Interview with Leslie Marsh on Entrepreneurship in Canada

[This is the full interview with Leslie Marsh which was published in our Kaizen newsletter.]

Leslie Marsh on Entrepreneurship in Canada

Leslie Marsh is a research associate in the Dean’s Office at the University of British Columbia and Founding Editor of Cosmos + Taxis, a journal focused on studies in emergent order and organization.

Kaizen: Where you were born and how did you get to Canada?

Leslie Marsh: I was born in London, England.

KaizenAs we can tell from your accent.

Marsh:  So I was born in London, England, and I spent some of my early years in the Dominions—what was then Southern Rhodesia and South Africa—but that was forty years ago. I went back to the UK in the 70s. The early 70s were pretty grim. Musically it was fantastic, but economically it was pretty grim.

I didn’t know what I was going to do, but my mother—not an educated woman—always said, “Son, whatever you do, get a liberal arts education.” How she knew that, I don’t know. She said, “Whatever you do, don’t become a freaking accountant at 23 or 24. Don’t do that. Go and get a classical liberal arts education, and find out who you are, what you’re interested in, what you’re suited for. You might discount things, and you might discover things.”

But liberal arts education then in the UK was pretty much under stress. It was in North America, in the U.S., where you had small liberal arts colleges. And guess where I landed up?

Kaizen At one of them?

Marsh:  Yes, Evergreen College in Olympia, Washington.

Kaizen: How did you find your education there?

Marsh:  I had a ball. It took a while for the pennies to drop. It was very much the early days of what we now call SJWs.

Kaizen:  Social justice warriors?

Marsh:  That’s what I’m saying. It was there, but it wasn’t. I got on well with people. They had individualized study there, which suited me perfect because I don’t follow anything. I do what I want. In point of fact, I’m so embarrassed about what universities have become these days. I consider myself an autodidactic.

But anyway, they let me be, and I followed what I wanted. I did mathematics, early computer programming, literature, and Harvard Business School-style case studies. I let it rip and had a ball socially as well. It was in the days of sex, drugs, and rock-and-roll.

KaizenAfter Evergreen what happened?

Marsh:  I went back to the UK, and very naively. I didn’t know what I was going to do with my life. I didn’t have a clue, but I’ve always been lucky. I’ve never had to plan.

I went into merchant banking at Chemical Bank. And the fact that Chemical Bank no longer exists is not down to me. It might have been the seeds of its downfall. It might have started with me. Anyway, I was there doing arbitrage eurobonds.

Kaizen:  This is your math and computing background coming in handy, right?

Marsh:  Yeah, but I had absolutely no interest in it. It was silly money basically, and I hated the office culture. I really wasn’t interested in the water cooler conversation there, but I struck it lucky. The guy that hired me was, in his early days, a student. He was what you would call a committed socialist, but a very, very thoughtful one. I mean, he spoke Russian and loved Russian literature. And I said to him, “Simon, why did you hire me? You know how disinterested I am in all this.” And he said, “Well, at least I’ve got someone to speak to over lunch.” We’re still great chums these days, but he said, “You know you’ve got to get out of this. You’ve got to do something else.”

Kaizen: So he could see that it wasn’t your thing.

Marsh:  Yeah. I got lucky, and he said, “Well, go out and just bloody well do something else.” And he knew I was philosophically inclined, but I didn’t really know that. I couldn’t articulate that, because I love philosophical literature. So I went out and I did my Master’s at Birkbeck, which is the evening college at the University of London. I just continued studying, and I’ve never really stopped. I found philosophy very unsatisfactory, especially because I made the mistake a lot of people make. I wanted to go into philosophy via literature, because of course that is where the rubber hits the ground, and I had to be educated. You’re vulgarizing it if you look at it purely in those terms. That’s how I snuffed out of that way of thinking, but then I saw the failings in the syllabus— no conservative stroke. The syllabus was liberal thinking as we understand it.

