At first, he wouldn't let himself believe it. But once the guys from Motorola showed up, Mark Guibert knew that he and his colleagues were on the verge of the big breakthrough. Guibert, 36, is vice president of brand management of a midsize Canadian company called Research In Motion Ltd., or RIM, which makes radio-based modems and wireless handheld communications devices. Three years ago, he was at a trade show — PCIA GlobalXChange, the personal-computer industry's coming-out party for all things wireless. As a crowd squeezed into RIM's booth, he noticed several engineer types who had reversed their ID badges, hoping to slip in anonymously. Guibert figured out that they were from Boynton Beach, Florida, where Motorola's messaging division is headquartered. For two days, the trade-show floor had buzzed about the ultracool email machine that RIM was previewing. People from Motorola, which had just launched its PageWriter2000 wireless device, wanted to find out what was up.
What the incognito visitors saw was a device poised to become the next big thing in mobile communications: a two-way pager the size of a cigarette pack, with a tiny screen for displaying text and built-in keys the size of Tic Tacs for punching in messages with your thumbs. Guibert watched as his archrivals registered "a bit of shock and a bit of uneasiness" over the BlackBerry, a 4.5-ounce device that people at RIM promised would enable users to send email messages anytime, from anywhere, without any hassle.
"The experience was surreal," says Guibert. "I realized that after 10 years of researching and experimenting with wireless technology, we had done something right. I also had another realization: that the days of working in stealth mode were over."
RIM launched the BlackBerry in January 1999. The company has been on a roll ever since. The BlackBerry has proved to be something of a rarity in the mobile-computing world: a wireless gadget that's actually useful. Giant corporations such as Credit Suisse First Boston, IBM, Intel Corp., Merrill Lynch, and Oracle have outfitted thousands of their employees with RIM's pocket emailer, as have the U.S. Army, Navy, and Air Force.
Devotees of the BlackBerry became easy to spot, thumb-typing on the pager-sized device during a quick lunch or an endless meeting. Sending email with the devices proved to be so habit-forming that partners at the Boston-based VC firm Charles River Ventures jettisoned their PalmPilots and dubbed RIM's gizmo the "CrackBerry." Reportedly, the device was banned from meetings at Loudcloud Inc., chief Netscapee Marc Andreessen's Web-infrastructure development company: Too many staffers were furtively thumb-typing email messages.
Over the past year, as much of the tech sector imploded, Wall Street let loose with one big raspberry at BlackBerry's maker. RIM's shares skidded from a 52-week high of $132 to $15 this past March. But a funny thing happened while its stock was tumbling. RIM kept selling BlackBerries. In April, it announced a blowout fourth quarter. RIM racked up a profit of $8.3 million, compared with $3.2 million a year earlier; revenue for fiscal 2001 was 160% better than for fiscal 2000.
The future seems to promise even more rapid-motion growth. RIM's workforce has more than doubled in the past nine months to more than 1,400 employees. It's also building a second manufacturing facility that's capable of cranking out 5 million units a year, for a sixfold increase in capacity.
"Everyone's got to be concerned about the current market and the IT spending environment," cautions Mike Lazaridis, RIM's 40-year-old founder, president, and co-CEO — and a man not given to speaking with exclamation points. But even as he expresses solidarity with the rest of the tech sector, he insists that RIM won't lower its sights. "We have discovered the first true wireless-communications appliance, and people are becoming addicted to it. It's hard not to be optimistic."
How will RIM get to the next level? By adopting the very tactics that enabled it to create a pocket-sized gizmo that could send an email message winging across the airwaves and safely into your inbox. To build a wireless device is to cope with a world of constant, severe design constraints — of limited power, limited network capacity, limited screen space. As RIM raises the curtain on its own Act II, it offers the rest of us uncommon common sense for thriving in these constrained times. Here are the five design principles behind RIM's rapid motion.
