What’s In The Water At Waterloo?

FOR YEARS, sources I’ve spoken to from all corners of the Bay Area tech scene have said this exact phrase: Waterloo creates cracked engineers.

They always emphasize cracked, a techie badge of honor for the freakishly talented, the kind who work absurd hours and build impossible things. As journalists do, I decided this meme ought to be investigated.

After arriving on a red-eye flight, filming a chess match with Geoffrey Hinton, and touring Toronto’s graffiti alley, I found myself inside a broom closet with two University of Waterloo engineering students and a tank of helium. “We usually use argon gas,” one of the students, Eric Jessee, explained. “But we ran out, and we can’t buy any on the weekends.”

In front of us was a table covered in wires, microscopes, and miscellaneous tubes. At the center sat a makeshift magnetron sputtering machine, a tool that deposits metal onto silicon a few atoms at a time. It’s one station in what amounts to a jerry-rigged chip fab.

“I worked in a lab where my professor had one, and I think it cost him about half a million dollars for the setup,” said the other student, Skye Koh. The one here cost “less than $500.”

This is the main project for Waterloo’s Hacker Fab, a club that builds cheap, homemade versions of semiconductor equipment and publishes the plans, so that chipmaking is something a college student can do in a closet. This doesn’t earn them credits, and professors even ask to be kept in the dark about it altogether. “No one wants to be responsible for us doing this,” Koh said. “They also don’t want to give advice and then we blow up.”

This—not experimenting with drugs, not stumbling into exams hungover—is what kids at Waterloo do with their free time.

THE CITY OF Waterloo, Ontario, does not scream talent factory. Your eyes will never have to adjust to the sun at high noon because you will never see it through the constant cloud cover.

The most interesting businesses live in one-story buildings that share a parking lot with one—or more likely several—shawarma joints. Nothing about it invites you to dream, the way a new city usually does, that life here could be grand. If you wanted to design a place where twenty-year-olds have nothing better to do than churn out rockets, race cars, and drones, it would look a lot like this.

Less than a century ago, the entire town was farmland. The university was founded in 1957 by professors who had been holding lessons in shacks and barns, and its first building went up next to a farmhouse. It’s now known as Engineering 1.

The students even have their own bible: Water Under the Bridge. Its author, Chris Redmond, is a much more entertaining writer than Moses. On the layout of Waterloo, he wrote:

“Somebody … had the idea that the place should be organized around quadrangles, where the great minds would mingle... But Waterloo weather doesn’t exactly lend itself to mingling for most of the year, and in any case, whatever happens in, say, the engineering quadrangle is a well-protected secret from the rest of the university. The main effect of that design principle was to have engineering turn its back on arts, and arts turn its back on science, which helped to produce the six solitudes in which Waterloo still lives now.”

In the two and a half decades since that book was published, not much has changed. The campus is dotted with brutalist concrete slabs from the sixties, brick squares with gray trim carved out for windows. The sleekest architecture is reserved for the stars: the Engineering 5 and 7 complex glistens, somehow without sunlight, with floor-to-ceiling windows on every side.

The more Waterloo students I talked to, the more my ambivalence grew. Look, I’m impressed by what they’re able to accomplish. This seems like the perfect place to send your kids if you never want them to lose their virginity or try hallucinogens. As far as raising stand-up citizens goes, I’m all for it.

But my college experience taught me some of the grittier texture the wider world has to offer. You’re there to learn the curriculum, of course, but I’d argue it’s just as important to learn how to get home with a dead phone and one shoe.

WHEN I RECENTLY HOPPED on a Zoom call with Nevedhaa Ayyappan, I assumed I’d be catching her somewhere in Ontario. She’d graduated from Waterloo months earlier, after helping run Socratica Symposium, a student demo day that drew 4,000 people including myself and our camera crew.

Instead, she picked up a couple miles from my apartment in San Francisco. She was here doing work trials at a robotics startup. “A lot of my friends are here, so it kind of just feels like an extension of Waterloo,” she told me. “I think I could survive here without ever talking to somebody not from Waterloo.”

For this story, I wanted to get more details about who Ayyappan is. I asked and watched her rattle off the answer—which was more or less her resume.

So, here’s the rattle: a software internship at the Bank of Montreal, a gig at a space robotics company in Ottawa then another at a medical robotics company in Toronto, some tech policy work at Northguide, then finally data things at Roblox.

As she listed each, I penned three notes to ask once she was finished: Is this too much pressure for this age? How old is she? What are your hobbies?

I asked the first one. Her face contorted as if she’d smelled a foul odor. “I don’t think so. I also think it’s for the best,” she said. “You only have neuroplasticity for so long.” Her theory is that we don’t push kids enough—that the “wow, I did that” feeling only comes from doing hard things, and the symposium, which nearly broke her, was proof. “That’s not an easy thing to pull off as a, what, 21-year-old,” she said.