Kaizen:  So this is a Master’s degree. After Birkbeck, what was the next step?

Marsh:  Now bear in mind I was in community college, but I was working during the day. I did part-time in classics, but not for linguists because I just felt that my classical education on mainstream philosophy was somewhat underserved. I needed to look at Plato and Aristotle much more closely. I taught myself elementary Greek, and I worked again independently. And then after that I moved into sociology for my sins, also at Birkbeck.

Kaizen:  Okay. Let’s jump ahead to your position at the University of British Columbia. You work in the offices of the Dean at the medical school. What’s the nature of your position there?

Marsh: I work with a guy called David Hardwick. I work with him for the International Academy of Pathology, which is an educative thing in underserved areas of the world. It’s a big, big outfit. But he’s also interested in open systems and the Scottish tradition of liberality as we understand it.

Between us, we set up Cosmos+Taxis, which is an open access journal. It’s with Simon Fraser University as well. I don’t know if you’ve seen the journal, but it’s open access and it’s beautifully done. It started off under different guys as basically PDFs.

Kaizen: So, actually, you’re part of the evolution of publishing from the traditional style into contemporary media.

Marsh:  Yeah, and it’s thriving. Of course it’s free, but we’re not in it for money. We’re in it to get knowledge out there. We don’t have careers riding on it.

Kaizen:  What’s the scope of this particular publication now?

Marsh:  Studies in spontaneous order, which basically covers the liberal tradition as we understand it.

Kaizen: You’re also involved in another start up you mentioned in distributing video content.

Marsh:  Yeah.

Kaizen:  This is in Canada, of course. The current heavy hitters are Netflix, Amazon, and so on. Your idea was to do a Canadian entrepreneurial start up that would distribute video content based on that model. Can you say more about that project and some of the central problems that you’ve run into?

Marsh:  Well, Dave’s nephew Doug is a big player in the film industry in Vancouver. He’s spent probably the best part of 30, maybe 40, years with that same open systems mentality. He was an Oscar nominee, but he doesn’t buy into the, pardon my French, bullshit of Hollywood. But, of course, he had this idea because you could see where Hollywood was going. Basically, he was tired of the circus-type stuff coming up to Vancouver because of the tax credits.

Kaizen:  Right.

Marsh:  But anyways, he had this idea. He’d been thinking about it for a good fifteen years, and he started building it. And then when we met, we got to talking about it. We said, well, let’s bring this to market. So we had a good crowd of people that understood what we were doing, but not people with deep pockets. We put together what you’d call a crowdfunded group, and we built it out. It’s online. It’s finished, but there was a snag: we need the content.

Now, it’s not so much the content. Anyone can come to it and put up their content, but we needed a kick-start by having all the free content that the National Film Board, which the taxpayer is paying for in Canada, has. It’s paid for. The National Film Board really should have given us the content or should have used our platform to distribute our content. We’re not profiteering; it’s run like a utility. We only have a markup on the bandwidth, simple as that. The whole back is Amazon technology. The technology is there, but because of governmental faffing around and not understanding the way that the digital world has gone, they just failed us.

So we didn’t have that kick-start, we don’t have the content, and it’s just been mothballed. Well, it’s there and running and functional, but it’s not doing any business.

Kaizen: Okay. So, Canada is a 35-million-person market, and they are accessing digital content. Where are they getting it from? Is it all from Amazon and Netflix?

Marsh: That’s exactly what they’re doing.

Kaizen: So it’s all American distribution. American companies succeed, whereas Canadian companies, in effect, got mothballed?

Marsh:  But the whole point of the World Wide Web is not that we’re serving Canadian content to Canadians. The rest of the world are interested. Can you imagine indigenous populations in New Zealand or Australia being able to hook into indigenous populations generating content in Canada? There could be a whole thing going, and it can be monetized so easily. The problem is, it’s not on a level playing field. Netflix and Amazon and any of these U.S.-based mega entities do not pay tax, whereas a Canadian entity has to pay tax. It would’ve cost us over $300,000, probably a lot more, to have all the programming and the mechanics involved to be able to do the regional Canadian tax. And there’s this whole harmonization problem in Canada between the two tax tariffs, for want of a better word.

