A Conversation with Jim Balsillie, CEO, Research in Motion: On Innovation, the Mobile Internet and Managing RIM

Barcelona, Spain- It is that time of year where close to 55,000 people convene at the Fira de Barcelona to shape the future of innovation, technology and thought leadership in the mobile industry. During the Mobile World Congress, Myla Villanueva, Chair of the GSMA's Mobile Innovation Market, met Jim Balsillie, CEO Research in Motion (RIM), to discuss his thoughts on the state of innovation.

 

Despite the insatiable interest from a technology-hungry public, and an equally curious media (3000 media outfits participated), the Mobile World Congress begins privately enough in the grandiose Palacio Nacional in an invitation-only Leadership Summit. It is the first day of Congress and this is where thought leaders and captains of industry converge to debate and share the latest areas of growth or friction, in their areas of market coverage, in their part of the world. For a 1.5 trillion dollar global industry, it is a very select group of about 200 attendees, where everyone greets everybody by first name, friend and competitor alike.

 

Every major CEO is there. I see the always energized Arun Sarin of Vodafone, Chairman Wang Jiangzhou of China Mobile (with 376 million subscribers under his belt), Masayoshi Son, the maverick internet billionaire and founder of Softbank Japan (speaking on his aim to become Japans number one mobile company from current third, via insurgent internet strategies), Sol Trujillo of Telstra (sharing anecdotes of Australia's fast rise as an internet mobile powerhouse), the gracious Sunil Bharti Mittal (Fortune's Asia Businessman of the Year and one of India's most inspiring entrepreneurs), Napoleon Nazareno of Smart, ITU Secretary-General Hamadoun Toure and the combative European IT Commissioner Vivienne Redding. Also seen in congress were John Chambers of Cisco, Olli-Pekka Kallasvuo of Nokia and Ericsson's Carl-Henric Svanberg.

 

This is the second year of the Mobile Innovation Marketplace where we are working to bridge relations between mobile industry start-ups, venture capital and mobile operators. We are very energized by the interest it has generated.

 

This coming year, the MIM is launching beyond Barcelona, directly linking with innovators in Israel, India and China, and the Americas. It is also our goal to reach out to the leading academic communities in the world to participate, and perhaps help bring about more research and development in longer term innovations like battery life and green and renewable energy sources (for example for base stations and remote subscribers. Other areas of breakthrough sought by many operators are in the areas of Search, femtocells (small base stations that can further propagate coverage into indoor settings), mobile social networks, mobile payments via near field communications, machine to machine communications, mash-ups, and location-based services.

 

I can safely say that the time has come where voice is just one of a variety of offerings as the mobile phone fast becomes the personal Internet device.

 

Nothing is more personal an internet device to me than my Blackberry. I am a certified "Crackberry", one who is addicted and cannot do without the now iconic device made by the Canadian company Research in Motion. I was very happy when Jim Balsillie, its CEO, accepted my invitation to keynote, when I met him months earlier in China. I wanted him to share his thoughts with start-ups, on how he started with RIM when it had eight employees, how it continues to spike in growth with 12 Million users, its 59 Billion dollar valuation, and how the company plans to grow beyond its popular push email dominance. An inspirational character even outside of his work, Jim has donated eighty million dollars of his own to create a foundation in support of entrepreneurship and international relations in Canada.

 

Some excerpts from our conversation:

 

Some excerpts from our conversation:

 

MCV: Thanks Jim for giving your time to the Mobile Innovation Marketplace here at Barcelona.

Jim: Thank you I was happy to, I think it is very important that developers see the opportunity and the importance of the ecosystem and the importance of the transformative aspects of wireless data and the opportunity it creates for them to play the enabling role in many different roles. It's a huge opportunity.

MCV: Going back to when RIM was a start-up, can you tell of the inspiration behind the idea of Blackberry. What were the technological and market forces at that time that made you believe that this could be a potentially great company?

