The BlackBerry Problem | The Mistakes Series

Introduction to Agentic Commerce

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Smart People

2:48It dawns on all of us, at some point before adolescence, that there is something called smart. And it is really rare. Only a small number of people are smart. And then, a few years later, you have an even more important realization, which is that smart comes in many different varieties. I feel I spent my adolescence cataloging all the varieties of smart. There was my high school friend who had a mind that was a giant sponge that could soak up what seemed like an infinite amount of knowledge.

3:21Then I got to college. I met a guy whose thinking seemed effortless. He could be distracted, or procrastinating, or dancing in a party. It didn't matter. Somewhere in a back room in his brain was a giant computer that just quietly hummed along, solving one problem after another. Oh, then I had a friend who had a mind that she'd attached to a giant V8 with like 800 horsepower. I'd never seen smart attached to energy like that before. I spent a lot of time in college working on my taxonomy of smart.

3:52And along the way, I had a third realization. That every kind of exceptional intelligence has a downside. A price that person had to pay for being one of the chosen few. And every time I think of that third rule, I think of my old college friend, Jim Balsley. My mistake and naivety was to think that people were with me. So, you're flying around the world, you're trying to get people on side,

4:23and you think they're on side, but they're not. And you get blindsided.

Revisionist History Introduction

4:31My name is Malcolm Gladwell. You're listening to Revisionist History, my podcast about things overlooked and misunderstood. This episode is the fourth in our series on mistakes, inspired by Michael Linton and Josh Steiner's book, From Mistakes to Meaning. And this story is about the big mistake that changed the life of my old college friend, Jim, who I will say without reservation is possessed of one of the most remarkable minds I have ever met and paid a price for it. Um, what was it like for you growing up?

5:09You went to, you grew up in Peterborough? Yes, I did. And you went to public high school in Peterborough? Yes. Peterborough, for those unfamiliar with Southern Ontario, is just over an hour east and north of Toronto. It is to Toronto, roughly what? I don't know. Poughkeepsie is to New York City. My dad was a tradesman. My mom was a homemaker. Your high school, I suspect, was a lot like my high school. We're not talking about Exeter. No.

5:39Although, I actually, I don't mean to diss it because I got an amazing education from fabulous teachers. So what was it like to be, you were the smart kid in high school. Yes. What was that like? Uh, it, um, I, I don't think they know what to do with you. Um, so I think you're just, I think there's a premium on compliance. I think we've learned now that high energy kids need to run around and when they're young

6:11until they're tired, but kind of making them sitting at a desk all day is, when they're young, is really, really difficult. Are you talking about yourself? Yes, very much so. And, uh, it was just incredibly boring. And, um, you just look at the clock and count minutes. And, uh, yeah. Did you get in trouble in high school? Yeah. Yeah. A few times. One time when I was in grade seven, a teacher did a long formula across three or four boards.

6:42And he said, where did I go wrong? And from the back of the class, I said, when you were born. And, uh, and, uh, Malcolm, I don't, and he took me out of the class and he held me up by the scruff of the neck. And I was, my feet were off the ground against a locker. And he had me taken out of the math class. And I was just, it seemed funny at the time. And then, um, and then a couple months later, there was a, there was a provincial math contest for, you know, the 10 million people in Ontario.

7:12And as a grade seven, I'd came first in grade seven and eights in Ontario. He was the best math student in the entire province, but he wasn't allowed in his own math class. What did your parents make of you? Uh, when I was four years old, they took me to some child psychologist, which was, uh, they didn't know what to do. What were you doing at four that led your parents to take you to a child psychologist?

7:44I don't know. I don't know. We, we're, we're, we're kind of Presbyterian Southern Ontario. So you don't really talk a lot. You don't sort of, you just sort of carry on. And, uh, so you, you don't, it's not like this rich unpacking of psychologist kids or something like that. Everybody's just, you know, it's kind of go play outside and, you know, try, try to make it home for dinner kind of thing. Right. That was a, it was a very different era, very different era.

