May 8, 2023
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CANADALAND
#882 Blackberry The Phone The Podcast
For nearly a decade, Research in Motion was the global leader in smartphones with its iconic QWERTY-keyboard-having Blackberry. Through a mix of guerilla marketing and an unexpected boost in sales after 9/11, the rather simplistic email device was transferring some of the world’s most closely guarded secrets, from government officials, business leaders, and celebrities through some servers in Waterloo, Ontario. What was the cause of its demise? The iPhone? Google? Hubris?
Jesse Brown
Host & Publisher
Jonathan Goldsbie
News Editor
Cherise Seucharan
Reporter, CANADALAND
Bruce Thorson
Senior Producer
Tristan Capacchione
Audio Editor & Technical Producer
Annette Ejiofor
Managing Editor, Podcasts

For nearly a decade, Research in Motion was the global leader in smartphones with its iconic QWERTY-keyboard-having Blackberry. Through a mix of guerilla marketing and an unexpected boost in sales after 9/11, the rather simplistic email device was transferring some of the world’s most closely guarded secrets, from government officials, business leaders, and celebrities through some servers in Waterloo, Ontario. 

What was the cause of its demise? The iPhone? Google? Hubris? 

Jesse chats with Cherise and Jonathan about his interview with Sean Silcoff, co-author of Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry, also written by Jacquie McNish. The book is also the source material for the new film by Matt Johnson, Blackberry, starring Glenn Howerton and Jay Baruchel, which releases on May 12, 2023.

Host: Jesse Brown

Credits: Tristan Capacchione (Audio Editor and Technical Producer), Bruce Thorson (Senior Producer), Cherise Seucharan (Reporter), Jonathan Goldsbie (News Editor), Annette Ejiofor (Managing Editor)

 

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Transcript

Canadaland’s transcripts are edited to the best of our ability to ensure accuracy from audio to text. Please contact editor@canadaland.com should you have a correction.

INTRO
(Canadaland theme plays)
(BlackBerry alert)

Jesse Brown:
Jonathan can uh… can we see your phone?

Jonathan Goldsbie: Absolutely!
(all chuckle) 

Cherise Seucharan: Amazing. Can you describe what version is this?

Jonathan Goldsbie: This is a BlackBerry Key2. This is basically what was the second last BlackBerry-branded phone that exists for about two-thirds of the front of the device is the screen. And the bottom is a classic-style BlackBerry keyboard.

Jesse Brown: I noticed that when you pulled it out Cherise laughed.

Jonathan Goldsbie: Yeah.

Jesse Brown:
Do people laugh?

Cherise Seucharan: Can I just clarify? It was not a laugh of mockery. It was a laugh of amusement. I’ve never I have not seen a BlackBerry in many years.

Jesse Brown: The BlackBerry movie.

Jonathan Goldsbie: Oh, I’m looking forward to that.
(“BlackBerry” clip plays)

BlackBerry Bro 1: Okay, picture a cell phone and an email machine, all in one thing -it’s called a BlackBerry
BlackBerry Bro 2: Huh?
Blackberry Bro 1: Try typing with your thumbs.
BlackBerry Bro 3: You said they were the best engineers in the world.
BlackBerry Bro 1: I said they’re the best engineers in Canada.
(“BlackBerry” clip concludes)

Jesse Brown: So it’s a comedy.

Jonathan Goldsbie: Oh, yeah.

Jesse Brown: I think that people when they see these devices these days, it’s an object of, if not mockery, amusement. It’s not something that people take terribly seriously. But I got to tell you, I used to cover tech during the heyday of BlackBerry and BlackBerry not very long ago was not a joke.

This device, like the category of device, the smartphone. I don’t think you can name anything else, like that is the device that changed the world more than any other, I think, in our lifetime. I’m not sure what you can mount a defence of that would be the device. More so that has changed has radically transformed the world. And these smartphones. And the first smartphone was the BlackBerry.

It was a Canadian innovation and it was the biggest smartphone in the world – actually, it was the only smartphone in the world. That was not a joke when Canada was leading the future, and it was hard to imagine it going in a different direction. At a certain point, smartphones and BlackBerry were kind of synonymous. It did not work out that way. And so now, while Steve Jobs is sort of revered as this like magnificent figure of history, this incredible innovator, probably one of the most famous people.

Jonathan Goldsbie: Oh yeah, important. Yeah.

Jesse Brown: In the world.

Jonathan Goldsbie: Mmmhm hmm (in affirmative).

Jesse Brown: Jim Balsillie and Mike Lazaridis are not names that I think most school kids-

Cherise Seucharan: No, no.

Jesse Brown: -would know, but these guys are about to get a lot more well-known, more well-known than they’ve been in many years with this movie. And again, they’re doing so the first blast of attention they’re getting in years is as the subject of mockery. So they’re not getting remembered for what they actually did. They’re not really getting remembered as the guys who created the device that changed the world. They’re instead, I think, remembered as the guys who momentarily owned the entire global smartphone market. But blew it… but did they?

Cherise Seucharan: But did they?

Jesse Brown: I don’t know what’s in the movie. I haven’t seen the movie. The movie does not claim to be terribly faithful to the truth. But I have lived through this, as I say, as a tech journalist though, my focus was not on consumer electronics. It was hard to be covering tech in Canada at the time and not be aware of BlackBerry and what was going on.