Design Principle #1: Build the Factory Next to the Gold Mine
Research In Motion is located in Waterloo, an industrial city of about 98,000 people that sits on the outer edge of southwestern Ontario's Mennonite country. RIM's world headquarters is similarly unprepossessing: a squat two-story building surrounded by minimal landscaping and modest signage. Inside, it's cube land to the max, a dead-on reflection of the company's personality: ultrabland. Asked to define the company's purpose, Jim Balsillie, 40, RIM's chairman and co-CEO, responds with this less-than-inspiring mission statement: "to push data packets to your hip." Patrick Spence, a 27-year-old salesman who looks even younger than he is, sums up RIM's culture this way: "We're a little weird. We think it's fun to be serious."
Fair enough. But you can't help but wonder: How could something as cool as the BlackBerry come out of a company as dull as RIM? An answer starts to emerge when Lazaridis replies to a slightly more diplomatic question: "Why did you headquarter the company in Waterloo?"
A heavyset man with a thick thatch of silver hair, a modest demeanor, and by all accounts an off-the-charts IQ, Lazaridis offers a succinct reply: "Because we wanted to build the factory next to the gold mine." Loose translation: The "factory" is RIM itself. And the "gold mine," it turns out, is a three-minute walk from RIM's back door, on the far side of an employee parking lot: the William G. Davis Computer Research Centre at the University of Waterloo, one of the most respected, yet most unsung, computer-science schools in North America, and a hunting ground for some of technology's leading luminaries, including Cisco and Microsoft.
But neither tech titan has RIM's advantage. All day long, the school's math wizards must cross RIM's campus as they walk to class. Until recently, Elizabeth Roe Pfeifer, 35, RIM's chief headhunter, worked out of a corner office that looked directly into the school's computer lab. RIM's recruiters know all of the top students, many of whom spend four months or more interning at the BlackBerry maker before they graduate. All told, about 20% of RIM's employees attended Waterloo, including employee number one, Mike Lazaridis.
Building next to the gold mine is a clever strategy for winning high-end human capital, and RIM's executives credit it as a critical reason for their success. RIM's code crunchers might be boring and bland, but they are also disciplined and driven. Lazaridis has been working on wireless technology for nearly two decades and on wireless data networks since the late 1980s. While still a student in the University of Waterloo's engineering-and-computer-science program, he designed a local-area network that ran industrial displays. In 1984, General Motors offered to buy the displays for use on its assembly lines, and Lazaridis had to decide between completing his degree or accepting the $600,000 contract from GM. He chose the latter, dropped out of school just one month shy of graduating, and launched Research In Motion. The name derives from his belief that research and engineering excellence would drive the company's growth. And "motion"?
"That means we never stop, we never end," Lazaridis replies. "We keep going."
Design Principle #2: Design Your Product for You
The BlackBerry has the feel of an overnight sensation, but the journey to build it dates back to 1989. Lazaridis and his design team wrote some gateway software that would let users run a wireless email account on a Hewlett-Packard 95LX Palmtop PC, which came with a flip-up LCD screen and was powered by two AA batteries. They hooked up the Palmtop to Ericsson's first portable Mobitex data modem and — voila — they brought the world's first wireless-email solution to market — a market that, at least initially, consisted solely of RIM's own employees. At a time when the worldwide population of wired email users consisted of professors and scientists on ARPANET, Research In Motion built wireless email for Research In Motion.
"We were a small company, and we spent most of our time on the road," Lazaridis recalls. "We were always looking for tools that would make us more efficient. Email made us more efficient. So at least at the start, we were our own customers."
Even in the early 1990s, when email was largely unknown to corporate America, RIM's engineers and salespeople were email power users. Lazaridis printed an AT&T Easy Link wireless email address on his business card — and found himself apologizing to people who had never heard of email. Justin Fabian, RIM's 31-year-old VP of marketing channels, recalls showing off his email address to some friends at Microsoft — which hadn't yet put email addresses on its cards.
