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Online Extra: RIM's Lazaridis: "We're Not a Startup"

Mike Lazaridis was aiming to solve a variety of technical problems when he founded Research in Motion Ltd. (RIMM) 20 years ago. Of all his inventions, though, few can match the buzz generated by the BlackBerry. The distinctive device, which lets users instantly access their e-mail as it's going to their desktop, is the hottest name in wireless e-mail.

On Apr. 7, the Waterloo (Ont.) company reported that its subscriber base grew 24%, to almost 1.1 million, in the fourth quarter, which ended on Feb. 28. Sales increased 37% over the previous quarter, to $210.6 million, while profits were up 255%, to $16.3 million. Lazaridis, who shares the CEO job with Jim Balsillie, recently sat down with BusinessWeek Associate Editor Diane Brady to discuss what makes him and RIM tick. Following is an edited transcript of their conversation:

Q: Are you surprised by the success of the BlackBerry?

A: When you look at everything we've done, we've always excelled. We've won awards. I got an Oscar. Ann Heche was there! We were the first company to come up with two-way communications devices where you had a thumb keyboard that actually worked.

There's a history of innovation here -- from the very first day, where we developed software-based video-display systems, all the way to our networking products, industrial-display systems, and our film barcode readers. We built the first wireless cards for the PC. We're very innovative. We deliver. We know how to run a company.

Q: Do you feel you're not taken seriously?

A: Of course. Our last innovation was our latest trick.... We're 20 years old, and people still ask: What makes you think that next year is going to be great? Or that you'll still keep growing? Twenty years shows that we know how to run a company.

People have now recognized that we're not a startup. We're not a dot-com. We're not in this for an IPO to get rich. We've proven to the world that we want to run and build a company. We're going to put in the time. We're going to make the sacrifices and investments we need to provide an environment where we can make products and meet customer demands.

Q: Is Waterloo a good environment for a high-tech company?

A: The University of Waterloo plays a very strong role. It has the largest math faculty in the world. From a co-op and computer-science standpoint, it's one of the top universities in Canada. We're the largest industrial employer of co-op students in Canada. That gives us our intellectual transfusion every four months.

So being a Canadian company is no impediment to competing in the U.S.

I don't know. It's like being born into a family. It's all you know. As long as you have a respected and state-of-the-art legal system, and the resources available -- transportation, airports -- what does it matter where you are?

Q: Why didn't you finish your electrical-engineering and computer-science degree at the University of Waterloo?

A: I've always been entrepreneurial. In fact, I paid for a lot of my tuition through consulting. I had a contract with General Motors that was very exciting. It used all the skills that I learned. You get an opportunity, and it absorbs your time. I was managing a whole group, and I just couldn't keep up with classes. I put it on hold.... I only had a month to go.

Technically, I'm a dropout. But I figured I had finished enough graduate courses as an undergraduate that, you know, it didn't make a difference. They gave me an [honorary] doctorate of engineering, but it was actually completed as if it were a proper doctorate because of all the documentation I provided -- and the courses I gave.

Q: How did you come up with the BlackBerry?

A: We started working with wireless e-mail really early. When I was at university in the early 1980s, I had access to what became the Web. I had an e-mail address from the day I left university, but the addresses were hard. You had to describe the path that you wanted the e-mail to go through -- what's called the hops. Nowadays, it's all done automatically.

I think the fact that I had a fax number and two e-mail addresses put us ahead of accepted business practices at the time. But I knew there was an opportunity there. We had a LAN in our office. We had the first PCs in town that had disk drives in them in 1984/85. We brought in laser printers when they first came out. As soon as I found an affordable laser printer -- at around $5,000 -- I bought it.

In 1987, I went to a trade show and saw a company called DoCoMo (DCM). They were talking about a wireless data network they put in Tokyo to monitor Coke's vending machines, so the trucks didn't have to spend so much time driving around the city. The vending machines could call out for stock. I thought, wow, there is value here.

Within a few months, I get a call from a company called Cantel that had bought this wireless data system called Mobitex and needed a consultant to come and look at it. I was so personally motivated. I saw there was no competition in this area. We always had this e-mail in our head. One of the first products we did for Ericsson (ERICY) was send electronic mail over the radio.

Q: Did you think two-way pagers would be the next wave?

A: What excited me was "push e-mail" and trying to make that work wirelessly. But it was incredibly hard. There were a whole series of innovations we had. What kept driving us was the value.

Sure, you can come up with cool stuff, but that's just a dot-comism. Business is about searching for value. It took us years of evolving this and redeveloping it and, at the same time, we were watching the market catch up. We realized these things had value when people were taking these big clunky things home, and we asked why. They said: So I can keep in touch.

Q: When do you think e-mail became mandatory in business?

A: I don't think it became a big mission-critical resource until 2000. We launched the BlackBerry in 1999 as an enterprise product, and we launched it just as e-mail became critical. If we had launched it any earlier, we would be trying to sell two things: the value of e-mail and the value of wireless access to that e-mail. In 1999, we only had to sell you on wireless access to that critical resource. Now, of course, BlackBerries have become mission-critical to thousands of companies.