But more to the point, I have spoken to Sean Silcoff and Sean Silcoff wrote the book that this movie is based on. He and Jacquie McNish wrote the book Losing the Signal, which was all about the rise and fall of BlackBerry. So Sean and I spoke, and in a moment I’m going to share with you some of that conversation – some reflections and some history.

Because what we’re going to do today – Jonathan, Cherise – I’m going to tell you exactly how a Canadian company briefly held the world in its hands and then dropped it. Wait for it.

PATRON SUPPORTER SHOUTOUT
(Canadaland intro music plays)

Jesse Brown:
This episode is brought to you by Kris  Rondolo, Alastair Kellett, Gayle Laws, David Reimer, Dennis Raphael, Kenzie Traill, Suzanne Faiza and Jim.

Patreon Supporter Jim: I’m Jim, a professor of Economics in Vancouver. I support Canadaland because it is my go to podcast for keeping me up to speed on important Canadian issues. Listening to journalists rather than reading their news reports deepens my learning and increases my curiosity about news events.
(Patron sting plays)

DÉTOUR LIVE EVENT INFORMATION
Jesse Brown: We just released tickets to our first French-language live event in Montreal. Join us on June 8th at the PHI Centre for a Détour Live with Emilie Nicolas, together with a panel of special guests, journalist and day tour host Emily Nicola will address the online hate that women increasingly face when they speak up publicly about the issues they care about. Tickets are free for you because you are a Canadaland supporter if you’re in Montreal. Come on out. We hope to see you there to get your tickets. Go to PHI.ca. You’ll find in the show notes to this episode a promo code which will connect you to your free tickets.
(Canadaland Patreon sting plays)

PART ONE
Jesse Brown: Let’s skip the part about who these guys really were and their biographies and their childhoods and how they came up with this amazing invention. Or at least let’s gloss over all that stuff very quickly.
(Contemplative xylophone music starts)

Mike Lazaridis was born to Turkish immigrants but is of Greek ancestry, born in Windsor, Ontario. And was one of these kids who was just an incredibly gifted, both in math and engineering got really interested in computers, radio technology by profession, electrical engineer, computer scientist.

His eureka moment was actually kind of obvious, and I hesitate to make too much of it because what was it? He knew this for years before he actually made it. He knew from a young age that whoever connected computers to wireless communications was going to cash in big. That was going to be something special. But the fact is, by the 90, everybody knew that the Internet was already getting pretty damn big. Cell phones were getting pretty damn big. And it was kind of clear that whoever was going to smush together your chocolate with my peanut butter first and make that something that you can do on the go was going to win big. And a lot of people tried. So why did RIM succeed where so many big players failed?
(Contemplative xylophone music concludes)

Cherise Seucharan: What’s RIM?

Jesse Brown: Oh, my God, of course, people forgotten this. Blackberry used to be called Research in Motion. I don’t know what the research was about, but the motion part I get, because they were always a wireless company and they were actually they were around for a long time before the BlackBerry.

There’s a whole successful history of Research in Motion before the smartphone era. But these guys were watching as the big players, the Nokia’s and the Motorolas, and everybody was like trying to take us like, you know, we’d have the era of the Filofax and the personal organizer and Filofax.

Jonathan Goldsbie: I’m thinking like a Greek pastry?
(Chersie chuckles)

Jesse Brown: Like it was like a book where, like, everyone was trying to get a portable device that could do everything right that had your calendar. I mean, that is what a smartphone is now.

Cherise Seucharan: Called a Filofax though?

Jesse Brown: Before the electronic version, there’s actually a Jim Belushi movie that the plot revolves around a Filofax.

Jonathan Goldsbie: Oh, really?

Cherise Seucharan: Ok…

Jesse Brown: Yeah. Don’t Google that now, Johnathan.

Jonathan Goldsbie: Okay.

Jesse Brown: All the big guys were thinking maybe too far ahead because they were like, we need to get a device that does everything. And so they had these devices that did a lot of things really poorly. So how did RIM succeed and why did RIM succeed where so many else failed? It was because they kept things simple. They focused on one killer app – email. And here is what Sean Silcoff told me about that.

Sean Silcoff: This is the mid-90s when everyone is starting to use email. Hotmail is created I think in 1996 and by 1996, 97, Research In Motion is saying we should have a device that can send emails back and forth.

Jesse Brown: That was what Mike Lazaridis innovated on,  that’s what he did. He built the world’s first workable mobile email machine. You know, they had gone from pagers and there was a lot of pressure to stay with pagers. And he said, no, we have to be able to send and receive email on the go.

And that was no small feat. Getting the antennas to be small, like tiny little modems is what RIM specialized in previously getting everything into this one holdable device and of course the keyboard and a keyboard that like the ergonomics work with two thumbs you could type. It just worked. And they innovated with push email and they had a very complicated back end, like they hosted all the stuff themselves on their own servers. And so the notion of like, you don’t have to sit there and say, get my email and wait as it very slowly delivers, your email is kind of waiting for you.

Jonathan Goldsbie: So basically the idea of like being constantly connecting and you get the email moments after it’s sent and an ongoing basis as opposed to having to manually refresh.

Jesse Brown: That’s right. And that notion of constant connectivity is, I think, one of the kind of defining ways that our lives were changed. A lot of it had to do not just with the efficiency and the miniaturization of the hardware, but the data, because if you think about what networks were able to handle at the time.