Once they had endowed HP's Palmtop with wireless capabilities, RIM's engineering team kept advancing the concept. They built a wireless Type II card for the HP 200LX, which came equipped with a PCMCIA slot — slide the PC card into the slot, and you've got a complete, self-contained wireless email device. The gizmo was too large to wear on your belt, but it was small enough to carry around in your briefcase.
"Our employees started taking these things home, and they wouldn't return them," says Lazaridis. "That's when we knew we were onto something. We had discovered that always-on, always-connected wireless email was completely addictive. The challenge now was to make it practical."
Design Principle #3: You Can't Be "PC" in a Post-PC World
The technical demands of building the BlackBerry were huge, because Lazaridis and his design team set out to create more than just a sleek email appliance. They aimed to design a technically complex service that would be easy to use. In its current form, the BlackBerry comes with software that's installed on corporate servers using Microsoft Exchange and Lotus Domino; there is also desktop software that works with Microsoft Outlook and Lotus Notes. Since the BlackBerry is fully integrated, users don't need an extra address for wireless email.
To build a wireless email solution that's easy to use meant taking on a massive systems-engineering task. It meant writing the kind of server software that would work on both Exchange and Domino. It meant building a miniature, low-power, low-cost radio transceiver. It meant reversing the data flow of the Internet itself. "Up to that point, the Net was a 'pull' environment," Lazaridis explains. "You logged on, pulled in your email, downloaded it, and got off. We didn't want the user to have to go out and get data. We wanted data to come to the user. We had to reverse the flow."
An even bigger challenge loomed. Building the BlackBerry meant rejecting some of the computing world's most basic tenets. Even today, no one at RIM would argue that wireless devices are about to eclipse the personal computer. But RIM's employees know from hard-won experience that PC strategies can't compete in a post-PC world.
A case in point: the computer industry's addiction to Moore's Law, the proposition that the number of transistors on a computer chip doubles every 18 months or so. The inevitable result of ever-increasing hardware power is that software writers feel comfortable developing ever-more-complex code — and that's not always a good thing. "In the PC world, you have less engineering discipline on the application end, because you know that next year you'll have more memory, a faster processor, and an infinite power supply," says Lazaridis. "In wireless, you can't get away with that. Wireless is inherently constrained in terms of memory, power, and bandwidth. We develop from scarcity, so we have to be disciplined."
Right from the start, Lazaridis believed that what would matter most to the BlackBerry's long-term success was not what RIM put into the device but what it left out. Only by eliminating certain features could engineers extend the life of its power source — a single AA battery — to three weeks. Only by leaving stuff out could they successfully launch an email message from a two-watt transmitter or conserve memory that's measured in megabytes (as opposed to a PC's gigabytes). In 1997, Lazaridis typed a white paper that road-mapped the BlackBerry's design. On the opening page, he wrote that RIM's engineers would define the device by outlining what it wasn't — only then could they say what it was. His title for the paper: "Success Lies in Paradox."
This drive to define limits and to innovate within them led Lazaridis to partner with Jim Balsillie in 1992. RIM was taking off. The CEO needed a copilot. "There were so many complexities in terms of building out the product and growing the company that I realized I needed someone to handle the business side," says Lazaridis. "To me, it was an engineering problem. I defined what I needed, and I started looking — although I had to go through two or three others before I found Jim. But it all began by recognizing my own constraints."
Design Principle #4: Grow by Saying No
Back in the early days of building the BlackBerry, RIM's engineers hung a sign over their cubicles. The sign issued a challenge to everyone who worked in the "pit." It read: "Have you saved a milliwatt today?" RIM's executives continue to apply their save-a-milliwatt focus to the company itself. Lazaridis and Balsillie believe that RIM has arrived at a perilous moment in its evolution: While it has the ingredients for sustained, profitable growth, RIM could founder if it embarks on too many diverse initiatives before fully strengthening its core business. Lazaridis says that these days his chief job is to derail any project or plan that threatens to drain energy or weaken that core. Saying no, he believes, will help RIM grow.
