Mike Lazaridis founded Research In Motion (RIM) with his friend Doug Fregin in 1984 while still an undergraduate at the University of Waterloo. One of their first projects was a local area network that ran industrial displays. Near the end of Lazaridis's senior year, they landed a $600,000 contract to build a similar network for General Motors. A few weeks shy of his graduation, Lazaridis left school to focus full-time on the company. RIM was one of the first companies to appreciate the importance of wireless networks. In the early 1990s, when email was still largely unknown in corporate America, Lazaridis foresaw the potential of mobile email. A series of projects in this area culminated in 1999 in the BlackBerry, now the dominant product in this market. The BlackBerry was one of those innovations that not only became popular, but changed the way organizations operate. Some of the most powerful people in business and politics run their lives with this device. RIM went public in 1997, and is one of Canada's most admired technology companies. Livingston: How did you get started with Research In Motion? How did you know Doug? Lazaridis: I knew Doug from grade school, but we started working together in high school. Our high school had a state-of-the-art electronics and shop program that was the result of a donation from a local industrialist. When all this equipment had arrived, it was still in crates. I had asked to open some of the boxes and pull out the equipment, and I remember the teacher saying, "Well, you can open any box you like, but there's one condition: you have to read the manual first." 141 Mike Lazaridis Cofounder, Research In Motion 10 CHAPTER This doesn't sound like a big deal, but, to a student that just came to high school--to read a manual on how to use an oscilloscope, how to use a signal generator, a computer trainer, how to use all this advanced equipment--these were tricky textbooks to get through and understand. Of course, once I was able to prove that I knew how to use the equipment and what it did, I was able to open the box. And we opened every single box. Livingston: This was at a high school? Lazaridis: Yeah. It was a tricky time back then because a divide between the honor roll students and the shop students was beginning. The shop teachers tried to correct it before it got out of control and became the culture there. Many of us down in that shop program were also honor roll students. It was sort of "Upstairs, Downstairs"--the upstairs math and computer science classrooms, and then there was the downstairs shop program. We tried to bridge the gap and explain to the teachers and students upstairs what we were learning down there and how we were applying the mathematics and science we were learning upstairs. Literally we were. I was able to give lectures to the math program, showing them how trigonometry could be applied to power generation, power control, power transformation that we were learning downstairs. Livingston: I read that your high school electronics teachers said that connecting computers to wireless would be the next big thing. Did you realize how big it would be? Lazaridis: Of course not. The thing back then is that you are juggling all these courses and work, and at the same time you've got these passionate interests that you just can't find enough time for. You're just trying to juggle it all, knowing that you want to get to university, so you have to get good marks. It was a bit of a challenge because you really had an extra course load. These shop programs were almost like a course to themselves, there was so much work to do. You just spent every waking hour--you come to school early, you go to the shop, work a little bit further on it, then after school you go down there and hope that you can finish your homework in time to keep working on what you were doing. It was a grueling time, but it was rewarding in the sense that we had all these resources, and we basically had a brand new curriculum, so it could go as far as we were prepared to take it. Doug and I started learning about computers on our own. This was back in the late '70s. Computers were still punch card systems that were in some other building that you never got to see. But Doug and I started playing with these computer trainers--they were Digital Equipment Corporation computer trainers--and what we learned there was the actual fundamentals of computers: how to build gates, how to build recent memory circuits, how to build registers, and how to wire them all together and sequence them with a clock. It was very fundamental knowledge, and it really made a difference as time went on. 142 Founders at Work At the same time, my electronics teacher was also the president of the local amateur television and ham radio club. So he had us taking apart televisions and converting their tuners for use at the amateur band. Back then, we knew how to tune them, but we didn't really understand what we were doing. It wasn't until university that we started to get that understanding, but we saw how the stuff worked; we saw the potential. When my teacher started to see us really get seduced by the computer and what we could do there, I remember him saying, "Don't get too caught up with computers, because it's going to be the person that puts wireless technology and computers together that's going to make a big difference." I don't think he was seeing what we eventually did, but he understood the fact that computers gave us two fundamental things. One was the ability to send information unambiguously, and the second was that it allowed us to control the RF process and make it more efficient. It wasn't until years later that I understood what that meant. So we went to university and, again, this is the early '80s, so you're talking about stuff that was going on at university that most people had no clue as to what it was, what it meant, and its relevance. The University of Waterloo had this massive computer system. It was a big IBM mainframe system that was the centerpiece of the campus. But more importantly, it was the centerpiece of the vision of the founders