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‘Technology is a Global Enterprise.’

WATERLOO REGION — The University of Waterloo cannot tell graduating students where they should or should not work, says Pearl Sullivan, the school's dean of engineering.

Sullivan was reacting to a report released last week that showed many recent grads in software engineering take jobs in Silicon Valley at the same time that Canadian tech companies are scrambling to find talent.

She said she has not read the report, "Reversing the Brain Drain: Where is Canadian STEM Talent Going?," that tracked more than 3,000 grads from UW, the University of British Columbia and the University of Toronto.

"We all know we cannot tell a 23-year-old or 24-year-old where to go. Not even their parents can do that," said Sullivan.

"To think that young people with the right skill set and experience are not going to be attracted outside where they went to school is fairly naive," she said. "Technology is a global enterprise."

The report, which was paid for in part by Toronto tech firm Delvinia, identified what it described as an alarming trend among recent university grads to work in Silicon Valley, where salaries are nearly double. Big employers there also have global brands with interesting jobs to offer.

Talent migration is highest in software development (66 per cent), computer science (30 per cent), engineering science (27 per cent) and systems design engineering (24 per cent), according to the report.

"Every technology hub in the world, London U.K., New York, San Francisco, Detroit, Beijing, Hong Kong, Singapore, they all have the challenge of finding talent," said Sullivan. "This is not specific to any geographical area."

UW expanded its undergrad engineering program by 36 per cent in the past 10 years and 98 per cent of those students are in co-operative education, which combines academic studies with work experience. In 2016, there were 8,100 co-op students from engineering, and 6,100 of them worked in Canada.

"So when you do the math 83 per cent are deployed across Canada, mostly in Ontario," said Sullivan.

There will be increasing demand for engineers to work on technology related to the Internet of Things and all aspects of digital security, she said. The university is ready and willing to work with the private sector to predict demands for future grads and find co-op placements for current students, she said.

"We cannot tell a graduate where to go. We do not have the authority, it is not really our mandate," said Sullivan. "We are an educational institution. We advance knowledge not just to students, but the whole world."

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Miovision Preparing for New Round of Investment

KITCHENER —Miovision has raised $15 million in funding as it prepares for a much larger round of investment in about six months.

The money will allow the Kitchener-based to continue to ramp up its growth.

"The primary use of the proceeds from this one will be around expanding our channel, so hiring more sales people, getting more distribution partners," Kurtis McBride, Miovision's co-founder and chief executive officer, said Monday.

He also wants the company to be ready for a third major round of investment.

"Building the track before the train arrives, so building all the stuff that will make us structurally well suited to take on a big capital injection," said McBride.

Since it was founded in 2005, the company has achieved a compounded annual growth rate of more than 50 per cent with its smart traffic intersection technology. It now employs more than 150 people and continues to hire.

Miovision, located in the Catalyst137 hardware accelerator, builds technology that monitors traffic through intersections, and helps cities improve the movement of vehicles. It is finding markets in cities around the world.

"We see a big, global opportunity with the emergence of smart cities, there is a big, growing demand for what we do," said McBride.

The new $15-million investment is in the form of a convertible note. When the larger round of investment comes together in six months or so the loan will convert to shares in Miovison, said McBride.

This round of financing was led by Miovision's biggest shareholder, MacKinnon, Bennett & Co., and also involved McRock Capital, BDC Capital and HarbourVest Partners.

"We are really excited to see our largest shareholder McKinnon, Bennett come back in on this deal. That was great, a vote of confidence," said McBride.

MacKinnon, Bennett led a $30-million round of financing for Miovision in 2015.

"Miovision's business has been built on data," Ken MacKinnon, MacKinnon, Bennett's managing partner, said in a news release. "With better data, cities have more information to optimize a traffic network to minimize congestion and emissions while making intersections safer for all."

As part of the financing, Whitney Rockley, co-founder and managing partner at McRock Capital, joins the Miovision board of directors. McRock Capital is a Toronto-based venture capital fund dedicated to industrial side of the internet of Things.

"She has a ton of experience and lots of energy and we are pretty excited to have her voice at the table," said McBride.

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Waterloo Tech Firms Linked to Human Rights Abuses

WATERLOO REGION — The federal government is concerned about reports that made-in-Waterloo technology is being used by some foreign governments to censor the internet and abuse human rights, says a spokesperson for Global Affairs Canada.

"Canada is committed to controlling the export of dual-use items that have both civilian and military applications," Elizabeth Reid, spokesperson for Global Affairs, said in an email. "We will continue to engage with our international partners on the review and control of this type of technology."

The promotion and protection of human rights and democracy is a priority for the Trudeau government, she said.

"Canada is concerned by allegations of the misuse of Canadian-made technology, including reports of its misuse in inappropriately preventing free access to the internet," she said.

Reid was reacting to a report, Planet Netsweeper, produced by the Citizen Lab, a University of Toronto-based internet watchdog. The report details how Netsweeper's internet filtering technology is used in 10 countries to block content about gays, lesbians, abortion, gender, politics and HIV/AIDS prevention.

The report made several recommendations, including calling for export controls that require companies to monitor and report on how their technology is deployed. It also called for tech companies to be included under the government's new policy on corporate and social responsibility for Canadian oil, gas and mining companies operating in foreign countries. A government agency that can compel witness testimony, seize documents and levy fines is also recommended by Citizen Lab.

"We strongly support democracy and the right to freedom of expression, including an open internet," said Reid. "Parliamentary Secretary Omar Alghabra was recently in Turkey and Egypt, where he met with human rights activists and reiterated the commitment of the Government of Canada to the defence of human rights and democracy."

Ron Deibert, director of the Citizen Lab, called Reid's statement "encouraging."

"The next step requires some meaningful action," he said. "We believe the Canadian government could help — and indeed is obligated to help — prevent the abuse of Canadian-made censorship and surveillance technology through export controls and other regulations."

