Permission to Fail: A case for youth entrepreneurship

[0:00] Ronnen Harary

I think it’s the most exciting time to be an entrepreneur ever, The fact that AI is in the marketplace is disrupting everything and in disruption creates opportunities. And if you’re younger and you have the energy level and you’re closer to the tech, you are going to run circles around the bigger companies.

[0:20] John Stackhouse

Today we’re talking about a really positive disruption. It’s called entrepreneurship. But unfortunately Canada does not have enough entrepreneurs. Not nearly enough.

And there’s a whole new post-pandemic generation emerging that is not gravitating towards starting their own businesses.

Which is why it’s so important to hear from Ronnen, because he’s just written a book called No Experience Necessary And why being in your 20s is the best time ever to start a business.

Ronan is the kind of new entrepreneur that we need a lot more of.

A few decades ago, when he was just 23 coming out of university, he and some friends launched a company that became Spin Master.

Now, you may not have heard of Spin Master, but I’m pretty sure you’re familiar with its products and brands, things like Hatchimals and Air Hogs, or that global TV sensation Paw Patrol and all the toys that go with it.

That all started with just $10,000 and a lot of youthful ambition.

Today, Ronnen is still helping to drive and relentlessly grow a global champion right here in Toronto.

Ronnen tells his story in no experience necessary, but he really uses the book to to push a generation of 20 somethings to embrace entrepreneurship the way he did when he was 23.

It’s the biggest, most positive disruption anyone can take in their lives.

Ronnen, welcome to Disruptors.

[1:43] Ronnen Harary

John. Great to see you again.

[1:45] John Stackhouse

Great to see you again and to be talking about your book No Experience Necessary. That’s so liberating for those of us of any age. We can do things without experience.

[1:57] Ronnen Harary

You can bet on yourself at any age.

[1:59] John Stackhouse

What inspired you?

[2:01] Ronnen Harary

You know, I when I hit middle age, I was thinking back to my 20s and all the amazing things that accrued to me and my business partners and everybody that joined us on the journey in that decade and how magical that decade was. And I didn’t realize at the time, like, everybody’s rooting for you and the power of not knowing.

And like, there’s so many things and your energy level that that you’re gifted in your 20s that recedes in your 30s, 40s and 50s. You have other things that accrue to you in your 30s, 40s and 50s.

[2:30] John Stackhouse

Tell us a bit more about what what’s the magic elixir and combination that comes together in one’s 20s?

Yeah.

[2:37] Ronnen Harary

I think that if you’re inclined to start a business, one of the things you have going for you is that you’re very close to the zeitgeist, and you’ve been in your parents’ home for the last 20 years. You’ve been in university. You’ve been observing, observing, observing. And once you graduate from school or graduated from high school, or once you hit your 20s, you have the you finally have agency to take your thoughts and bring them out into the world.

Right. And I think that the key thing about business is always identifying the white space opportunities, like what’s different and being part of the zeitgeist. You are practically the zeitgeist when you’re in your 20s and suddenly you’re like, I see the way I want to serve food differently, or have a restaurant be differently, or a food cart, or the way I want to open up the service.

Or it could be anything. And that’s what I’m trying to encourage people to do, is that if you see the world differently and you see an opportunity, you should go for it, especially if you have like this, this desire. And but what happens is that we always conventional wisdom is you need more experience to actually go into it.

So that’s what you have in your 20s. Seeing the world differently, you have other things like the power of not knowing. Sometimes when you know too much, it holds you back.

And so for us, you know, our big power of not knowing moment was when we brought out Air Hogs into the marketplace?

I don’t know if your kids play with the Air Hogs. You know, the airplane you pumped up and it flew for 45 seconds. When the inventors pitched it to us. We went to this park, we flew it, and me and Ben, we were like 25 year old kids. We felt like we were ten and we were like, we need to make this product.

This is so magical. We knew there were safety issues. We knew that it was a plane and it was going to fall out of the sky and it may break. So there’s going to be some returns and we’re like, we’ll figure it out. So we took all our money for our first two products. We plowed it into the Air Hogs spent a year and a half engineering developing it, and just about when we were about to bring it to market, we found out that Hasbro Matel had passed on it.

We thought we were the first to see it, and I think that if we would have been a bit more of a mature company, we would have. We would have intellectualize the returns and the safety issues too much and would have said, you know, it’s it’s too much of risk. But we didn’t know as much. And we went with our gut and it turned out to be great.

And it launched as we were producing flying toys for the next 15 years, doing hundreds of millions of dollars in flying toys.

But when you’re in your 20s. You have so much energy, right? And so I write about the book I write, passion delevers risk. If you’re super passionate about something, it becomes less risky at the end of the day because you will feel you will figure out so many different ways to make it a reality, right?

So it’s a, it’s a combination of, of those sorts of things.

[5:31] John Stackhouse

Let’s get into the Spin Master story. But Ronnen first start When did you first see that entrepreneur in yourself?

[5:39] Ronnen Harary

You know, I probably say probably around 15, 16, you know, in and around there. You know, I grew up with classic immigrant, middle class family, right? And so I was an immigrant, middle class kid in an upper middle class neighborhood so that, you know, highlights a lot of things. And it drives you to actually, you know, when you’re a kid, you want to fit in.

So my allowance was always like less than everybody else’s. So I always had to like, work and I always had jobs and stuff like that. So that was a combination. And then also growing up with a learning disability called dysgraphia.

[6:21] John Stackhouse

Explain that.

[6:22] Ronnen Harary

It’s basically it’s the inability for your hands to keep up with your thoughts. So as I start writing my handwriting, my hands start to cramp up and then my handwriting becomes illegible and even illegible for me. So I got to go back and rewrite the words so the teacher can read it, and I can read it, and then you lose your train of thought and you kind of have to reboot.

So an exam that.

[6:43] John Stackhouse

But your thoughts are already down the road.

[6:46] Ronnen Harary

There, down the road. But you’re having but you have to go back and then you have to think about what you’re thinking, what you were just thinking about. So an exam that would take person an hour would take me two hours. And so I was very lucky to get it identified as a kid. And I got a lot of accommodations as a result of it in school.

And I’m so fortunate to the public school system for identifying me, because a lot of kids actually don’t get identified. And if you don’t get identified it’s very hard to actually graduate school. So I was lucky, but my learning disability forced me to because I knew academics was not going to be my career path and I probably would not be a doctor.

It forced me to be entrepreneurial in nature. So it was the immigrant and the learning disability mixed together and also my curiosity. Right? I was just curious about a lot of things. And I actually it’s funny, we’re in the Royal Bank building, and when I was a kid, like I always used to look at this building, I looked at this specific building and I was like, what’s going on in there?

Like, I was a kid, I would always read the business section and I was always looking up. I wouldn’t read sports or anything like that. It wouldn’t read entertainment. I was reading business, I was reading those magazines, and I was always aspiring to like the people that were working in buildings like this. So it’s actually cool that I’m actually here doing this with you.

So I, I don’t know, just innately. I love business, I love the I love the art of business.

