Losing The Signal

The Spectacular Rise and Fall of BlackBerry

Jacquie McNish, Sean Silcoff

• Publisher: HarperCollins Publishers
• Year: 2015
• Print ISBN:
  9781443436199
• eBook ISBN:
  9781443436205
• Topic: Business
• Subtopic: Business General
• Index: Business

THE INSPIRATION FOR THE MAJOR MOTION PICTURE BLACKBERRY

#1 National Bestseller

Winner of the National Business Book Award

It was a classic modern business story: two Canadian entrepreneurs build an iconic brand that would forever change the way we communicate. From its humble beginnings in an office above a bagel store in Waterloo, Ontario, BlackBerry outsmarted the global giants with an addictive smartphone that generated billions of dollars. Its devices were so ubiquitous that even President Barack Obama favoured them above all others. But just as it was emerging as the dominant global player, BlackBerry took a dramatic turn.

Losing the Signal is the riveting, never-before-told story of one of the most spectacular technological upsets of the 21st century. Unlike Enron, which was undone by its executives' illegal activities, or Lehman Brothers, which collapsed as part of a larger global banking crisis, BlackBerry's rise and fall is a modern-day tale of the unrelenting speed of success and failure. It is a thrilling account of how two mismatched CEOs outsmarted more-powerful competitors with a combination of innovation and sharp-elbowed tactics; and how, once on top of the world, they lost their way. The company responded too slowly to competitors' innovations, and when it finally made its move, it stumbled with delayed, poorly designed and unpopular smartphones. A little more than a decade after Research In Motion introduced the BlackBerry, it is now struggling to survive. Its share of the US phone market fell from 50 per cent in 2009 to about one percent in 2013, showing just how aggressive, fast and unforgiving today's global business market can be.

PART ONE

IF AT FIRST, THE IDEA IS NOT ABSURD,
THEN THERE IS NO HOPE FOR IT.

—ALBERT EINSTEIN

1 REACH FOR THE TOP

The students at Prince of Wales Public School had long since stopped paying attention to Reg Nicholls squeaking away on the blackboard. Every few minutes the math teacher frowned, erasing part of his work. Then: more numbers, a spiraling out-of-control formula, and that awful scraping of chalk on blackboard. Finally, the classroom fell silent. Poor Nicholls stood motionless. “Can anyone tell me where I went wrong?” he asked.

An answer came from the back of the room: “When you were born.”

The room erupted. Nicholls raced to the back of the class, dragging his heckler into the hallway. The sputtering, mottle-faced instructor pinned twelve-year-old Jim Balsillie against a wall of lockers. Balsillie stared right back at Nicholls. Balsillie’s real punishment came the next day when he was kicked out of math. He’d have to study on his own for the rest of term. See how far that gets you, his teacher said. Oh, and you’re still going to have to join classmates for the compulsory provincewide math test in a couple of weeks.

Later that month, Balsillie rejoined his class for the big test at the Peterborough, Ontario, school. The smart-ass, it turns out, really was smart. Studying all on his own, the lippy twelve-year-old math castoff scored first in the grade 7 test, not just at Prince of Wales but in the entire province. A regional superintendent traveled to the school to bestow the 1974 math honor on him. When he raced home to tell his mom, Laurel, about winning the award, she just shook her head, laughing, repeating a line she often used to sum up her difficult middle child: “Jim, you always fall in shit and come up smelling like roses.”

Getting in trouble was relatively easy in Peterborough’s working-class west end, where houses were small and ambitions were oversized; where lawns doubled as parking lots and sports games frequently ended in fights. Young Jim, the middle of three children born within three years, fit right in with the time and territory. “I was always a troublemaker,” he says, “mouthy and cocky.” Growing up, Balsillie played a lot of hockey and lacrosse and loved watching Peterborough Petes junior hockey games at Memorial Centre with his father, who had seasons tickets. Many Petes players made it to the NHL—including Bob Gainey and Steve Yzerman—and Balsillie dreamed of one day following them and returning to his hometown with hockey’s greatest trophy, the Stanley Cup.

Even more important to Balsillie than Petes players was the team’s coach. “The leading figure in my eyes was Roger Neilson—an innovative coach in so many ways.” Neilson was junior hockey’s infamous trickster. When pulling his goalie for an extra attacker, Roger had his net-minder leave his stick across the mouth of the crease to stop long shots. When he was managing a local baseball team, Neilson had a catcher hide a pared apple in his equipment. When a runner for the other team dangled off third base, the catcher fired the apple over his third basemen’s head. The jubilant runner then dashed home, smiling, only to be touched out with the real ball by Roger Neilson’s catcher at home plate.