Deibert said it is interesting that the Global Affairs spokesperson mentions a recent trip to Turkey and Egypt by Omar Alghabra. The Citizen Lab published a report in March on how Sandvine's technology is used in both countries to secretly inject spyware into devices. Sandvine is a Waterloo company that develops hardware and software for managing network traffic.

 The lab noted that Sandvine has stationed engineers in some foreign countries to work more closely with its customers, making it difficult for the company to deny knowledge about how its technology is used by internet service providers.

"The prospect of in-country work of this sort, especially at the large ISP level, raises questions regarding company awareness of, or participation in, activities with significant human rights impacts," said the Citizen Lab report on Sandvine.

For years, the Citizen Lab has researched how technology made in Waterloo is used by foreign governments to censor the web or abuse human rights. The lab's renewed recommendations for tighter controls and meaningful oversight come as Turkey is under increasing scrutiny by Amnesty International and others for widespread human nights abuses, including the jailing of 120 journalists and thousands of dissidents.

Turkey is now the world's biggest jailer of reporters and editors, says the Committee to Protect Journalists.

Netsweeper and Sandvine did not respond to requests for comment.

               tpender@therecord.com, Twitter: @PenderRecord

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Tech Brain Drain: ‘Cali or Bust.’

WATERLOO REGION — Canadian tech companies should pay higher salaries, provide signing bonuses and stock options, and maybe even pay down student loans for new employees, says a study that shows that 66 per cent of software developers take jobs in California after graduating from university.

"Some response is needed here from industry. We heard a lot about a massive income gap, that graduates can earn almost double in California than what they can up here in Toronto or Waterloo," said Zachary Spicer, a senior associate in the Innovation Policy Lab at the University of Toronto's Munk School of Global Affairs.

The average tech job in Toronto pays US$73,000, according to the study. The average in California is US$143,0000.

"That's a problem. I don't think there is a government response to that," said Spicer. "Firms need to find a way to essentially close that pay gap."

Spicer and two researchers from Brock University tracked 3,162 graduates from the University of Waterloo, University of British Columbia and University of Toronto. They followed that up with interviews of 35 graduates. They found that a lot of students in science, technology, engineering and math programs took jobs in Silicon Valley after graduating.

The study, Reversing the Brain Drain: Where is Canadian STEM Talent Going? was released Thursday. Among its key findings:

•66 per cent of software developers, 30 per cent of computer engineers, 30 per cent of computer science grads, 27 per cent of engineering science grads and 24 per cent of system design engineering grads took jobs in the United States.

•University of Waterloo graduates stressed there is a lot of peer pressure to land jobs in Silicon Valley. The saying on campus is: "Cali or bust."

•Brain drain impacts a national economy when migration rates surpass 20 per cent of graduates for highly educated talent, the study notes, citing previous studies.

Spicer said the co-operative education system should be changed to ensure a student's last placement before graduation is at a Canadian tech company.

And Canadian tech companies need to raise their profile to impress potential talent. They also need to share more information about long-terms plans, growth and new products, said Spicer.

The study was initiated and partly funded by Toronto tech firm Delvinia Interactive Inc. Adam Froman, the company's founder and chief executive officer, sits on the board of the Canadian Council of Innovators, which was founded by Jim Balsillie, the former co-CEO of BlackBerry.

Froman said the study underscores the need for a national talent retention strategy developed by the tech sector, governments and universities.

"Bring all the players to the table," said Froman.

The talent shortage is so acute it is holding back the growth of Canadian scale-ups — small technology companies with the potential to become global players, said Froman.

He wanted an independent study to look at the issues because he was having so much difficulty finding qualified talent.

One of his big take-aways from the study is the need for tech companies and universities to work together to increase the profile of Canada's technology sector among university students.

"If that's what this study can do, stimulate that dialogue collaboratively among the companies and the universities, then everybody is a winner," said Froman.

The study found that graduates from UW are the most likely to head for California.

"While Waterloo gets a lot of attention for the talent it is producing, I think unfortunately they are going to take a lot of the heat right now related to this study," said Froman.

While the university did not respond to requests for comments, Iain Klugman, chief executive officer at Communitech, the organization that advocates for the region's tech sector, said UW produces some of the best software, hardware and engineering grads in the world.

"There is a reason everyone is coming here to recruit University of Waterloo graduates," said Klugman.

UW pioneered co-op education in Canada, and more universities should emulate that program to increase the talent pool for Canadian tech companies, he said.

"How do we 10 times the number of co-op students that we have in this province and in this country? Because obviously what UW is doing is working," said Klugman.

Virtually every country in the world with a technology sector loses talent to Silicon Valley, said Klugman. Communitech runs many programs to attract and retain talent, he said.

"We have 27 campus ambassadors on 14 campuses across Canada to try and build relationships with great students to hopefully get them to come to Waterloo Region," said Klugman.

Currently, there are more than 2,000 open tech positions in Waterloo Region.

tpender@therecord.com, Twitter: @PenderRecord

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Kitchener Startup Takes on Fake News with Mobile App

KITCHENER — A Kitchener startup wants to counter fake news on the internet with its globe-girdling network of smartphone-enabled witnesses.

Ground News, based in the Velocity Garage in the Tannery building, has just launched an app that provides its 300,000 monthly users with content from more than 10,000 publishers around the world. It allows individual reporters or news organizations to ask users for photos, video and verification of the events.

"When we set out to make Ground News we wanted journalists to be involved, to be using it and to be benefitting from it," said Sukh Singh, the startup's co-founder and chief technology officer.

One of the startup's hire is Melissa Long, an American broadcast journalist who left her job with an NBC affiliate in Atlanta to work for Ground News. She will remain in Atlanta.

"Melissa has been an adviser to us, and over time wanted to become more involved," said Singh.

Singh said Ground News' technology verifies the physical location of its users so a fake news creator in Macedonia can not pretend to be somewhere else.

He said the app is especially helpful when media follow location-based stories, such as natural disasters, riots, political unrest, fires, traffic jams, rescues, derailments, spills of toxic chemicals or the deadly aftermath of a chemical weapons attack.

"We can verify any news story that has a location component," said Singh.

