Losing The Signal: Business Book Club Discussion

This book scared us. It was a cautionary tale.

Our business book club read Losing the Signal: The Untold Story Behind the Extraordinary Rise and Spectacular Fall of BlackBerry, written by Jacquie McNish and Sean Silcoff.

I really enjoyed the beginning chapters, recounting the early days of Research In Motion’s (RIM) early wins and battles with the likes of Palm and U.S. Robotics.

The story turns dark and unfortunate as the iPhone is released and Android handsets begin to sweep the globe. It is a scary example of the cutthroat nature of business, especially in technology companies.

Business Book Club: Logistics and Attendees

Wayne was hosting again in his Chelsea apartment lobby. We were treated to sparkling water, coffee, and tea selections.

Five dapper gentlemen on a Sunday morning in Manhattan

L to R: Derek Halpern, Steve Kamb, Wayne Mulligan, me, Ramit Sethi, and special guest Ben Casnocha

Special Guest: Ben Casnocha

This was the first time we had a special guest. Ben Casnocha was visiting from San Francisco. We all met him a few months prior at Ramit’s wedding. It was great to have an outside perspective and fresh voice in our group.

CALL FOR GUESTS — Female founders: Do you know or are you a female founder in NYC with at least $3m revenue or 20 employees? We’d love to have someone join our business book club as a guest. Please email me to say Hi!

Facilitation Questions

Wayne Mulligan, our book club host this month, prepared a bunch of great discussion questions. Here are a few:

  1. What did everyone think of the book? Did you like it? Dislike it? Why?
  2. Were there any big topics or stories that stood out?
  3. There were plenty of handheld communication devices + PDAs before the BlackBerry — how much did timing play in BlackBerry’s success? How so?
  4. Has timing played a role in any of our businesses? In other words, if we had launched our businesses — or even a specific product — five years earlier, would it have failed? Why?
  5. How did design play a role in RIM’s rise and fall?
  6. BlackBerry Connect could have created a robust ecosystem of smart phones all powered by BlackBerry software — of which RIM would have collected monthly access fees — but ultimately, RIM used it as a way to push its competitors back while it secured its lead. Was this the right move for the company back then?
  7. What were the TRUE causes of RIM’s failure?
  8. What could have RIM done to turn things around? For example, should they have adopted a “Samsung strategy” and become a leading handset manufacturer? Or could RIM have used a “Google strategy” and created the de facto, non-iPhone operating system of the mobile world (i.e. “the WIndows of mobile”, etc.)? Or was there something else they could have done?
  9. Are there any changes coming to your industry that could potentially pose an existential threat to your business? How would you prepare for and counter it?

Previously, our book club has read these books: Measure What Matters, What Got You Here Won’t Get You There, Safari, and Netflixed.

The Early Days of BlackBerry and Research In Motion

Remember the glory days, when people printed their BlackBerry Messenger numbers on business cards and in email signatures?

Here are some photographs that I found online of the founders and their early hardware:

two Research In Motion founders, black and white picture, they're both wearing ties

1994 photo showing Jim Balsillie, left, and Mike Lazaridis with a wireless scanner that processes credit and debit card transactions. Photo by
TIBOR KOLLEY/THE GLOBE AND MAIL

“RIM’s co-CEO’s Jim Balsillie and Mike Lazaridis when the company was still making PCMCIA radio modems”

Hand holding a BlackBerry 850

Research In Motion launched the first BlackBerry, the 850 Wireless, in 1999.AL SEIB/LA TIMES VIA GETTY IMAGES via WSJ

Hand holding a BlackBerry 957

WSJ: “The BlackBerry 957 was Research In Motion’s breakthrough device, with its characteristic larger screen and keyboard.” ROB HOMER /FAIRFAX MEDIA VIA GETTY IMAGES

Anecdotes from the early days:

  • Getting kicked out of math class, and then scoring the highest in the entire town.
  • Mom who gave kids gunpowder for making homemade bombs for fun.
  • Lazaridis worked for himself for his 3rd year apprenticeship in school.
  • 1984: RIM was founded.
  • U.S. Robotics jerking them around for modems.
  • Pagers as the real beginning. Cannot underestimate this: before mobile phones dropped to consumer affordability, pagers were the definition of wireless connectivity. Tens of millions of Americans had them and used them every day. BlackBerry was born as a pager.
  • 1997: 40,000,000 pager customers in the USA.
  • How RIM gave $5m to Bellsouth for an upfront payment to access their mobile network.

Great Stories and Quotes

  • The dinner table story, where one of the co-CEOs asked the waiters to set a new place for him at the ultimate VIP table. He even went so far as to make his own fake name tag, folding a business card in half and writing his own name on it.
  • How RIM strategically skipped the I.T. Department to seed users within the enterprise for later company adoption.
  • Their “1 Month Free Trial” which got many enterprise users addicted.
  • Calling it the “Crackberry.” We can’t understand how massive this shift was, taking email away from the desktop and making it mobile and into the hands. BlackBerry as a hardware success swept through the enterprise like a virus.
  • From Wayne: When RIM made the transition from two-way pagers to email, they originally wanted to develop a full featured PDA to compete with Palm. It would have all the bells and whistles of a Palm Pilot (e.g. calendar, notes, email, etc.). But one night Lazaridis had this big revelation and he wrote it down in a company-wide memo (it’s on page 49) — he wrote something about devices being too complex and that RIM had to reduce and simplify. More specifically, he wrote “We must maximize adoption by minimizing complexity.” So they launched the 950 as a simple device that ONLY did email and it took off like wildfire.

