Two Middle Powers, One AI Bet: Canada and Germany's Tech Alliance

Two Middle Powers, One AI Bet: Canada and Germany’s Tech Alliance

[0:00] John Stackhouse

AI stands for Artificial Intelligence. It also stands for All In and we are at the All In conference in Montreal. This is the biggest AI gathering in Canada. 10,000 people, hundreds of companies and dozens of countries represented here. And as a sign of just how much change is underway in the world, the country of honor this year at All In is Germany.

And there’s a lot of talk about how Canada and Germany can become even greater AI partners, which is why I’m excited to have my RBC colleague Nora Bieberstein join me here. Nora knows a lot about AI, and she’s also from Germany. Nora, welcome to Disruptors. Or should I say Willkommen?

[0:41] Nora Bieberstein

Thank you John. Or should I say Danke schön! It’s very exciting for me to be here as a German living in Canada. It’s great energy. Some really big announcements made in the last 24 hours on stage, and we have some excellent German tech leaders lined up for today’s episode.

[0:58] John Stackhouse

And here we have another special guest on Disruptors, a robot. Don’t know if it speaks German, English or something else, but welcome Willkommen to Disruptors. So a lot to discover. Let’s get going. We’re joined by Yvonne Denz, the head of the Canada German Chamber of Commerce. Yvonne, welcome to Disruptors.

[1:20] Yvonne Denz

Thank you. Thanks for having me.

[1:22] Nora Bieberstein

So tell us a bit about what you’re hearing from the delegation that is here at All In over the last 24 hours. What are the key themes and experiences?

[1:31] Yvonne Denz

They’re all very, very excited. So for most of them, or for some of them, it’s their first time in Canada and they’re very, very impressed with the trade show. They’re impressed by the talent in the AI space, by the research in the AI space, but also the openness to collaborate. The sense of we are going to work together to build something bigger.

The spirit of, as I said, cooperation and the trust, and as we usually say, like the shared values between the two, the two countries.

[2:02] Nora Bieberstein

You moderated a very insightful panel with industrial AI leaders. BASF was on the panel, a really interesting robotics company. Tell us some of the takeaways from the panel conversation.

[2:18] Yvonne Denz

So I think one very interesting aspect was the idea that was raised by a Irene Yang from BASF about having maybe some template IP agreements that companies, especially startups, could easily access, maybe 2 or 3 just templates that of course they would still have to adapt to their own case, but something very concrete they could just pick up on a website to make that step easier for the collaboration.

That was one. The other one was the was the idea to really work on concrete problems. And we had NEURA Robotics on the stage. We had someone from Linamar on the stage who really said, well, we have an aging workforce that’s going to retire, and we have a gap in people that are coming into the workforce. There’s numbers out there that 25% of the workforce in the manufacturing field is going to retire within the next years, but we only have 8% that’s coming.

So how do we bridge this gap? And to bridge that gap we need autonomization. That’s the only way we can go. And so that is something where they now start talking. Well what can automate.

[3:29] John Stackhouse

You’ve spent the past decade, probably more trying to convince Canadian companies to do more business with Germany. What have been some of the ahas for you in making the case to Canadians to get on the airplane and start selling?

[3:47] Yvonne Denz

I think it always comes down to the business case, and we are all business people. We all know that the moment you can show them a real business case, they will get into the plane and they will make the trip. It’s also making sure that they, sometimes if they look at Europe, they can see it as a very complex market.

And it is a complex market. But if you start somewhere and of course, I always say start in Germany. It is an amazing, and it’s a big market where you can have very successful business.

[4:18] John Stackhouse

Yvonne if we’re fortunate enough to be here a year from now, what do you hope will have changed?

[4:23] Yvonne Denz

I hope to see there’s more Canadian German cooperation. And I actually don’t necessarily think that’s a hope. I believe this is going to happen because there is no way around it. I think we will see some concrete outcomes. And of course, hope we will have a good German contingency at next year’s All In, because I think Canada and Germany are all in.

[4:47] John Stackhouse

What a great way to end, Canada and Germany are all in. Yvonne, thank you for being on Disruptors. Thank you.