The smartphone app looks like a map of the world that is dotted with bubbles. Tap a bubble and a news story pops up, keeping its users informed about current events. News organizations that do not have reporters in the area can ask users of Ground News who are nearby to check it out.

Singh said several independent witnesses providing photos, video and comments about unfolding events on the ground can effectively counter propaganda from governments, corporations and authorities pushing out misinformation.

"That becomes more and more important in countries that suppress the media or where there is confusion about what's happening in the news," said Singh.

The startup's other founder is chief executive officer Harleen Kaur, who his sister. The siblings came to the world of software startups via different routes. Singh graduated from the University of Waterloo with a degree in nanotechnology engineering.

Kaur graduated from Ryerson University with a degree in aerospace engineering, which she followed up with a master's degree from the International Space University in France and an MBA, entrepreneurship from INSEAD in France. She worked on satellites at NASA and later become the first female vice-president at Rolls-Royce.

Ground News is among five startups accepted into Ryerson's Digital News Innovation Challenge, an incubator for startups driving innovation in news organizations and journalism.

It has raised more than $1 million from angel investors, and is researching ways to earn revenue from the traffic it drives to publisher's websites around the world. It employs five people.

Kaur and Singh previously launched uCiC, a startup that developed an app that connects members for sharing pictures, video and information about events, restaurants and other local happenings. By the end of 2017, about 500,000 people around the world had downloaded the app. It is still running but Kaur and Singh are no longer actively developing that business.

In 2016, uCiC completed a six-month program at the Techstars incubator in Atlanta. That's where Kaur and Singh decided to focus on news and journalism. Atlanta is a hub for several major media outlets, including CNN and the Weather Channel.

"We were in the same room with the head of digital at CNN and the chief operating officer of the Weather Network, and the sentiment in the room was: 'We have been looking for that, we have been looking for something that gives us user-generated content in a solicited way,'" said Singh.

tpender@therecord.com, Twitter: @PenderRecord

tpender@therecord.com , Twitter: @PenderRecord

Terry Pender covers technology and can be reached via Twitter @PenderRecord.

Email: tpender@therecord.com Facebook Twitter

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He was a great human being and this is a beautiful tribute.

“However difficult Life may seem, there is always something you can do and succeed at” By @akse_p19 with his oldest son posing in front of his Tribute to Stephen Hawking at the @contrastmuralfest in Liverpool, UK

Inspired by original photograph by Bruno Vincent

#akse #p19 #stephenhawking #globalstreetart #contrastmuralfest #liverpoolstreetart #streetart https://www.instagram.com/p/BiDCiBkAfhJ/

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Startups and Scaleups Driving Office Market Boom in KW

WATERLOO REGION — Autonomous vehicles, big data and e-commerce will have big impacts on the real estate industry, but the sector appears unprepared for the shifting sands of tech change, says a senior executive at a national real estate firm.

"I recently reviewed the management teams at as many real estate companies as I could, both public and private, and I've got to be honest with you: I did not see a lot of tech experience in the C-suite," said Paul Morassutti, executive vice-president and executive managing director of CBRE.

Morassutti was speaking Thursday at the commercial real estate firm's annual Southwestern Ontario Market Outlook breakfast in Kitchener, that highlighted, among other trends, how technology is influencing commercial real estate.

Mass production of advanced autonomous vehicles is expected to begin next year and adoption will happen faster than people think, said Morassutti. It will be absurd to buy vehicles that sit idle for 95 per cent of the time, when autonomous rides can be summoned with a smartphone, he said.

"The disruption to urban mobility will be massive. If you do accept that autonomous vehicles are at some point coming, how do you prepare? How do you future-proof buildings today when the need for parking is still very real?"

Parking garages built today should have level floors, higher ceilings, modular sections and knockout panels, Morassutti said. That will make it easier to covert them into offices, shops and fitness centres, he said.

Owners of multi-unit residential buildings were told the data generated by tenants could provide valuable insights into their wants and needs. That data could also be sold to third parties, creating a new revenue stream for landlords.

And while Canada lags the rest of the developed world when it comes to online shopping, there is a slow, steady increase in e-commerce. Morassutti said that is driving demand for industrial spaces near city centres for distribution warehouses that fulfil online orders. That trend is captured in the quip: "Retail clicks drive industrial bricks."

Leasing activity for warehouses and distribution centres in Waterloo Region has been accelerating because of online shopping, says CBRE's national market report.

"Consider this: for every $1 million in online sales we need approximately 1.3 million square feet of distribution space," said Morassutti.

CBRE's report says the region's burgeoning tech sector continues to drive demand for office space. Investment in commercial real estate last year totalled $1.8 billion, a 63.5 per cent increase over the previous year. The vacancy rate among industrial properties is at a 16-year low.

"We are currently nine years into an incredible bull run for commercial real estate," said Morassutti. "And the question that arises more and more frequently is: Have we peaked?"

Market fundamentals and leasing activity remain strong, even as some predict the start of an economic downturn before the end of this year, he said.

Canada is among four only countries to set back-to-back records for investment in commercial real estate last year, said Peter Whatmore, CBRE's senior-vice president, managing director and broker for Southwestern Ontario.

Locally, there are no signs things are slowing down.

"With more than 1,000 startups in our tech cluster, we are creating more momentum than ever before," said Whatmore.

tpender@therecord.com, Twitter: @PenderRecord

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Netsweeper Criticized for Helping Censors of the Web

WATERLOO REGION — The technology sector in Waterloo Region needs to do some soul searching about how its products are used by oppressive governments abroad to censor the web, stifle dissent and violate human rights, says the director of an internet watchdog group at the University of Toronto.

Citizen Lab released a report Wednesday that documents how technology from Waterloo-based Netsweeper is used in Afghanistan, Bahrain, India, Kuwait, Pakistan, Qatar, Somalia, Sudan, United Arab Emirates and Yemen in ways that it says have "serious human rights implications."

"Our research has verified that Netsweeper installations are used in several countries to implement internet censorship in ways that undermine internationally recognized human rights," says the report, called Planet Netsweeper.