Remember that detail, keeping things as small as possible was a big key to their success. As for Jim Balsillie, he wasn’t the technologist. He was the business person of the bunch. And I can only infer from the previews of this movie he’s portrayed as this aggressive shark of a businessperson. Is he an inventor or is he an innovator? Should he be celebrated? I think you can’t tell the story of the BlackBerry without talking about his contribution.

Cherise Seucharan: Who was Balsillie? Was he like the CEO of RIM?

Jesse Brown: So these guys ultimately were co-CEOs. But I’ll back up, I’ll give you a little bit more of who is Balsillie. The top-level parts of his biography will just sound like a typical Canadian establishment blueblood, right? This guy, Harvard Business School before that, Trinity College. Before that, he literally played lacrosse and hockey with George Cope, the future CEO of Bell Canada, and Wade Oosterman. It’s almost like they had like a future telecom executive boys club. He was a hard partier,  his nickname was Balls-
(Stifled laughter)

But he is not exactly the stereotype blueblood that may be described by all that.

Jonathan Goldsbie: They didn’t call him silly balls.
(Jesse chuckles)

Cherise Seucharan: Oh, that’s perfect.

Jesse Brown: If we could turn back time.
(Cherise brays)

But listen to this, at Trinity College, his squad was actually kind of interesting. Here’s who he hung out with, Malcolm Gladwell-

Cherise Seucharan: Of course, he hung out with Malcolm.

Jesse Brown: Gladwell, Atom Egoyan. Jim Balsillie actually acted in an Atom Egoyan student film called “A Clockwork Trinity”.

Cherise Seucharan: Oh, my God.

Jesse Brown: And then there were people who you might expect as part of this group. Andrew Coyne was there, Nigel Wright, future uh-

Jonathan Goldsbie: Chief of staff to Harper?

Jesse Brown: Waylon Smithers to Harper’s Mr. Burns, yes. Balsillie also has Métis Heritage his dad’s Métis, and interesting family history. His grandmother on that side of the family once managed exotic dancers in Winnipeg and was known as the “Queen of the Strippers”. The book posits that maybe Balsillie was like a try-hard because he was a little bit of a fish out of water amongst all of those other guys. He was a bit more working class in his background.

Fast forward, he muscles his way into an equal partnership with Lazaridis into the early Research in Motion. Famously, he mortgages his house to do so. There are two things in the history of BlackBerry that above anything else you have to credit Balsillie with, in terms of what led to the success. The first one was that he is the one who carved out the deal with the telecom carriers who really had no idea at the time what to do with wireless data networks.

Sean Silcoff: By the early 90 seconds, there was a lot of promise and hype and hope about wireless data, but no one could figure out what the market was. You had these two wireless data networks that were ancient and tiny in terms of their capacity by today’s standards, but they were empty. No one could figure out what to do with them. So that’s when the folks at Research in Motion said, okay, well, how about we do wireless email and we’ll rent some of your space on your network? And BellSouth was so strapped for cash for its wireless data network that they took the 5 or 6 million bucks that room was offering just to sell a bit of time and fill up this vast, empty network that they were having difficulty selling into.

Jesse Brown: I find that really interesting, that and I remember that time when, like your cell phone, your flip phone or whatever would have like, you could like, pay money for a ringtone or something. Like that’s what they were doing with data. And I guess this was a deal that they couldn’t resist just to get free cash.

Cherise Seucharan: Yeah, why did these data networks exist if no one was using them?

Jesse Brown: They didn’t know yet and in Silcoff and McNish’s book, they talk about how they were trying everything. In fact, RIM was involved in one of these experiments. There was an early payment system at Skydome for like your hot dogs. Rogers tried to use wireless data networks to predict when delivery trucks were going to arrive, and then they brought it to the consumer. But when it was the wireless carriers trying to offer you, you know, data products, well, how good are they going to be at that, you know?

So what you had was these wireless data networks kind of sitting dormant and there was an opportunity there that they saw if we can actually just get the space and manage it ourselves, we can do something with this. So that was one business innovation. The other major thing you got to credit Balsillie with was his marketing strategy. And here, Cherise, I’ll ask you to read this passage from Losing the Signal.

Cherise Seucharan: The solution Lazaridis and Balsillie decided was an unorthodox plan to infiltrate Fortune 1000 companies. RIM made it easy for influential managers and executives to link the addictive BlackBerry system into their corporate email without involving the IT department. RIM even priced the devices, so they fell within executive’s discretionary spending budgets. The idea was to get a critical mass of top executives in a company to use Blackberries before their CIO realized a new technology had infiltrated the business.

Jesse Brown: So those are the two innovations Balsillie brought from a business perspective. First off, he was able to basically buy from BellSouth, the wireless data network capacity that the carrier didn’t know what to do with, and he was able to get this thing popularized by just putting it in hands, either by making it as cheap as possible or giving it away for free to top-level executives. And if you think about that, once your boss is hooked to like always on the go email, as we all are now, but once your boss is hooked to it, they are expecting to be replied to.

Jonathan Goldsbie: Oh, so was his fault.
(Cherise chortles)

Jesse Brown: Oh yeah. You know, you basically make their efficiency. First of all, you turn them into an employee who was never not working and somebody who was communicating constantly around the clock and expecting to get replies on the same schedule. And after that, yeah, it’s going to just proliferate throughout these companies.

Jonathan Goldsbie: Wow. It didn’t occur to me that this could all be pinned at the hands of one person.