Jim: Well, the inspiration, I think, really lies in seeing what we thought were the trends and thus anticipating the changes in the market, and doing the work in advance of these things happening. And you got to remember these trends are always obvious in hindsight, but at foresight they are far from obvious. In the mid 90s when we are working on Blackberry, most of the focus was on broadcast packet, for paging, or dial up cellular. We believed in two-way digital packet radio. So two-way packet radio was considered really not very important then, but we believe that was scalable, and it was immediate and it was efficient, and this was the basis for our data communication, not broadcast paging, not circuit switch from cellular which were the conventions. So most things in wireless data were very custom and highly engineered systems that were tailored and used in the X.25 backhaul. We saw the emergence of an IP backhaul as a standard interface, and if we could create software with an IP interface, that used the IP backhaul, then it took away all of the custom engineering and custom designs that the companies had to do. Third thing was is, the nature of applications there for messaging then was very much focused on paging, and service bureau type stuff and custom applications and we really saw this emergence of email as payload for messaging. We called the original blackberry server distributed paging, where you had email as the paging messaging payload. We sort of pick those trends of two-way packet radio, IP as a backhaul, and email as a payload and fundamentally, we said we think these are important, and if we package them together, then this is a very compelling way for people to collaborate. I think it was anticipating trends and anticipating how it will be used. That is the key thing for a lot of people.

The second part is, when you do these things, they don't always quite unfold the way you want, they don't always unfold as fast as you want, they don't always unfold without resistance. And so I think if there is a core vision and a core value proposition, there is a myriad of challenges, and you just have to accept those as a rite of passage. But never take your eye off the value proposition and your own ability to analyze and understand, and have belief in the bigger trends. That was a lot of what I was trying to talk about in my Keynote yesterday is that there are these bigger trends that is changing the nature of applications, that is changing the nature of customer ownership of the platform, and changing the nature of the value proposition...and if you can understand these trends and take advantage of them and bring change into a situation, you will prosper, you will prosper quite a bit. These are not small changes. This services platform thing for wireless, that is a dramatic, dramatic shift in computing architectures and applications architectures.

MCV: How big was the team when you were starting?

Jim:Well, there used to be eight of us, we are more now. But a huge credit goes to my partner Mike Lazaridis, my co-CEO, he is a technical visionary, he's the one that really came up with it, and drove it so he really deserves principal credit for it.

MCV: How do you keep the spirit of innovation going as the company grows? It's always a conception that smaller teams are conducive to the creativity, and innovation is an art. How has the innovation culture within RIM evolved since you joined in 1992?

Jim: I think it's true. I think small teams. I think part of the way to keep an innovative company is one to value and celebrate an innovative culture so it becomes cultural in the support of innovation and the nature of your reward systems, your celebratory systems, and your hiring systems, and your recognition systems are very focused around innovating an original thought. I think absolutely keeping teams small and focused is very important. A big model, a big team is not particularly how one wants to do it. The third one is it starts from a leadership proposition and Mike deserves particular attention. He is a visionary. He is highly involved technically, he challenges teams, he makes them accountable. So a good innovative culture starts at the top and Mike deserves a large amount of the credit for that.

MCV: Entrepreneurs, through all the challenges, always like to think that it is as they planned it to be, right? ... (laughs)

Jim: Actually that is not the case, here is what happens. What happens is entrepreneurs navigate cascading circumstances, and if things work out as they wished, then they just use revisionist history, and say they knew what they were doing all along... (laughs)

MCV: You are now a $51B (59 as of press time) market cap company today. How much of this was envisioned by the founders?