When he wasn’t pulling a fast one, Neilson fought the rules. That’s how he became known as “Rule Book Roger.” The establishment—referees and umpires, who were league officials—hated Rule Book Roger. Not teenage Jim Balsillie: he loved the maverick as much as he loved the game. Neilson’s skirmishes mirrored the deep-rooted conflicts with authority that defined Balsillie’s teenage years. He was close to his mother and her parents, but he sparred frequently with his father; he was a bright student who alienated teachers with a razor-sharp tongue. Although suspicious of figures of power, Balsillie also aspired to join Canada’s business establishment. Balsillie would struggle throughout his career to make peace with his warring two-headed demon: the positive force of ambition versus a deep-rooted distrust of authority.

Predictably, perhaps, Balsillie’s trouble with those in charge first became manifest in dealings with his father, Ray Balsillie, a descendent of French Métis, Canadian aboriginals of mixed European and indigenous ancestry that trace their roots to the fur trade. The Balsillies were a complicated bunch. One wing of the family worked at Saskatchewan’s fabled Cumberland House, a northern Hudson Bay Company trading post that once housed the ill-fated Franklin expedition to the Arctic—Scottish explorers who perished in the far north in the 1840s. The Balsillie clan shares both Scot and Métis blood. All of which explains Jim Balsillie’s piercing blue eyes, sharp cheekbones, and olive skin.

Ray Balsillie whose family moved from Manitoba to a small town south of Waterloo when he was a boy, left the family home as a teenager to make a fresh start in Seaforth, Ontario, with the Royal Canadian Air Force. As an adult Ray Balsillie seldom spoke of his native heritage, and his two sons and daughter were discouraged from raising the subject. It was only when Jim traveled as an adult to Winnipeg that he learned that an aunt was one of that city’s most notorious residents. Gladys Balsillie, who died in 1987, began her career as a pilot before opening a popular restaurant and music venue, the Swinging Gate. When the restaurant closed, she made her mark managing exotic dancers at Winnipeg hotels. At her peak, the “Queen of the Strippers” managed more than one hundred male and female performers. Ray may have tried to hide his family’s colorful past under the lush blue-green carpet of Ontario cottage country, but there was a strain of restless adventure in Balsillie blood—a history of flesh and fur traders.

Jim was born in 1961 in Seaforth, a small town near Lake Huron. Shortly after, Ray began moving the family around, accepting positions as an electrical repairman with various Ontario companies. Eventually the Balsillies settled in Peterborough, a small, conservative city in the heart of Ontario that, apart from their neighborhood, was straight as an accountant’s ruler. When Jim was growing up, Peterborough was a predominantly white, churchgoing community defined by Trent University, a handful of U.S. manufacturing branch plants, and the summer influx of affluent Toronto cottagers. According to Jim, Ray Balsillie viewed himself as an outsider in the upbeat town; he gradually adopted a forlorn, Willy Loman–like air of defeat. “He grappled with insecurities,” Balsillie says of his father. He and his dad’s relationship “wasn’t all hugs and kisses.”

As Ray Balsillie withdrew from social activity, devoting his spare time to storing found objects and oddities in the family house, Jim flew in the opposite direction, growing increasingly ambitious. He cut his teeth as a salesman at age seven, selling Christmas cards door-to-door as his mother supervised from the sidewalk. Soon there were multiple paper routes, a painting business, and a job manning the lift at a nearby ski hill.

“I wanted the independence. I wanted nice things. If you wanted books, records, a car, athletic gear, you had to go earn it,” he says.

What Balsillie really wanted was to be someone. Upon reading Peter C. Newman’s seminal 1975 study of Canada’s cozy business aristocracy, The Canadian Establishment, the tradesman’s son decided that he had to join the country’s most inbred club. Tracing the education and early career paths of powerful corporate chieftains mapped out in Newman’s book, Balsillie realized he needed to take three giant steps: first, be accepted by an elite undergraduate school; second, land an accounting job at the establishment firm of Clarkson Gordon; and third, graduate from Harvard Business School. Balsillie had been an indifferent student who, except for his grade 7 home run in math, earned only average marks. He threw himself into studies his final year of high school. Upon being accepted by the University of Toronto’s prestigious Trinity College, Balsillie replaced his childhood dreams of professional hockey with a new yearning. “I remember deciding I was going to be the best student in the history of the University of Toronto, set every academic record imaginable, prepare for every assignment, get 100 percent on everything,” Balsillie says. “I was pretty sure they were going to put up a statue of me.”

It was deafening, like having your head next to a row of whirring propellers in an airfield. Grade 12 students at W. F. Herman Secondary School, in Windsor, Ontario, were busy in shop class, revving machines under the watchful eye of their electrical shop teacher, John Micsinszki. Students attached wires to motors, generators, instruments, and electrical panels at worktables. A bigger racket came from the back where a closet-sized power supply fed electricity to worktables. Once everything was plugged in, kids measured load factors, testing the efficiency of power coursing through machines.