Netsweeper technology filters internet content. It is used by libraries and schools to block sexually explicit and hateful material.

Citizen Lab's latest report documents how Netsweeper's filters are also used by authoritarian governments to block content about LGBTQ issues, civil rights, HIV/AIDS prevention, political campaigns, abortion, media websites and religious content.

Ron Deibert, Citizen Lab's director, has long called for greater accountability and transparency around the export and use of technology that is developed in Waterloo Region and sold to authoritarian governments known for abusing human rights such as freedom of speech, freedom of worship and peaceful dissent.

"What I would say to the entire community there, because it is a kind of Silicon Valley North, is there needs to be some serious reflection on what are the responsibilities of companies in this sector to act in conformity with Canadian values and internationally accepted human rights principles," said Deibert.

"Clearly, the standard is not being met by several of these companies, and I think there is a black mark on the industry because of that, and that needs to be attended to by the people in those companies."

Netsweeper did not respond to requests for comment about the report, the fifth one prepared by the Citizen Lab highlighting how the Waterloo company's technology is used by foreign governments to curtail human rights.

In the new report, researchers say they found the company's technology was deployed in 30 countries, and focused on 10 that appear to be filtering content at a national level. It says Netsweeper technology was blocking access to a wide range of digital content "protected by international legal frameworks, including religious content in Bahrain, political campaigns in the United Arab Emirates and media websites in Yemen."

The use of the technology raises many questions, says the report.

"These questions include whether and to what degree Netsweeper undertakes due diligence with respect to sales of its technology to jurisdictions with problematic rights records, and whether the Canadian government should be assisting Netsweeper financially or otherwise when its systems are used in a manner that negatively impacts internationally-recognized human rights," it says.

Citizen Lab, based at the Munk School of Global Affairs at the University of Toronto, researches information communications technologies, human rights and global security. It has published several reports that have been critical of technology companies in this region, including Sandvine, BlackBerry and Netsweeper.

The new report on Netsweeper makes several recommendations. It says Canadian governments should not fund companies that sell technology to oppressive governments; export licences should be required for any technology that could be abused by foreign governments; and those export licences should require tech companies to monitor how their technology is deployed.

"And they would have to monitor that on an ongoing basis, that is what we are pushing for," said Deibert. "Certainly, the government could require this as a byproduct of getting a licence to export."

Earlier this year, Global Affairs Canada published Ottawa's corporate social responsibility strategy for oil, gas and mining companies that operate in foreign countries. Deibert wants to see that expanded to technology companies selling products to foreign governments.

The new policy for the oil, gas and mining industry came after two decades of work by groups such as Mining Watch that looked into the overseas operations of Canadian mining companies.

"There has been a maturation among many of the companies in that sector over all. They understand that at least they have this obligation," said Deibert. "I think in the tech sector, the IT sector, for the most part, that is largely absent."

Direct financial support for tech companies from federal and provincial governments should come with prohibitions against the unlawful or unethical use of their technology by foreign governments, says the report.

And federal, provincial and local governments should only buy technology from companies that have policies to respect human rights and monitor how their technology is used overseas, it says.

Citizens of foreign countries victimized by governments that used Canadian technology should be able to sue the Canadian tech companies in Canadian courts, says the report.

In January, the federal government announced the creation of the Canadian Ombudsperson for Responsible Enterprise to investigate allegations of abuse by Canadian corporations abroad.

The Citizen Lab says the new office should be given powers to compel witnesses to provide information, seize documents and make legally binding and mandatory orders and impose fines.

"There needs to be some capability that's entrusted to that office to ensure that rights violations are mitigated," said Deibert.

tpender@therecord.com , Twitter: @PenderRecord

by

Terry Pender

Terry Pender covers business and can be reached via Twitter @PenderRecord.

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Greenest Building In Canada

WATERLOO — The latest addition to the David Johnston Research and Technology Park is being hailed as the first building in Canada to achieve a new national zero carbon designation.

The Evolv1 building at 420 Wes Graham Way has received a zero carbon building design certification from the Canada Green Building Council.

The designation means the 110,000-square-foot office building is extremely energy efficient, producing enough carbon-free renewable energy to offset the annual carbon emissions associated with its operations.

The building, expected to be completed this summer, was designed and built by the Waterloo-based Cora Group in collaboration with the lead tenant, EY Canada, Sustainable Waterloo Region and the research park.

Design and engineering firm Stantec Inc. was hired to help design it as well.

With a large array of solar panels on the roof and more covering sections of the parking lot, Evolv1 will produce more electricity than it uses.

Triple-glazed windows, a three-storey atrium with a living wall, technology that taps into heat produced underground and charging stations for electric vehicles are among the technologies included in the building.

"What's really key about this building is we are delivering it at market rates," said Adrian Conrad, chief operating officer at Cora.

"We have put together a business model where we can deliver that at the same rates as any other new building in the market."

The zero carbon building program was launched late last year by the green building council. Evolv1 is among 16 buildings that joined the council's pilot program for this new standard.

"They are the first ones to come through and get certified," said Mark Hutchinson, the council's vice-president of green building programs.

The zero carbon standard was launched to encourage the construction of buildings that eliminate carbon emissions, a  cause of climate change. It is estimated that 20 to 30 per cent of all greenhouse gas emissions come from buildings, said Hutchinson.

"We hope to see the industry pick up the standard, and adopt it quite rapidly," he said.

Evolv1's two main tenants — EY Canada and TextNow — have leased most of the building. Evolve Green, a collaborative project involving Sustainable Waterloo Region, the University of Waterloo, Wilfrid Laurier University and the Accelerator Centre is taking up space to work on clean technology.

Tenants will move in by late summer or early fall. At this point, only 10,000 square feet of space remains available for lease.

The performance of Evolv1's green technology and features will be carefully assessed after one year. If the building meets all objectives it will be awarded LEED Platinum, the council's highest standard for energy efficiency. LEED stands for leadership in energy and environmental design.

But Cora Group isn't waiting for that to come through before proceeding with Evolv2, an office building that will go up across the street from Evolv1.