Q: Why didn't you target consumers, too?

A: These things always start in the enterprise. They can afford it and figure out how to get a competitive edge. Communication drives business. Misunderstanding goes down. Information is disseminated immediately. You don't have to be at your desk. All these good things make the return on the investment look almost embarrassingly high. That's today. But it took 15 years to get here.

Q: What is next on the horizon?

A: The biggest thing for us has been to make it more affordable. We already know the value of Blackberry. The trick is now to change the value equation so that we have a larger audience for it. We want more people to take advantage of it.... And I still drive innovation. I make sure it happens and it continues to happen. I try to be role model more than the actual inventor these days.

Q: How do you do that?

A: A whole bunch of things. Understanding what is practical innovation and what is pie-in-the-sky innovation. Understanding what is possible. And really hiring the right people and mentoring them. It's hard to get a job at RIM. We hire from more than 300 universities around the world. At one point, we hired only from the University of Waterloo's co-op program because it was the only one we knew about. Now we hire from a dozen.

Q: What prompted you to start the Perimeter Institute for Theoretical Physics?

A: I've been interested in physics since I was in public school. Just the idea of the energies involved, the different scales -- the universe, gravitation, black holes, lasers, quantum mechanics. If you have any active imagination, you can get carried away with this. When I got to university, I noticed that science had gotten so advanced that it lost its apparent relevance to day-to-day life. Without an active investment to make it more relevant, it would almost become like a forgotten art.

How many jobs are there really for physicists in the world? Someone struggles through to get his PhD, then post-doc, and then maybe he'll struggle through to get an associate professorship.

Yet so much discovery comes from those fundamental physics discoveries. But we didn't understand the connection between physics discoveries and our way of life. The time scales are too long. A business investment cycle is anything under three years. A government cycle is under eight years. Education cycles are generational -- 10 to 20 years. That's still too short.

The stuff we are using today really didn't get commercialized for years. Semiconductors didn't get commercialized until the middle of the last century, but the quantum mechanics that led to the discovery of semiconductors happened around the turn of the last century. That's a 50-year lag.

I recognize it's shortening, but the problems are getting harder. You need to understand the cycle, believe in it, and support it. I found myself in a position where I'm able to support it. Philanthropy is important. There are a lot of people in a position to do it who haven't.

Q: Are you talking about your peers in Canada, or is that an overall observation?

A: Let's limit it to Canada. I think the U.S. has a stronger tradition of philanthropy. The laws in this country need to continue to evolve to make it more attractive and easier to do. But for me, the question is how much money does any individual need? Life is a short time, but we can produce lasting effects on future generations. This is not just a clich?.

Quite frankly, I know that the work that the researchers are doing at the Perimeter Institute, and the work being done at the Institute for Quantum Computing at the University [which Lazaridis was also involved in starting], is going to have huge effects. There are a lot of areas where I could have spent my money, but a lot of those areas are well-funded. This was something that I felt needed support.

Q: Do you want to leave a lot of money to your kids?

A: The family and the kids will be fine. The only way to counteract this is to not let it go to your head. You sit there, realize you've got a short amount of time, you're working like crazy, you're taking on enormous stress in your life and you ask: Why am I negotiating for this? Why am I negotiating for a car? It's part of your character, and you need to do that. And your children need to see it.

I was looking at the coupons for a pizza order last night for the family, trying to figure out what the best combination would be to save $3. But, you know, as long as you keep doing that, you're O.K.

But the bigger issues are more important. My kids read. They've taken the lead from my wife and I. They've read from a very early age, and they're exceptional readers. Once you can read and you can actually comprehend -- and you love reading -- your world is open to you. And I know that my interest in physics and science is rubbing off on my kids. That's bound to happen. They're programmed to copy. Then what matters is their health. That's the only thing that's out of my hands.

Q: Is there any thing that keeps you up at night now?

A: Just to finish everything in the 20 or 30 years left. How much time is there left, really? I'm in my early 40s. The company has already exceeded my aspirations. I witnessed the turning points years ago that are manifested in the stuff you're seeing today. But there's new stuff we're working on today that is even more exciting.

One thing about RIM is that it focuses on what it's good at: wireless communications. But we didn't rest on our capital. We have been innovating nonstop. We have far more resources innovating now than we did 10 years ago.

Q: Would you take time off?

A: To do what? I've turned my hobby into my career. I would have to find a hobby if I took time off. We're 20 years old. We've passed all the initiation by fire to get to 20 years old. The toughest period was in the first seven years. Did we make the right decision?

I tend to be a fairly modest person. There are days when I have to actually force myself to look down and notice that I'm walking on a tight rope. It's just so easy to make decisions in areas that I know. I surprise myself at how confident I am when I make a decision.

I have to remind myself: This is a big bet. You feel like a thoroughbred when you're doing this stuff. When it comes to wireless data and where the value is in this marketplace, it's just so clear to me.

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