The Cali or Bust Conundrum

A recent study highlighted the brain drain problem for tech talent in Canada. In this post, I will explain the ‘Cali or bust’ movement and describe its effect on the tech brain drain. In addition, I will provide 8 recommendations to retain and attract top Canadian tech talent.

Brain Drain Report

A study led by Zachary Spicer, found that 25% of recent tech grads from Canada were working in the US. To summarize the study, the team collected data from 3,162 LinkedIn profiles of graduates from University of British Columbia (UBC), University of Waterloo (UW), and University of Toronto (U of T).

It is important to note that 52% of this sample size were UW graduates in Software Engineering (SE), Electrical & Computer Engineering (ECE), Systems Design Engineering (SYDE), Computer Science (CS), and Mathematics. These programs are all highly competitive and generally require students to complete 5 or 6 co-op terms. Engineering Science, ECE, and CS graduates from U of T and UBC make up most of the remaining data points. These programs are also highly competitive and offer co-op or PEY opportunities.

Based on these facts, it would be far from the truth to extrapolate the report results to Canada as a whole. The University of Waterloo is the #1 feeder school to Silicon Valley and large US tech companies. Given that UW grads represents the majority of the sample, it would be extremely unfair to make any conclusions about Canada STEM students in general. A more accurate phrasing would be “25% of recent SE/CS/ECE graduates from Canada’s top undergrad programs such as UW are working in the US”.

I personally think that the Canadian tech brain drain problem is being overblown, as these results do not represent Canada collectively. However, I do believe that at UW specifically, brain drain is a major problem. For the remainder of this post, I will be focusing solely on analyzing brain drain at UW.

What is ‘Cali or bust’?

‘Cali or bust’ is a catch phrase and meme that was popularized on /r/uwaterloo in mid-2016. There is a general misconception that this maxim means “I must only consider and get an internship offer in California or else I have failed”. For most students, a more accurate interpretation is “I will try my best to get an internship in the US or at a well-known US tech company. I will use more than half of my co-op applications for these competitive roles in the main round. If I ‘bust’ in the main round, I will open up my options for the continuous round.” Despite not being located California, Google Waterloo, Bloomberg NYC, and Amazon Toronto are all considered ‘Cali’ in the mentioned maxim.

Cali or bust: When you use most of your co-op applications for competitive US companies. ‘Cali’ = receiving an internship offer for a competitive US company. ‘Bust’ = failing to get ‘Cali’.

The main reasons for why a student would ‘Cali or bust’ are: higher internship pay in the US, experience new locations & cultures, work at reputable companies, and the fact that the many of their classmates are also heading to the US.

Consequences of ‘Cali or bust’

The winners of the ‘Cali or bust’ movement are UW students, US tech companies, and UW. The losers are: UW students, Canadian tech companies, the Canadian tech industry, and the government.

For students, ‘Cali or bust’ isn’t regarded as a negative mindset to have. UW students should be able to pursue whatever opportunities maximize their potential. It just happens that the majority of these opportunities are located in the US. As mentioned before, there are countless reasons why a UW student would consider ‘Cali or bust’. There is little to none real incentive for a UW student to not ‘Cali or bust’.

The tech industry in Silicon Valley is the equivalent of the film industry in Hollywood. It’s regarded as the place where shit gets done. Silicon Valley and Hollywood are the world’s largest supercluster of opportunities for their respective industries. Opportunities in the US vs. Canada is like comparing the NFL to the CFL. The former is far more reputable and prestigious than the latter; the difference in salaries is also quite significant. Of course, in both examples, it’s important to note that there are still excellent opportunities outside of the industry leader.

Finally, UW’s co-op program provides a perfect gateway for students to ‘Cali or bust’. It’s very common for CEOs and engineering leaders of US companies to fly into Waterloo to recruit students. For reference, here’s the employer info session calendar.

Unfortunately, at the same time, UW students can also be losers. ‘Cali or bust’ also promotes a toxic competitive environment amongst students, where co-op jobs that are not ‘Cali’ may be considered inferior. This creates a detrimental effect to many students’ self worth when they ‘bust’.

At the end of the day, the only clear, real winners of ‘Cali or bust’ are the US tech companies.

Why UW students work in the US after graduation

When I was an SE student, over 60% of my class worked in the US for their 5th co-op term. For new grad roles, this number will be in a similar ballpark. Amongst the CS/SE/ECE/SYDE programs at UW, over 30% of new grads will work in the US.

The #1 reason why UW students move to the US is the massive difference in total compensation, which I previously wrote about here. After considering taxes and cost of living, your take-home income can be 50 to 100% higher in the US compared to Canada.

Other reasons include: company reputation, scope of work, professional development, peers, location preferences, and personal factors.