Cherise Seucharan: It also seems like they were trying to sort of do this backdoor access to these executives without going around the official sort of technology.

Jesse Brown: It channels for sure, because when you deal with the IT department, they’re like, well, we have to support this. We have to do tech support for this. We have to change our whole system. But this was an infiltration attempt and it was very deliberate. It was very intentional.

Jonathan Goldsbie: A monster! No, but like there are laws across the world to try to undo, try to undo this.

Jesse Brown: In any event, BlackBerry becomes incredibly popular amongst the jet-set business class, not just executives, but also world leaders. And one key moment in the history of BlackBerry and the smartphone, as Sean told me, was 9/11.

Sean Silcoff: I mean, the only way people could communicate after the towers were hit were by Blackberries. And in Washington, you know, this company had tried hard to get into official Washington with very limited success. And on that day when the plane hit the Pentagon, that knocked out communications as well. In Washington, the only people who could communicate were the people who had Blackberries.

And one of the first things that happened when Washington got back to business a few weeks later was every member of the House of Representatives was issued a BlackBerry, and suddenly Blackberries were used to convey global secrets. I mean, this was you know, this is a company whose devices were- think about it carried the secrets of presidents and princesses, CEOs and celebrities. I mean, it really did change the world.

Jesse Brown: I find that so interesting, both like there’s this period where the Pentagon is hit and communications are out. And the only communication that’s happening amongst Washington power people is over these Blackberries.

Cherise Seucharan: Why was that?

Jesse Brown: When the third plane attacked the Pentagon that knocked out most cellular and landline phones for people who are working in government, communications down the chain of command went dead, writes Sean in his book. And the only way people were able to communicate was over their Blackberries. It’s also interesting to note that once you’ve got all of these different elected representatives in the states and all these world leaders, all those secrets, as Sean says, are going through these servers in Waterloo.

So that really establishes the BlackBerry as the device of choice for this type of person. And pretty soon we’ve got Barack Obama coming into office and one of the major narratives is that he’s either smoking his Newports or he’s on his BlackBerry and he’s got a whole fight with the Secret Service over about whether he can keep it or not and he wins that fight. And that’s when we see CrackBerry entering the lexicon and it just goes like a juggernaut from there.

They created the smartphone market and owned it, and they had 50% of the global cell phone market. I mean, even iPhone doesn’t have that now. Nobody has anything remotely close to that. And then they fucked it all up. And nobody can agree on why that happened or if it could have been avoided, but there are theories.
(Canadaland chapter transition music plays)

PART 2
Jesse Brown: Why did they fuck it all up? Let’s count the theories.
(Groovy mystery music starts)

Okay, theory one, they just got soft. And here I think that there is a very strong Canadian element to this particular theory. By 2007, when the iPhone is released, RIM is an absolute darling of a company in Canada. They have been celebrated the co-CEOs, Balsillie and Lazaridis, for years. This is a phenomenon. This is the pride of our nation. And the co-founders were crowned and anointed and in every way imaginable, and they were used to that kind of life.

Jim becomes a philanthropist. He founds the Balsillie School of International Affairs at the University of Waterloo, the Centre for International Governance and Innovation Think tank. He donates all this money for Balsillie Family Hospital Wing. Honorary degrees from- Wilfrid Laurier University, Dalhousie, U of T, Trent University. He is an honorary captain of the Royal Canadian Navy and Sean told me this anecdote about how the first time he actually met Balsillie, it was at the Chateau Laurier Hotel in Ottawa, and Balsillie is wearing a full naval uniform. I think this is a very Canadian thing that once you are in the top level of establishment, it’s very comfortable. I mean, Steve Jobs also had a lot of success by the time he came up with the iPhone. But there’s a different attitude, I think when you are in a very competitive atmosphere with other people who are trying to take it all away from you, and he’d already lost a lot and had to fight to get it back. These guys were hella comfortable and maybe distracted.
(Groovy mysterious music concludes)

Balsillie had a wild hair up his ass about buying a hockey team. He wanted to buy an NHL team and move it to Hamilton. And he tried that three times. It did not work out.

Cherise Seucharan: Which team did he want to buy?

Jesse Brown: The Pittsburgh Penguins, The Nashville Predators and the Phoenix Coyotes.

Cherise Seucharan: Wait, he wanted to buy American teams and bring them to Hamilton?

Jesse Brown: He did. And he had to be coy about it and at times promised that he wouldn’t bring them to Hamilton. And then he was discovered to already be selling tickets. And his bid was rejected by the NHL with prejudice.

Cherise Seucharan: I see. 

Jesse Brown: He failed to pass what they called their character test for reasons that will soon become clear. As for Mike Lazaridis, he too, was enjoying his perch. He was made in 2006 an officer of the Order of Canada. He was also a member of the Order of Ontario. And he also starts this phase of like, now I’m going to give back and be this sort of lion-champion of research. He founded the Perimeter Institute of Theoretical Physics, the Institute for Quantum Computing. So maybe by this point, there was a hubris to them, they had already done it.

Jonathan Goldsbie: Oh yeah.

Jesse Brown: And the idea that anybody could come take it from them, I think wasn’t contemplated. And perhaps there was also an arrogance to them and uh-

Jonathan Goldsbie: Famously, (all chuckle) that’s like the premise of the movie. assume there’s this amazing detail in this Bloomberg Businessweek story from a decade ago. And there was this one person, one former, I guess, executive there who told this quick story. One thing we missed out on was that Justin Bieber wanted to rep BlackBerry.