[8:05] John Stackhouse

The art of business. Yeah. And at university, you may make made friends, deepen friendships, but decided out of the gates that entrepreneurship running your own business is going to be your path.

[8:19] Ronnen Harary

For sure. I knew it since I was ten years old and then we go to university. It was a bit of a necessity because I had to pay for school and, you know, and I were selling fertilizer door to door for our first two weeks after first year. And we were like, this is a tough gig, so we better figure something else out.

And then we started Campus Faces, which was like this poster, marketing poster with advertising and pictures of students. And so that’s that was our first real entrepreneurial journey.

[8:45] John Stackhouse

And then talk a bit about the birth of spin Master and how you got into the toy business instead of the fertilizer business.

[8:53] Ronnen Harary

Well, it was funny because we actually started with plants – Earth Buddies.

You know, when we graduated from university, I was waiting for Anton to graduate, and we said we were going to continue this business. And Anton’s my business partner. I met him when I was 12, and we have another partner, Ben Varadi, that went to business school with Anton and Ivy. And literally we found out about this product called Earth Buddies, which is a little potato head.

You put them in water, gross grass for hair after seven days. And it was doing really well in Israel. And I went to Anton, drove up to Western. I said to him, no one was doing this in Canada. What do you think about doing them? And he said, I think you’re crazy. Like this is never going to sell.

It took me two weeks to convince him. He finally said yes. We said, we’re going to make 5000 pieces for Mother’s Day. I got my brother in law to help us with the machinery, gave him 5% profit sharing. My sister made the packaging, she got 5% profit sharing and we started selling those 5000 pieces on the streets of Toronto.

Came into the office on Monday. We still had like 4000 in the warehouse. Found a distributor that we went to. He called us up three weeks later. He’s like, when can you order? When can you deliver us 26,000 pieces? And then we move factories and then, you know, the most amazing thing happened. A couple months later, we got this big order from Kmart Corporation for half a million pieces.

And the craziest thing is, you know, I was actually talking about it today is like, for us as Canadians, we never we never thought about Canada as like the single market. We were always thinking global. And we got our first big order from an American retailer within three months of being in business.

[10:32] John Stackhouse

You tell the story in your book how the buyer from Kmart, and it took chutzpah on your part, going to Kmart headquarters and tracking her down in her office. But she took a chance on you because you were in your 20s, correct?

[10:48] Ronnen Harary

What happened was Anton was backpacking with a guy a year before in Europe, and his family was well connected in Michigan. So Anton called me and said, do you know, can you get us an appointment at Kmart? And he said, sure, no problem. And for some reason I took the appointment. Okay. I woke up at 3:00 in the morning.

I drove down to Kmart, 9:00 meeting. I do a presentation and after 30 minutes the buyer looks at me and says to me, I’m not the buyer for this product.

[11:17] John Stackhouse

You got the wrong guy.

[11:18] Ronnen Harary

You got the wrong guy. And I didn’t believe him. So I re-pitched him again. And after 15 minutes he says, I’m not the buyer. To which I said to him, you know what, we’ll give you the product on consigned sales. And if it sells, just pay us. And he said, I’m not the buyer. So I said to him, well, who is the buyer?

I just drove from Toronto. He went back and he gave me this, and he came back in the room and he gave me the piece of paper and written on it was Adrienne Zacks. And I took my box of Earth Buddies, and I walked around Kmart Corporation looking for this lady. And I got so lucky that she was sitting at her desk.

And I pitched her and she said, okay, I’m going to give you a meeting at 3:30. I go downstairs, Aaron Hermelin, Anton’s buddy, was there and the rep, and they were like, what happened? I say, got the meeting at 3:30. They’re like, great, let’s go for lunch. I’m like, I’m not leaving. I’m not going anywhere. I didn’t leave the office.

I go up at 3:30 and as I walk in the door, she’s got seven competing products sitting on the side. So I’m like, great. I found the right buyer and b, I was like, oh no, I better reduce my price. And before I sat in the seat, I reduced my price. I was going to go in with the price of 265, and as I sat down, I changed the price to 165.

I did a 20 minute pitch. I told her everything about Campus Faces our poster business at university. I told her everything we’ve done for the last three months, and then she did the most magical thing, and she turned around and she grabbed this book and she gave it to me and she said, this is the vendor agreement. Read the book.

I’m giving you an order of 48,000 pieces. And if it goes well, we’re ordering half a million pieces from you. And I share the story in detail because she gave the order to 23 year old guys over the seven other people that had that shipped in product to her, a because we got in the room. So it’s like, I’m a big believer.

It’s like you don’t go, you don’t get, you got to get in there.

[13:15] John Stackhouse

You don’t go, you don’t get.

[13:16] Ronnen Harary

And I was earning and genuine about what we were doing. And she felt the passion. And then on top of that, she was like, this is a young guy. They’re young but they’re passionate and I think they’re going to be able to deliver. And I think that’s what gave us the edge at the end of the day.

[13:38] John Stackhouse

So you start with the Earth Buddy, but it explodes from there to Spin Master, today is one of Canada’s great global companies. Even though Canadians may not be familiar with the corporation, we’re sure familiar with its products.

[13:56] Ronnen Harary

Yeah. I mean, it’s it’s I write about in the book about the inverse risk. You can’t I would never be able to write the story from selling nylons filled with sawdust and grass seeds to, you know, all the products that we’ve brought out into the world.

[14:17] John Stackhouse

You know more about what you mean by inverse risk?

[14:20] Ronnen Harary

Well, the inverse risk is like whenever you’re evaluating an opportunity, right? Two things happen. One is usually we get a lot of resistance. Right. And so it’s the ability to break through the resistance. Usually when we evaluate the opportunity we look at we can game out the downside. We know what’s going to happen right. Negatively go out of business, we lose money.

You know we lose the time. We lose our opportunity cost. But when you look on the other side of the ledger, of all the things that potentially could happen, it’s hard for you to write that story because you just don’t know. Right? It’s so unknown. Right. So it’s like once you start. So in our case, you know, like when we started with the Earth Buddy, we never knew a year later we’d be selling Devil Stick, right?

And we never knew that Devil Sticks would lead us into the toy business. And we never lose the. Once we were in the toy business, ten years later, we’d be making TV shows. And then we never realized. Like we’d produce, you know, one of the greatest preschool shows ever.

This is Paw Patrol. So you the journey, right? You you can’t write it all out. And so because you can’t write it out, you lean more to the conservative side of things, but you miss out on your ability to see what potentially could happen. And it’s actually even deeper because you almost give up, right? You give up on the upside of, of the of what’s possible.

And you give up on potentially the screenplay of your life and living out the screenplay of your life. And so it’s that it’s that balance between uncertainty and certainty. And I call it the inverse risk because it’s riskier to not know, to try and live it out.

even the failures I firmly believe are going to lead to your successes, It’s actually not so risky because you’re inclined to go in that direction. Right. And sometimes I would say is like resistance. Resistance is actually good a good thing. It tells you that you want to do something.

