical reaction, without which really the speed of the reaction would be too slow to sustain life. With that said, industrial enzymes are the key biological enablers for the use of renewable resources as a source of raw materials. In the pulp and paper industry, they look to use enzymes to bleach pulp, instead of using chemical agents, which was the traditional method. So what they typically do is they have an enzyme in mind that needs to be tailored and made very customized for their specific process. And they come to us to go through that research and development process to have that enzyme perfectly meet their needs. The example that I use is that you can go buy a $2000 beautiful suit but it won’t really be perfect until a tailor matches it perfectly to your body. We are like that tailor. We are those engineers that take that raw, beautiful material and turn it into something that creates value.

Michael Mancini: You have a very interesting product. Now why was California the right market for your company?

Ali Tehrani: Well, you’ve got to remember that the two bio-technology hubs in North America, being California and Massachusetts, California is closest to us, and what is so valuable about California is that it is source of talents pool that is an early-adopter mentality and practice. And also, we have trends setters in our field of interest, in our market, that really opened up this field of industrial bio-technology, or the use of industrial enzymes. Because of their work, you have venture capitalists that believe in this field of bio-technology, and are actively looking for deals and looking for companies to invest in. We look at California as a state that we can draw talent from, but also work with the bigger brothers, so to speak, they are the companies that are ahead of us, to position ourselves in this market. And last but not least, none of us will survive without financing, and if the right people with the right mindset are in California, we’d like to be close to them, and we’d like to be able to benefit from their expertise and their financial support.

Michael Mancini: Tell me, what were some of the obstacles that you encountered when establishing your presence there?

Ali Tehrani: As a Canadian company, as a non-local, it’s very hard to find the right people to talk to within an organization. We all know which organizations to talk to, but it’s not as simple as picking up the phone and just going through a directory and saying, “Well, could you patch me up to somebody that is interested in a Canadian company?” You have to know somebody that is willing to give you the time. And that is always a major obstacle if you are somebody new and up-and-coming in the field. So you have to be able to find that right person to champion you.

Michael Mancini: How did the Trade Commissioner Service help you?

Ali Tehrani: Well, I am taking our technology and our capabilities on the road, so I’ve been working with Trade Commissioners all throughout the world, especially in California and in Germany and in the Netherlands. And in all three cases, they have made introductions for me, they have provided us with the place to meet if one was not available, which is key, because oftentimes you do want to make a good impression and you don’t want to go to a coffee shop to talk serious business. And also, they provide you with the sort of market intelligence and the know-how that is not readily available. Today, they are an active part of my business development strategy. I go to all of the major conferences, I interact directly with customers, and I talk to every Trade Commissioner that I can to update them on what we’re doing, what we’re looking for, and where we’re headed.

Michael Mancini: What should other Canadian companies watch out for when approaching the market?

Ali Tehrani: Other Canadian companies need to be aware of the competitive landscape, because it could make them or break them in the financing stage. If you’re not aware of your competitive landscape, you could be making assumptions that would be ultimately your downfall. And to really understand your competitive landscape, you have to look at every piece of business intelligence that is available, and you should not be taking shortcuts. Again, one of the values that the Trade Commissioners provide is that business intelligence. They are very much in contact and aware of the specific expertise and they could provide you with information that perhaps you were not aware of. Case in point, I do believe that I knew everything there was to know about California and in speaking to two of the Trade Commissioner, one based in San Francisco and the other one in San Diego, I became aware of three companies that I wouldn’t necessarily at this point classify them as competitors, but I certainly would want to know where they’re headed and what they’re doing.

Michael Mancini: Do you have any advice for Canadian companies looking to export or invest in California?

Ali Tehrani: Get out there right away and talk to your Trade Commissioner. It is the best way to save time and money. You can have one or two professional business development employees full time on your staff, or you can have a team of professional, knowledgeable and well educated individuals try to help you out, without hurting your budget or the amount of cash that you have that you can allocate to something else.

Michael Mancini: So what does the future hold for Zymeworks?