Jim's Story

8:11In my taxonomy of smart, Jim has a whole category to himself. I don't mean this in a derogatory way, but Jim has cunning. My brain, I was beginning to understand at that time, likes to take the long way home. Jim only took shortcuts. If life was a maze, most of us stumble along, retracing our steps from one dead end to another dead end until we finally get to the other side. Jim would see the right path instantly. Or more accurately, he would recognize that there's actually a gap in the hedge

8:43right at the start, which no one had ever noticed before, with a straight shot to the finish, and he'd just cut through there. And by the time the rest of us stumbled to the end, he'd won the trophy, gone home, changed, and was having a beer. This is Canada, remember?

8:59Not long after college, Jim met an engineer named Mike Lazaridis, who had a little company called Research in Motion, RIM as it was known. Jim becomes co-CEO, and to the surprise of absolutely no one who knew him, builds RIM into a multi-billion-dollar juggernaut. Remember 15 years ago, when everyone had a BlackBerry? First real smartphone with those clickety-clackety buttons? That was Jim. So why don't you use a BlackBerry anymore? In the business school case studies about the fall of BlackBerry,

9:32there are pages and pages on the rapidly shifting smartphone landscape of the early aughts. Strategic miscalculations, the cloud of Apple, all the things that business school case studies like to dwell on. But I think there's a simpler explanation. I think you need to understand something about my old friend, Jim. Set the stage for me. Sure. It's interesting because when you talk about mistakes, and I do think the biggest mistake in my career when I look back,

10:10with RIM we had a fork in the road, and I mismanaged the board relationship at a time where I wanted to go left and they decided to go right. And that not only changed the trajectory of the company, it changed the trajectory of the global technology industry. We spend hours researching products online and deciding what to buy,

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BlackBerry's Mistake

14:09So tell me, what do you mean by you wanted to go left and they wanted to go right? And we're talking about what, first of all, let's date this. What era are we talking about? We're talking 2011, and a couple things were going on. One, our hardware business had grown a lot, but it was under pressure, huge pressure. And there were new operating systems, one from Apple and one from Google.

14:40They were putting tremendous pressure on our hardware sales. But our services business was where we made all our money, our messaging services. So at that year, 2011, we had more profit from our services businesses than Facebook had total revenue at that time. We're going to talk about BlackBerry, the beleaguered smartphone maker. BlackBerry's CEO himself has admitted one of the reasons they're struggling is because they didn't innovate fast enough. Let me give you my 2012 prediction with the company that brings us to BlackBerry.

15:11I'm predicting that they are going to be on the verge of bankruptcy. There were two sides to BlackBerry in those years. There was the phone, that rectangular plastic block with the physical keyboard. And there was also a messaging function, BlackBerry Messenger, BBM. That was what Jim is calling the service business. Hardware and services were separate. And Jim thought that BlackBerry should get out of the physical phone business, which wasn't making any money anymore, and just be in the BlackBerry Messenger business. And so I'd spent a year and a half buying companies to avail a service to make it an open service.

15:51And I'd spent time with the carriers, and they were going to launch it with SMS, call it SMS 2.0. And it had storage and rich media functions. What he was imagining was turning BlackBerry Messenger into the backbone of the entire smartphone ecosystem. So it's effectively what we know of as social media right now. And there was a small emerging player called WhatsApp that worked cross-platform, but we had multiple abusers, as they did.

16:23And so, yeah, I'd beavered away on it, and I thought the board was on side. I thought everyone was on side. Apple had just come out with the first iPhones. Jim was thinking that there was no way Little BlackBerry, as fast as it was growing, could compete with Apple, or giants like Samsung. But BlackBerry Messenger was a different matter. BlackBerry was dominant in that space. And in the version of the world Jim imagined, your texting and social media would come bundled with your wireless contract.