[16:43] John Stackhouse

One of the reasons I wanted to have this conversation Ronnen is that entrepreneurship is a big need in Canada.

Why don’t we have more of that.

[16:56] Ronnen Harary

It’s a great question. And I was talking to someone about this earlier today.

And I think it’s I think it’s a cultural thing. It’s a deep cultural thing because it actually doesn’t square because we have all these amazing resources. We have the best schools, right? We have such smart people. We have the most supportive society. Right?

We have we have everything best country in the world. So I think at the end of the it’s a cultural thing, going back to giving people permission to do things differently, giving people permission to fail. It’s okay to fail, right? It’s okay to try multiple times because it will lead to your success. And maybe it’s entrepreneurialism.

And starting your own businesses is a is not such a risky path at the end of the day, right?

[17:52] John Stackhouse

One of the many strengths we have in this country is a range of groups that do lean into entrepreneurship. One of them is Futurpreneur, ad organization that RBC has gotten behind, and we’re making even greater commitments. You’ve been a big supporter of Futurpreneur over many years. What is it in Futurpreneur that you see and how does it help young entrepreneurs?

[18:18] Ronnen Harary

We I think the amazing thing about Futurpreneurs is that they give out loans without collateral, right to people to start their business.

And that’s the biggest thing. It’s like, you know, it’s really hard. I will tell you, in the early days when we start our business, I’m not going to mention which banks, but we did not get loans from the Canadian banks.

[18:47] John Stackhouse

Is it harder to be an entrepreneur today or easier?

[18:50] Ronnen Harary

I think.

[18:50] John Stackhouse

It’s a young entrepreneur.

[18:51] Ronnen Harary

I think it’s I think it’s the most exciting time to be an entrepreneur ever, ever, ever, ever. Okay. It’s like the tools you have with AI are incredible. The fact that AI is in the marketplace is disrupting everything and in disruption creates opportunities. And if you’re younger and you have the energy level and you’re closer to the tech, you are going to run circles around the bigger companies.

The bigger companies are slow. They are lumbering. I know, okay, because we’re in middle age, you know, and we’re trying to keep up and we’re having to buy other people’s companies and pay a lot for them because we didn’t create what they just created. And we have a bigger machine to put it in. But you know what? I’d prefer if we would have created it, not have to buy it.

Right? We just had to do an we just did an acquisition right now. Case in point okay. The most beautiful, incredible product. It’s called Sticker Box okay. It’s basically it’s a beautiful red box. You press the button on the top, you speak into it and you say, make me a sticker of John riding a horse on a surfboard.

It’s the first ever amazing physical AI product that’s invented and brought commercialized, and we didn’t create it. I was with the guys today and I said to them, you guys will go down in history for actually creating the first ever amazing physical AI product in the world Sticker Box.

Congratulations. You guys will go down in history and we had to buy it from them.

[20:34] John Stackhouse

How old are they?

[20:35] Ronnen Harary

They are not in their 20s, but they’re in their 30s. Yeah. The one guy he actually has, he built the prototype, built it for his three year old kid.

There are so many amazing things happening out in the marketplace.

So I know the markets like it’s it’s dire out there because of Covid and the political situation and the uncertainty in the world. Like it’s an uncertain time for young people and I feel for them. But at the same time, there is some other stuff over here that’s going in your favour and you got to lean in where you lean.

[21:11] John Stackhouse

Does not just seize the day, seize the decade and.

[21:14] Ronnen Harary

Seize the deck. Seize the moment, seize the moment, and don’t let the moment define you. Don’t let the other stuff over here define you. Let the stuff over here, okay? And whatever’s and whatever’s. And I think whatever’s whatever is your definition of success. And I think that’s really the decade that we’re moving into. Right. Is that people it’s like you don’t have to follow conventional paths.

And I think the fact that there’s so much disruption is giving people the permission to follow other paths that are that are the past, that they want to take at the time, that they want to take them.

[21:50] John Stackhouse

What a great message to wrap up on. There’s never been a better time to be an entrepreneur. Ronnen f I can ask the last question, it’s, what would you tell your 23 year old self?

[22:01] Ronnen Harary

Life is long, right? And you don’t have to rush and enjoy the journey, But but at the same time, you know, like make sure you make sure you’re moving right. Because movement creates luck.

[22:15] John Stackhouse

Movement creates luck.

Thanks for being on Disrupters. Thanks for the book.

[22:18] Ronnen Harary

Thanks, John. Pleasure. Thanks for reading it.

[22:22] John Stackhouse

Permission to fail. Those may be the three most important words, Ronnen said. And it’s really a code for disruption.

You can’t disrupt in business, and you can’t disrupt yourself if you’re not willing to take a chance. And there’s no such thing as taking a chance if you’re not willing to fail In your 20s, you have more permission to fail.

You have more runway to recover as well.

It’s why it really is the greatest time in life to become an entrepreneur. This is Disruptors, an RBC podcast. I’m John Stackhouse. Thanks for listening.

Canada’s Biotech Challenge

[0:00] Clarissa Desjardins

We need to get our acts together or else in the future you can see the majority of our drugs coming from a place like China.

[0:06] John Stackhouse

How much time do we have?

[0:09] Clarissa Desjardins

We may have lost the race already on the so-called “Me Too” small molecule drugs or the “Me Too” antibodies. But there are so many other diseases to be addressed, right? We can still compete by using unique technologies and being more innovative and creative, which the Chinese have not yet become, but they certainly will.

[0:28] John Stackhouse

Hi, it’s John here. You may have noticed that Canada is in the global spotlight, certainly when it comes to capital and investment.

A couple of weeks ago, the world’s biggest investors came to Toronto, and hundreds of billions of dollars were committed to major projects, but also some really interesting tech opportunities in Canada. AI, quantum, space, technology were all center stage, which was really exciting. But one thing was missing, and that was biotech.

I don’t think that was by design, but it’s really important that we take that challenge on. How do we make biotech and life sciences more broadly a national priority for our economic growth, for our investment agenda, and for our sovereignty? There are few people in the country who are better versed in this than our guest today, Clarissa Desjardins. She is a serial entrepreneur, a scientist, and a real champion of biotech and life sciences.

Clarissa, welcome to Disruptors.

[1:30] Clarissa Desjardins

Thank you. Happy to be here.

[1:32] John Stackhouse

It’s great to talk to you and I want to dive right into it, but first give us a sense of your own background. You’re a serial entrepreneur. You’ve had a number of successful exits. How did you go from science into entrepreneurship?

[1:46] Clarissa Desjardins

Sure, happy to tell you about my journey as an entrepreneur. So when I was doing my PhD at the Montreal Neurological Institute, I loved research. I had no inklings that I would become an entrepreneur. So it was an accidental discovery where I was working in the lab with a lot of radioactive peptides. So these are I 121 labeled peptides, and nobody enjoys that. Very naively, a colleague of mine and I decided that well wouldn’t a fluorescent label be better than a radioactive one? It was a very naive idea because fluorescent labels are huge and they usually destroy the activity. So anyhow it worked and we thought this is a great tool, but then the idea slowly sunk in that well if this is a great tool for us that replaces radioactivity, that is stable, that isn’t bad for the environment, you could do many more different types of experiments.