[4:53] Nora Bieberstein

Great insights from Yvonne Denz.

[4:55] John Stackhouse

Nora, I find it fascinating how Canada and Germany are trying to find more things to trade and invest in. We’ve got a submarine deal, more to come in space. And all this in AI. Who will we hear from next?

[5:08] Nora Bieberstein

Talking about AI, we will hear from Robert Jozic from Schwarz Group.

[5:13] John Stackhouse

And Schwarz Group. Who are they?

[5:15] Nora Bieberstein

They might not be a household name here in Canada, but in Germany and beyond in Europe they are a big deal. We’re talking Lidl. If people have heard of that or Kaufland. Big, big brand names over in Europe.

[5:27] John Stackhouse

We’re joined now by Robert Jozic from the Schwarz Group. He runs pretty much all things digital there. Robert, welcome to Disruptors.

[5:36] Robert Jozic

Yeah. Thank you for having me here in the lovely Montreal area. So looking forward to our exchange.

[5:41] John Stackhouse

Building scale in a fragmented world is not easy. You mentioned those two countries. Our Prime Minister Carney refers to them as the hegemons, the United States and China. They certainly are the tech hegemons. So you’re up against an American firm, Amazon. You’re trying to develop AI capabilities. While the hyperscalers, largely Americans, are rapidly moving things forward. How do you see the world evolving when middle powers like Germany and Canada are trying to develop, and even formalize tech alliances in a free market environment?

Where will each have sovereignty over our own countries? I think that’s probably what most Germans and most Canadians want, but there needs to be some sort of allied effort.

[6:30] Robert Jozic

For me, the first step is, and please don’t get me wrong on this one, but take out emotions. Don’t get me wrong on this, because of course we are all proud of our nations and of what we have to achieve. We also feel being responsible for moving forward. But this actually matters. For any kind of geography and nation.

If we come back to the essence of your question, see, we are right now in the middle of the biggest technological change ever. We are right now the heartbeat right now, if you just take the chip sector is on a cadence of every 12 months right now. So literally every year there is a new chip generation, which is on average two and a half times more efficient, more powerful, you name it, than the previous one.

And that’s the heartbeat. So at the same point in time, if you want to differentiate yourself, you need to find ways on how either to address a specific new market which the case in the sovereign game. Why? Because there is a strong demand on sovereign setups. Everybody would like to have their LLM being hosted at a data center of a partner in your jurisdiction because then actually you have the guarantee, or at least a higher level of guarantee, and trust into the setup being available on the next day.

Literally. The second aspect is that by looking into the technology field, the race is not at all. So there is a high potential for a lot of technologies, especially when it’s about the convergence of software and hardware for moving forward. The only issue is you have to come up with a ten-fold, 15-fold or 20-fold improvement in order to be relevant in this market at all.

But these opportunities are there, and we are looking forward to leverage them jointly with partners. So and coming back, the market is huge, the opportunities are huge, and all it actually needs is determination because the understanding of the dependencies are there. The conviction that we need to move forward for technology and sovereignty is there. And let’s just execute.

So determination. And I have to emphasize this because while talking a lot with the politicians and so on, and not the ones here during this event, but generally. Right. Talk is cheap. You have to act.

[8:54] Nora Bieberstein

Yeah. You mentioned LLMs and you mentioned partnerships. So there was a big announcement on stage yesterday, Cohere and Aleph Alpha, you decided to back that deal. Could you tell us a bit about that and why you decided to be involved there?

[9:09] Robert Jozic

See, for Cohere and Aleph Alpha, I think this was one of the most important moves, for a number of reasons. First of all, scale is important in that whole game. And I think we see that even the leading players are having a severe issues right now in order to stay successful, or just to go for their IPO.

Secondly, there is a decent market for closed models, for sovereign closed models, as there is also a market potential for open weight and open source models. But both kind of solutions are addressing a complete different need and requirement. So you don’t have a problem with running a request for on linear algebra when Chinese model is answering you. So you can be pretty sure that there is hardly any kind of political bias in the results.