and the faculty there. It was in a massive room we called the Red Room, which was literally right out of a science fiction movie--it had a raised floor with a windowed mezzanine going right around it, and inside you had all these computers. In all the classrooms around the mezzanine area were these terminals. We were just converting from punch cards to video terminals, so again, it was that transition period. I arrived just in time not to have to use punch cards. I went straight to terminals. And we started using something called "email" to get and submit our assignments--as well as using it to collaborate between ourselves. We started working with the Internet. It was called the ARPANET back then, and it was a collaboration between universities, researchers, businesses, and the military. We didn't think much of it, but we were being trained to use something that really wouldn't become mainstream for at least another decade. At the same time, we were working with computer networks. This was when computer networks were research projects at universities. In fact, we had our own research program called Watlan (Waterloo Local Area Network Project). We had compilers, real-time operating systems--you don't really see the relevance these things are going to have in your life because you're so caught up in the workload and the social environment. You don't realize that you're being trained with state-of-the-art technology, applications, and techniques. As time went on, we started realizing that this stuff was pretty cool--it was pretty advanced technology--and we started getting more and more involved with the various aspects of these different programs and research projects. In my later years, I took on projects where I was helping some of the faculty projects, just basically trying to pay my way. When the last year came, I had already been doing some computer programming contract work. It was then Mike Lazaridis 143 the 1984 recession, and it really impacted the high-tech industry. A lot of the engineers weren't getting jobs. University of Waterloo prided itself with its very high placement record for both co-op and graduate programs, and that was one of the worst years we ever had. I remember a lot of the students were very upset. They said, "We worked really hard, and now we can't even get jobs." I just couldn't believe that, because you're talking about students that had to work very hard and had to be very talented to get to this university. We were being trained with stuff that was right out of a science fiction novel, so I couldn't imagine how we couldn't be in a better position. I remember us having these arguments, and they knocked me off my soapbox one day when they said, "If you believe this so much, why don't you start a company?" Literally, I went out and started it within a few weeks after that. Livingston: Weren't you a month away from graduating? Lazaridis: Yeah. I started a company before then. We got a contract that just got us so busy, we started hiring people, and I couldn't actually keep working at school. I had to take a leave of absence. Livingston: When did you start this? Lazaridis: Contract work would have been in my third year. Then, in my fourth year, I started what became RIM. Livingston: In the third year, you were just doing this work to earn some extra money to pay for college? Lazaridis: It was that, and there was also some very interesting work going on at the university. In university I was working on some new languages that were sort of the beginnings of what became Java. The whole virtual machine. I'm drawing a difficult parallel, but I was working on something called STOIC. It was an interpretive language that we were getting working on various microcomputers at the time. In fact, we ended up buying one of those computers when the university put it up for surplus. Apparently, it had broken, and I remembered that computer system because we were using it in our engineering class. We were doing all our assignments on that one computer. I put a bid in and I got it for--I can't remember now, but it would have been $400 or $600, because it didn't work. I took it back to our office--it was massive--and took it apart, and, as I powered it up part by part, I realized that the power supply had broken. Once we fixed the power supply, the computer just came right up. So we did our big contract on that computer. Livingston: How did you land these contracts as a young undergrad? Lazaridis: When you have access to state-of-the-art education, and you know how to use these machines--and you are comfortable with them--you just have to make that one leap to realize that you can actually help people. There is a need for that kind of experience, but the problem was that a lot of these companies didn't know they had that need. It was just a matter of breaking out of 144 Founders at Work your shell and going out and talking to them--looking in the newspapers, looking in local message boards, talking to different companies, asking if they needed any work done. Basically, you had to do a little bit of sales. But what was interesting was that, in every case, you were able to bring this experience to bear on a tricky problem that had been there for a while and that you found that you could solve it very elegantly and quickly using what you'd learned. That's how we got these projects with General Motors and the National Film Board and Kodak, which eventually led to the Emmy Award and the Technical Oscar. When you go back, you realize that the exposure you had in high school and in university was actually preparing you for a decade and two decades out. We need to make sure that we are allowing students to be exposed to future technology and not reducing it to current--what a lot of people would like to say, "relevant" teaching. What's relevant teaching? What's relevant research? When I was at university, if you went in and started looking at what we were doing, you would say, "Why don't you guys get a life and do something relevant? What is this stuff? Nobody's going to use this." When we were there, that's what people were thinking. "How many