Wouldn’t it be useful to other people? I felt so lucky to have the privilege to do basic research. You know, I loved it, and I thought, you know, only wealthy countries can afford to pay scientists to investigate these basic questions, whatever interests them. So if you discover something practical that could lead to economic activity, you should really try to make sure that it’s available and that someone develops it. I didn’t think that someone would be me. I thought, well, they’ll hire some qualified business people who know what they’re doing, but it ended up being me. So I patented the tool and I started a business. And I learned as I went along how to patent, you know, how to do payroll, etc. And those learnings are quite easy compared to, you know, the technical learning that that we all do in our PhDs. But long story short, this company was successful in the sense that we were selling across the world. It was incredibly rewarding. And that was the entrepreneurship bug that I then never lost.

[3:47] John Stackhouse

It’s really interesting that you wanted to get your science to application to make it useful to a wide range of people. I’m sure most scientists want that. But you saw the private sector and entrepreneurship as the route for that. Canada’s changed a fair bit over the decades since your first company. But people may not appreciate how significant we were globally. Going back to the 80s and 70s, we were the country that invented insulin, but with Connaught Labs took it to a global level, and then Connaught was sold to a European country. We were the country that developed the science behind GLP, what people now know as the Ozempic, created in Canada, scale globally somewhere else.

We’ll get into what we need to do as a country, but just curious, Clarissa, what you’ve seen in terms of those significant changes from the nineties to today.

[4:40] Clarissa Desjardins

Yes, so what you’re pointing out, John, is just the wealth of knowledge creation that we’ve always had in Canada because of the high quality of our universities. So we, you know, publish more papers per capita than the US. We are, you know, the quality again of our universities and of the output is tremendous. So we can go back in history and point to all of these incredible breakthroughs that unfortunately we did not translate into commercial benefit for our society. So that that’s an issue. What has improved since the 90s a lot is first of all the culture and the attitude. When I started my business, it was frowned upon. My supervisor at the time and others were saying, you’re selling out, okay, you’re going to the dark side, you want to make money. And it really was not that. I really want felt that it was important for discoveries to generate economic activity because I thought we needed to give back for everything that we had as researchers. But people understand that now and scientists want to develop their ideas and their devices and drugs into commercializable products for that for that good reason. So there’s better culture of entrepreneurship, there’s a lot more money than there used to be.

The knowledge of how to develop drugs, etcetera, how to commercialize them is there.

[6:03] John Stackhouse

Tell us a bit about Congruence.

[6:05] Clarissa Desjardins

So Congruence is the fourth company that I’ve started here in Montreal. And what I wanted to do was to use the latest computational tools, both structure-based tools, but also machine learning and artificial intelligence tools, to accelerate the discovery of small molecules. This process of discovering a small molecule, which is a once-a-day pill, you know, the most convenient form of drugs, is a very arduous process. It’s shrinking now because we’re all using these tools, but it used to be, you know, minimum four to six years to go from an idea, a target that you want to develop the small molecule pill for, to four years to the development candidate. That means you’re just starting to prepare to go into the clinic, you’re two years away from the clinic. All in all, we’re talking 10 to 12 years. So this is part of the reason why I think our industry is so misunderstood.

It’s complex, it’s long and it’s high risk and you really have to have expertise in all those fields. So I’m very proud to say at Congruence we have shrunk that time and that risk down, largely due to our platform to machine learning and AI tools that we’ve applied. We’ve shrunk that initial stage, that stage of going from target to the clinic. So that would be about six to seven years. So we’ve reduced it down to three to four because we have our first product going into the clinic. It’s in the clinic, excuse me. The second one will be in the clinic next year and so will the third. So we did it with three products as we normally do for risk mitigation and we shrunk the time by about 50%.

[7:35] John Stackhouse

And it’s no coincidence that Congruence is based out of the Mila building. Mila is one of Canada’s great AI innovation but application centers, if I can call it that, to get AI out of the lab and into the real world. Give us a bit of a sense of how AI and biotech are dancing together to move things move things faster. And we’ll talk about the Canadian opportunity because we have strength not just in life sciences, as you said, global leading researchers. We’re a global leader in AI as well. So if we’re gonna win in one area, surely this is it.

[8:18] Clarissa Desjardins

Yeah, so I mean AI is being used across the entire drug discovery spectrum where we use it at Congruence is in the early stages, as I mentioned, to generate the molecules in silico, test them in silico, such that instead of generating typically two to five thousand molecules to find the right one in a trial and error type fashion, we’re now synthesizing two to five hundred molecules before we find the right one. So it’s a lot of simulation of protein motion, a lot of simulation of the pockets where the small molecule binds. This is atomic level, you know, physics and chemistry. But AI is being used to identify patients, to discover novel targets. So a lot of the big companies that came out over the last 10 years were actually looking to kind of digitize nature, right? So those are very exciting but very expensive enterprises. A lot of them were started by the AI experts. And I have to say the jury’s still out on whether they’ve been successful or not, because when I say it’s expensive, I’m talking hundreds of millions of dollars to try to capture this digital biological information and you know, sometimes they miss the mark.

So yeah, we’ve been very practical about how we use it. We use it to reduce trial and error in a drug discovery paradigm. We’re not trying to digitize biology yet.

[9:54] John Stackhouse

Yet. Tell us a bit about the Canadian challenge. As I said in the intro, tech was certainly at the forefront of the Canada Investment Summit, except for biotech. And I don’t think that was deliberate, but it’s also a recurring challenge for life sciences. What what are you and others up against?

[10:13] Clarissa Desjardins

I think we’re up against the complexity of our industry and just lack of public awareness. So I think people are aware of big pharma where they get their drugs, and you know, the reputation of big pharma has not been great. And people are aware of researchers that are contributing new knowledge and discovering new targets and sometimes very early stage molecules. But what biotech does, what we’re great at, taking those early stage academic ideas and turning them into drugs, that’s kind of invisible.

[10:46] John Stackhouse

One of the challenges is also venture funding. As you said, it’s really expensive. Go to the US and there’s lots of capital. Our calculations shows that there was just $273 million of venture funding in the first half of this year. That’s a pittance compared to the amount of capital in the country. What are investors missing?

[11:08] Clarissa Desjardins

So I think investors are really missing first of all, the returns, the historical returns that biotech has delivered, and those are only increasing now with the increased M&A activity that we’ve seen. So they’re they’re missing great returns. And it’s not on purpose, it’s because you need that expertise to understand at each stage of bringing the molecule forward, what is that worth and kind of being able to weigh the risk and the investments. As I was saying, luckily there’s a lot more Canadian VCs now. I think I might be the first biotech at Congruence to have a cap table that is dominated by Canadian venture capital. So we’re talking Lumira, Amplitude, Fonds des Travailleurs du Québec, BDC.