16:59So the minute you hooked up your new iPhone or Samsung phone to a wireless provider, you'd be using BBM. Jim, let's stop there, and let's go back, and I want to make sure everyone understands what we're talking about here. So in 2011, many of us still have a BlackBerry. And there's two components here. There is the physical phone, and there's also, you're talking about, a service that could live, a messaging service that could either live on a BlackBerry or live anywhere.

17:33Correct. Yeah. That would be the equivalent of what WhatsApp became? Is that the mess model? Yes. What Facebook and WhatsApp became. That's correct. What at the time was BBM effectively was social media. And the difference would be is it would be in your subscription plan as part of your texting, rather than an ad-supported social media service. Yeah. So the goal here, or the play, was to make the BlackBerry services business the backbone of basically new media, of new social media.

18:14That's correct. And it would be embedded in your cellular plan. And I worked with the carriers, the major CEOs throughout Europe, and already had two of the big three committed in the U.S. So all you need is enough to keep it going. And it eventually tips. So, yeah, people would have said, I'm migrating to an Android. I'm migrating to an iOS. I'll just take my BBM with me. I'll maintain all my contacts, all of my – and you remember, you had digital, you know, voice over IP happening on those things at that time.

18:48You had pictures. You could store them. You've established groups. You had status of delivery. All of the things that were social media that was emerging at that time, we had that in the BBM. Well, how many users, BBM users, did you have at the beginning of 2012, say, or the beginning of 2011? 80 million. 80 million. So what would you put the probability of BBM becoming the dominant – becoming this kind of dominant player in the telecommunications world if you had gone that route?

19:22Do you think you could have – how big do you think you could have grown it? Well, the probability that it would have stayed a major force is 100%. That's the vision he pitches to the board. We're trapped in the maze, along with everyone else. Here's the shortcut. Was he right? Of course he was. Jim's always right. So, yeah. In the immortal words of Yogi Berra, when you reach a fork in the road, you've got to take it. So, you go – tell me about the board meeting.

19:56You go to the board, you go to the board and what happens? Well, they – we'd had – the board had brought in consultants, and I was explaining this and presenting this and talking about the strategy, thinking they were with me. And really, I was just speaking into just a vacuum of receptivity and interest to it.

20:27Why weren't they with you? I think it was too radical, what I was trying to do. I had not spent near enough time with them explaining it and debating it, which is a lesson I learned. And you've really driven the company's strategies for 20 years to a $20 billion company. And you think they'll just follow you.

20:59They say, what are you talking about? We're a company that makes phones. And SMS 2.0, Jim's vision for the next stage of BlackBerry, is killed just a few weeks before it was supposed to launch. And I wasn't consulted. I didn't know it was happening. It was just on the agenda, presented, and decided. And I called the lead director after that, and I said, what's going on here? This will kill the company.

21:29And they say, the decision's made. And so I resigned from the board and sold my shares, the remaining shares at that time. And they were extremely confident for a year and a half. Marketing campaigns, Super Bowl ads, lots of declarations of its future and its success, and it's going to be great. And there was just one board member who was from the tech industry and from the telecom industry who called me and said, there's nothing I can do to stop it.

22:00This is madness. And, yeah, and it was just jaw on the floor. I just never experienced anything like that, and I didn't see it coming. And how could somebody be so blind to something like that when it's such a consequential decision?

Sponsored Break

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25:394imprint for certain. Jim and I both went to Trinity College at the University of Toronto, which was, and still is, the smallest and the snobbiest of the colleges that make up the University of Toronto. I met Jim in the first few weeks of freshman year. I had just turned 17. I had just had eye surgery. So I had a huge scar running down the side of my face, a massive afro, lots of acne, maybe 110 pounds, and all the wrong clothes. I was from a small town, way off in the countryside.