Ali Tehrani: Our future is one of success and profitability. I do see us establishing offices elsewhere outside of Vancouver, and one of the places that I am very closely looking at is having a presence and an office in California, not only to be able to recruit talent, but also to expand our operations there because there is so much business to happen there.

Michael Mancini: Well, best of luck Doctor Tehrani, thank you for joining us.

Ali Tehrani: Thank you very much for having me.

Michael Mancini: I’ve been speaking with Doctor Ali Tehrani, CEO of Zymeworks in Vancouver.

Barbara, it’s clear that Canadians are making an impact in California. In fact, a study released this year is helping us understand the Canada-California relationship a little better.

Giacomin: Yes, Michael, and we’re learning more and more about this relationship all the time. That study by the Bay Area Economic Forum highlighted California’s economic ties with Canada, and it had some interesting findings. For example, in 2005 we were surprised to learn that an estimated 832,000 jobs in California were created as a result of two-way trade with Canada. The study went on to show that Canada-California trade has grown steadily since the 1970s; but perhaps most importantly, the study clearly showed that the cultural similarities that we share have placed our two economies on parallel tracks in their competitive strategies. This in turn creates opportunity for new kinds of commercial research and government-to-government partnerships.

Michael Mancini: In fact the studies show that Canada and California are moving towards long term cooperation in research and development in areas like cancer stem cells, infectious diseases, information technology, nano-technology and alternative energy. Some interesting partnerships are starting to form. But what does this mean for Canadian business? With me to discuss this is Doctor Robert Dynes, president of the University of California. Hello Doctor Dynes.

Robert Dynes: Hello, how are you?

Michael Mancini: Good, thank you. Thank you for speaking with us today.

Robert Dynes: Pleasure.

Michael Mancini: So you are a Canadian heading the University of California. What has that been like?

Robert Dynes: Heading the University of California is the toughest job I’ve ever had. It’s a huge enterprise.

Michael Mancini: Well, let’s talk about the links between Canada and California. Tell me about some of the partnerships that are starting to form.

Robert Dynes: Well, we’re very, very excited by those partnerships. We began forming those about a year and a half ago at a meeting at UCLA where a lot of Canadians came down, mostly from academia, some from industry, and the areas that we identified that would be really exciting to work on are stem cells, cancer, energy, emerging infectious diseases, nano-technology and information technology.

Michael Mancini: How do Canadian businesses get involved with the University of California?

Robert Dynes: I think a fair question is: How do California businesses get involved with the University of California? And it’s through a variety of things, through supporting research, through intellectual property, through tech transfer, through venture funding, new ideas that spin out new companies; all of the above. And, partnerships and collaborations with California business. We have people working on new drugs, development of new drugs, going through clinical trials, looking at new information technologies, looking at the future, how people interact via cell phones and communications systems, new techniques in medicine, in agriculture; the wine community in the world is dependent on what goes on in California. I mean, it just goes on and on.

Michael Mancini: Now, how can Canadian companies leverage opportunities with California universities?

Robert Dynes: The value that the companies here see is that they get the first glimpse of the future, and can look at new intellectual property that’s coming out and figure out how to get their hands on it.

Michael Mancini: Our Canadian companies, they’ve wanted to partner with the University of California, how can they be in touch?

Robert Dynes: See, I see this as a three-fold partnership: its government, industry, and the universities. And we have a lot of that here in California, and the best connections we have, that is the University of California has, in Canada is through the universities. And the presidents of the major universities in Canada are very enthusiastic about this, and I would guess the best thing to do is to get in touch with the universities that industry have the best contacts with in Canada, and that would then naturally connect them to us.

Michael Mancini: Could you tell me about the connection that exists with CANARIE, Canada’s Advanced Internet Development Organization?

Robert Dynes: It’s the next generation telecommunications internet system, that’s in Canada. The southern California folks met with the CANARIE folks and said: “Yah, we can do this.” And so they did it within three or four months, and I think within a year movies were being transmitted back and forth; and at McGill, which is one of the leading neurosciences programs in the world, large amounts of data on brain imaging is being transmitted back and forth between McGill and the University of California San Diego, which has one of the best neurosciences programs in the country. So they’re sending pictures, brain images back and forth where you couldn’t do it with a low speed network, and it just required us connecting our two networks.