So if and when Congruence succeeds, either by selling our drug to the market or potential acquisition, all of these Canadian investors will benefit. So we’re looking forward to that day because what’s happened historically is that the US VC’s have benefited.

[12:09] John Stackhouse

And they have a lot of subject matter expertise, especially the funds in Boston, but also on the West Coast. It’s as we’ve been discussing, this is science and you want scientists in the VC pool.

What can we do differently, given the pressures on the country to move at a much faster pace and greater scale.

[12:30] Clarissa Desjardins

I see more and more young people wanting to become entrepreneurs in medical device and services in drug discovery. And you know, drug discoveries is takes hundreds of millions of dollars. So it’s it’s normal that you don’t have hundreds and hundreds of these types of companies, right? So that pipeline is getting richer.

We need more venture capital, more shots on goal, such that 10 years from now we could have an anchor company.

By an anchor company, I mean a company that’s worth more than $10 billion, that employs thousands of people, that is selling, you know, hundreds of millions of dollars, making hundreds of millions in revenue that is kind of stable and there for decades. I think that that’s more than possible in the next 10 years.

[13:15] John Stackhouse

So we’ve got plenty of seed capital, really good science. We’re getting better at the growth stage, although a lot more to do there. There’s still that big jump to global scale. As you said, we don’t have an anchor company. I’ve heard that we are the only G7 country, is that correct, that doesn’t have a billion dollar life sciences company.

It should have been a wake-up call in the pandemic, when we were not able to produce our own vaccines, even though we were one of the creator of vaccines. We had to go cap in hand to other countries, including big pharma to work that out. So there’s a sovereignty issue here as well. This isn’t just about economic development. When we talk about sovereignty, health sovereignty, protecting ourselves against diseases and even pandemics is a growing part of national security. You’re in the thick of it as you look ahead, developing what you’re doing at Congruence, huge applications in areas like obesity. But you are also up against pharma giants, the Lillys of the world that can do this, but may just want to buy what you’re developing. And for many entrepreneurs, that’s a good exit quite literally and then they can invest in their next venture as as you’ve done. How do we as a country think through that challenge of helping science entrepreneurs like you grow, scale, reach that global market, and not end up as part of an international company based somewhere else.

[14:48] Clarissa Desjardins

So before I comment on the build versus buy dilemma of biotech companies once they reach a certain scale, I just want to mention that we do in Canada have several companies that could become these anchor companies, right? So we have Xenon, we have AbCellera, right? They’re they’re traded on the they’re worth $4 billion in market cap. We have Zymeworks, over a billion dollars. So we have those, and they could evolve in into that stage. I hope they do. And we’ve also had all of the multi-billion dollar exits, you know. We’ve had Chinook for over five billion with GSK, and that’s what you’re talking about. My prior company, Clementia, for 1.3 billion, Inversago, Bellus, each for 2 billion. So that just demonstrates the amount of value that can be created within these companies in a relatively short period of time, within five to six years. But it’s a shame, as you’re pointing out. Why do we get acquired? Well, it’s very hard, and I was sitting in the situation with Clementia, wanting to deliver the drug myself. So what happened is we developed a drug for a rare pediatric bone condition, and the FDA stated that the data that we had was sufficient to now go seek approval.

So you’re sitting around the board with venture capitalists that have taken the risk for the last five to seven years and they’re paying you for certainty. They’re paying you for everything going right over the next five years. And we know that in our field things don’t always go right. Sometimes a new, you know, adverse event materializes, maybe the market wasn’t what you thought. So it’s very difficult for the board to make that decision. And I did plead with my board to say, please let us market it ourselves, right? We’re gonna build an anchor company. And they said, Clarissa, we understand and we believe you could probably do it, but it’ll cost another five hundred million dollars of fundraising and it’ll take five years with zero certainty as compared to the price that they’re paying us today. That’s why it’s so difficult to say no to an acquisition that is paying you for certainty.

[17:02] John Stackhouse

I suspect those market dynamics haven’t changed. How do we navigate against that? Or do we accept that as a positive part of capital and life sciences?

[17:14] Clarissa Desjardins

It is a positive. One of the things that I love about biotech is that employees own 15% of the stock options. This is everybody’s an owner. And so that money is recycled in Canada. So that wealth creation is fantastic. We all own 15% of the company. It’s the other owners, the venture capital owners. Unfortunately, it’s the majority in the US. But it is normal and healthy that this occur. What has to happen at one point is that our own capital providers are in a situation where they want to take the risk and they say, no, you know what? We don’t this price is a good price today, but we would like to continue to build. We have confidence in this team, we want the benefits of the anchor company for the ecosystem, and we were willing to take the chance. So I think that’s a numbers game. I think that once enough of our capital providers have been successful, once the conditions are right, those bets will be made.

[18:33] John Stackhouse

We’re focusing this season of Disruptors on what’s called geotech, so the intersection of geopolitics and technology and disruption. That’s happening in biotech. I’ve seen numbers that suggest like two-thirds now of discoveries is coming out of China. Which means the world is, whether we know it or not, increasingly dependent on China for drugs including many that are life-saving, but certainly life-improving. There’s all sorts of efficiencies that go with that and benefits to the consumer, but pretty clearly creates a key vulnerability that comes with dependency. How do you think through that challenge of going up against those so-called hegemons? We’ve talked about the US, but China is becoming the hegemon in in biotech.

[19:29] Clarissa Desjardins

Yeah, so what’s happened in China is really outstanding. It’s hard to believe how far they’ve come in the last six to seven years. And so it’s obviously a result of industrial policy investing hundreds of millions of dollars such that now their Western North American trained scientists are going back into fully funded labs, operating 24-7, I understand, industrializing this drug discovery process.

And they’ve changed the economics for our industry. So, for example, VCs are gonna fund our company Congruence, and they’re gonna wait five to seven years to see if we get a signal in the clinic, whereas they could buy this clinic-ready proven compound for a fraction of what they would have to invest in Congruence.

Now, where there’s hope is that I don’t see them really on the bleeding edge of technology. I don’t see the application of machine learning AI to difficult to drug targets, to novel modalities. But I do believe it’s a matter of time, and we need to get our acts together or else in the future you can see the majority of our drugs coming from a place like China. That’s scary.

[20:47] John Stackhouse

How much time do we have?

[20:49] Clarissa Desjardins

We may have lost the race already on the so-called “Me Too” small molecule drugs or the “Me Too” antibodies. We’re we’re losing it. They’re so efficient, so they’re able to to sell their clinically proven early stage drugs to pharma for a fraction of what it would cost to develop them in in North America, unfortunately. That race has been lost. But there are so many other diseases to be addressed, right? So the CNS diseases, the psychiatric diseases, etc. There’s there’s a lot more to do there and we can still compete by using unique technologies and being more innovative and creative, which which the Chinese have not yet become, but they certainly will.

[21:31] John Stackhouse

So we do have a window and it’s remarkable to see how Canada has changed even in the last twelve months in areas like energy and space and defense. In some ways it’s a completely different country than certainly twenty four, thirty-six months ago. What would you suggest, Clarissa, we need to do to have the same sort of shift and focus for biotech over the next year or two?

