On May 1, The Globe and Mail‘s Sean Silcoff reported that BlackBerry was exploring a potential breakup of the business.
Years after stepping away from the smartphone sphere — a space it once dominated, and arguably created in the first place — the company formerly known as Research In Motion has persisted as a collection of vestigial ventures, from in-car computer systems to legacy-patent licensing.
You could ask how a Canadian company that once held the world in its hands (or at least the world’s data on its servers) crashed so brutally. But a better question might be how a tech startup based in Waterloo, Ontario, got so big in the first place.
In some respects, the answers to both questions are the same.
They’re explored in the 2015 book Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry, which Silcoff co-authored with his former Globe colleague Jacquie McNish. It’s been loosely adapted into a comedic feature film hitting theatres this Friday, starring Jay Baruchel and Glenn Howerton as BlackBerry co-founders Mike Lazaridis and Jim Balsillie, respectively.
On this week’s CANADALAND, Jesse Brown talks to Silcoff and, drawing from his book, attempts to distill the various explanations for how everything went so wrong:
By the time the iPhone was released in 2007, Research In Motion (RIM) was an object of national pride. The co-CEOs, Jim Balsillie and Mike Lazaridis, had been crowned and anointed in every way imaginable — and had become accustomed to that kind of life.
Balsillie became a philanthropist, founding the Balsillie School of International Affairs and the Centre for International Governance Innovation in Waterloo. He received honorary degrees, became an honorary captain of the Royal Canadian Navy, and made multiple (unsuccessful) attempts to buy an NHL team for the purpose of moving it to Hamilton, Ontario. Lazaridis, meanwhile, founded the Perimeter Institute for Theoretical Physics and the Institute for Quantum Computing.
It’s very comfortable to be at the top of the Canadian establishment. While Steve Jobs had certainly had much success by the time he devised the iPhone, he’d also been through the experience of losing his company and fighting to get it back. As such, he was acutely aware he was in a hyper-competitive business space, occupying territory constantly under threat from rivals.
In contrast, Balsillie and Lazaridis were comfortable and somewhat distracted: they had already found success and hadn’t yet contemplated that anybody could take it from them. Rather than watching the world for the next encroachment on their space, they expected the world to come to them.
When American investment bankers would reach out for a meeting, Silcoff recalls, “Jim would say, ‘Great. When are you gonna be in Waterloo next?’ Like, you know: Waterloo is where it’s happening. He wanted to send the message, ‘We’re here. We’re not gonna come at the drop of a hat down to Manhattan or Silicon Valley to grovel.'”
From the late 90s through the mid-2000s, RIM had been improperly backdating stock options in a way that benefited Balsillie, Lazaridis, and other executives. Regulators in Canada and the U.S. pursued these (non-criminal) securities violations and in 2009 reached monetary settlements with the company and its leaders.
While the alleged malfeasance was relatively minor in the scheme of things, it did break up the relationship between the co-founders.
Lazaridis, the engineer, was furious with Balsillie, the business mastermind, for putting him in that position. Balsillie consequently believed that Lazaridis was blowing out of proportion a single misstep along a road he’d paved that had brought them both enormous wealth.
Still, why would something so seemingly minor break up the band? It had to do with their reputations: they had come care deeply about their legacies, and this was the first mark against them.
When Steve Jobs rolled out the iPhone in 2007, it was clear to everyone except BlackBerry that it was a game changer.
Every quality that Lazaridis had toiled to perfect when he created the BlackBerry was something at which the iPhone sucked. The first BlackBerry lasted a month on a single AA battery, but the iPhone had to be charged every day. Lazaridis had struggled to make the BlackBerry’s data usage as small and efficient as possible, but the iPhone was a monster with its emphasis on music, photos, and video. No cellular network could handle this thing, he thought, and consumers would get killed on their bills.
Further, the price was absurd, because the BlackBerry, a product aimed at people in suits, cost US $350 for an entry-level device at the time. The iPhone, pitched to general consumers, went for US $499.
Their initial take on the iPhone was that it wasn’t a threat. But while they’d accurately assessed the Apple device’s weaknesses, they overlooked something crucial: that, to consumers, none of those drawbacks would ultimately matter.
The success of the iPhone put Blackberry on its back foot, and they started to chase trends instead of setting them.
Silcoff points out that BlackBerry didn’t come out with a full touchscreen phone with proper underlying software until early 2013. “You don’t have six years in technology to come up with a proper response,” he says, “and I think the roots of that were the fact that they were doing it from Canada and that they were so mired in what had been, you know, very successful thinking and product strategies for so many years that they didn’t realize or appreciate how much the paradigm had changed and that they [would just have] to do everything in an entirely different way from the word ‘Go.’ And they didn’t.”
One of BlackBerry’s original genius strokes was making the data consumption as conservative as possible. As Michael Geist has observed, it was a machine built to fit within the tight constraints of Canada’s telecom networks, which offered slow and expensive wireless data and pricy fees for texts. With its push emails and BBMs, the BlackBerry offered workarounds using the smallest possible packets of data. Built to cope with scarcity, its ambition was simply to stand as a portable email machine that worked.
Jobs’s approach, on the other hand, was to refuse to compromise to fit the constraints of existing networks. Instead, he correctly bet that by giving consumers what they wanted — an entertainment machine promising videos and games — the telecoms would have no choice but to build bigger, faster infrastructure to accommodate it.
If BlackBerry had succeeded in the first place, it was only because there was a moment when Canadianness was not a bug but a competitive feature in the tech space, when the constraints of our mentality put us very briefly ahead of the curve.
Top image — of Jay Baruchel as Mike Lazaradis and Glenn Howerton as Jim Balisillie — comprised of two different stills from the BlackBerry movie, courtesy Elevation Pictures.