26:11Here I was at Swanky Trinity, and I had no idea how the fancy kids dressed, and no money to do anything about it. I had a moment of truth. I need to figure out how to fit in. Jim lived across the hall from me. He taught me how to play backgammon. I played endless games of touch football with him. I had a beloved jade tree that I called William F. Buckley, and he used to steal Buckley from my room and put him in some perilous place. And I think the reason that I felt a certain affinity with Jim

26:42is that I sense he shared my urgency about fitting in. Only, it was going to be much harder for him than me. First of all, he was from Peterborough. Nobody was from Peterborough. He had further to climb. And second, he was really, really ambitious. I mean, I was ambitious, but not like Jim. Jim wanted it more. Do you remember, what was it like when you came to college, to university? Jim, what's your account of your kind of first year at Trinity?

27:15Well, it was very intimidating. I found these people from tremendous privilege and just very, very intimidating, and meeting people with stellar backgrounds. I'd never been on an airplane. I'd never been outside of Ontario. Very modest background. Yeah, just tremendously intimidating. I mean, I was smart, but then you'd see Robertson Davies at High Table, and sometimes his friend Northup Fry there. And it's like, Dorothy, this is not Kansas anymore.

27:47Just so you know, Robertson Davies and Northup Fry were two of the biggest Canadian intellectual celebrities of that era. And we'd see them out our window, walking through the college quadrangle. God, out for a stroll. For those of us from the sticks, this seemed unbelievable. So we, just to remember, you and I, you were across the hall in our second year, and I remember there were, how many people were on our floor? Thirteen people on our floor, or something like that?

28:17I remember telling my dad, I can't. Max, max, max. Maybe 12. It was like, private school kids, and kids who went to Upper Canada College, you know, and kids who went to, it was, did you feel like you had to work harder to prove yourself in that world? What was your kind of cycle? Yeah, yeah. Well, I worked all the time. As a kid, I had five or six paper routes, four or five paper routes, almost all the time. And then I got summer and winter jobs from grade seven on.

28:50And I bought my own clothes. I still, to this day, have my own pants and darn socks. Yeah, I can darn socks with the best of them. I sew my own buttons on, because you learn how to do it. And I'll sit there, watch the news, and sew up my clothes all the time. It's very, very funny. I just enjoy sewing. But I always sewed. I had my own clothes. I stitched in my shirts. I darn socks. Yeah, it's a funny thing, right? And when something rips, I'll, you know, my wife says, why don't you buy a new pair of

29:21sweatpants? I said, well, I can fix those. And it's very funny. So I'll sit there with a big thing and do a catch stitch on it. And yeah. And so you work all the time. And then you go to school. And you, you know, I would do the math club. And I'd go to basketball. And then I'd go out to a party. And then I'd work all weekend. So yeah, I just, I just, I work every day. Jim went off to Harvard Business School right after graduation. He could have gotten a job anywhere.

29:51But he chose RIM, right near where I grew up in Waterloo, Ontario. And RIM's rise was swift. It's important to understand that, uh, that Apple launched the iPhone in January, 2007. And in response, there was a very aggressive selling and marketing and device function. Apple supercharged the smartphone category, the same way Starbucks supercharged cappuccinos.

30:22And in the beginning, RIM was able to ride that wave. So when they, they launched in 2007, we were 3 billion sales. The next year we grew to 6. The next year we grew to 11 billion. The next year we grew to 15. The next year we grew to 20 billion. Fortune had us in the middle of that time, the fastest growing company in the world. Smarter and sleeker. Now with real-time turn-by-turn GPS navigation. It has the intelligence you require with the beauty you desire.

30:53The all-new BlackBerry Curve. I would drive through Waterloo in those years and see building after building after building with the big RIM logo on it. Even today, my mom lives across the street from a giant recreational center donated to the city by RIM back in that era. RIM Park. It is impossible not to have a certain amount of pride and affection for the guy who used to steal your jade tree and ended up a billionaire.