[21:54] Clarissa Desjardins

So there’s certainly some policy changes that would again cause, you know, more funds to be attracted, foreign and domestic. So the R&D tax credit system can be improved, so that just like for every dollar you have two dollars worth to work with. There are other policy changes in terms of attracting foreign talent that we could do, tax holidays, etc., that we used to have. But fundamentally we just need to mobilize more more capital. And so I don’t know if that’s a policy change with the pension funds. I understand they’re doing very well, right? But we need more economic growth and we need more capital within our industry to ultimately lead to these anchor companies and to just generate the revenues that our country deserves by virtue of having invested in this great education and this great society where we can be creative and we can innovate, we need those returns from biotech in Canada.

[22:56] John Stackhouse

Maybe you can leave us with a future state, Clarissa, something to shoot for. Ten years from now, if we get this right, what’s your vision of what Canada can be?

[23:07] Clarissa Desjardins

It’s possible, if we get this right, that ten years from now we could triple the number of startup companies in medical devices, drug discovery services, and that would lead then to more, you know, billion-sized companies, and that would lead to anchor companies being developed, because they wouldn’t all be acquired, and that would change the whole ecosystem where all of the brilliant scientists that we have now studying in universities would find a place to work in Canada. They wouldn’t have to go to San Francisco and Boston where we have the brain drain and where the revenues from these great drugs that are solving serious societal problems are coming back to us in Canada. So that would move the needle on our GDP and just make this great industry benefit us.

[23:56] John Stackhouse

What a great ambition to shoot for and one that is within reach, as you’ve shown over and over and over again, with your companies and also with your leadership on the national stage. Clarissa, thank you for being on Disruptors.

[24:10] Clarissa Desjardins

Thank you, John. My pleasure.

[24:17] John Stackhouse

Like so much of the world, Canada is having a moment, and it’s a moment, even a reckoning, on that word sovereignty. We’re trying to figure out how we can produce more of what we rely on and also what our allies depend on. Yet in all those sovereignty conversations, biotech tends to be left out or comes at the end of the sentence. We all know the pandemic was a wake up call that we need to find better ways to produce vaccines, yes, but a whole range of medical and health technologies that literally save our lives, but also build our sovereignty. Clarissa Desjardins has been a voice in a bit of the wilderness for decades on this, and yet she’s stuck at it, building company after company and quietly helping to build a Canadian ecosystem that is ready to take on the world. But as she made clear, we all have a role to play in that through public policy, through capital mobilization, through the education of future generations to ensure that we have the scientists and entrepreneurs who can build biotech, but also biotech sovereignty for Canada.

That will be critical to keeping Canada healthy and secure for generations to come.

I’m John Stackhouse, and this is Disruptors, an RBC podcast. Thanks for listening.

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.

From Ottawa to Orbit: Two Views on Canada’s Big Day

SPEAKERS

Colonel Jeremy Hansen, Michael Sabia, John Stackhouse

John Stackhouse 00:00:09

Hi, it’s John here. As we wrap up this season, I want to share a couple of conversations with you that I thought captured a couple of the big ideas we heard over and over again this season. One is on moonshots, the other is on big ambitions.

The first is with Jeremy Hansen, who is now the Canadian authority on moonshots because he’s been to the moon and back. He’ll share insights from the journey, the voyage, and what it taught him about leadership and about humanity. We’ll also hear from someone who may be a little less celebrated than Colonel Hansen, but is hugely important to all the moonshots that Canada is trying to undertake this decade.

Michael Sabia runs the Canadian public service and is Prime Minister Carney’s right hand for pretty much everything major that is going on in the country. He’s also one of Canada’s most respected business thinkers and business leaders. Having run Hydro-Quebec, the Quebec Pension Fund and Bell Canada, he knows a thing or two about disruption and is on the front lines of all the disruptions that Canada is up against.

Both conversations were recorded live at the recent RBC Eurasia Group Canada US Summit held here in Toronto. One of my takeaways from that summit is that we’re going to face a long, hot summer when it comes to trade negotiations and everything else that’s on the table between Canada and the US. But there’s also a huge amount of opportunity, especially if we stay grounded but reach towards the stars. That’s the formula of every great moonshot.

Here he is, fresh from Halifax, Colonel Jeremy Hansen. So he literally flew from Halifax to get here this morning, but of course has also returned from another trip. He’s been to the moon and back. For those of you who don’t know Jeremy’s story, born in London, Ontario, educated at the Royal Military College and spent 17 years in Houston living, working, training with the American astronauts, but always wearing that Canadian flag on your shoulder there. So we’re going to talk about space, but we’re also going to talk about Canada and what lies ahead. But thank you. A lot of people are wanting to spend time with you right now and it’s wonderful for you to be part of this conversation.

Colonel Jeremy Hansen 00:02:35

Yeah, I appreciate that. And I actually appreciate the opportunity just to be with you, thought leaders. These types of conversations and leaders like you that put Canada in the position to collaborate with the United States, that Canada became the second country to send a human in a deep space because of that collaboration. So I’m excited to be here with you. It was worth the flight.

John Stackhouse 00:02:53

Well, we’re going to talk about– it was worth the flight–we’re going to talk about all that’s going on down here, but let’s start up there because the summit has been very much about the ground level, but you’re, I think, the only one in this room who has seen our beautiful continent from afar, very, very far away. What went through your mind as you were whipping around the moon there and got to look down on our little rock here and our little piece of that rock?

Colonel Jeremy Hansen 00:03:19

Pretty extraordinary journey. I would highlight, I flew with Reid, Victor and Christina and they had all spent at least six months, Christina closer to a year, aboard the International Space Station. And in the beginning, when you ride the rocket to space and you get out to, we went out to about 2,000 kilometers on our first orbit. I did get to see the continent, all of Canada, all of the United States all at once, but it wasn’t very long until all of that started to disappear and you couldn’t make out continents anymore. You saw a lot of blue, you saw a lot of white clouds. You’d see strange shapes of the terrain, but it was hard with the cloud cover to really make out what you’re looking at. And very soon you just started to connect with what we termed “tiny earth.”

And you couldn’t always see earth out the window, it depended on the orientation of the spacecraft. And so whenever the spacecraft would turn for thermal reasons and we would catch earth out the window, someone would just say, “Oh, there’s tiny earth.” And we would all float over and admire tiny earth. But I think it was interesting that I stopped connecting with a country, I started connecting with a planet. And I didn’t really think about that until I had some time off last week and I was like, “Gosh, yeah, it’s really true.” I just naturally stopped connecting with a country. But I will say, when I do think about our collaboration, something that really jumps out at me and when I looked at it from space is, for a thriving North America, you have to have a thriving Canada and you have to have a thriving United States. There’s just no other way to see it from space.

