Redmond. Cupertino. Mountain View. In the tech world, these cities are indelibly stamped with their respective company names: Microsoft, Apple, Google. The places have become synonymous with their firms: we await the “news from Redmond” when Microsoft debuts a new operating system, or whisper about Cupertino’s penchant for secrecy.
Though less well-known, Waterloo, Ontario, is another city stamped by the accomplishments of a tech giant. Research in Motion began there in 1984, and with its era-defining success came an influx of talent and a growing community. But RIM has stumbled, and lately the signs have been especially grim: the all-or-nothing BB10 has been delayed until early 2013, and the company lost a half-billion dollars last quarter. It can be easy to treat the news from Waterloo abstractly, as just another unfolding corporate drama. But RIM’s fate affects real, actual people — and not just those buying (or not) its phones. It remains one of the area’s largest employers, a source not just of local pride, but Canadian pride as well. As Google is to Mountain View or Apple is to Cupertino, Research in Motion is more than just a company. It’s a symbol of accomplishment, a defining feature of the community’s self-image. Hoping to better understand what it’s like to live in the shadow of a humbled giant, I visited Waterloo one weekend and talked to the people there.
Coming from Detroit, the route to Waterloo is flat and grassy, a gently undulating expanse of land much like Ohio but with less obvious signs of industrialization. A border agent asks about my business in Canada; when I answer that I’m writing about RIM she smiles but looks protectively skeptical, cocking her head and asking, “Good things or bad things?” There’s a brief discussion about whether conducting interviews in Canada requires a work visa (it doesn’t) and then I’m on my way. The highway runs straight across the plain, east through the Historic Oil District and past Petrolia and London, angling north by Cambridge and Kitchener, and three hours later I’m in Waterloo, population just shy of 100,000.
It looks like a modestly developed university town, which it is. The University of Waterloo, alma mater of RIM co-founder Mike Lazaridis, has several new-looking buildings in the modern corporate glass-and-steel aesthetic. RIM itself lies just off the UW campus — indeed, there’s no real physical boundary between the two. It’s fitting given the number of co-op students the company employs; the university has long provided a valuable talent pool. Banners hanging from telephone poles nearby read “Ideas Start Here,” with logos for both BlackBerry and the University of Waterloo.
About half of RIM’s workforce is located here, some 8,000 or so people; you can recognize some of them on a hot summer day, making their way across the parking lot on their way to lunch, most of them conservatively dressed — khakis and a polo shirt, perhaps — identification badges and RSA fobs dangling from their necks. You might note the prevalence of belt-holstered BlackBerrys; you might see one man standing by himself in the grass before a RIM-logoed building, wearing a black-and-white “Be Bold” t-shirt. Or another, off company grounds, tapping away on what appears to be an iPhone, his BlackBerry silent in its holster.
"The pink slips fly every Thursday."
The employees don’t speak to the media (monthly meetings usually include a reminder that all communications must go through official channels), but it doesn’t take a Woodwardian feat of investigative journalism to imagine what they’re feeling. Their new CEO has been on a PR offensive, telling the press that the company’s not “in a death spiral.” RIM stock sits mired in the single digits, having lost 90 per cent of its value in the last three years. There’s talk of a buyout, or a break-it-up-and-strip-the-parts. The company’s announced 5,000 layoffs, with the looming prospect of more.
“The pink slips fly every Thursday,” says Jason Eckert, Dean of Technology at nearby triOS College. He’s spent his whole life in the area, and studied computer science at UW. A number of his students work for RIM, and he describes them as generally optimistic about their futures. Some genuinely believe the company can reverse its fortunes, want it to do so, to find its feet and start regaining market share. Others just want to be happy at their jobs. Still, he says, “a lot of people have cleaned out their desks just in case.”
Eckert himself has no sentimentality when it comes to Research in Motion. He’s had enough run-ins with what he describes as the “worst corporate culture in the world.” After RIM lost a long and brutal patent battle with NTP in early 2006, he says, lawyers came to dominate the culture. The company’s earlier rapid growth had meant hiring a layer of lifelong managers, many of them risk-averse. Fiefdoms were carved out and protected; a degree of complacency settled in. After NTP, that complacency — especially about creating new products — was joined by an obsession with secrecy and legalistic wrangling. The environment inhibited new ideas; instead of daring to be bold, he says, employees worked in fear because, “if something goes wrong, someone has to get fired.”
Yet talented people still see potential in the company’s new platform. RIM needs developers to embrace BlackBerry 10; Alec Saunders, VP of developer relations, has made a sustained and concerted recruitment drive. But Eckert mentions two students developers who fully committed to the new OS. They planned for perfect timing, with a lead time that would see their app released just as BB10 launched. Then RIM pushed the release date into 2013. With no revenue and an uncertain future, the two couldn’t afford to wait; they felt they’d wasted their time. “I can only imagine how many new, small developers were screwed that way,” Eckert says. The two developers then went to work for a London firm on Android games.
"Don't buy something that sucks just to support the local economy."
It’s difficult to say how many BB10 developers rethought their plans following the delay. But University of Waterloo student Mayer Tanuan remains a RIM supporter. He developed a PlayBook app, and in addition to the tablet, he owns a BlackBerry 9900. Asked to speak as a panelist at BlackBerry World 2012, he explained why he, as a student, sticks with the brand. His answers were just what RIM’s marketing department would hope for: the BlackBerry sips data compared to its competitors, it’s secure and reliable, it conveys a professional image (all of those belt holsters), and it has a physical keyboard. He thinks the layoffs could be good for the company; having grown too big too fast, maybe now it’ll reconsider how it manages resources. Adversity is an opportunity, he says. “I feel that they need to turn their challenges into an Oprah moment” that’ll allow RIM to refocus. He hopes for the best with the company, and is sticking with it.