But this might look completely different if you serve an agent for healthcare, public or defense requirements for environments in the corresponding industries.

[10:12] John Stackhouse

Maybe. The last quick question for you. Germany is here pitching AI to Canadians. A lot of Canadians are in Germany pitching AI as well. What does Germany have to offer Canada that we should be paying attention to?

[10:25] Robert Jozic

I think we’re on both sides opening up the market potentials, because the European market is, I think, quite attractive for Canadian players as it is relevant for European players. Also to have an additional market and extend their, addressable market for sovereign solutions. So from a market perspective, it’s a match and it’s an extension.

From the talent pool it’s it’s exactly the same. Most people do not know that the leading researchers in Canada are very close friends, personal friends of the corresponding peers in Germany and vice versa. So we are emphasizing bridges, which were there already since a couple of decades. Now it’s just about to use them more frequently.

[11:08] John Stackhouse

Emphasizing bridges, using those bridges. Robert, thank you for being on Disruptors. Danke schön.

[11:13] Robert Jozic

Thank you very much.

[11:14] Nora Bieberstein

Fascinating to hear from Robert Jozic. And watch what Schwarz Group is doing in Germany and beyond.

[11:19] John Stackhouse

Who will we hear from now?

[11:21] Nora Bieberstein

Next up we have Dr. Ralf Wintergerst who is the CEO of Giesecke & Devrient, G&D for short, a big security company, Munich based. They started out printing banknotes and are now evolving into digital currencies, payments and can’t wait to dig in. Herr Wintergerst, welcome!

[11:45] Ralf Wintergerst

Well, thank you for having me here.

[11:46] Nora Bieberstein

Yes, tell us a bit more about you, what you do and what brings you to Canada.

[11:51] Ralf Wintergerst

Well, I’m actually running a German security technology company. We are based in Munich and we have long standing operations here in Canada. So it’s like coming a little bit home because I have been here many times because of business.

[12:04] Nora Bieberstein

And tell us a little bit about All In. Germany is the country of honor. There’s a big delegation. What’s been your experience so far and what can you tell our listeners?

[12:13] Ralf Wintergerst

Well, I have a second role in my life, right? I’m the head of the president of Germany’s digital association, and there is 2300 firms members. So I also represent Germany’s kind of digital business, so to say. Right. And seeing the All In here with all centered around AI of course. Right. I’m very thrilled. It’s a very good vibe and a very good atmosphere.

And what I personally recognized is that there’s a lot of business opportunities for us. In my other role as a CEO of a security tech company as well. Right. Because, we do a lot of things in mission critical security solutions, mostly on the digital side in the meantime. And so I’m really very happy about all the connections I’ve made here.

[12:54] John Stackhouse

We’re living in a world of incredible change, and many of us are trying to better understand other parts of the world and what they have to offer. Tell us a bit about what we may be missing in terms of Germany’s tech capabilities. We all know the engineering prowess of the country, but in newer and frontier technologies, AI particularly, what does Germany have that Canadian should be paying more attention to?

[13:19] Ralf Wintergerst

Yeah, I think the connection between Germany and Canada can pay off when we combine the know-how and the foundations you have in AI with the Mila Institute, for example, or what you have done in the AI space with Germany’s found, let’s say, very strong industrial base we have and all the data we have, because if we can leverage that, then the next frontier in AI, which will be physical AI, can be mastered and scaled through the combination of the assets of both countries, because no country like China or U.S., I think there’s no comparability.

But, Canada with 41.5 million inhabitants, Germany is 84. I think if you combine two markets, we have a better possibility to scale. Right. And the industrial foundation and physical AI and the AI foundations can be a very strong combination. And the combination of Aleph Alpha and Cohere here, that we at least have a third moment in global AI as a separate model.

Combining that, again, provides the ample opportunity for me.

[14:27] John Stackhouse

Just for clarity, the third moment, what were the first two moments?