And that does mean two things. In the Astronaut Corps, we have these expeditionary skills, we call them, but two of the five are self-care and team care. And in order to be a good team player in a crew, you have to have good self-care. And so understanding how each of us take care of ourselves and our thriving as individuals is what allows the conversation to figure out how do we collaborate while still accomplishing that.

John Stackhouse 00:05:13

It’s a bit of a message for Canada and the US that we have to take care of ourselves but also be part of the team.

Colonel Jeremy Hansen 00:05:19

When you decide to go on a trip, try and send yourself around the moon, you do need a team. You need mission control, you need the engineering teams and of course you need the team that’s in the capsule and you don’t pick that team lightly. And so our currency is competency and collaboration. Those are the two things we have to have, otherwise, it falls apart. And we demand that. There’s no free rides in space exploration. Everybody has to be in it fully, has to be digging in and bringing real meaningful contribution. And that’s what I see here when I look at this room. You guys are all spending time here because you see that it’s valuable to lean into how can we get our two countries working together and firing in all cylinders to bring that collaboration.

John Stackhouse 00:06:09

Give us a sense of the collaboration up there because there’s no more challenging or risky environment.

Colonel Jeremy Hansen 00:06:15

Yeah. So Reid was our commander and the commander is always the commander, but a good commander will lift up their crew and utilize them to their full capability. And so Reid was very intentional about finding meaningful roles for all of us in the capsule and dividing the tasks through the mission. And so for launch and entry, Reid and Victor were in the seats with the controls and those were their primary areas. For all of the other trajectory burns that we did to navigate around the moon and back and get up to 39 times the speed of sound, that was Christina and I who were responsible for those. We’d built a lot of trust and we had worked through a lot of tensions.

In the beginning, we committed time in saying we want to get to be the highest functioning team that we can be. And then eventually when we came to understand that we would need to understand each other better. And so with that time we started to dig deeper and then we started to build a muscle that we would communicate when things, anytime there was a small friction, we would start to communicate about it. And that is the muscle we built so that we would eventually become this team that just wouldn’t let something fester.

John Stackhouse 00:07:23

So a team, but you’re also an individual. What did you learn about yourself on the mission?

Colonel Jeremy Hansen 00:07:29

I really found myself moved in gratitude for the opportunity and for what we have. There is an innate human joy in accomplishing tough things, taking on big challenges, leaning into help, helping others. What it reinforced for me coming back here is that it is very much worth continuing to dig into the challenging and hard things that we have in front of us. This Canada-US relationship for one, how we leverage space. There’s a list as long as my arm of things that we could do that are the right things to do for our country and the right things to do for our international collaboration on space. I guess I know with concrete certainty that there’s value in pursuing that.

John Stackhouse 00:08:22

So let’s get into some of those challenges and opportunities. We’re all more excited about space today, I’d suggest. How do we seize on that excitement and what should we as a country, as Canada, but also as neighbors, Canadians and Americans be doing?

Colonel Jeremy Hansen 00:08:37

Something that I’ve said often that I think is worth highlighting here is, why was there a Canadian on Artemis II? And it’s because Canada partnered with the United States decades ago. Canadians held a vision over decades, thousands of people participated in this, but also because the United States carved out space for a country to bring their gifts and actually bring real value to the collaboration. And so when we committed to developing a third generation of space robotics, Canada earned its way onto the Artemis II flight and that’s a really incredible example. And so what I would suggest out of that is as we look at our relationship, we really need to ensure that we are guiding the masses, that collaboration is our stated objective.

Actually getting stuff done and working together in a way that is mutually beneficial has to be our stated objective. And so if you’re going to lead thousands of people who are going to make millions of decisions in order to make this the thriving collaboration it could be, then you need that stated commander’s intent, that overriding commander’s intent. And it does not need to be complicated, but it has to be simple in that collaboration is the desired outcome and that at the end of the day, it should be mutually beneficial for both parties.

John Stackhouse 00:10:01

I wonder, Jeremy, if you can leave us with some of the insights you’ve brought back from space on what we can all take away in terms of how to go about our own days, but also how our two countries can work together in the years ahead.

Colonel Jeremy Hansen 00:10:14

Well, pretty much every night that we’re sleeping on board the spacecraft, the caution and warning system went off and woke us up. And every time the caution warning system goes off, it might be a false alarm, but you don’t treat it like that. You float out of your sleeping bag and you float the displays and you start trying to figure out what is going on and why that happened. And then you talk to mission control and you work through it. And I think what is maybe useful for us as humans is, especially with our cancel culture and our culture that just is constantly pointing out what’s wrong, we as leaders can’t accept that. That’s not good enough. People who can point out what’s broken and stop there is not acceptable in our space culture. We do not allow a flight control or a mission control to pass or to participate in our program if that’s all they can do is point out the problems.

We have an expectation that they will, yes, identify the problem, but then they will identify a workaround or a solution, or at the very least, a path forward to find a solution and who they need help with. And we as leaders right now need to demand of the people in this conversation that they either get the depth of understanding to understand all sides of the problem and an actual solution, or we just don’t need to hear from them yet.

John Stackhouse 00:11:43

I can’t think of a better message to end on Colonel Hansen, Jeremy. Thank you, thank you. On behalf of the audience, on behalf of the US-Canada Summit, thank you for this conversation, but also all that you’re doing for Canada and the world.

Colonel Jeremy Hansen 00:11:56

Thanks everyone. Have a great day.

John Stackhouse 00:12:03

Jeremy Hansen went to the moon and came back with something more than data. It was a new way of seeing. From that distance, borders disappear. What’s left is the relationship.

Canada’s top public servant has kind of been doing the same but from a very different vantage point. Here’s Michael Sabia. What a great way to end the day. Michael is one of the most thoughtful people I’ve known. You are.

Michael Sabia 00:12:32

You’re jumping to conclusions.

John Stackhouse 00:12:34

See what I say at the end of the conversation. No, let’s get right into the relationship because you’ve been clerk for close to a year, probably feels a lot longer.

Michael Sabia 00:12:44

It does.

John Stackhouse 00:12:44

But you’re not quite at the one year mark. And you’ve in various jobs dealt with Americans, worked with Americans. Curious what, in this position, what you’ve seen that maybe the rest of us don’t see or understand about the relationship?

Michael Sabia 00:13:00

I don’t think that I see anything in particular that others don’t see. I mean, at the end of the day, this relationship between Canada and the United States, this is not ultimately about a relationship between two governments. Obviously, governments matter. I mean, that’s the statement of the obvious, but the relationship is so much deeper and so much more highly distributed. Here I’m thinking about governors, chambers of commerce, CEOs, investors, firms, families. I mean, that’s the bedrock of this relationship between Canada and the United States. And I think those people on both sides of the border understand that by working together, we are collectively stronger and it creates strength on both sides. That’s the essence of it. And as Canadians, I think we have to be and we are trying now to invest a lot more in the strengthening of those relationships and taking our case to a broad spectrum of Americans beyond just the administration in Washington.