people are going to have a computer in their house? What is this networking stuff? You are talking about science fiction; you're not talking about important things. Why don't you do something important?" "Important" back then became "obsolete" very quickly after we left university. Livingston: Was Doug part of the consulting business? Lazaridis: Doug was at University of Windsor, and we collaborated. It wasn't until I decided to start RIM that I called Doug up and told him what I wanted to do and I needed his help. He was up within 2 weeks of that call. Livingston: Did you have to tell your parents you weren't finishing school? Lazaridis: Oh yeah. But what was actually harder was having to go to the president of the university and ask for a leave of absence. I had never met him before. It was quite interesting because he apologized for having to try to dissuade me from it. After he finished his speech, he wished me the best of luck and shook my hand with a big smile. I remembered that and, ironically, 20 years later he's one of RIM's board members. Livingston: So you start RIM, and you have a $600,000 contract with General Motors. What were you doing? Lazaridis: One of the things we did was that we listened to what General Motors was trying to accomplish. The RFP had been out for over 2 years. We got a copy of it and looked at it, and we recognized a couple things in there that you couldn't do without some of the state-of-the-art techniques that we'd learned at university. One was that it was begging for a local area network. So we had to create one, based on what we remembered. I went back and talked to some of the teachers there and looked at some of the research that was being done. We had to develop that LAN from scratch, but we had to also make sure that it was very rugged, because it had to be used Mike Lazaridis 145 in a very hostile environment in these manufacturing plants. There were things like arc welders and 4800-volt systems. It was a tricky thing to do. Then we made sure that the display systems could boot from a central computer. If you think about it, even today, we're just starting to realize the "diskless PC"--PCs that boot up remotely, sort of the Internet appliances today. We had to come up with a system that could do that. Then, of course, what was interesting was that we got to play with one of the first IBM PCs. I remember it was just about the time when we ordered it that the big hard drives were coming out. We changed our order from the tape system to a hard drive system. We thought that was just a luxury. That was a whopping 10-megabyte hard drive. Livingston: I read that you got a grant from the Canadian government. Why did you apply? Were you seeking money to grow? Lazaridis: You have to realize that the early days aren't pretty. You are worrying about paying rent. Doug and I were sharing a leased Honda Civic. The big luxury in that car was the option we took out for a five-speed transmission instead of a four-speed. We lived in the same apartment, but the whole thing was just trying to conserve expenses because we had no idea how long it would take before we'd be established. We heard about these government programs, and we started applying for them. It was a lot of work to actually apply for these things, and then it was a lot of paperwork to maintain them. In the early days, they weren't really big grants. They were rather small, and sometimes you wondered if it was worth all the trouble. But it was very helpful when we needed it. As you became experienced, and as the government agencies that we were working with became comfortable with what we were doing and recognized that we were onto something, the grants became more interesting. But the real boost for us was when we started recognizing this wireless data technology. That's when it hit me. I was at a conference in 1987 where someone was talking about what was happening in Japan, where they had put in a wireless data system just for Coca-Cola. It was expensive to have to keep driving these trucks out every 2 days covering all of Tokyo to make sure all of the vending machines were full. They'd find that, most of the time, the vending machines didn't need to be refilled. The system went in and was able to pay for itself just because of the reduced number of truck trips and fuel expenses, because the machines were able to signal that they needed refilling. Then a computer system was able to schedule deliveries to make sure that none of the machines ever emptied out. When I saw that, I remembered what my teacher had said in high school. I looked at it and said, "This is interesting. I want to do this." Back then, I also remembered some of the things we did at university with a lot of signal processing work. I had received a contract at that point because of my interest-- and this is just weird how this happens, but you happen to be in the right place at the right time. I received interest from Cantel, which is now Rogers. The president of Cantel asked to meet, and we started talking about this system that 146 Founders at Work they had just bought called Mobitex. It was a wireless data system, and they needed someone to write some software and help them make it work. It was a strange request, but I went and saw what they had bought and realized that this was brand new stuff. It was very primitive, and the documentation hadn't even been fully translated from Swedish yet. I remember meeting with someone and he said, "If you can make this stuff work, you've got the contract." Michael Barnstijn, one of my early partners, looked at it and said, "Mike, I think I can read this well enough"--because he was from the Netherlands--"that we could probably get this stuff to work." We spent the next few hours hooking everything up, and we surprised them because we got it working. We got the contract and started writing software to make it all work, and the rest was history. We wrote most of the very first wireless protocol software, application programming interface (API), the development tools--all the early stuff for the first wireless data networks. That was our first