BlackBerry and Waterloo: The story of a company and a city

Waterloo is a small city in southern Ontario, Canada, an hour's drive from Toronto. It has well-developed transportation and a strong cultural and learning environment. Waterloo is known as the "Silicon Valley of Canada". It not only houses the headquarters of the three largest insurance companies in North America, but also technology giants including Google, Apple, and Microsoft have established R&D institutions here.

Of course, the most famous company in Waterloo is BlackBerry. This company, which was born and raised in Waterloo, was once the business card and pride of the city, and Waterloo has also witnessed the rise and fall of BlackBerry. Kevin Roose, a reporter from foreign information media Fusion, recently visited Waterloo. The following is the main content of the interview article.

It was 5:30 on a normal Wednesday afternoon in Waterloo, Ontario, Canada. The streets were deserted. I was sitting in a cold taxi, and the BlackBerry headquarters was just outside the window. Looking back five years ago, these buildings were basically full of people, but now they are as deserted as a ghost town, and this scene seems to be a true portrayal of BlackBerry's fate.

The quietness was odd, given that it had been a busy week for BlackBerry. Just hours before my visit, Reuters reported that Samsung was in talks to buy BlackBerry for $7 billion, the company had just released its latest BlackBerry Classic, employees were working on a turnaround plan, and executives were hoping to reverse a declining business by focusing on core customers.

It is hard to recall BlackBerry's glorious past today. This company, which makes Canadians extremely proud, had a market value of $80 billion at its peak and had nearly 20,000 employees. In addition to having hundreds of millions of ordinary consumers, BlackBerry phones are also the preferred communications device for government agencies including the White House and Fortune 500 companies.

Although BlackBerry is still alive today, the company has only 7,000 employees and its market value has dropped to US$5.25 billion, less than 10% of its peak period. BlackBerry's share of the global smartphone market dominated by Apple and Samsung is less than 1%, and it looks like a hero in his twilight years.

Before conducting this interview, I would like to clarify a question: What impact will the decline of BlackBerry have on Waterloo? Will it be a fatal blow to Detroit like General Motors did in the past?

Compared with other large mobile phone manufacturers with supply chain resources all over the world, BlackBerry is quite special. The company's product design, testing and production are all carried out locally. At the same time, BlackBerry not only provides a large number of internship opportunities for local college students, but also solves nearly half of the employment problems in Waterloo. Like Kodak to Rochester, New York, the fate of Waterloo is closely linked to BlackBerry. So when BlackBerry went downhill, the entire Waterloo also entered a downturn.

Although BlackBerry had rejected my interview invitation many times before, I still decided to come alone, so after getting off the car, I checked the surrounding environment again and again. When I saw the words "Never Give Up", "Be Prepared to Conquer the World", "BlackBerry Magic is Returning" written in white chalk on a blackboard on one wall, I knew that this was the headquarters of BlackBerry.

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Birth and glory

Waterloo has never been a technology-focused city. The entire city has a population of only 120,000. The city was founded by the Mennonites in the 19th century and has always been a small city known for its mid-range manufacturing industry. However, all this changed in 1984.

This year, two engineering students from the University of Waterloo, Mike Lazaridis and Douglas Fregan, co-founded a wireless data transmission equipment research and development company called Research in Motion (RIM), and in the following decades, this company changed the way the world communicates. Most of RIM's big customers are well-known, including Wall Street banks and government agencies, who all like BlackBerry phones with high security and the ability to send and receive emails at any time. In 2005, BlackBerry ushered in a golden period of development, with sales rising from 1 million units per year to 1 million units per month, and then soaring to 10 million units per quarter.

As its business grew, RIM began to purchase a large number of properties in Waterloo, with the largest number reaching 15 buildings, and the company's headquarters could accommodate 10,000 people working at the same time. As a result, the city of Waterloo almost became RIM's world, and RIM people could be seen everywhere, whether in schools, hospitals, hotels or restaurants. At the same time, it was also because of RIM's existence that Waterloo became a tourist destination. In addition to ordinary tourists who came here for its reputation, celebrities including the Queen of England, legendary athlete Armstrong, rap host Will.i.am and physicist Hawking have also visited RIM.