"We are starting planning right now," said Conrad. "We've got some preliminary site plan work, and I am in the process of interviewing my team."

               tpender@therecord.com, Twitter: @PenderRecord

tpender@therecord.com , Twitter: @PenderRecord

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Cool Trumps Practical

WATERLOO — People wearing Google Glass sparked fist fights in San Francisco bars because the internet search giant did not bring enough behavioural science into the design of the product, says an expert in the field.

"This actually did happen on multiple occasions," said Jason Hreha, a behavioural scientist and speaker Wednesday at the Persuasive Technology Conference at the University of Waterloo.

Google Glass included a computer, scanner, monitor and camera. It was hyped as a huge advance in wearable technology.

"The problem with Google Glass is that when you wear it, people know they are being watched, making people very uncomfortable," said Hreha, head of product, behavioural sciences at Walmart.

The term "Glasshole" was quickly applied to the early adopters.

The technology violated so many social norms, including the automatic recording of people without their permission, it sparked violence, Hreha said.

There was no way to save it without getting rid of the look, and the technology inside, so the product was pulled, he said.

Hreha has a PhD in neuroscience from Stanford University and uses his research to increase shoppers' engagement and spending at Walmart, the world's largest retailer.

Many product failures could have been avoided if behavioural scientists had been involved in design from the beginning of development, said Hreha, founder of Dompamine, the first behavioural design firm in Silicon Valley.

Behavioural scientists should be viewed as core architects of new products, not optimizers and saviours who are brought in to save something that is already failing. He says a company needs to get the product right the first time, or it never will.

Behavioural science exposed big myths about what motivates people — that everyone is rational, information alone will change behaviour, and new habits are formed in as little as 21 days, Hreha said.

What motivates consumers 70 per cent of the time is what behavioural scientists call "signalling," he said. That means using a product to be perceived as cool, smart, powerful, righteous, sexy, wealthy, cultured, well read, well travelled, kind, generous and nice, said Hreha.

Entertainment is the main driver of consumer behaviour between and 10 and 20 per cent of the time, he said. Practical considerations get the same weight as entertainment.

The consumer landscape is littered with products that failed because these insights were not used in their design and marketing, Hreha said.

There are many examples of high-profile failures. They include New Coke in 1985 and Qwikster, a DVD-only service launched by Netflix in 2011, but pulled after 11 days. A redesign of the main page for Snapchat outraged users, and Google+, the internet company's foray into social media, floundered from the beginning, said Hreha.

When it comes to wearable technology, only one company — Apple — got it right, said Hreha. The Apple Watch succeeds where others failed because it piggybacks on a deeply ingrained repertoire of behaviour — wearing a watch, he said. It has health-related features as cool additions, not main attractions.

"You are already wearing this thing, let me show you your heart rate, let me show you your steps, as a kind of bonus," said Hreha.

Developers of new product features and marketing campaigns must realize most people are lazy when it comes to changing routines. They don't want to make more than one or two clicks when shopping online. And when the default option is good enough, very few people will ask for anything else, said Hreha.

A lot of behaviours are triggered by cues from other people and things in the environment, he said.

"We understand that there are real drivers of behaviour that are almost invisible, that unless you key into them you don't really see them."

tpender@therecord.com, Twitter: @PenderRecord

tpender@therecord.com , Twitter: @PenderRecord

Terry Pender covers business and can be reached via Twitter @PenderRecord.

Email: tpender@therecord.com Facebook Twitter

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Brownman Ali brings his award-winning Blue Note Composer Series to the Rhapsody Barrel Bar, 179 King St. West in Downtown Kitchener, every Sunday afternoon in May.  3-6 p.m.  May 6 is the music of Joe Henderson.  May 13 is the music of Wayne Shorter.  May 20 is the music of Herbie Hancock.  May 27 is the music of Freddie Hubbard.  Cover: $20.  All proceeds to charity.  Music starts at 3 p.m. Two sets, 75 minutes each.  Amazing music.  Money back guarantee. I shit thee not.

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Bartesian About to Break Out

KITCHENER — The at-home cocktail machine developed by a Kitchener startup is scheduled to be in stores sales in North America later this year.

Bartesian, founded four years ago by Bryan Fedorak and Ryan Close, signed a deal with Hamilton Beach Brands last month that will see the manufacturer of small household and houseware appliances oversee the manufacturing, distribution and servicing of the machines that make different cocktails at the push of a button.

"It is Bartesian branded," said Close. "It is our IT. It is our designs, but they basically have the expertise in working with factories in China, servicing the products."

Bed Bath & Beyond, with 1,050 outlets across North America, will be the first retailer to carry the Bartesian units.

It is no coincidence that Bed Bath & Beyond is the first big retailer to go with Bartesian as it was also the first to sell Keurig machines. What Keurig is to coffee, Bartesian is to cocktails.

"They take chances, they are giving us premium space and are working with us," Close aid of Bed Bath & Beyond.

The startup remains headquartered in the Velocity Garage — the University of Waterloo's tech accelerator in the Tannery building — and also has space in a building on Duke Street where more than 600 Bartesian cocktail machines are being assembled, and shipped to people who placed orders for the units on the Kickstarter crowdfunding platform when the company was starting out.

Since Bartesian was founded, it has completed more than 25 prototypes of the machine and cocktail mix capsules. In 2016, it secured a multimillion dollar investment from Beam Santory, the third largest premium liquor company in the world.

Positive feedback from early users of prototypes culminated in an order for 5,000 units from a big retailer, and that's when a partnership with an established company such as Virginia-based Hamilton Beach made sense, said Close.

"The cost of goods to make that is high, and then you have to manage the working capital for it," he said.

Bartesian could have borrowed the money, but a pre-revenue startup would pay a higher rate of interest, he said. And it balked at the idea of taking on more investors.

"We didn't want to raise too much more money because then we are diluting our shares. You should never dilute your shares just to fill orders, so we decided that we would pursue that partnership," said Close.