break. That was our first chance to break out of a consulting role and really start producing products. Livingston: Would you say this was one of the biggest turning points for RIM? Lazaridis: I would say it was the beginning of a turning point. No one knew what wireless data was. You couldn't go in and apply for loans to do wireless data. It was bizarre. Cell phones were just happening--you started seeing lawyers and real estate agents with cell phones. When you started talking about wireless data, no one knew what you were talking about. Think about it; there were no computers in people's homes at the time. It was a very rare occurrence to see a computer in somebody's home. They weren't dialing in to the Internet. Everything back then was very specific. It was proprietary; you were dialing in to servers. So it was a different world than it is today. Livingston: If you were doing things that were so ahead of their time, how were you so successful? Lazaridis: The tricky part was, how do you intercept a market trend? How do you intercept an industrial trend? How do you package what you've learned and what's happening in the technology space so that it has new value to customers? How do you find those customers? What we learned with Mobitex and later Datatech was that there were some really interesting applications that were being developed, and we were right there while it was happening. But it took a lot of faith. You call it vision, but it's a combination of vision and faith that 1) it's going to happen someday, and 2) it has value, and 3) you can actually accomplish it in an economic way and promote it so that you can fund the development and growth of the business. That's pretty tricky stuff. Livingston: Can you tell me about any of the other major turning points? Lazaridis: One of the dreams that I had all through high school was to build some kind of space-based technology. You have these visions when you are young of working for NASA and building a space probe or part of a spaceship. Mike Lazaridis 147 At about the time when I was getting deeper into wireless data, I had an opportunity to work for SPAR Aerospace, a Canadian company. They had contacted us and asked if we wanted to bid on something that was very similar to something that we had done before. They needed this product for what was going to be the Canadarm2 on the International Space Station. You have to remember that people were just starting to understand what Canadarm1 was. And the space station was still a document before Congress, and Canadarm2 was something that was going to be built later. You look at that, and you go, "Holy smoke, this is what I always wanted to do! In a strange way, I had been preparing myself to do something like this, and here it is in front of me and I could have this contract." That's when the business sense kicked in, and I had to ask the question, so I asked SPAR, "How many of these are you going to need?" They said, "Six." "Six for what--initially, over time?" Although these circuit boards were going to be very, very expensive, the opportunity for mass production was six. Then I asked, "When are you going to need them?" "We'll need a couple prototypes first; then, of course, we won't need them until the space station is built." I said, "When is the space station going to be built?" They said, "It hasn't quite passed through Congress yet." So I had to make a decision--and I believe I chose wisely. I gave up my childhood ambition, to continue building wireless data products. Ironically, years later I was meeting with Sean O'Keefe, the former director of NASA, at his office. He was a big proponent of BlackBerry. NASA is a user of BlackBerry. They found them extremely useful when the hurricane season went through there--just being able to coordinate and having a backup system--but now they use them daily. I remember Sean telling me this story that one day he was going home (he got driven home and he does his work on his BlackBerry on his way home), and he gets an email from someone that he recognizes and it's asking all these questions about the space shuttle. He's answering them, and he gets more questions and he's answering them. And he says, "This name is really familiar." And he looks it up, and he realizes that name is on the active duty roster. It turns out to be an astronaut on the space station, and he was basically asking, in a nice way, when's he coming home. Years later, ironically, the BlackBerry allowed me to enjoy part of that childhood aspiration, because the BlackBerries were used by NASA, and they were using them to communicate with the International Space Station. Livingston: Fast-forward a little bit to when you came up with the idea for the BlackBerry. You were in your basement--it seems like you have a thing for basements! Lazaridis: When you try to get away from it, the basement is a nice place to hide. All through this, I was always looking for value. I was trying to find, "Where's the value of wireless data?" Early on, we had realized that wireless push email had some serious value. But it was really tricky to do. There was a lot of work, a lot of trial and error, a lot of R&D that had to be accomplished and 148 Founders at Work invested in to actually get the system to work properly. To this day, the BlackBerry is the only system that works well and is reliably secure under those conditions. Fifteen years ago, this was still a bit of a research project, and we were spending a lot of time on that. But the product itself, its final form, was still too unwieldy to be able to put in your pocket. That was our goal. We realized early on that the function was there, but the value was limited by the packaging and limitations of the technology of the day. So we started working on this, and it was just about the time when my son was born. I remember coming home, and my son had had a more difficult day, and I had to take over. I remember just getting him to bed, and then I went downstairs and got on the computer, and I put on some music and just started writing. Three hours later, I had just put the finishing touches on what became the plan