"The biggest mistake a company can make is to try to diversify when it's successful," he says. "You taste success, and your inclination is to try to take on new initiatives. But in fact, that's the time when you really have to redouble your focus."
So what is RIM saying no to, exactly? "We won't be an ISP," says Balsillie. "We won't be an OS. Because the moment that we become one of those things, we must also become the epicenter of the brand. And then we'd have to contend with some extraordinarily powerful constituencies. We can't declare that we're a digital bank and still think that we're going to partner with a Schwab or an E*Trade. And if we don't partner with them, do we really think that we can win against an AOL or a Schwab or a Compaq or a Microsoft? If we tried to take on any one of those companies, let alone all of them, we'd be toast."
Design Principle #5: Make Your Competitors Your Partners
Soon after he joined RIM, Balsillie made a tactical mistake that he's never forgotten. He was closing on a deal with Oracle, he got ambitious, and it all fell apart. "The agreement was to have them license our software and build it into Oracle to get wireless access to databases. Oracle was a big partner, and they wanted to work with us on this. But I got stubborn on a couple of clauses in the contract, figuring I'd play businessman. Surprise, surprise — Oracle walked. And basically, they disappeared from the sector for four or five years.
"Since then, Oracle has come back," Balsillie continues. "They love the product, and we get along great. But for a while, we lost a good ally. I learned that you don't win by trying to hit a grand slam to Mars. You win by making constant progress."
Balsillie recalled that lesson as he watched BlackBerry take off. He knew that with the device's success, RIM was at a turning point. "We had to shift from competing with the companies that felt threatened by us to partnering with them," he says. "We couldn't let them feel as if we were trying to control the game." RIM has launched a slew of partnership deals with an array of software and communications providers, from America Online to BT Cellnet to Nortel Networks to Yahoo.
Still, the BlackBerry faces major-league competition. Both Motorola and Palm have more visibility than RIM in the consumer market — and both make devices with similar features. Handset makers Ericsson and Nokia are rushing headlong into the wireless-data space. But Balsillie, who argues that packet data is BlackBerry's turf, likes RIM's chances.
"Who wins between an alligator and a bear?" he asks rhetorically. "It all depends on the terrain — do they fight on water, land, or mud? So it goes with wireless. All the carriers want to get into data, and packet data is our terrain. I would submit that it's far more straightforward to put voice into a data appliance such as the BlackBerry than it is to put data and data infrastructure into a voice appliance. So packet data, which used to be the irrelevant sector, is now the principal grounds of contention. And we've already installed the software base, we're building our eighth generation of applications and the sixth generation of packet radio, and we've got our software behind the firewalls of 7,000 companies."
Balsillie and Lazaridis practically glowed with confidence as they talked about their company's future over a steak dinner. You couldn't help but contrast their optimism with all of the doom and gloom in the technology sector. But to their way of thinking, they've done the hard work of building an incredibly complex service and staking out their place in a market that is getting bigger faster. "The market for wireless data is 400 times larger than it was five years ago, and we've been there from the start," says Balsillie. "How could we not be confident?"
Bill Breen (email@example.com) is a Fast Company senior editor. Learn more about RIM on the Web (www.rim.net).
Sidebar: These Stars Are All Thumbs
Who would have imagined that a crew of supersober Canadian engineers would have produced an email device that's so compelling, it's become a lifestyle accessory in the highest circles of power and glamour? Intel chairman Andy Grove has joked that the BlackBerry is so addictive, "It should be reported to the DEA." Internet poster boy Marc Andreessen, a huge BlackBerry fan, has banned the device from meetings at his new company, because too many people type rather than listen. Then there are the beautiful people, including Howard Stern and Matt Damon, as well as Jennifer Lopez and Pamela Anderson, neither of whom is best known for her thumbs. Other power users include former U.S. vice president Al Gore and venture-capital superstar Roger McNamee.