David Pecaut, 46, is a long-time e-commerce booster who now runs the tech firm ¡Formation Group. He talked to Maclean’s in Toronto about his work as chairman of the Canadian E-Business Opportunities Roundtable.
Maclean’s: Why create the Roundtable?
Pecaut: I was leading the Boston Consulting Group’s e-business globally and I could see other countries like Finland that had embraced the Internet so dramatically that they were punching above their weight in terms of international exports. But we were not grasping the opportunity. Maclean’s: What should government do now? Pecaut: The big challenge is applying this technology in its own areas: health care, education, government service. It could deliver drivers’ licences at a much lower cost electronically. It could say to the woman tied down with kids in northern Ontario that she could study at the University of Toronto through the Internet. And we have completely lost sight of the fact that health and education are becoming global export businesses. Universities could use the Internet quite dramatically. We could export health-care services. But no one is even talking about this. The health-care debate is still mired at the level of: are we going to have a universal system? It just kills me. If we turned them into export earners, we would have resources to solve some of the problems.
Maclean’s: What is the small business concern? Pecaut: The eBay auction site has enabled the creation of thousands of small companies in the U.S. That kind of explosion has not happened to the same degree in Canada. We discovered that small
businesses were very concerned about security. That is old thinking: you can get very secure systems today. Second, there was this sense that it was an incredibly complex thing, almost technophobia. So we put together a free tool kit that they could download. A third issue was: “my customers are not demanding it.” But when your customers tell you that you should have done it, they are gone. Maclean’s: How would you improve Canada's sources of venture capital?
Pecaut: Most pension funds are not in the game here. That is a scandal. Pension funds are saying to the government: raise the foreign ownership limit to let us invest more offshore. My response is: if you want to put more money offshore, then start putting more money into young entrepreneurs. Maclean’s: What is the Roundtable’s legacy? Pecaut: At the top of the list of impediments to Canada’s success was a tax code that actually inhibited venture capital and e-business start-ups. One of our proudest achievements is that the tax changes we recommended and the government has implemented have done more than level the playing field: they have tipped it to our advantage. We have a lower capital gains rate than the U.S. Corporate taxes are coming down. That is incredible. Canada could be Silicon Valley North.
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