Kaizen: Is it a tax differential at the national or the international level? Amazon and Netflix pay taxes domestically back in the U.S. on their profits, but they’re not paying on the Canadian tax.

Marsh: They’re not paying Canadian.

KaizenIf you’re a Canadian company you’re not paying the American taxes, but you would be paying Canadian taxes, so where is the tax differential?

Marsh:  Well, there are maybe a dozen small entities with platforms in Canada, but they’re not doing a large volume. No one’s making money. Netflix is basically cannibalizing already existing content. Just because they have their loss leaders—their big things that they’re financing—doesn’t mean they are contributing any content. So what’s happened is that…

Kaizen: They’re denying rights to broadcast.

Marsh: That’s exactly it. And if you’re a struggling independent and someone comes to you and says, “I’ll give you $15,000 for your one-hour documentary,” the temptation is enormous. You take that, but afterwards you can barely afford a cup of coffee. There’s no serious money.

Kaizen: How would the model that your company was proposing do that differently?

Marsh:  Well, you would have to go online to see it, but let’s just take an example. When you go on to Netflix, what have you got? Thumbnails. What we offer is deep search—the ontology. We work hard on the ontology of categorization of documentary, performance, and theatrical. We had the idea of referrals that had some substance. In other words, not anyone can just come on the site and skew the referral system. Everyone on the site is answerable. You couldn’t rate anything until you’ve actually viewed it. You could drop something in someone else’s box and say, “Hey Stephen, I saw this show. I think you might like it.” And you’d build up community. You could put your own playlists on. So on the viewer’s side there is a lot of engagement.

On the provider side, you’ve got so much flexibility. You can brand it yourself, so when I come to Joe Blog’s filmmaker, it’s all Joe Blog. It’s all branded by Joe Blog. We’re just operating in the background. They’ve got complete flexibility, and they’ve got access to their accounts.

Kaizen: So different treatment than from, say, the YouTube model.

Marsh: Yeah. It has some similarities, but we don’t do everyone’s cat video. You’ve got to have stuff of substance that people obviously want to monetize.

Kaizen: So if you have a registration fee to be a part of your site, then you can put up whatever you want and brand it, market it, and so forth. And it becomes open source?

Marsh: Totally. You market it yourself. You do not need a film distributor. In this day and age, if you’ve got access to the distribution you do not need the traditional middleman, which is what screwed the film industry over—especially the independents—historically.

Kaizen: So what do you need the Canadian government to do if it’s essentially the YouTube model? Why does the tax differentiation matter at this point? It sounds like you’re doing is different from Netflix. You’re not going out and paying $20,000 for the film rights or whatever. That’s what Netflix is doing.

Marsh: Right.

Kaizen: If you’re not competing in that market, why is there a problem?

Marsh: Well, because they don’t have to pay tax. We do. And not only that, there’s a very complicated technological way to collect the tax.

Kaizen: It’s not just a matter of, say, here’s how many registration fees we have and here’s our twenty percent tax or whatever.

Marsh: Yeah.

Kaizen: Okay, so you have byzantine tax structure.

Marsh: Not only do we have to collect tax that way, but we also have the corporate tax that Netflix and the others are not paying, so it’s all going south of the border.

Kaizen: Since the government is interested in long term revenue, why are they not more on top of this? If they recognize Netflix and Amazon as huge entities—there’s going to be billions of dollars in the coming years—why are they not leveling the playing field or having a more rational tax policy?

Marsh: I think it’s traditional political short-termism. Right now 500 million dollars might seem like a lot of money.