This is 2007, 2008, the peak of Bieber. He said, give me $200,000 in 20 devices and I’m your brand ambassador, basically. And we pitched that to marketing. Here’s a Canadian kid. He grew up here. All the teeny boppers will love that. They basically threw us out of the room. They said, this kid is a fad. He’s not going to last. I said at the meeting, This kid might outlive RIM. Everyone laughed. (All chuckle)

Jesse Brown: I think that their tone-deafness for things cultural is a theme that’s going to come up again here. They were proudly Canadian in a way that you could describe as arrogant. They were not watching the world for what the world’s next move was in their space. They actually expected the world to come to them.

Sean Silcoff: They were very proud of being Canadian. I mean, Jim had even said, you know, when Americans would call up and say, oh, we’d love to meet with you, you know, investors or I bankers or other technology companies, Jim would say, great, when are you going to be in Waterloo next? Like, you know, Waterloo is where it’s happening. You know, he wanted to send the message, you know, we’re here. We’re not going to come at the drop of a hat down to Manhattan or Silicon Valley to grovel.

Jesse Brown: So that’s theory one, they got soft. Here’s theory two.
(Smartphone tone plays)

Lennon and McCartney had a fight and broke up. Jim kind of broke the law. RIM kind of broke the law, but Jim knew about it and was a part of it. What he did was he backdated stock options. And what that is, when you’re trying to entice people to be executives, you give them stock options that allow them to buy your company’s stock dated to a certain point in time. So even though the stock may have skyrocketed, they can buy them when their option comes up for what it was worth at an earlier date.


And they changed those documents, they changed the documents in a way that benefited Jim Balsillie and Mike Lazaridis for millions of dollars, but also lots of other executives. There’s an email chain that came up where they were asking other people to change the dates on documents so that they could buy them for a price based on a time when the stock was worth less. But it is illegal and something that should be said kind of everybody was doing. He’s never been charged or convicted of a crime. This is a securities violation by billionaires. So it’s not going to be a criminal matter. But it was pursued and then it was settled with a hefty payoff. Jim never claimed to be innocent. He never claimed that he never did it. He said he didn’t know it was wrong or something like that.

Jesse Brown: This may sound like a routine thing in the history of any company of this scale. That shit like this happens. It’s like lawsuits, some security stuff. Find me a company where this hasn’t happened. But for the relationship between Mike Lazaridis and Jim Balsillie, this actually is what broke up the marriage. This is why mommy and daddy don’t talk anymore.

What Mike Lazaridis had to say about this after he had to give testimony and felt like, you know, it’s been a long time since anyone spoken to him harshly, and here he is getting deposed and asked all these bracing questions. And he was furious with Jim. And his point of view on this was, I don’t know anything about this for years now, I just signed what you put in front of me. How could you put me in this position? Jim’s position was one of equal feelings of betrayal. Like I have made so many moves to make you a gazillionaire, and now one thing goes sideways and you are shocked and appalled and your monocle is falling out.

I asked Sean Silcoff why these two guys who had done so well by working together, why would they let something so seemingly minor break up the band? And he agreed that it had a lot to do with their reputations. This was really the first mark against them, and they had come to really, really, really care about their legacy, their reputation, their record.

Sean Silcoff: I think that was the case for Mike in particular. And then it turned out to be a key pivot point. And interestingly, it’s also, you know, I mean, the film adaptation, obviously, It’s going to be different than the book. They have two hours to tell a story. It’s a piece of cinema as opposed to a book. But it’s interesting that they also glommed onto that as a central point in the story and make that a core theme of the story.

Jesse Brown: And, you know, the board demanded that Balsillie step down as a CEO after that, and they basically lost control of the company in the wake of that relationship Getting-

Cherise Seucharan: Yeah, so essentially what we’re looking at is two people who got real comfortable in their own success and this idea that they were these two great amazing tech guys and then got caught for something that they never thought they would get caught for.

Jesse Brown: And all the while unaware that something was about to smack down from the heavens right on their head.

Cherise Seucharan: Yup.

Jesse Brown: Which brings us to theory three,
(iPhone ringtone plays)

It was the iPhone, stupid.

Steve Jobs (at iPhone launch): Is a revolutionary mobile thing. (Rapturous cheering) Three things: a widescreen iPod with touch controls, a revolutionary mobile phone and a breakthrough Internet communications device. These are not three separate devices. This is one device, and we are calling it iPhone.

Jesse Brown: So Steve Jobs rolls out the iPhone. The press calls it the Jesus phone. And it is clear to everyone in the world except for BlackBerry that this is a game changer.|
(Energetic marimba music plays)

Cherise Seucharan: To rivals such as RIM, Nokia and Motorola. The iPhone’s popularity was illogical. Its battery lasted less than eight hours. It operated on an older, slower second-generation network. And as Lazaridis predicted, music, video and other downloads strained AT&T Network. RIM now faced an adversary it didn’t understand. By all rights, the product should have failed. But it did not, said David Yach, RIM’s chief technology officer.
(Energetic marimba music concludes)

Jesse Brown: Everything that Mike Lazaridis as an engineer toiled to perfect when he created the BlackBerry. The iPhone sucked at. You know, battery power, the first BlackBerry lasted a month on one AA battery.

