A Canadian on Wall Street

As a Canadian investor, I’ve had a chance to see many forays by various Canadian companies into the United States, either under their own brand or through the surrogacy of a more well-established American one. As an investor in La Senza at one time — and boy do I wish I had held them for the longer term — I saw them attempt little runs down south with brands like Wet Seal, but the juggernaut of Victoria’s Secret ensured that that was about all they would be able to do. In the end, it was the American parent of VS, Limited Brands, that ended up buying La Senza and its brand.

Another company, the Quebecois pharmacy chain Jean Coutu, ended up waving the white flag when they sold off the Brooks and Eckerd line of American pharmacies, white elephant brands that had been sold to them by JC Penney and to which they are somehow managing to deliver at a minor profit I believe to Rite Aid, the struggling runt to the CVS and Walgreen juggernauts. Was it a case of a bad purchase on the part of Jean Coutu or are Canadian companies not particularly well-suited to fighting into the much larger American market?

One of the few minor success stories is Tim Horton’s, which holds its own in small sections of the northern US, mostly on the East coast. A quintessential Canadian brand, its tried and true formula of decent coffee and doughnuts, or a hearty bagel and soup, seems to have worked a lot better than Krispy Kreme’s disastrous expansion into Canada, with its donut-flavoured drinks and lack of a strong strategy. But Tim’s is an exception, and it’s mostly likely helped by having the deep pockets of its parent, Wendy’s, behind it. Is this the only way that Canada can compete in America, when we aren’t depending on our rich natural resources, and if so, is there a way to match the big financial guns of our Yankee neighbours?

In fact, Canada has been moderately successful in the new era of dot-commerce and online businesses, where the start-up costs are small and expansion can be done with the purchase of a few servers. Flickr, a company that started right here in Vancouver, grew significantly and successfully as a community photo-sharing service that outstripped most of their competitors for features. As usual, it was bought out by Yahoo. So that makes me wonder — even if Canadians do succeed with their businesses, as soon as their is proof that they can compete on the American and world stage, the big pockets swoop in. When do Canadians get to do the buying?