Kaizen: That was the Netflix offer to the Canadian government?

Marsh: That was what they, the government, sold out to Netflix for.

Kaizen: So it’s about 400 or 500 million U.S. dollars.

Marsh: It’s over five years; it’s peanuts. You know, a government in the normal course of operations can blow that. So it’s short-termism, but it’s also a lack of political leadership and insight.

And the whole point of the platform is we’re content neutral. So long as it’s not the obvious hate, it’s content neutral politically.

One of the guys that did use us as an experiment, and it worked quite well, went on a bicycle and made a documentary following the famous pipeline that they were going to build.

Kaizen: The Keystone controversy?

Marsh: Something like that. He’s a documentary filmmaker, and he went out on a bicycle with his damn camera and did show the exact area. I thought, well, he’s an environmentalist, but there’s also political aspect to it—a policy thing. But this is good stuff whether or not you subscribe to his political ideas. Why aren’t people taking any notice? Because you can’t get his stuff out there.

Kaizen: Sure.

Marsh: And it’s a wonderful thing to get people with localized knowledge creating content. In this day and age, with an iPhone you can do interesting things.

Kaizen: What about YouTube? Why is not advantageous for him to say, “Here’s my 50 minute documentary. I put it up on YouTube, and I’ve got my subscribers and word of mouth, and people vote it up and down.” So it’s already distributed, a public domain thing.

Marsh: Because we offer him a lot more flexibility behind the scenes in terms of marketing and branding. For all intents and purposes, everyone comes to him thinking this is his whole operation.

Kaizen: I see. So, one more question and we’ll wrap up. If the Canadian political jurisdiction doesn’t work, is there anything to stop your company, or the idea of your company, just being in some other jurisdiction?

Marsh: Well, there are two options. We’re putting together a video and a letter, because I’ve been in correspondence with the previous minister of heritage or culture or whatever they call themselves. We can locate to south of the border, but then what’s the point? There are others, and they’re giants. The whole point is to give the Canadians a break, a Canadian entity, Canadian jobs, and Canadian content, but not just for Canadians. Canadians are not interested in Canadian content because most of it is crap. It really is.

Kaizen: In every country 80 percent of it is crap, but the world market is huge.

Marsh: Exactly. If you wanted to do a woodworking video, you’d only need a hundred thousand nerds around the world who would willingly pay the price of a cup of coffee—99 cents—and you’re sitting on $100,000. That is the point. You can find your niche.

Kaizen: You’re looking for the long tail.

Marsh: The long tail, exactly.

Kaizen: It sounds like a work in progress, but this is also wide-open technology to a large extent. We’re in the early days of all of this.

Marsh: Well, I’m afraid nothing is going to happen with this company. I’ve been making inquiries to see if we could sell it. At the very least, maybe we’ll just mothball it. It’s not wasted, but it hurt because people who are set builders—and not on the glossy side of things—put their money in it. I think each put in $10,000, and we put together about $300,000. And though these people knew the risk, it still left a bad taste in our mouths, especially because these are people who know the industry. They’re in the industry. They’re not people sitting up on high saying, “Oh, wouldn’t it be nice?”

Kaizen: Would you then say the lesson for you, the entrepreneurial strategist, was that you needed better understanding of the political process before committing the capital? Were you too idealistic about how that would go?

Marsh: I think I had misplaced expectations in the political process. It’s all lip service; we live in an age where we’re young, hip, and tech savvy—but not really. Underneath all that you need a politically sensible, ethically sensible, long-term view. You need some substance, and you also need to understand the dynamics of a market.

Kaizen: Right.

Marsh: These people just don’t understand the dynamics of a market.

Kaizen: So political value-structures set cross-purposes in this case.

Marsh: Yeah.

Kaizen: Fascinating stuff. We’ll stop there.


This interview was conducted for Kaizen by Stephen Hicks.

More Kaizen interviews with leading entrepreneurs are here at our site.

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