Bartesian has seven employees, most of whom are focused on the ingredients used in the capsules to make different cocktails. The contents of the capsules are developed in Kitchener and manufactured in Wisconsin.

Close was in Chicago last week opening a small office and lab that will oversee contract manufacturing of the cocktail capsules at the Wisconsin plant.

"The drink has to taste stellar, rival what you would expect to have at a nice cocktail lounge," he said. "We don't use powders or artificial flavours, chemicals or high-fructose cornstarch."

Bartesian's founders met while pursing different startups at Communitech.

After graduating from Grand River Collegiate in 1999, Close did a business degree at Western. He was working in sales and marketing for a Toronto company, and was involved in a startup on the side that was working a new crowdfunding platform.

Fedorak graduated from UW with a degree in mechanical engineering and then did an MBA at Wilfrid Laurier University. He had an idea for a machine that made cocktails the way a Keurig makes coffee and was looking for someone with business experience to help out.

That's when the two decided to pursue Bartesian together.

tpender@therecord.com, Twitter: @PenderRecord

tpender@therecord.com , Twitter: @PenderRecord

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New Wearable Tech for Consumers Coming Soon from Thalmic Labs in Kitchener

KITCHENER — Each Monday morning new employees from around the world stand up and introduce themselves at the weekly companywide meeting at Thalmic Labs.

On the main floor of the startup's latest office — the former Schreiter's furniture building at Gaukel and Charles — new hires from France, the United Kingdom, Korea, Mexico, Germany, the Netherlands, Korea and the United States talk about themselves and their interests.

"Every week, there is at least one, but many weeks there are five or six people starting," said Stephen Lake, co-founder and chief executive officer of the wearable technology company.

Thalmic is among the fastest growing tech firms in Waterloo Region. Since early 2017, there have been about 200 hires, 75 per cent of them in engineering or research and development. The company now has about 340 employees in Kitchener and Waterloo, and about 10 in a small office in San Francisco.

Some of that growth is the result of changes to how visas are approved by Immigration, Refugees and Citizenship Canada. Last July, the federal government launched its global skills visa program. In the worldwide scramble for talent, tech companies long complained it was taking too long for Ottawa to approve visas for new hires in specialized fields. It routinely was taking 10 months, sometimes a year, they said.

Thalmic and Communitech submitted detailed proposals for streamlining the process, and Lake was thrilled to see many of the suggestions incorporated into the program. Since it was launched last summer, Thalmic has secured at least 12 visas under the new program.

Visas are now approved in days, sometimes a few weeks. The program has thresholds for education, skills and incomes. Once those criteria are met, approvals quickly follow.

"It has actually been very, very successful for us," said Lake.

Previously, visas were issued under the Temporary Foreign Worker Program. Someone with a PhD in robotics from Germany was lumped in with a high school graduate who was working in a fast-food restaurant. It was frustrating for a startup that is pushing the boundaries of human-computer interaction.

Thalmic makes the Myo, a device that wraps around the forearm and turns the electrical signals from moving muscles into computer commands.

It is developing a new product, but has been supersecretive about what it is. The product, which will be made in a 50,000-square-foot factory on Roger Street in Waterloo, will be wearable technology for the consumer market, said Lake. The company is months away from going public about it, he said.

People with PhDs in human-computer interaction and other highly specialized fields were needed to develop the new product, build prototypes and conduct tests, said Lake. The new visa program is a huge help.

"We proposed, and I think most Canadians would agree, that we want to attract highly-skilled, highly-educated folks from around the world to come and move to Canada and eventually become citizens," said Lake.

The visa program gives Canadian tech companies a competitive advantage over Silicon Valley in the search for talent. U.S. President Donald Trump is making it harder for American companies to hire foreign talent while Canada is making it easier.

Other local startups that have hired people under the program include Shopify Plus, Plum, Chalk, Skywatch, Mappedin and Clearpath Robotics.

"The program is a two-year pilot, and the results after less than one year have been remarkable,' said Chris Plunkett, vice-president of external relations at Communitech, the organization that advocates for the local tech sector.

People hired under the program typically fill intermediate and senior positions, and play influential roles in a company's growth, he said.

"This has become a huge advantage for our companies in recruiting talent, and we would encourage the government to make this a permanent program as soon as possible," said Plunkett.

tpender@therecord.com, Twitter: @PenderRecord

tpender@therecord.com , Twitter: @PenderRecord

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Privacy is the new battle field

WATERLOO REGION — As Facebook CEO Mark Zuckerberg was preparing to testify before U.S. lawmakers in Washington this week, Karolina Godwinska was taking a hard look at the apps causing widespread outrage with the social media giant.

"I don't think I have ever used most of these," Godwinska says as she looks at the 37 apps on her Facebook account. "I didn't even know that most of these apps had access to my Facebook."

Godwinska is a first-year kinesiology student at the University of Waterloo. She's had a Facebook account since Grade 8 and uses it mostly to stay in touch with family in Europe.

The apps access her name, age, gender, profile picture, friend list and whole lot more. It is alleged that data mining firm Cambridge Analytica used personal data like that from an estimated 87 million Facebook accounts to influence elections in the United Kingdom, the United States, Nigeria and elsewhere.

"I use Pinterest. I used to use Candy Crush. Crosswords, I think I used that once. I used this, PicMonkey, when I was younger, it is for picture editing," Godwinska says as she scrolls through the apps, most of which she did not recognize.

There is an app she downloaded, but never used, for mapping fitness runs. That app still accesses her personal data as it sits there unused. There is one for free Wi-Fi in Toronto, which accesses her birthday, current city and email address, among other information.

"Why does Toronto Wi-Fi need my birthday or where I currently live?" says Godwinska. "That's crazy. Is there any way to control it or turn it off."

Yes, is the short answer, says Aimée Morrison, a UW English and literature professor, specializing in computer technologies, digital media and multimedia. She urges Facebook users to delete the apps.

"Whatever information they already have on you they get to retain, but they can not come back and get any more about you," she says.