[14:30] Ralf Wintergerst

Well, I think the first, I was surprised when ChatGPT came out. Right. Then the second really moment was the Mythos moment, right when it actually turned out that the software all of a sudden can be shut down. And we really, at least in Germany, I think I have the same notion from Canada we felt dependent. And when you feel the dependency and when you get a notion that technology is weaponized against you, then of course you must act right.

And the action, of course, is we cannot switch off the American models because they’re simply too dominant at the moment. Right. But if we are good in creating choice, then we reduce dependency and we increase the offerings not just for our own countries, but for the world. And this is what we should aim for.

[15:18] John Stackhouse

It’s important for us in Canada to understand what Germany is doing in AI. But I also wonder what Canada has to offer Germany, because you could do probably a lot of this on your on your own. Why does why does Germany need Canada? Yeah.

[15:32] Ralf Wintergerst

Well I think the deep tech and the high tech technological advancements require so much funding and so much infrastructure that we have to think differently in combining businesses, right? Because Germany has a lot of funds, some are used well, some maybe not, right, as in every country, but doing it all alone against these two big gorillas in the world, the United States and China.

I think it’s impossible. So we have to find coalitions in the Western world not just to be good to our own economy, but to have something which is equally scalable. And a third point for me personally, is we have to make an offer to those countries who eventually not cooperate with the United States and China, which is the global South, because if the global South always makes the choice for China and the United States, we are pretty much left alone.

And this is not good. Right. And your Prime Minister, Mr. Carney, said that we don’t want to be on the menu. Right, because we want to play our own game. And I think the own game has a different formula.

[16:36] Nora Bieberstein

Yeah. Yeah. I would love to switch to the digital euro project. Oh, yeah. Yeah. Your company Giesecke & Devrient or G&D as we say here, it’s a bit easier. Is building the offline component for that. Can you tell us a bit about that project?

[16:52] Ralf Wintergerst

Yeah. Well the European Central Bank is very sensitive when we talk about this project. Right. Because but generally I think we, we come from a legacy. Right. Because we turn next year 175 years old and once upon a time we have even printed Canadian currency here locally in the country. Right. And so now we have a lot of interface to all the Canadian banks and to the Bank of Canada.

But we do the same in Europe. And when in Europe, the big project came up for central bank digital currency. We were already three years developing along the lines for other countries in Africa and in Asia. So we have the entire set of minting digital currency to circulating it. So the entire algorithm suite, and we have tested and tried it.

So of course, then we got a major part of the digital euro, which is a very important project, because I think from a European perspective, there’s a lot of players who dominate the digital space in payment. Right. And there’s that notion of how can we protect in a, in a certain way, digital sovereignty, how can we be independent?

What happens if somebody switches us off? What can we offer against that? Because you must have an offer countering it on the digital side. Yeah, right. And that was probably the prime purpose of running the project. And we are in the middle of actually making the specifications for the digital euro. Right. Which of course for details you must ask the central bank.

They are always very sensitive on that. Yes, but but I think overall it has a place in the world for protecting own interests.

[18:29] John Stackhouse

Ralf, it’s been a pleasure. Thank you for being on Disruptors.

[18:32] Ralf Wintergerst

Great pleasure. Thank you.

[18:34] John Stackhouse

We’ve had a couple of intense, fascinating days here in Montreal at the All In Conference. Nora, what’s most impressed you?

[18:42] Nora Bieberstein

John. What an action packed 48 hours. As a German, I must say, the German delegation and talking to tech leaders from Germany was very special to me. And I learned a lot, as we saw from the conversations earlier, but also just the energy. AI is here to stay and all the ecosystem getting together around artificial intelligence, innovation and the newest developments.

It’s energizing to be in the room with with everyone.

[19:11] John Stackhouse

It’s got me thinking more about the globalization of AI. The science has been dominated by the United States and China, but we’re seeing so many other countries all around us here at All In and beyond, who are growing their foothold in AI. Canada is one of them. And Canada will be partnering with more and more countries on this in the years ahead.

That’s why we’re focusing this season of Disruptors on geotech and this brave new world of technology. I’m John Stackhouse.

[19:40] Nora Bieberstein

I’m Nora Bieberstein.

[19:41] John Stackhouse

Thanks for being with us.