“BlackBerry was the coolest company because everyone had a BlackBerry in their pocket,” said Michael Litt, a former BlackBerry engineer. “The feeling was that the company was invincible.”

According to local people, the success of RIM in its early development was largely due to the University of Waterloo. This engineering school, known as the "Stanford of Canada", provided RIM with a steady stream of engineering talents. Of course, RIM also provided these talents with very good conditions. In addition to relatively competitive salaries, it also provided them with the "BlackBerry Unlimited Data Plan" (implemented in 2007) that only Wall Street bankers can enjoy. In other words, as long as you are a student of the University of Waterloo and buy a BlackBerry phone, you can get unlimited data traffic. Of course, the city of Waterloo is also very "loyal" to RIM. In the heyday of the latter, no one in the entire city used Nokia or Motorola mobile phones, because doing so was like "driving a Honda car on the streets of Detroit."

Despite its remarkable global success, RIM is still a company with a strong Canadian character. For example, although the company's rise has cultivated dozens of millionaires, it is rare to see expensive sports cars in the parking lot, and most of the company's executives have not bought luxury homes. Everyone seems to have a strong ability to control material desires. For example, the company's former co-CEO Jim Balsillie's plan to buy an NHL hockey team several times has not yet been realized.

Compared to Silicon Valley in the United States, Canadian technology companies are more low-key and pragmatic. There has never been a technology company like Uber that can subvert an industry. However, BlackBerry is an exception. Although the company was originally established to solve the connection between employees and companies, it eventually became a successful consumer electronics company. "RIM is a great company," said Pearl Sullivan, dean of the School of Engineering at the University of Waterloo. "Its success has inspired many people in Waterloo to dare to put their ideas into practice. Once their products have a market, they can succeed by commercializing them."

The success of RIM made Waterloo realize that Canadian companies can also gain a foothold in the highly competitive high-tech field, even in the face of challenges from their American counterparts. Locals in Waterloo told me that when they went to the United States for business before, they always tried to cover up their accents and sit up straight in the meeting room, just to avoid being looked down upon by Americans. But RIM, which later achieved great success worldwide, made them completely proud, and they straightened their backs even in front of Americans.

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The Decline

"When a barber pulled out his iPhone in front of me, that's when I realized we might be in trouble," David Yach, former RIM chief technology officer, told me in an interview.

BlackBerry really went downhill in 2007. The iPhone was launched and the world was amazed. It turned out that smartphones could be so beautiful. However, BlackBerry executives still believed that the most important thing about smartphones was their functions. It turned out that their idea was wrong. The annual sales of iPhone easily exceeded 10 million units in 2008, and at the same time, it began to ambitiously enter the enterprise market dominated by BlackBerry. Although bankers and lawyers could not find a physical keyboard on the iPhone, they preferred the iPhone's touch screen and massive applications to the keyboard.

The next few years were a nightmare for RIM. With the rise of iPhone and Android, BlackBerry's market share continued to rob Apple and Samsung, and many corporate customers began to gradually adopt BYOD policies. However, BlackBerry executives still stubbornly refused to launch a touch phone with no physical keyboard, but invested heavily in the development of the tablet PlayBook. When they realized this, it was too late.

In January 2012, German Thorsten Heins became CEO of RIM, and then Heins launched a large-scale layoff. In mid-2012, a group of employees left RIM every few weeks, and eventually about three-quarters of the employees at the Waterloo headquarters were laid off. In January 2013, RIM officially changed its name to BlackBerry and launched a new mobile operating system BlackBerry 10, which was considered to be a new chapter for this Canadian company.

Although BlackBerry's problems were exposed, the speed of its decline still caught Waterloo off guard. Many local supporting facilities had to close down due to BlackBerry's layoffs, and the entire city even fell into an inexplicable panic. At the same time, more and more BlackBerry engineers were poached by Apple, Google, and Samsung, and the loss of outstanding talents was getting faster and faster. Although the local government and enterprises in Waterloo introduced many measures to attract talents, they had little effect.