The roar also tested one’s ability to think. Minutes after starting, a confused student crossed wires on a motor, causing a burst of sparks. Micsinszki flew to the back of the shop to shut everything down. In his haste, he forgot students were still running generators at workstations. Within minutes, the machines routed so much electricity back to the idled power supply that it overheated, belching plumes of acrid fire and curdling purple smoke. Now no one could see or hear. Micsinszki shouted for everyone to get out, turned off the motors, and extinguished the fire. When the smoke cleared, he knew he was staring at a financial and physical mess. Unless he figured out how to fix the fried machine, it was going to be impossible to teach electronics.

The solution to the mess arrived minutes later when a tall, broad-shouldered student with a thick hedge of dark hair returned to the shop room. Most kids spying the wreckage of Micsinszki’s shop class complained of a sulfurous smell. Not Mike Lazaridis. He went right to the problem, examining the machine’s wounded electrical panel. Micsinszki felt that no student at W. F. Herman had a keener grasp of applied science. A polite student with an easy smile, he was always asking permission to reassemble boxes of unwanted equipment donated by local companies. At first Micsinszki insisted Lazaridis study manuals. Soon, though, the prodigy was taking apart and assembling machines, even early, primitive computer systems, on the fly.

“Think you can fix this, Mike?” his teacher asked, nodding to the smoldering mess. After squinting at its wounded organs, Lazaridis offered a confident smile. It took months of tinkering, but Lazaridis eventually succeeded in breathing life back into the charred machine. News of his wizardry spread. Soon teachers were driving Lazaridis to their homes to repair broken TVs and stereos. His most lucrative job came from performing a favor for the school’s librarian, who also coached W. F. Herman’s Reach for the Top team. In the 1970s, Canadian high schools competed for a chance to shine in a nationally televised academic quiz show hosted by a young, pre-Jeopardy Alex Trebek. The key to the contest was connecting agile, well-stocked minds to gunfighter-fast buzzer hands.

W. F. Herman’s practice buzzer was always breaking down—ropes of electrical wire came loose from battered hand controls. Lazaridis grew so frustrated with repair requests that he rebuilt the contraption at home, creating a simpler network built around a single thick cable connecting a control console to eight buzzer boxes, each housing a small light and electrical circuit that automatically reset the device for the next answer. Soon other schools were clamoring for the more reliable devices. By the time he graduated from high school, Lazaridis had sold enough buzzers to pay for his first year of university tuition.

It would be too easy to call Mike Lazaridis a born innovator. Better to say he excelled at the family business, which was transformation, new opportunities, and, sometimes, wholesale reinvention. Much of Mike Lazaridis’s drive, the airy confidence everyone commented on, was shaped by his family’s remarkable history. Born in Istanbul in 1961, Mihal Lazaridis was the first of Nick and Dorothy Lazaridis’s two children. Greek transplants in a bustling Turkish city, his parents operated a women’s clothing store. Like many Christians in Turkey, they found conditions difficult. Discrimination against non-Muslims was on the rise and the prospect of a compulsory military training program in a Muslim-dominated army promised further hardship. In 1964, the family of three followed Nick’s brother, Paul, to Germany, where the siblings began training as tool and die makers. Dorothy Lazaridis earned extra money assembling hats from their small apartment. Four-year-old Mihal kept out of the way by making his own creations. One was a record player made out of Lego blocks, a pin, rubber bands, and a revolving tray. The creation never pulled music from his parents’ records, but it did produce enough sound to convince them that their son was unusually skilled.

In 1966, the family followed Nick’s brother again, this time to Canada in search of a job in North America’s expanding automotive sector. A 1965 bilateral agreement relaxed trade restrictions around auto manufacturing, allowing Detroit automakers to integrate production plants in Canada and the United States. Nearby Windsor was now home to factories producing duty-free car and parts factories for sales in both countries. Nick soon landed a coveted job at a Chrysler assembly plant. Dorothy took part-time jobs as a waitress and seamstress. They saved money, hoping to buy a house and allow Nick to return to his retail roots. When Mihal, now Mike, wanted a sled to negotiate his new homeland’s winter, Nick taught his son how to make it out of spare parts.

The Lazaridises’ journey instilled in their eldest son an enduring belief that the world was what you make it and Canada was a place where dreams could come true. “It takes a lot of guts to leave behind your country, your family, and my dad’s business and move to a whole new country and learn a whole new language,” Lazaridis says. “In a sense [my parents] were entrepreneurs; they were explorers. To me, [change] was an opportunity.”