Cherise Seucharan: Forgot it lasted forever. That was a thing.

Jesse Brown: Monochrome screen like this was a functional business tool and it would last for almost a month. The iPhone, you have to plug it in every day. So as an engineer, he’s like, What a piece of shit. It’s an energy hog. Data efficiency? Forget it. Like, this guy had struggled to get the bits as small and efficient and elegantly moving around so that you could just rely on your email communication. The iPhone is a monster – music files, pictures, videos. No cellular network he thought could handle this thing. Consumers are going to get killed on their bills. The networks are going to crash.

And the price? The price was absurd because the BlackBerry, you remember like this was a product for rich people, for people in suits, and it cost $350 for an entry-level BlackBerry at the time the iPhone is debuted as a product that’s basically pitched to hipsters and priced at $499. Who’s going to buy that? Who needs a $499 phone? So when you consider their initial take on the iPhone that this isn’t a threat because all the things the BlackBerry excels at the iPhone sucks at, they were 100% right about all of that. It just didn’t matter.

Sean Silcoff: And that’s one of the most amazing things. They were right about every single one. You know, the AT&T network crashed from so much Apple use, There were lawsuits.

Jesse Brown: Blackberry was now on its back foot. Jim and Mike were no longer in agreement with each other about the path forward, and their board was rapidly losing confidence in both of them. And this is when they started to chase trends instead of setting trends.

Sean Silcoff: What did BlackBerry do? Blackberry said, Well, this is interesting. Let’s develop a touchscreen phone. But it’s going to be the BlackBerry version of a touchscreen phone. And their device was called the Storm. So instead of doing everything by tapping this magic software on your screen, the actual screen is a giant button. And so when you want to tap a letter, you’ll click down in the entire button. The entire screen, which is floating on top of the device, will click down and you hear this click and it’s like, oh yeah, I’m a BlackBerry user. I can relate to this smartphone because it makes a clicking sound.

They didn’t have enough time to develop it properly. This was new technology and new approach and so it was very buggy and it flopped and it just felt like dead technology. So that was the first mistake they made. The second mistake they made was instead of abandoning it and going all in on a touch screen, Mike decided he wanted to perfect it. Well, let’s fix the bugs and then the storm will be great. So we did a Storm 2 and they were already working on Storm 3 when one of the carriers said, you know what? Just give us a touchscreen phone.

So they lost about a year and a half doing that. And then they thought their problem was the browser. And so they lost some time on that and then they couldn’t make the decision on what to do about what operating system to build. And they wasted time on that. So by the time the BlackBerry comes out with a full touch screen phone with proper underlying software is early 2013 and that’s like six years after the iPhone had appeared. You don’t have six years in technology to come up with a proper response.

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 just had to do everything in an entirely different way from the word go, and they didn’t.

Jesse Brown: They then chased Apple on another product. They put out this atrocious tablet with a late and inferior product. And then there was this hilarious period where finally they’re like, maybe we have to actually try to make this cool and hip and make this a lifestyle product. And they tried to like out Apple, Apple with marketing. They named Alicia Keys, their global creative director.

Cherise Seucharan: I remember that.

Cherise Seucharan: Amazing.

Jonathan Goldsbie: I remember that. This is 2013, so Alicia Keys is cool, but she’s- 

Jesse Brown: Yeah.

Jonathan Goldsbie: You know, it was an odd choice.

Jesse Brown: The kids love her. You know who else? The kids love you, too. And this is maybe my favourite anecdote about this phase of BlackBerry history because. There’s this scene where Mike Lazaridis actually goes and is like walking down the beach with Bono, and they’re trying to arrive at the best philosophy for what their ad campaign is going to be. And this is what they come up with.
(BlackBerry promotional clip plays)

Jonathan Goldsbie: So just like a generic U2 video, there’s not even on a roof or anything. It’s in a black void.

Jesse Brown: Here comes the slogan. Oh.

Jonathan Goldsbie: Oh… Blackberry loves you, too. What? Not necessarily the other way around, I guess. 

Cherise Seucharan: That was the slogan?

Jesse Brown: I mean… (laughing) this…

Jonathan Goldsbie: I’m glad, okay. I’m glad BlackBerry has its own taste and preference. It’s not very good taste. I’ve just got to say here.

Jesse Brown: Blackberry Loves U2 was a massive international ad campaign. The central concept of the celebrity endorsement is U2 loves BlackBerry like that’s what you’re paying for. You’re paying for the celebrity to say that they love your product. 

Cherise Seucharan: Wait, was this like a double entendre where it’s like BlackBerry loves you? Is that … is that was?

Jonathan Goldsbie: They must have thought they were being clever? Blackberry loves U2.

Jesse Brown: Apparently, they just talked about how what this is really about is love. And we love you, U2. And maybe that’s what this campaign is about. And it’s cheesy for Bono to say, I love BlackBerry, but we just want people to know that you love U2 the band, so do we!

Jonathan Goldsbie: Okay.

Jesse Brown: I do not like U2, but I have to respect Bono because that motherfucker then turned around and did a deal with Apple.

Cherise Seucharan: Apple? Yeah. Remember this? And Alicia, they put the album on every single iPod. It was so annoying.

Jesse Brown: Whatever, Bono gets paid the-

Jonathan Goldsbie: Alicia Keys thing famously, remember? She was like, on Twitter, you could see the metadata for tweets and how people are tweeting. So Alicia Keys, the global brand ambassador for BlackBerry, was tweeting from an iPhone. That was the thing I remember-

Jesse Brown: That’s amazing.