Jim's Reflections

31:18And then, at the very height of BlackBerry's success, Jim wanted to go left and the board of directors wanted to go right. But Jim, B, this is a good moment for a reflection here. How are they not with you? You've built this thing. You've been the strategic force behind this extraordinary company. You're, you know, the device is in the hands of the President of the United States. I mean, like, how is it that they could look at, that they would see what you had done

31:53for the company and look at, come to this crucial fork in the road and not even, they don't even seem interested in your option. Yeah, well, Mike and the new CEO, Thorsten, didn't, they were hardware people. And Mike did say, right, in the end, in a meeting, before the board meeting, if we do this, it'll kill hardware. And I said, hardware's already dead. And it's like I told him his dog just got hit by a car.

32:25When you look at your, at what you did, what, where do you think the mistake lay? I think it's many things that you're touching on. One is, for sure, you're busy because you're flying around the world trying to enact this shift. I underestimated how a strategic shift is hard for people. You'd much rather have a continuum. Uh, yeah, and more time for sure, more, more preparation, more persuasion.

32:59I, I, I did not spend the time I needed to. I, I, I'd always driven the decisions and they'd always been, yes, of course, we'll do what I'm pushing. And, but ultimately the board held the power. So underestimated their power, underestimated how they were sold in their way of thinking. If we cut to the bottom line here is you, you have a, uh, a notion of where the company's future lies, which turns out in retrospect to be accurate, right?

33:32Yours was the only path. There was no path. The, the, the, the, the right word fork in the road was only going to lead to disaster. There was no path that BlackBerry was going to emerge a winner by focusing on hardware. Yeah. There's no, there's no debate on that now. Yeah. There was a, of, at least a decent probability it could have come out on top or at least very healthy in the other path. You had, you came up with this idea. You had enormous amount of intellectual confidence in the accuracy of your decision.

34:02Um, but what you, uh, what you overestimated was that you thought that, that, that having a great idea, well supported by evidence would be sufficient to win over a group of intelligent people. And what you discovered was actually, no, a room full of allegedly intelligent people need more than an intellectual argument to win them over. They need to have, you need to go out to dinner with them seven times and at a lovely restaurant

34:34and hold their hand and kind of, you know, make them feel like they're wanted and needed and that you're someone who they can trust, et cetera, et cetera, et cetera. That was the, it was all that soft stuff that you underestimated the importance of. You thought it was big. What you needed was, what you needed to be, you thought what, what was, what was most important was to be right. Yeah. Yeah. Yeah. And yeah, no, I do a lot kind of in, I do a lot in public policy and my wife makes a joke.

35:08She says, Jim's motto is why convince when you can confuse.

35:13By the way, what's Jim doing as all of this is going on? Trying to buy a National Hockey League franchise. The Pittsburgh Penguins in 2006, the Nashville Predators in 2007, the Phoenix Coyotes in 2009. In each case, the franchises were struggling financially and Jim proposed to move them to a big city in Southern Ontario called Hamilton. Was Jim right to want to do this? Of course he was. Southern Ontario is home to 14 million people and at present has just one hockey team,

35:45the Toronto Maple Leafs, which is absolutely bananas. There could easily be three or even four more franchises in the Toronto region and each would be more successful than almost any franchise in the entire league. But could Jim convince the other owners to let him do it? No, he couldn't. I'm wondering, isn't the Penguins' story a version of this? That that was another case where you were right. The Penguins should not be in Pittsburgh.

36:16The Penguins should be in Hamilton, right? You are 100% correct. The future of the league, this is a terribly run league by a bunch of idiots who have not understood that Canada is the natural home for, has way too few hockey teams and Hamilton is, would be a hundred times better as a home for the Penguins than Pittsburgh, right? So in both instances, the story of Blackberry's fork in the road and the story of the Penguins, you are correct.