The ‘Cali or bust’ movement for getting the best internships directly affects the UW brain drain problem. For full-time opportunities, students are likely to return to an employer from their final 3 co-op terms. For example, Facebook is known to offer a 75K USD signing bonus for returning interns, which is higher than many Canadian companies’ salaries. When an exceptional full-time offer is thrown at you, and combined with an expiring deadline, it’s extremely hard to even consider opportunities in Canada.

In short, the ‘Cali or bust’ movement is the primary driver of migration. If a student has interned in the US, they’re much more likely to return to the US. If a student has only interned in Canada, then they’re more likely to remain in Canada.

As more and more students successfully achieve ‘Cali or bust’, the movement compounds into increasing brain drain for UW graduates.

Recommendations

To reduce UW’s brain drain, the onus is on Canadian tech companies and the university. I have come up with the following recommendations to address the problem.

Co-op jobs

First and foremost, Canadian tech companies must significantly improve their internship programs. By retaining students in Canada for their final internships, they are more likely to remain after graduation.

1: Increase the salary of senior co-op jobs to at least CAD $40 per hour.

For students, a short term goal is to pay for next term’s tuition and reduce student loan. Co-op jobs in Canada currently pay on average CAD $26 per hour, whereas US employers pay students USD $40 per hour, and also offer generous housing stipends. A US co-op job is even more competitive when you consider the USD to CAD exchange rate. To satisfy a student’s short term financial goals, it’s critical to increase the salary of top Canadian co-op jobs. For Canadian tech companies, increasing co-op salaries can lead to increases in the quantity and quality of talent, as well as intern to full-time conversions.

2: Incentivize former interns to return for another internship in their final terms.

One excellent tactic I’ve learned about is PagerDuty’s return intern offer. Former interns who return to PagerDuty for their last co-op term receive a $10,000 one-time bonus. This seems to work well for them, as many new full-time engineers are direct intern conversions. Microsoft also does a similar tactic by offering returning interns a $5,000 one-time bonus. Incentives can also be responsibility based. For example, Canadian tech companies can offer interns to work on more senior technical projects and provide invaluable learning opportunities.

3: Get engineering directors to sell an intern on returning for full-time.

As an intern, I would appreciate having an engineering director sell me on returning full-time over a recruiter. Most Canadian companies cannot offer a compensation package that is competitive to US companies. This means that it’s crucial for a director to sell the intern on the impact and professional development they will experience. The time commitment could be as little as a 30 minute 1 on 1 with the intern.

Full-time compensation

4: Increase total compensation by offering stocks/equity/options.

If increasing salary is not possible, then Canadian tech companies should be prepared to offer long-term compensation bonuses to be competitive with US companies. Stocks/equity/options also help the employee feel more personally invested into the company. Perhaps, the government can consider investing into a one-time grant for companies to provide a signing bonus for co-op students beginning their first full-time job.

International students

About a quarter of CS/SE students at UW are international students. UW graduates who are Canadian citizens currently have the privilege of working in the US easily via the TN visa. However, for international students, acquiring an H1B visa to work in the US is very difficult.

5: Target international students and retain them in Canada for full-time opportunities.

Canadian tech companies can take advantage of international students’ visa situation by investing into recruiting them. From the discussions I’ve had with my friends who are international students, they all seemed very impressed with Canada as a country. Tech companies can sell international students on the roadmap to getting a Canadian permanent residence. Similarly, from orientation week to the graduation ceremony, UW should be proactively convincing and supporting international students to remain in Canada.

US satellite offices

6: Welcome more US satellite offices.

Some great examples are Google Waterloo, Amazon Vancouver, and Facebook Montreal. Although US companies will steal potential tech talent from nearby small and mid-sized companies, it does provide lucrative opportunities for UW graduates to pursue. The government should be proactive in welcoming new US satellite offices due to the well-paying jobs created, and the net increase in tech talent retained.

Re-acquiring Canadian tech talent from the US

In addition to retaining graduates, another important goal is to re-acquire Canadian tech talent that migrated to the US. A common theme in my conversations with UW graduates and friends is that they expressed strong interest in wanting to return to Canada in the future.

7: UW should proactively sell alumni into returning to Canada.

The UW communications team should be communicating the state of Canadian tech to alumni on an annual basis. For alumni who have spent years in the US, they are likely to be out of touch with what’s happening in the world of Canadian tech. For in-person events such as the 5 and 10 year alumni reunion, UW needs to send a strong message to welcome alumni back home.

8: Tech companies should target senior engineers and leaders in the US, and sell them on “coming home” and taking on additional responsibility.

This blog post is an excellent example of a Canadian startup convincing an engineering leader from the US to join them. Although Canadian tech companies won’t be able to match the candidate’s previous compensation, what they can do is selling them on the company’s vision and values. They can also sell the candidate on ‘levelling up professionally, i.e. taking on additional technical or management responsibility. Recruiters and engineering leaders at Canadian tech companies should proactively target UW alumni who have gathered 5-10 years of experience in the US and sell them into “coming home”.