for what eventually became the BlackBerry. Back then, it was called an interactive pager--I coined the phrase "interactive pager." Then what I did was come up with five improvements to the wireless data networks that would allow us to provide a reliable experience that was also power efficient. I came up with the basic premise as to where the value was and what became the foundational underpinnings of our technology for almost a decade after that point. As soon as I sent it to the office, that's when my son woke up. That was a turning point, because we've used that document for years. It's still used by people here because it defines the essence of the BlackBerry experience, and it has allowed us to remain true to that and really bring value to our customers. It helped us stay away from the fads that really didn't bring any value and just made the product more complicated and more expensive and impacted things like battery life. Livingston: Back in 1997, was it hard to convince people that they should want to travel with email access? Lazaridis: The key thing to remember was that email was not a new idea for anyone that went to school in the early '80s. But industry was rather slow to adopt it. Not because of anything with industry, but because the technology just hadn't reached the kind of ubiquity that it needed. It had to reach a certain critical mass so that there was somebody to send it to. What we realized was that, in 1997 and before, there was a paging culture in North America. (These networks were fundamentally North American.) We decided to build a very advanced pager. It looked like a pager; it was the size of a pager; it even seemed to operate like a pager. Except that it was a full-blown two-way email terminal. It took a lot of back-end processing to make that work. Something that a lot of people don't realize is that the BlackBerry product is a system, and the email posting and reception is actually done by a server. We spent a lot of time getting it right, knowing that the market was not ready for it. We disguised what later became the BlackBerry as a pager. Livingston: Because people knew what a pager was, they could say, "Hey, I need one of those"? Mike Lazaridis 149 Lazaridis: That's right. We gave them the opportunity to go two-way, so that they could send a message as well as receive it. That people found very valuable. But the system was expensive--the monthly fee was expensive, because it was brand new; it was embryonic. But we knew that email was catching on. We had email at RIM as soon as we started the company. We had email on our business cards back when other business cards had telex numbers on them. Every time I gave out my card, people would ask me, "What's an email address?" It wasn't until about 5 years later that we started to converge on something called a fax number. It wasn't until 15 years after university that you really started to see people adopting email in the Fortune 1000 in a big way. So in 1999, we knew the time was right, and we had done a lot of research to make sure we were launching at the right time. We decided to launch it in New York, in the financial markets, because they were big users of systems and email. They were also affluent, so they could afford the service early on. They were big users of data and information, and they needed it in real time. To them, time was money in a big way. The BlackBerry system gave them that in spades. What was interesting was how we named it, because it goes back to our research roots. We decided to do it very scientifically. We went out and found one of the leading naming companies at the time, called Lexicon, and we worked with them for 6 months to come up with the name. It was probably the most expensive word I ever bought. BlackBerry ended up being one of the all-time most famous brands worldwide. It works everywhere. We tested it around the world. It was one of 40 names that were on the list that we narrowed it down to. We did a lot of testing to see what it meant to people. Could we build a brand, an experience, around it? There was a lot of thought around that name. Livingston: As a Canadian founder, do you think there's anything that readers should know about advantages to being in Canada? Were you ever tempted to move to Silicon Valley? Lazaridis: I have to tell you, we were so busy that we never really thought it made a difference. One of the great things about being in Canada is that there's this education that is available to everyone at the highest level, and that's really what helped us. There was never a thought in my mind as to "should I put it somewhere else?" Regardless of whether we should put RIM in the United States or not, even the idea of where I should put it in Canada. There was never any hesitation. I had to have this company next to University of Waterloo and Wilfrid Laurier, a university down the street, because I knew that we needed to draw this talent to grow. There's something about having the proximity to the students and university in terms of brand awareness. In fact, when we first leased our building here right next to the university, we could put a sign up, and I remember they were asking, "Do you like this sign? Do you like that sign?" I said, "Actually, I don't care about that. What's important to me are the signs on the back of the building." Of course, everyone recoiled from that. I explained to them, "I don't really care if anyone else knows 150 Founders at Work where the building is. All I want is the students to know where the building is." From then on, all our buildings have had signs in the back, toward the university. One of the things I realized was that to get strong co-op students, you had to start early because, by the second year, you've lost them already to some other company. So we started hiring first- and second-year students, knowing that they were not really going to be full-time employees for 3 to 4 years after that. It was a 3- to 4-year investment we started making with students early on because I knew their value. We treated them like full-time employees. We're the largest co-op employer in Canada.