36:47And in both instances, you cannot convince the board, in one case, the rest of the owners, and in the other case, the board of the company, they, you cannot convince them of the 100% accuracy of your position. Had you done this? No, I think they're different because one just was never meant, one was a, was just never meant to be. It wasn't ever, they weren't going to allow it to happen. Was it never going to happen? Is the one blind spot in the otherwise sublime mind of a man like Jim that he can't see how

37:19he could have made it happen? Jim, you were, let me, let me, let me, let me just, I just want to, one last point about Pittsburgh, the Penguins. I'm going to imagine a completely different Jim. Imagine, I'm going to, imagine if you are the schmoozer of schmoozers. You are the most kind of gregarious, back-slapping, you're everyone, you know, you're like this beloved social, blah, blah, you spend, and you had wined and dined and got to know every single owner in the, in the NHL.

37:51And then you would say to them, you buy the Penguins and then you say to them, guys, this is a bad hockey market. I think, let me talk to you about a future of the league where blah, blah, blah, blah, right. Is there not a version? If you can't do it, because that's not who you are. But imagine a version of yourself where I shave off 40 IQ points and I give you a beer belly and an aw shucks, like, you know, and an endless appetite for martinis and steaks.

38:22And I send you on a tour of all the good old boys who run NHL franchises. Do you get your way if you do it that way? If you're that person. In hindsight, I don't think it, I see no chance. Oh, come on. Really? Oh, come on, Jim. This is your mistake. This is your blind spot. Doesn't this drive you? Why is it? Why am I the only one who's driven crazy by this? They're morons. They're morons. Well, it would have been very, very profitable. There's no question. We had the facility and we had the real estate.

38:54Yeah, it would have been very, very profitable. The greatest concentration of hockey fans in the entire world. Hockey fans with money in an underserved market who can't get any tickets to the Toronto Maple Leafs. Well, that's the map. That's the map.

39:08Several times during our conversation, Jim used the word heretic to describe the way other people at RIM, the board and everyone else viewed him. And I think it's the perfect word. The heretic is the person who strays from the orthodoxy, but not quietly or passively. The heretic does it loudly, without regard for everyone else's sensibilities. I said at the beginning that when Jim and I came to Trinity from the sticks, both of us were engaged in the project of figuring out how to fit in.

39:39We came in with chips on our shoulders and we had to find a way to remove them without calling too much attention to ourselves. I think I was better at that than he was. My jade tree, William F. Buckley, kept getting stolen because in 1980s Canada, to openly affiliate with a conservative like William F. Buckley was a provocation. So when I got a second jade tree, I called it Run DM Tree. I put the lyrics on the side of the pot. I'm a sucker jade tree can't grow much higher.

40:11All you other jade trees can call me sire. And no one ever stole my Run DM Tree. There were simple ways to appease the orthodoxy. But I don't think Jim really ever wanted to appease anyone. I think he just wanted to find the hole in the hedge. It's how he got out of Peterborough. It's how he made his way to Trinity. It's how he turned a little startup into a juggernaut. There's a famous psychology experiment from the 1950s where infant monkeys are taken from their mothers

40:43and given a choice between two inanimate surrogates. Cloth mother, a toy mother monkey that's soft and cuddly, and wire mother, a surrogate made out of steel wire holding a banana. Which do they choose? Cloth mother. They went for short-term comfort over long-term survival. At the end of the day, I think the rim board wanted a cloth mother. And Jim was wire mother. They weren't rejecting BlackBerry Messenger.

41:15They were rejecting Jim. And maybe Jim's mistake was simply that he didn't understand that for the rest of us monkeys, a banana isn't enough.

41:29Revisionist History is produced by Nina Byrd-Lawrence, Lucy Sullivan, and Ben Nadaff-Haffrey. Our editor is Karen Shikurji. Fact-checking by Anjali Mercado. Our executive producer is Jacob Smith. Engineering by Nina Byrd-Lawrence. Original music by Luis Guerra. Sound design and mastering by Marcelo de Oliveira. I'm Malcolm Gladwell. We spend hours deciding what to buy,

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