There is a blue bar along the top of a Facebook account. On the far right side of that bar is a triangle. Click on it, scroll down and select "Settings." That takes you to the page called "General Account Settings." Go to the left side of the screen, and click on "Apps and Websites."

From there you can delete apps, or restrict some of the information they can access. Facebook users can also download all of the data Facebook has collected on you.

"A lot of people have clicked on a lot of things over the years and they will have literally 60 of these third-party apps," says Morrison.

Usually, personal information is sold to advertisers, who target ads at you based on your interests. But that kind of surveillance capitalism shades into nefarious political manipulation when Cambridge Analytica created fake accounts and propaganda during elections, says Morrison.

"It was precisely one of these third-party apps that was collecting personal information for Cambridge Analytica," she says.

With about two billion accounts, and 1.2 billion active users, Facebook is among five corporations that dominate the internet, along with Google, Amazon, Apple and Microsoft.

Federal and provincial privacy commissioners in Canada should have access to all the data Facebook collects on individuals to protect the users and the integrity of elections, says Jennifer Whitson, a professor of sociology and legal studies at UW, who specializes in surveillance studies.

"This is going to be the new battlefield over privacy," she says.

Consent forms and user agreements drafted by companies such as Facebook are ridiculously complex and change every few months, so it unfair to put the onus on individual users, she says.

The European Union has new legislation called the General Data Protection Regulation or GDPR that comes into effect May 25 and will fundamentally change how corporations such as Facebook use personal data.

Proper consent must be obtained from users before data is collected, and when individuals ask a corporation to delete all of the data it holds on them, the company must comply, Whitson says. "You have the right to be forgotten."

The European legislation calls for huge fines — 10 million euros or two per cent of the previous year's annual revenue, whichever is higher.

"It is beautiful," says Whitson.

The Canadian Civil Liberties Association has called for tighter regulations around the collection and use of personal data by corporations. In short, the association says personal information should only be collected when it is essential to providing the services the company offers.

Before companies collect it, keep it or sell it, "they have to ask themselves: Is it needed for the service they are providing to consumers?," says Brenda McPhail, director of the association's Privacy, Technology and Surveillance Project.

"That would help, that's a big one."

There needs to be more transparency in user agreements, too, says McPhail.

"Right now you have a one-click-agrees-to-all model," she says. "Take it or leave it, if you want to use our service you will let us do whatever we want."

Privacy commissioners should also be given powers of enforcement, McPhail says. Currently, commissioners can do little more than make public breaches of privacy.

"We need to make sure there are teeth to the law," she says. "We need to have our privacy watchdog administer consequences to those violating our rights."

A more targeted approach to regulating how Facebook uses personal data was developed by Robert Kerton, a professor of economics at UW. He is the lead researcher on a project involving six universities and the four largest consumer protection organizations in Canada.

"It is naïve to think Mr. Zuckerberg wants us to select security settings because if we do that, it decreases the value of the rich trove of personal information Facebook can sell," says Kerton, former president of the American Council of Consumer Interests, an international association of researchers and policy experts working on consumer issues.

"Instead, we should allow users to opt in to sharing private details for a small fee. A modification of this business model is an offer to click 'Share' or 'Don't share' each time a user provides personal information," he says.

Or Facebook could pay individuals for the use of their data by sending them a cheque once a year, says Kerton.

"That is a business model that could work because Facebook would prefer to be able to sell your data."

It's not too late or difficult to regulate how personal data is used by social media platforms, says Kerton.

"Right now, you are sharing all these private details that allow the political manipulation of you," he says. "That's why it is risky. By providing information on your core political and religious beliefs, you are allowing yourself to manipulated by Cambridge Analytica and other users of Facebook."

Zuckerberg met behind closed doors with U.S. legislators on Monday in advance of his appearance in the Senate on Tuesday and a congressional committee on Wednesday.

No matter what he says, many Facebook users already have a new-found wariness about the social media behemoth.

"I don't remember these," Melika Sedaghati says as she looks at third-party apps on her Facebook account. She clicks on a music-related app and sees it has access to her profile picture, friend list, email address and more.

"I actually didn't know they could do this," says Sedaghati, a student in third-year health studies at UW.

Megan Smith is about to graduate from Waterloo with a degree in legal studies and English. She's been using Facebook since Grade 6, and she too was surprised to find so many apps on her account that she has no memory of using.

"That's far too invasive," says Smith.

tpender@therecord.com, Twitter: @PenderRecord

tpender@therecord.com , Twitter: @PenderRecord

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Big real estate deal in Waterloo

WATERLOO — A Halifax-based real estate investment trust has purchased Westmount Place from Sun Life Financial for $77.8 million and says it will focus on the "significant multi-residential opportunity" the site provides.

Killam Apartment REIT bought the mixed-use development because it has all of the key elements it looks for in potential sites for new development — a great neighbourhood, jobs, transit, shopping and entertainment, Philip Fraser, the Halifax-based company's president and chief executive officer said in a statement.

Westmount Place has 297,000 square feet of space on 14.7 acres of land at Westmount Road and Erb Street West. It includes a grocery store, scheduled to open in September, a pharmacy, medical offices, a bank, a Michaels store and a four-storey office building that houses Sun Life workers.

Most important for Killam, the site has 88,000 square feet of land on the Erb Street side of the property that could be developed with buildings containing up to 600 new apartments.

"Westmount Place is well located close to downtown Waterloo, both the University of Waterloo and Wilfrid Laurier University, the Waterloo Memorial Recreation Complex and the Waterloo Public Library," Fraser said in a news release.

Sun Life's Canadian headquarters are located in a historic building on King Street South in Waterloo. The financial services company employs about 3,500 people in the city.

At one point Sun Life was the largest source of property taxes for Waterloo. But it sold its Waterloo headquarters at 227 King St. S. in 2014 and now leases the property back. With this latest sale, Sun Life stresses it has no plans to move out of Waterloo, and will maintain its Canadian headquarters there.

"As part of a regular review of our real estate portfolio properties, we determined that in the current Canadian real estate market, it is more financially attractive for Sun Life to redeploy the capital elsewhere as part of our long-term real estate investment strategy," Laura Torchia, the company's manager of corporate communications, said in an email.