“There’s no loyalty in IT,” Eckert says — you buy what works, and when if it stops doing what you need, you buy something else. “Don't buy something that sucks just to support the local economy,” he says. (About four per cent of RIM’s revenues come from Canada, 25 per cent from the United States, and 62 per cent from outside North America and Britain.) He compares RIM to Palm: one day’s king is replaced by the next. Sometimes kings lose the crown, sometimes they regain it. RIM is just part of that cycle, to his mind. No one, he says, worries that the loss of RIM would mean Waterloo’s collapse. The local tech industry has matured: Silicon Valley companies (including Intel, Google, and Facebook) have opened local offices and there’s a flourishing startup community. If RIM goes, he says, it’ll free up talent for other companies.
A few factors have helped build the area’s robust tech industry. First, a wealth of local talent. The University of Waterloo is one of Canada’s best schools, especially in engineering and science, with what it touts as the world’s largest co-op program, placing over 16,000 students with more than 3,500 employers. And UW does not silo that talent the way some schools might, through restrictive intellectual property agreements. OpenText, the content management provider and Canada’s largest software company, for example, was spun out of the university in 1991, allowing several faculty members to found a company. The university values entrepreneurship. Mike Lazaridis, for one, received early encouragement to found RIM from a UW economics professor. He dropped out to start Research in Motion.
"I think for many years the Canadian dream was to win the lottery."
That entrepreneurial spirit doesn’t always come naturally to Canadians, says Iain Klugman, maybe half-jokingly. “The American dream is to make it big, to build a big company, to become a rock star,” he says. “I think for many years the Canadian dream was to win the lottery.” Klugman’s the CEO of Communitech, a local startup incubator that RIM has helped fund. (In fact, on the same mid-June day that RIM held its annual general meeting before a crowd of disgruntled shareholders, Communitech announced it would be committing $30 million in venture capital to the area’s tech startups.) He says that Waterloo and the surrounding area has the right combination of ingredients to enable tech entrepreneurs: strong academic brands, including UW and several other schools; a culture that accepts deviance (risking your future by going into business for yourself rather than someone else), and a network of capital comfortable with risk. He’s long been working to build on that foundation, and where the area had maybe 50 tech companies 15 years ago, today there are 1000 by his count. He says on average one local startup is founded every day.
The tri-cities area — Waterloo along with Kitchener and Cambridge — doesn’t just spawn local startups. It’s been able to attract companies that started elsewhere, too. Phil Noelting relocated job-application management company, Qwalify, in 2010. “It was tough to leave a place like Boston, which is seen as a hub for innovation, education and money (old money, many VC firms...),” he emails, “but when I saw what Waterloo and the Accelerator Centre [another startup advisor funded partially with government funds] offered, I was floored.” He points to the local talent pool, low cost of living, and generous government programs as very persuasive enticements. “It's built on an infectious culture that welcomes you in,” he writes, “supercharges you with guidance, resources and a perpetual go-get'em attitude, and then runs along beside you for any support you may need as you continue growing.”
All of which suggests that Waterloo’s fate is not inextricably tied to RIM’s. “Kitchener-Waterloo has significantly matured over the last 5-10 years. It’s not a one-horse town anymore,” says Scott Elliott. He spent two years working for RIM starting in the fall of 2001, just as the company began to reap rewards of an extensive marketing push into the United States. At the time, the local IT community was small, as he remembers it; instead, the big industry was insurance. OpenText was around, as were a few local players, but it was RIM's growth that helped the local industry become what it is today. Indeed, the company bought up nearly all the buildings on Philip Street, near the UW campus, where university spin-offs used to dwell. But the startups have multiplied and found another street. All part of the cycle, Eckert would say.
But if Jason Eckert sees RIM as an evolutionary loser in the Darwinian jungle of consumer technology, Elliott, the former employee, seems to have a more personal investment in its survival. He says he’s not alone: “I think it’s fair to say that lot of the community has high hopes for RIM. A lot of the community, not only in their own self-interest, want RIM to continue to do well...There’s a bit of pride — I come from Kitchener-Waterloo, and yes, RIM has made it known on the world’s radar.” RIM is like a family member that’s done well, he says, and people want to support the local company.
"In five years, I don't see RIM taking back the entire market."
Especially one that has given back so much: in 2001, it donated $2 million to help fund the city recreational facility that eventually became RIM Park. Co-founder Mike Lazaridis has donated $250 million to create the Perimeter Institute for Theoretical Physics, while Jim Balsillie spent $30 million to found the Centre for International Governance Innovation. Both men have donated generously to the University of Waterloo, with Lazaridis and his wife contributing over $100 million to the school’s affiliated research center, the Institute for Quantum Computing. “You'd be hard pressed to find an event between 2005-2010 that wasn't sponsored by RIM,” says Eckert. Now, at least to the casual observer, there seem to be more signs for the Perimeter Institute than for RIM itself.
“I know that when I go on a flight and when I walk through business class I always cast a glance at the people to see what devices they’re pecking away at, and there’s kind of a little fist bump when I notice that more than half the people are still tapping away at a BlackBerry,” Elliott says. He’s not in the camp that’s ready to say good riddance, declare RIM dead. When it comes to specifics, he hopes BB10 isn’t delayed any longer. But he has no illusions about the company’s chances: “In five years, I don't see RIM taking back the entire market.”
His hope for the future has less to do with the company’s products than what the company means: a local success story, a generous supporter and integral part of the community, and a technological innovator that made the current IT industry possible. All of those positive but intangible characteristics, weighed against the promise of those unseen phones, still months away — it’s complicated, this kind of loyalty. He’s optimistic but realistic, Elliott says, concluding, “As much as I’m rooting for RIM, I have an iPhone.”