The third question made her pause. “That’s a really good question,” she said. “I actually spent the summer afterwards kind of reacquiring what hobbies are.”

The problem, she explained, is that Waterloo trains you to turn every hobby into a thing. A club, a startup, a line on a beautifully designed website. She’s practicing not doing that. So, the current roster: sci-fi novels, morning writing calls at 8:30 with a friend from Socratica, and hosting elaborate murder mystery dinner parties. “I love high-effort gatherings,” she said with glee.

EVERY TIME I asked someone why all the kids coming out of Waterloo are so cracked—doesn’t matter who I asked or what country I was in—I got the same answer.

They say Waterloo is a filter, so everyone who gets in is already good. It’s cold and gray and there’s nothing to do, so they stay inside and study. Many of the students are the children of immigrants, and since their parents crossed the world to give them this shot, they work hard not to waste it.

The poster child for this theory is Mike Lazaridis, a man who arguably defined the 2000s more than Britney Spears or E! News. Born in Istanbul to Greek parents, Lazaridis came to Canada at age five and enrolled at Waterloo as an engineering student in 1979. While still a student, he won a $600,000 contract from General Motors to build scrolling message displays for its factory floors. He dropped out two months before graduation, started Research In Motion with a childhood friend, and went on to invent the BlackBerry.

When I laid out the immigration theory to Ayyappan—whose own family immigrated from India and bounced between Minnesota, Texas, Florida, Pennsylvania, and New Jersey before landing in Ontario—she disagreed. “This is a place that is known for excellence,” she told me. “I think immigrants then naturally tend to go there because they also want to be a part of this.”

Her take is that the true secret sauce here—and what Lazaridis is really the poster child of—is something called Policy 73. Policy 73 lets faculty and students build whatever they want without handing the university a cut of the intellectual property, even if you made it in their labs, using their equipment, during the school year. “Which is very different from any other school ever,” Ayyappan said. That, she says, is what actually attracts families like hers.

“Waterloo has the perfect puzzle pieces to allow people to explore,” she said. “And when you give people the freedom to explore, they will always reach beyond what you expect.”

Waterloo students tout the story of BlackBerry as the pinnacle of homegrown excellence. The funny thing is … Canada has a habit of exporting its excellence. For a moment, BlackBerry was the most valuable company in Canada. Then a little company in Cupertino called Apple invented a better phone, and BlackBerry slid into obsolescence. Google and Motorola opened offices in the region just to scoop up the thousands of engineers it laid off, meaning even the talent that stayed in Waterloo ended up working for America.

The students, meanwhile, now live by a phrase I would hear far too often: “Cali or bust.”

THE FIRST time I heard this phrase was in the broom closet with Koh. “It’s a little bit toxic sometimes, I think,” he said. “But it’s the idea that either you make it to a company in California or the search was considered a bust.”

By his estimate, for his field, San Francisco alone has about as many job postings as all of Canada, and a starting mechanical engineer makes around 70,000 Canadian dollars at home versus 120 or 130 in the Bay. “There’s not a lot of opportunities in Canada to work on this type of stuff, especially at the kind of smaller scale, like startup level, where you have a lot of ownership over a project,” Koh said. “There’s definitely a huge brain drain to the States for a lot of the high performers of the university.”

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Canada knows it has a problem, and it has spent the better part of the last decade attempting to fix it. The government poured $125 million into a national AI strategy in 2017, and in last year’s federal budget, pledged another $750 million for early-stage venture capital.

The results are, to put it charitably, mixed. A report this year from the National Angel Capital Organization and Startup Genome estimates that Canada’s largest tech hubs—Toronto-Waterloo, Vancouver, and Montreal—collectively missed out on US$66 billion in value between 2019 and 2024. That number is an estimate based on the gap between how they actually grew and how they would have had they kept pace with global peers. Over the same period, Toronto slipped from 13th to 20th in the global startup rankings. The median Canadian seed round is 37 to 40% smaller than one in a comparable top-tier American city, and it takes five months longer to close.

Just last month, an exec at the Council of Canadian Innovators, Laurent Carbonneau, put it bluntly: “We’re systematically losing promising Canadian startups to foreign acquirers.”

I must admit, I feel bad for Canada. But mostly I’m pleased to have finally figured out why these cracked Canadians keep popping up in my city. The Waterloo machine grinds them down for four gray years, and California is the sunny reward at the end of it. Also, ya know, ca-ching. Canada is going to have to offer its tech class a lot more than it currently does because I can’t blame these kids for leaving. My state is beautiful, and it pays.

“Some people want to live in Toronto, or Canada, and raise their kids there,” Ayyappan told me from her San Francisco apartment. “But if you want to grow your career, it feels like you have to be here.”

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