When Mike was eight, his family had finally saved enough for a house with a room for him and his baby sister, Cleopatra. The Lazaridises moved into a two-story, postwar brick home in an east-end Windsor neighborhood filled with European and South American immigrants. Mike’s interest in science was now a passion. With his father’s help, he set up a worktable in a basement room that became known as “Mike’s laboratory.” One of his first projects was a machine that might quicken the transformation from Mihal to Mike. After failing a spelling test at Ada C. Richards Public School, Lazaridis asked his father to purchase a cassette recorder. With a spelling book in front of him he sat in his lab reading hundreds of words out loud to the machine, pausing after each word before announcing the correct spelling. Night after night he turned the electronic teacher on to test himself. Before long, he was competing in school spelling bees.

Basement quests grew more sophisticated after Lazaridis received a secondhand copy of The Boy Electrician, a chatty how-to guide for understanding and building electrical machines, radios, and other equipment. Lazaridis still cherishes the worn book like an old friend, but his early adventures with The Boy Electrician were frustrating. When he was able to scrape together money for needed parts, he discovered Windsor stores didn’t stock items he needed, probably because his guidebook was published in 1914. Rather than discouraging Lazaridis, the setbacks deepened his determination, instilling in him a lifelong attention to thrift. If he could not afford or find materials, he would make them. There was always another way if you were smart and resourceful.

Lazaridis’s best friends shared his love of science. Ken Wood’s mom was a science teacher who provided ingredients for backyard experiments involving gunpowder, iodine bombs, and handmade rockets. His second pal, Doug Fregin, was a slight, painfully shy boy with thick glasses and a lazy eye who escaped teasing by building model planes. After Wood’s family moved, Fregin became Lazaridis’s shadow. “They were always together,” says Bob Oxford, a longtime school classmate. Although neither science whiz joined other boys in daily games of hockey and football, both were welcomed into the neighborhood.

“They were accepted because everyone liked Mike,” Oxford explains.

While Lazaridis read every science book at the local library, Fregin applied model-making skills to soldering circuit boards and wiring equipment. The Boy Electrician projects became more complex. After a neighbor, a ham radio operator, gave them some used equipment, Lazaridis and Fregin hit the big time at a grade 7 science fair. Surrounded by tattered paper volcanoes and wobbly constellations, Lazaridis and Fregin’s entry was a solar panel fashioned out of wood, tinfoil, light sensors, and a relay system attached to a small motor. A roaming TV crew showcased the impressive invention on the local news. Celebrity ensued. The school’s eighth-grade yearbook featured a caricature of Lazaridis as a mad scientist with thunderbolts bursting from his head.

At W. F. Herman, Lazaridis encountered his first roadblock, a segregated world divided into two castes. The building’s second floor was home to the school’s elite science, math, and business classes. The first floor was devoted to electrical and machine shops. Second-floor kids went on to university, first-floor grads went to manufacturing jobs. John Micsinszki’s wife, Margaret, remembers that her university-educated husband and other tech teachers “had no great love for the guidance department at Herman, where good academic students were discouraged from taking technical courses, even if the student intended to study engineering at university.”

All this was initially a challenge for Lazaridis, a kid with a foot on both floors of W. F. Herman. He got around the problem by ignoring boundaries. A devoted math and science student, Lazaridis wasn’t about to give up the chance to apply years of basement experiments to well-stocked machine shops. At first he was disappointed with the presumptuous second-floor teachers. “I didn’t like the way they looked down at us,” he says. Eventually, those instructors realized Lazaridis’s electrical prowess had classroom benefits. Students struggling with math turned to Lazaridis, who would explain how complex formulas could be applied to everyday use, such as electricity. In shop, it was “Laz” that the kids turned to for help operating machines. “He basically taught everyone how to use all the equipment. He had a way of explaining it so we understood,” Oxford recalls.

The greatest lesson he learned in high school came off-campus. As an electronics teacher and president of a ham radio club, Micsinszki introduced both Lazaridis and Fregin to the world of transistors and cathode-ray tubes. Before long, Lazaridis and Fregin were dropping by the Micsinszki home to talk shop. Margaret Micsinszki, one of the city’s first high school computer science teachers, introduced the boys to computing advances. Taking advantage of afterschool tutelage, Lazaridis built his own oscilloscope, Fregin perfected circuit making, and they each built computers. Margaret was convinced that computer science would lead the next wave of modern innovation. Her husband saw a bigger future. “Don’t get too seduced by these computers,” he warned. “The person who puts wireless communications and computers together is really going to build something special.”

Lazaridis never had to write that down. “The day he said that,” he s...

Table of contents

• Dedication
• CONTENTS
• PROLOGUE
• PART ONE
• PART TWO
• EPILOGUE
• ACKNOWLEDGMENTS
• NOTES
• About the Authors
• Credits
• Copyright
• About the Publisher