So if you asked me kind of what did I learn in this period, I guess it’s a bit paradoxical and I think I’d say, on the one hand, this is a relationship of great strength because of its depth, because of how highly distributed it is, but at the same time, paradoxically, it’s also fragile. Fragile because at this time in such a contested world, the strength doesn’t necessarily manifest itself in resilience on either side of the border. So for us, I mean, the lesson I draw from that is we have to continue and really redouble our efforts at working with that broad spectrum of opinion in the United States.

John Stackhouse 00:14:47

The Carney government is clearly focused on diversification but not decoupling. Help us understand how you walk that fine line between trying to diversify Canada’s relationships, not just through trade, without alienating our principle partner or antagonizing.

Michael Sabia 00:15:03

I actually don’t think there’s a tension here because you’re absolutely right. We are not decoupling. Yes, we are diversifying, but look at Canada’s economic policy and split it geographically. I mean, two basic pieces, there’s the United States piece and there’s the rest of the world piece. I don’t think there’s a strategic conflict between those two things. I think actually those two things are mutually reinforcing. That’s the essence of it. So take the US side, clearly proximity brings with it some economic gravity. I mean, that’s an inevitability. And therefore, does Canada need a well-functioning economic relationship with the United States? Absolutely we do. And that’s why the Prime Minister a couple of weeks ago in New York called for a new economic partnership between Canada and the United States. Now that starts with the work we’re doing on the CUSMA negotiations. It starts in addition to CUSMA with working to get to a trade arrangement for some of the heavily impacted sectors, whether it’s aluminum, steel, autos, et cetera.

But what’s really important to understand here is all of that rests on, in our view, a foundation of a stronger Canada. And that stronger Canada is the result of the work that we’re doing to invest in the country, to yes, diversify our economy, to use our natural resources as the coin that will allow us to diversify more broadly. It’s about doubling the electricity production of our country, which we are going to do. It’s about AI and the things that Canada is an intellectual leader in AI, we need to start using that for commercial purposes. It’s about all these other things that we’re going to do to make Canada a stronger economic presence and a stronger economic partner to the United States, which is why not decoupling, yes, we’re going to strengthen Canada, but by strengthening Canada, we think we can strengthen the relationship with the United States and that’s the frame of mind that we have.

John Stackhouse 00:17:09

Let’s shift to defense strategy. It’s been a focus of this summit. The government is clearly increasing, quite significantly, defense spending, but defense spending has become key to economic and trade policy as well, which is a big shift. How are you thinking through balancing the efficiencies as well as the requirements of defense spending, ultimately protecting the country while also stimulating economic growth, adding to the Canada Strong agenda and being used, if I can put it this way, as a trade lever.

Michael Sabia 00:17:39

Yeah. So national security and economic security, though those two things are mutually reinforcing and that’s pretty fundamental to how we think about defense. I think the issue’s a lot broader than procurement though. I mean, this is ultimately, on the defense side, this is ultimately about a few things. One, it’s Canada stepping up to take care of ourselves, which we need to do. It’s Canada stepping up to be a good ally in a context of NATO or whatever. And it’s Canada thinking creatively about how we can use defense dollars to accomplish two objectives at the same time, to strengthen national security on the one hand, but at the same time to promote economic development. In other words, by creating more defense industries, by creating a more dynamic environment in the Arctic with the investments that we will make there. So it’s a really good example of how the kind of policies that we’re pursuing and the diversification that we’re pursuing is not at odds with America’s interests.

Why do I say that? Look at the Arctic. There, we are working in a diversified environment. We are working with the Nordic Five. We are asserting our presence in the North, both for economic reasons and for military reasons. And I think actually that’s exactly consistent with what the Americans would like to see. They would like to see Canada stepping up, doing what we need to do a little bit more, well, more aggressively, not a little bit more, more aggressively from a defense spending and a defense presence point of view. But that diversity that we’re pursuing, that diversification we’re pursuing with the Nordic five is a great example of how our cooperation with other countries can frankly take some of the pressure off the United States. And when I stand back, John, and I think about, I just look at the hand we have to play and I compare that to other hands of other countries in the world.

We have huge reserves of low carbon, low cost gas, and the world’s going to need gas. We have foods and fertilizers for a hungry world. We have natural resources and especially critical minerals and in the fall, you’re going to see a package of regulatory reforms that are going to allow us to speed up and to speed up in a dramatic way. We now have a plan to move forward on using AI and adopting AI. As I said, we’ve been an intellectual leader, but now we need to integrate it into our economy and deal with some of our productivity issues. By the end of the year, we’ll be the only country in the world that has access to three billion consumers through free trade agreements, the only country in the world that can say that. We’re changing the way the country operates so that it’s not just a Montreal to Toronto corridor that dictates what happens in Canada, but that all of the regions of the country, because of their importance from an economic development point of view, that they’re part of the game as well.

One other thing, we also have one other asset that sadly is pretty rare in the world today and that’s a sad thing and that is a simple word, the word is trust. People trust us. They trust us because of our values. They trust us because of our history. So when I look at all of that, the conclusion I draw from that is, this is not a time for national anxiety about a relationship between two governments. This is a time for confidence because we have a hand that, played properly, played in a skillful way, can lead to really a new chapter in Canada’s history and a new chapter in the relationship between Canada and the United States, which we acknowledge is very important and an important foundation for the future prosperity of the country.

John Stackhouse 00:21:27

What a great note to end on. In fact, that’s the note we began on this morning. Dave mentioned its risk in Canada. We’re hearing that from around the world. Lots of smart people are seeing that hand. We are playing it, but we’ve got to play it even more ambitiously in the US.

Michael Sabia 00:21:41

Ambition. Now there’s an important word. That’s exactly what we need. Confidence, ambition. Those are the characteristics that are going to build the future of the country and build an enduring and good relationship with the United States.

John Stackhouse 00:21:53

Let’s do it.

Michael Sabia 00:21:54

Let’s do it.

John Stackhouse 00:21:55

All right. Great note to end on. Michael, thank you.

Michael Sabia 00:21:57

Thank you.

John Stackhouse 00:21:57

Thank you. Thank you.

Michael Sabia 00:21:58

Thank you.

John Stackhouse 00:22:04

Two conversations, one from orbit, one from the room where policy gets made, but both pointing in the same direction, which can be incredibly positive for Canada. From all of us at Disruptors, that’s season 10 and what a season it’s been. This season Disruptors won a Webby Award and that genuinely would not have happened without you. To everyone who listened, who shared the show and who voted, thank you. It means a lot to our whole team here at RBC. We’ll be back in the fall with more conversations at the edge of what’s changing Canada and the world. Until then, have a safe and happy summer. And if you’re listening along the way, be sure to check out some of the episodes from years past that we will re-release through July and August.

Be sure to like, follow, and subscribe to Disruptors wherever you get your podcasts. And if you want to explore more of RBC’s thinking on all the issues that we cover, head to rbc. com/thoughtleadership or follow us on social media. And if you can, be sure to like, follow, and subscribe to Disruptors wherever you get your podcasts. I’m John Stackhouse and this is Disruptors, an RBC podcast. Thanks for listening and we’ll see you in September.