After seeing this article in Fredericton’s Daily Gleaner, I couldn’t help but give myself the old facepalm. Do people around here have short memories? Do we not remember what happened to all the other e-learning companies around here? We have a few that remain, but they are only shells of their former selves. The majority of these are out of province companies that go shopping around for which government agency will give them the most money. Once the contracts have dried up, they lay off their staff and go home.

What most people don’t know is that there are 2 different types of IT companies: Product developers and contractors.

Product developers are ones that make their own product and sell it. There are many of these companies around Fredericton, most of them homegrown. A short list: Caris, Radian6, Q1 Labs, Chalk, Indosoft, Measurand, Remsoft, Virtual Expert Clinics, IVS, EDP, T4G

Contractors are ones that do work for other companies or government agencies. A short list: CGI, XWave, Accreon, PQA, Fujitsu, Unisys, Skillsoft

Most of the product development companies started in Fredericton while most of the contractor companies have head offices elsewhere. I’m not trying to say that contractor companies aren’t worth investing in, but that product development companies are better.

Let’s look at 2 relatively recent failures:

1. FatKat, a contract based animation company – They were given a lot of money, but when the contracts ran out, all economic activity stopped and the government lost their investment. No, it’s not an IT company, but there is very little difference between it and the average IT consulting company.
2. Mathis Instruments, a product development company  – They had a great product but couldn’t sell it. They went under, but their product was bought by C-Vision who continues development and is actually able to sell it. Sure, the government lost money, but C-Therm (as it’s now called) still has an office in Fredericton that employs people.

All we’ve been hearing about is how great it is that Company X is coming in and creating 200 jobs after getting lured in by the government. They get a lot of buzz because they’re big numbers, those 200 jobs come fairly quickly and look good politically. Product development jobs come more slowly and therefore don’t look good for the politicians. As any politician knows, true progress doesn’t get you in the newspapers.

If someone seriously wants to attract the good kind of IT companies, a two-pronged approach must be taken. Rather than simply spending all the effort into luring companies away from other jurisdictions, effort also needs to be spent in establishing home-grown companies. A few hints on how to do that:

  • Bring back Incutech, but this time, put some effort into it. Don’t just put it in some old run-down UNB building with cheap rent; put it downtown in a nice building. It needs to be more than just office space, there needs to be assistance with things like creating business plans, marketing and other non technical aspects of running a company.
  • Venture capital is what brings products to market quickly. Provide assistance to companies who are looking for VC funding. Market NB as a place for investors to invest. Yes, ACOA exists, but it is more focused on spending money than building companies.
  • Tap the potential of the universities. There are many great ideas that are stuck in a lab or a student’s head. Opportunities are being lost as these ideas aren’t able to be commercialized.