Michael Mancini: Tell me more about some of the partnerships that exist in the environmental sector.

Robert Dynes: Well I think it’s in energy mostly. And energy and the environment are most intimately connected, that’s one thing that, again, has no borders since much of the energy that we use in California comes from Canada. And the technology, I think, is being studied in both places.

Michael Mancini: And how about in the area of renewable resources and alternative fuels, alternative energy. Tell me about the progress that’s being made in that regard.

Robert Dynes: We have a huge research program going on now that was just announce is funded by British Petroleum. Over the next 10 years there’s half a billion dollars being funded into the University of California and a partner, University of Illinois, on bio-mass conversion, from bio-mass into clean forms of energy.

Michael Mancini: Well thank you, Doctor Dynes, for taking the time; it was a pleasure to speak with you today.

Robert Dynes: It’s my pleasure.

Michael Mancini: I was speaking with Doctor Robert Dynes, president of the University of California.

I’m Michael Mancini back with Barbara Giacomin, Senior Trade Commissioner in San Francisco. Doctor Tehrani also emphasized that it’s important for companies to do their homework when researching a market opportunity. How can the Trade Commissioner Service help in this area? What kind of homework are we talking about?

Barbara Giacomin: Basically, Michael, I think we’re talking about the fact that our officers know pretty much, from the companies they work with here, what it is they’re going to need to know about a Canadian company and its products, before they come to market. By sharing those questions with the Canadian company, they can walk through a lot of information to ensure that the Canadian company has thought about all the various elements that go into approaching someone here in the market. I know of examples where the conversation a Canadian company had with one of our officers actually persuaded them to delay coming to the market until they could do further research to further define exactly who they wanted to target with their specific service, in this case. So I think there is a way for us to assist a company to know whether they are actually ready for the market, and we can suggest ways to do their homework in Canada to become more ready. So that when they make an approach then to a local contact, they really come across as having thought it all through ahead of time.

Michael Mancini: And I understand that the Trade Commissioner Service actively seeks out Canadian companies to help. Tell me more about that.

Barbara Giacomin: That’s absolutely true, and probably here in the US it’s as true, if not truer, than anywhere else in the world. And that’s because I think that companies going further a-field think of using the Trade Commissioner Service, but very often if they’re coming to the US market they don’t necessarily think of us in the same way they would if they were approaching a market in the Middle East, or in the Far East. Consequently, we found that if we can meet the companies at trade shows, at conferences, either in territory or elsewhere in the United States, it’s a way for us to demonstrate to those companies that we’re here and that we’re at their service. I’ve give you a specific example. Recently, our biotech life sciences officer attended BIO, a major, major biotech life sciences conference in Boston. And at that conference were many of the people in the United States who do that job, and there was a tremendous effort made for the companies that were exhibiting, this is the Canadian companies now I’m speaking of, to have them meet all of our officers in group settings, so they could explain what they wanted to do in the United States, so that all of the officers working in that sector would go away from that conference knowing how they could look-out for that company, and how they could look for opportunities and look for partners for those companies. Now very often, the companies would not have known about that unless they were approached by us in a very proactive way, as I’ve just described.

Michael Mancini: Thank you for sharing your perspective on this, Barbara. So, if Canadian companies want to get in touch with the Trade Commissioner Service, how can they do it?

Barbara Giacomin: Information on who and where our Trade Commissioners are located worldwide is available 24/7 on the department’s website, and that’s at the Canadian Trade Commissioner Service website.

Michael Mancini: Thanks again Barbara.

Barbara Giacomin: You’re very welcome.

Michael Mancini: Well, that’s our show. Don’t forget to visit us online at CanadExport to subscribe to CanadExport, our twice monthly magazine. Or you can visit the Canadian Trade Commissioner Service website to learn more about the benefits of the Canadian Trade Commissioner Service.

I’m Michael Mancini. I’ll see you back here soon.

To download our other episodes, just go to www.canadexport.gc.ca or go to iTunes and use the searchword “CanadExport.”