Jonathan Goldsbie: -pointed out at the time.

Jesse Brown: They were toast. There was no out Apple and Apple. There was no celebrity that was going to fix it for them. They were done for.

(Canadaland chapter break music plays)

PART 3
Jesse Brown: And that brings me to my own pet theory about why they blew it, our final theory.

(Kazoo Canada anthem plays)

The Canada of it all. It’s not really my theory. This is a theory that appeals to me. I can’t take credit for it. I first read this from Michael Geist, and here I bring you back to that point that I highlighted earlier about how that original genius stroke of theirs was just like making the data as like literally conservative.

They were conserving, they were conserving bandwidth. They were conserving everything was conservative. It was conservative use of space on the device for it to be the right size. It was a machine built to fit within the tight constraints of Canada’s shitty telecom networks. Slow, expensive cellular data, super expensive texting fees. But here came a device that would let you do a workaround. You don’t have to spend money on how many texts you’re going to remember. We have to pay for texts. You got this many texts a month.

It would deliver push email with the smallest amount of data transferred possible. This was not some flashy, colourful American device. This is not an entertainment machine. Promising you video games and videos, not trying to be the best calendar or calculator clock. No, a portable email machine that just works. Conservative constrained. It was built to cope with scarcity. So that was a Canadian invention. Steve Jobs was an American and his strategy was, fuck you, fuck you. I am not going to shrink down my vision. I am not going to shrink down the data. So it fits on your highway, AT&T, Verizon, I’m going to give people what they want and the people will speak and they will use and they will demand and their oversize demands will force the old guard to build bigger highways like the cellular providers will have to create more bandwidth to accommodate because the consumer wants what the consumer wants.

I think it is wrong to ask, why did BlackBerry blow it? How did BlackBerry blow it? I think the better question is like, how did they even have it to begin with? That is the unique thing that there was this moment, this quirk of history, a weird glitch in time when Canadian-ness was actually a competitive feature and not a bug. And the constraints of our mentality actually put us very briefly ahead of the curve.

But the empire was always going to strike back. It was always going to happen. And Apple, remember, they already had the iPod. They had already created this incredible consumer device that people just fucking loved. And ultimately, this fight that everybody likes to perceive and there’s like a season of business wars of iPhone versus BlackBerry. And then it’s true, BlackBerry tried to fight iPhone. You know who ultimately killed it for them? Because even after the iPhone came up, they were still booming in international markets and they still had years of growth ahead of them who ultimately drank their milkshake.
(Google jingle plays)

It was Google.

Jonathan Goldsbie: Mmmhm.

Cherise Seucharan: Mmmh hmm.

Sean Silcoff: The ultimate ninja move comes from Android a few years later when they get an app store, and by then Verizon is like, Yeah, sure, you can have an app store. And Google says, that’s great. And guess what? The 30% cut that we take from selling apps on our app store, you can have that year. Just go take it. Here’s some free money. Go, go nuts Verizon So suddenly you’re handing the telcos not only a huge chunk of free money, but you’re also giving them an incentive to put androids everywhere. And that really killed BlackBerry’s business. And BlackBerry could not have anticipated that. That was a totally disruptive move.

And remember, because the market for apps was so shut down to the handset makers, RIM had never really had to worry about having apps any more complicated than things that worked perfectly well for enterprise customers or these, you know, ringtones and brick breaker games for consumers. And suddenly the world opens up and you have Apple and Google, who are software companies and work with app developers waltzing in with a ready made market crew of developers, ready to put instant apps out there. And BlackBerry does not have that.

Cherise Seucharan: Wait, so BlackBerry didn’t really buy into apps as a concept? Like were they sourcing different app developers for their phones?

Jonathan Goldsbie: Oh my god. It was a nightmare.

Jesse Brown: Tell us what you recall.

Jonathan Goldsbie: So basically, BlackBerry had its own operating system. Remember? Like that’s and you had to develop an iOS app. You had to develop an Android app. You had to develop a BlackBerry app. So a BlackBerry classic. My previous phone ran on this BB10 system and you could see the apps giving up on it. You know, Twitter, Facebook, you see them giving up on it one by one as they would either stop rolling out updates or do what Facebook did, which is the latest update, literally just deletes the app and replaces it with a link to the Facebook website on your home screen.

Jesse Brown: (Laughing) They just stopped bothering.

Jesse Brown: Yeah, they just stopped bothering.

Jesse Brown: Well, Apple and Google had a huge head start in the whole concept of like inviting other developers to play on their. I mean, I think BlackBerry’s whole thing was like, This is ours. Our servers are secure. You know, I think they were really ill-prepared to create something that an API lets developers just-

Cherise Seucharan: Is there any way they could have actually won here?

Jesse Brown: Yes and no. Like. I don’t think that there was any path whatsoever to this fight of like BlackBerry beating the iPhone. But Jim Balsillie actually realized that pretty early and he wanted to do what you’re supposed to do, which is pivot right in a very dramatic and dynamic way. He was ready to abandon RIM’s core business, or at least really under-serve it and pivot into the future. And he saw the future. He thought the future of the company was not in handsets. It was going to be in BBMs.

Cherise Seucharan: What’s BBM?

Jonathan Goldsbie: That was a messaging platform, instant messaging.