However, these companies that came to poach talents also faced a common problem, that is, many talented engineers did not want to leave Waterloo and go to California, a foreign country. Therefore, companies including Google, Square, EA, and Intel simply opened branches in Kitchener near Waterloo. It is reported that Facebook and China's Huawei are also planning to open offices in Kitchener.

In addition to the popular high-end talents, many ordinary BlackBerry employees also chose to stay after being fired. After all, many banks and insurance companies also have a special preference for BlackBerry employees who are familiar with their business models. At the same time, some employees have found jobs in technology companies in Toronto and nearby cities.

Although the decline of BlackBerry has had a certain impact on Waterloo's economy, the small town quickly adapted to the situation, and the overall economy has recovered rapidly, and local housing prices have only fallen slightly. Currently, the unemployment rate in Waterloo is only 6.5%, and graduates of the University of Waterloo's engineering program have begun to choose BlackBerry as the starting point of their careers, or to start their own businesses directly, rather than going to Google or Facebook.

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Today, with the help of Communitech, a local technology industry organization in Waterloo, a group of new startups have sprung up. Currently, there are about 120 companies with offices in Communitech's technology innovation center in Kitchener, and many of their employees used to work for BlackBerry. Objectively speaking, the decline of RIM has benefited these new startups a lot, because RIM once absorbed a large number of excellent high-tech talents, and these people were unwilling to leave Waterloo after BlackBerry went downhill, so they had to choose new jobs. Now many of them have become the backbone of new startups. So a strange phenomenon has appeared in the Waterloo technology circle: the collapse of BlackBerry has spawned a group of high-growth new technology startups.

Stand firm at Waterloo

One Waterloo resident who still uses a BlackBerry is Mayor Dave Jaworsky. When I spoke with him at Waterloo City Hall, he pulled a BlackBerry Passport from his pocket and placed it on the table. "It's a great phone," he said. "It's a secure device that people can be completely assured of."

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Jaworski was once a senior executive at RIM, in charge of the company's corporate social responsibility department. He left BlackBerry in 2012, 12 and a half years after joining BlackBerry. Jaworski did not look for a new job afterwards, but won the position of mayor of Waterloo with the slogan of "restoring prosperity." According to Jaworski, many employees laid off by RIM eventually found new job opportunities, and the economic conditions in areas such as Waterloo and Kitchener have successfully rebounded. "We have passed the most difficult time," Jaworski said, "After some hard work, everyone has adapted to the current situation."

To some extent, Waterloo has many similarities with the new economy in the United States. After all, the lifespan of many high-tech companies today is generally shorter than that of previous industrial giants, so at some point in the future, many companies will go bankrupt, and a large number of engineers will lose their jobs.

But these engineers don’t necessarily have to move to a new city to find a new job, because many jobs will come to them automatically. Companies like Google and Facebook are willing to take some extreme measures to attract high-end talents, such as setting up offices directly in talent gathering places. At the same time, the rapid development of the Internet has made it easier to start businesses across regions. Many startups can also look to the world and achieve success even if they are no longer in Silicon Valley.

BlackBerry still has a long way to go. The current CEO, John Chen, is an operations expert with a Silicon Valley background. Under his efforts, BlackBerry has gradually found a new direction for development. The company has $3 billion in cash and a large number of high-value patents, which makes it a very competitive acquisition target. BlackBerry currently has 2,700 employees in Waterloo, which is only a quarter of its peak period. However, BlackBerry has launched a small-scale recruitment plan in the local area since last year.

"Waterloo is the hometown of BlackBerry, and most of the company's people live here," Chen said in an emailed statement. "We will continue to stay in this place that helped BlackBerry grow from a small company to a technology giant, and we can see every step of BlackBerry's growth here. Waterloo is a vibrant city, and many technology companies have achieved success of varying sizes here, and the reborn BlackBerry will continue to show its talents here."