Co-CEOs: Good or Bad?

Ben and Steve in our book club wanted more stories of how the co-CEO dynamic worked between Mike Lazaridis and Jim Balsillie.

We were interested in lessons that could have been learned.

Related: Why Co-CEOs Are a Bad Idea for Early-Stage Startups, Almost Always  via Derek, who is a co-CEO at Truvani.

The Downfall

We thought that living and working in Waterloo, Canada was an ultimate accelerator to their downfall. They lived in a bubble of Canadian worship, removed from the cutthroat nature of Silicon Valley.

The patent troll lawsuit took a significant toll on the co-CEOs. They ultimately had to pay a $650,000,000 fee (which gave the lawyers a $250m contingency fee!).

Then the back-dating options scandal, combined with the iPhone launch, caused massive distraction and disruption.

Accusations of poor board management were met with the reply: “If we’re doing so bad at governance, why are we making so much money?”

  • In 2009, BlackBerry was winning awards as the fastest growing company. They bought a new FalconJet and were hugely profitable. And yet there was a major threat brewing from the iPhone and Apple who were “writing new rules” to the game of mobile data and customer expectations.
  • 2010 would become a nightmare year for BlackBerry. And by March 2011, it was being called a “sinking ship.” The Teachers Union questioned the co-chairmen with valid concerns, only to get blown out with defensive arguments.

From Steve: LET ME TELL YOU WHY THIS WON’T WORK (CRINGE)

“Unlike rival handset makers, Lazaridis didn’t come to Barcelona armed with 4G device prototypes, but with a physics lecture. He was never shy about teaching carrier executives how network technology worked— Lazaridis often knew better than they did— or explaining how “new” and “more expensive” rarely translated into better performance. RIM had failed to deliver an Apple killer when its top customer needed it or a 4G phone when Verizon wanted it. The consequences would come to haunt RIM at its darkest hour.”

Another highlighted passage from Steve: “Mike refused to acknowledge that we had any material technical issues, to the point that he would miss meetings so that he didn’t hear the negative feedback and hoping that we would not discuss it in his absence. That was wishful thinking, and I personally didn’t think we had any way around it. If anything, everyone was counting on Mike to see the flaws first and fix them as soon as possible.”

Trust in your gut… until you can’t

There wasn’t a lot of discussion about what data RIM looked at — and what analytical frameworks they used — to make business and strategy decisions. RIM seemed to always “go with its gut.”

Luck has played a big role in all of our lives and businesses. But so has good decision-making. Ramit and Ben mentioned a quote by Auren Hoffman which was something like:

You should trust your gut NOT to do something, but you should use data to do something affirmatively.

Gut: Discussion Questions

Wayne wrote so many great discussion questions, I’m including a few here verbatim from his facilitator outline:

  1. What do you think — when is it appropriate to go with your gut and instincts and when should you base your decisions on data?
  2. RIM also seemed to make decisions at the top of the organization with very little input from other employees (and even the Board of Directors). How do you run your organizations? Have you put processes in place at your company to keep a check on yourself from barreling ahead with potentially flawed decisions? Is there someone specific — or a group of people — you rely on to “give it to you straight”?
  3. Weakness in RIMs core business were offset — and sometimes “masked — by the growth in its international business. Has this ever happened to you and your business? Has it ever come back to bite you in the ass? What have you done to make sure that doesn’t happen again in the future?
  4. What would you look for in an entrepreneur, or a company, to tell you whether or not they have a sound decision making framework in place?

BBC Interview: The Walkout

This interview was mentioned in the book. We didn’t think it was terribly scandalous, but it was an interesting look into the character of Mike Lazaridis.

NPS and User Surveys

We talked a lot about customer feedback and how to think about it. Ramit shared his own company’s big wins with user surveys and things they learned. Ben shared his survey experience at LinkedIn. Derek talked about protein powder reviews for his new company.

  • Evernote’s recent user feedback survey, a case study in well-crafted questions. For example: An answer to a pricing question that said, “Feels too expensive but would still buy.”

Open Questions

  • How did the Bloomberg terminal not meet a similar fate as Blackberry? Is it because of the chat? Or the strict B2B relationships and tight customer base? The Bloomberg terminal has seen many competitors come and go, attempting to re-invent with a better interface and GUI.
  • Did anyone at RIM read the book The Innovator’s Dilemma? We talked about the irony of perhaps some RIM execs reading this book while the iPhone and Android were devouring their market share.

Conclusion

Timing is everything. The BlackBerry revolutionized how we think about email. Users were no longer tied to the desk and workstations. It paved the way for a worldwide consumer addiction to data services. RIM was Canada’s Apple-esque golden child. But the company was almost totally eclipsed by the success of the iPhone, Android, and new hardware manufacturers.

I recommend this book to anyone interested in enterprise sales and technology entrepreneurship.

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2019-01-30T12:59:32+00:00 January 14th, 2019|Books, General|