Jesse Brown: His last stand as RIM’s leader was a plan to radically reorient the business away from hardware and towards instant messaging. And here again, a very conservative and Canadian mindset. We still have this thriving handset business. It’s actually on the way up in international markets. We still have all these old guys in suits who are like, I’m not giving up my BlackBerry. I don’t need this iPhone. That’s our business. We need to double down on that.

And Lazaridis was like, still, I think in an engineering mindset, like, I still need to beat the iPhone. Like he was still trying to make a better BlackBerry. So here’s like this incredibly complicated challenge for Lazaridis and the rest of the company to try to actually out iPhone, the iPhone. And here’s Balsillie saying no, just as our original killer app was just like email on demand on the go. Here’s this super simple thing we have and we have a head start with, and that’s what we should double down on. He saw the future.

Sean Silcoff: Another thing that’s forgotten now is how popular BBM was. Bbm was the forerunner of Signal and WhatsApp and arguably could have beaten them all if they had taken some different strategic choices. It’s one of the greatest challenges companies encounter. You know, once you get something that works and makes a lot of money, it becomes the thing you try to protect. Even if protecting it in the long term is not the right choice for the business. Blackberry certainly encountered that in the early 2010s when BlackBerry device sales were in a freefall and Jim Balsillie had this idea, let’s go all in on BBM and make it available on every other phone.

And there was a strong countercurrent of the company that was like, well, no, if we do that, we’ll threaten BlackBerry sales even more. Well, guess what? Blackberry sales went to zero. And if they’d done this strategy, who knows? Maybe they could have stemmed the tide and become the one WhatsApp going forward. And look how valuable WhatsApp became. So sometimes trying to protect the golden goose is probably a sensible short term strategy and a disastrous long term one. And it’s super difficult to know how to navigate that because you have to answer to a board of directors, you have to answer to shareholders.

Cherise Seucharan: What’s interesting is that like the concept of BBM actually would have been an amazing app that could have been used across different types of phones and different networks. But the fact that they wanted to keep it to BlackBerry was the problem. Like it could have been Signal. It could have even been like an early Slack. But it’s not because they kept it to BlackBerry.

Jesse Brown: Yeah, they were locked into the idea that they were the makers of things. And as we discussed this well, just last week, Sean Silcoff in the Globe and Mail reports BlackBerry exploring potential breakup of company.

Cherise Seucharan: Right, so BlackBerry still exists.

Jesse Brown: It’s still worth billions of dollars.

Cherise Seucharan: So how are they making money then?

Jonathan Goldsbie: If I recall Silcoff’s article, it’s like this car operating system called QNX that they acquired at one point and patents. So that seems to be where a lot of it comes from.
(Reflective jaunty xylophone music starts) 

Jesse Brown: If you trace back the origins of some of the biggest technologies, there are Canadian roots, you know, Carol, with Photoshop and all the graphics software. Nortel, even like eBay. Youtube has Canadian roots, but nobody seems to be able to actually keep the company in Canada and create something. Like an apple. 

Cherise Seucharan: Except for Pornhub, still in Canada.

Jesse Brown: Except for Pornhub.

Jonathan Goldsbie: And Shopify.

Jesse Brown: And Shopify.

Cherise Seucharan: So I mean, you keep saying they blew it, but aren’t these guys all still mega-wealthy?

Oh, they are both ridiculously rich.

Sean Silcoff: He’s spending most of his time on a yacht these days. Big fucking yacht. Like you’re not going to believe. I don’t know exactly, but I think Jim’s a billionaire, and I think Mike is. Mike’s quite wealthy, too, but I don’t. I don’t exactly know. Because you don’t exactly know when they sold.

Cherise Seucharan: What is Jim up to these days?

Jesse Brown: Uh. He is very interested in Arctic exploration. The Franklin Expedition shipwreck thing that Stephen Harper was very excited about. Peter Mansbridge and them. He put a lot of money into that. He’s become a fierce advocate for funding tech in Canada, and he’s always got editorials about how we’re doing it wrong. Ottawa’s got to do it this way and not that way. I think that that’s, you know, if his legacy is not going to be the inventor of the smartphone that changed the world, it’s going to be actually a very Canadian legacy.

And it’s not without some credibility. Like I think that both of them really invested in Canada having a vibrant tech sector. And, you know, they’ve invested in other companies that have done very well. Jim’s made money on other companies. And it’s true that in the Waterloo region, they created like a tech scene, nothing to the scale of what they did. I think Mike’s whole quantum computing thing has basically fizzled out and he’s off on his yacht, so I’m not sure that he’s really putting as much work asJim is these days into keeping things alive in Canada. So that’s it.
(Reflective jaunty xylophone music ends)

CREDITS
(Canadaland theme starts)

Jesse Brown: That’s your Canadaland episode. You can email me at jesse@canadaland.com. I read them all. We’re on Twitter @Canadaland. Our website is at canadaland.com. This episode was produced by Bruce Thorson, our senior producer, along with Tristan Capacchione, our audio editor and technical producer. We had assistance this week from Cherise Seucharan and Jonathan Goldsbie, our managing editor is Annette Ejiofor. I’m your host, Jesse Brown. Our theme music is by So-Called, syndication is handled by CFUV 101.9 FM in Victoria. You can visit them online at CFUV.ca. Thank you for supporting Canadaland.
(Canadaland theme ends)

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