Sun Life is the biggest tenant at Westmount Place with 188,702 square feet of space. It has a lease agreement with Killam that runs until 2026.

"Sun Life will remain the sole tenant with full control over the facilities," said Torchia. "The sale of the building has no impact on employee operations, how we conduct our day-to-day business, or our commitment to the Kitchener-Waterloo region."

The sale of Westmount Place will count among the largest real estate transactions in the region in 2018.

"It is a very big one," said Karl Innanen, managing director and broker for Colliers International. "It's a big deal."

The site has the potential for an incredible multi-residential development, he said.

"Killam being the buyer, that's what they do, that's what they are good at, and they placed a big bet there," said Innanen.

Killam is among the biggest residential landlords in Canada with 184 apartment buildings containing 14,983 units. It also has 35 manufactured home communities with 5,165 units.

Killam said it will begin the process of consultations and master planning for the site this spring. It said it wants to maximize pedestrian connections, green space and new landscaping. It said it wants to begin construction of the first phase of the development within two years.

The site straddles the urban-suburban boundary, is close to Waterloo Park and the recreation complex, Innanen noted.

"A really nicely located site that lets you take part in everything the region has to offer, close to a lot of great amenities," he said.

Killam is the latest in a growing list of investors to put big money into local real estate. In recent years, institutional investors bought the Sun Life's headquarters, the Tannery building in downtown Kitchener, some of the former BlackBerry buildings and a big stake in the Breithaupt Block that houses Google's Canadian engineering headquarters.

tpender@therecord.com, Twitter: @PenderRecord

tpender@therecord.com , Twitter: @PenderRecord

Terry Pender covers business and can be reached via Twitter @PenderRecord.

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Tech and Arts at True North Waterloo

WATERLOO REGION — For the first time, Communitech's annual technology conference will include a budding downtown festival that organizers want to grow into a Canadian version of Austin's South by Southwest.

For the past 10 years, the tech organization's Tech Leadership Conference was held at Bingemans and attracted thousands of people and guest speakers from around the world.

It is now rebranded as True North Waterloo and will be based in a renovated industrial building called Lot42 on Ardelt Place. It runs from May 29 to 31.

The downtown festivities will include live music, art installations and tours that highlight the growing impact of technology companies big and small on the city core.

They will be centred around the Walper Hotel, the Tannery building and city hall, and include a wrap-up party at Themuseum on May 31. There will also be a street party in Hall's Lane. All of this will coincide with the first two days of the Open Ears Festival of New Music and Creative Sound.

This year also marks a change in philosophy for the annual gathering. Silicon Valley is facing what the The New Yorker calls "a moral reckoning" in the wake of the rise of fake news, propaganda bots and the misuse and exploitation of personal data from 50 million Facebook accounts by Cambridge Analytica.

A major theme for True North Waterloo is about bringing Canadian values to technology, said Iain Klugman, Communitech's chief executive officer.

"The things that have made us great as a nation, the things that others have mocked us about, things like being nice and polite and honest, are all of a sudden pretty important traits," he said.

"We are ready as global tech community to host a big conversation," said Klugman. "It is time for us to begin building principled businesses, and for people to feel a sense of accountability."

Those conversations have to include how tech companies treat women, minorities and customers' data, he said. "I look at a company like Facebook and I think: 'God knows where it is going now. It is in trouble. It is in real trouble.' "

The scandal around Cambridge Analytica, and its manipulation of personal data from Facebook users to influence the last U.S. presidential election, the Brexit vote in England and elections in Nigeria, has sparked a massive conversation that will continue at True North, he said.

"I think the conversations are going to change everything," he said.

Since Communitech moved into the Tannery building in downtown Kitchener in 2010, scores of startups that were incubated there have moved into offices in renovated buildings in and around the city core.

The burgeoning startup scene, the arrival of light rail transit and the move of Google's Canadian engineering headquarters into a former rubber factory on Breithaupt Street have helped give the region's tech sector an urban look and feel.

So it was time for Communitech's annual conference to be more urban and to include a festival that is open to anyone free of charge, said Klugman.

"The objective in the next few years is that we really want this thing to be truly region wide, and we want to go from targeting 2,500 people this year to targeting 10,000 in the future," he said. "We want this all to be big."

The South by Southwest (SXSW) festival in Austin started in 1987 when 700 people attended the music festival. It expanded to include interactive technology and film. It runs for about 10 days now in mid-March every year.

Klugman said he does not want to wait 30 years for the True North festival to have a global impact.

"We are very excited about next year because we know that's when the lid is going to come off," he aid. "We will have LRT rolling and we are going to be looking at venues up and down the LRT spine."

This year the conference has one venue, and the festival will be in one downtown.

"Next year we are looking at multiple venues in multiple downtowns because we really want this to be an urban conference," said Klugman. "The festival is all going to be free. We want this to be a community gathering."

The downtown festival is supported by the City of Kitchener, Perimeter Development Corp., the Waterloo Economic Development Corp. and Themuseum.

"I feel the arts community and the tech community are really starting to come together," said David Marskell, chief executive officer of the Themuseum. "That's awesome for our community."

Craig Beattie, one of the principals and founders at Perimeter Development, has invested heavily in both the downtown and the tech scene. His company bought and restored several old buildings in the core, and leased space to big and small technology firms. The Lokal bar in the Walper Hotel, which Perimeter restored two years ago, will be a central gathering place for the festival.

"The tech scene growth over the past few years has been very urban driven, so for a big event like this to dovetail an urban festival is super important," said Beattie.

Kitchener Mayor Berry Vrbanovic said the festival is a great opportunity to showcase the city and that can only help tech companies attract new talent. There will be a free concert in the public square in front of city hall, and a robot workshop as part of the festival.

"This region is becoming a real powerhouse in tech, innovation and digital media," said Vrbanovic. "We have lots to show."

tpender@therecord.com, Twitter: @PenderRecord

tpender@therecord.com , Twitter: @PenderRecord