Jim: You know, we don't look at stock...we don't think that way. We have one company policy that if you get caught looking at the stock markets, or talking about the stock price of RIM then you'll have to buy the whole company donuts. I haven't found anyone in 2-3 years, but I found couple of people who coughed up several thousand dollars worth of donuts...it's a joke but it's not a joke. So I think, everything in life has many dimensions to it, but you have to be driven by the intriguing, and the interest, and the passion and the challenge of what you are doing because that's what sees you through the uncertainties, that's what sees you through the barriers and that's what brings success. I am not convinced the desire for success brings true success. I think it's the intrigue and interest and passion in your beliefs and in giving value to whatever you want to be, that's what brings true success, in whatever business. You look at any successful business and there's somebody behind it that is very passionate about their products and services, their customers, their value proposition, and about the people who they counted on to bring that. If you had some good fortune, and pick a good sector, and you execute well, then success comes with you, come to it. But I don't believe success should be a goal in itself. I don't think any customer who does business with you or anyone wants to work with RIM just because I want to be successful. There is no partner value proposition in that. It's a self oriented thing, and for me I just don't think about it. I don't think back. I don't think forward. I don't think look at this here. I'm very involved and engaged and enjoy the job I have to do. I get up in the morning do my job, I go home and sleep. I wake up the next day and enjoy everyday and come what may.

MCV: Do you sleep with your blackberry? (laughs)

Jim: (Laughs) It's off! It's off! It's my alarm clock! Yes its there, but I keep it off!! You can't get me at night. If you need me in the middle of the night, then you better come knocking on my door and it better be a good reason... (laughs)

MCV: Let's talk about today. It is my sense here in Barcelona that the threats identified by the leaders in industry are not primarily of the current market turmoil around us, but of changing business models. That is, the internet models based on advertising, and market valuations on probable future incomes.

Jim: Advertising is one of them. A closed system based on music platforms is another one. A closed system based on a hybrid of OS that is proprietary with locked-in backend services. The third one coming in which is the big handset player leveraging in an agglomeration of all of the above. Four different...it's hard to call it Internet models ... but sort of technology company models. Would you consider Apple an Internet company? You consider Google an Internet company ... and Yahoo an Internet company. You sort of consider Microsoft a PC company. Apple a kind of music company ... though it has a PC... And Google a cell phone company. So the one thing they have in common is they are all technology companies who want to have a service platform model too. It is hard to call them Internet companies. But some of them are. But I am not sure that it captures them.

MCV: The business models are very much at odds. If you take the advertising industry as big as it is still pales in comparison to the 1.5 trillion telco industry with paid, subscribed and mature predictable services year after year. How do you feel it will resolve itself?

Jim: I think it's highly uncertain. I think there are many contending models, there are many contending architectures, and I think the stakes have gotten much higher, investments have increased dramatically, the aggressiveness of strategies have increased. We also have a PC company buying a handheld company which was Microsoft. So I think it's intensified and I think it's going to engage and intensify, and I think there's a great risk of turbulence and disruption. Right now, everybody is being sort of quasi-polite before the big war.

MCV: Is it World War 3.0 perhaps? (Laughs)

Jim:Web War 3.0 right? (Laughs)...You know what? Its in essence, you bring communication which has been a highly controlled environment by the carrier, to the internet which has been highly controlled by the application frameworks, sort of PC framework, sort of music, whatever framework. There's no question. There's contention. They're very different, and they're very different leverage points, and they're very alternate visions. I think there is gonna be at lot of turbulence. I don't think RIM's success as an OEM platform to the carriers is guaranteed. And I don't think the carriers' walking of customers is assured. That was kinda what Arun's keynote (Sarin, CEO of Vodafone) keynote was like. We have to make sure we look after these customers and continue to own them and be careful in everything we do...

MCV: But you don't think it is a zero sum game? I mean somewhere along the line...

Jim: Its not, but you also have major shifts in winners and losers. So in a sense, the digital media, the mp3 thing, grew the market. But one could say that once that synced well to an mp3 player, there was a dramatic shift in fortunes from the content owners of music to the platform of syncing. So it is not a zero sum game but dramatically disproportionate returns accrue to the person who oversees the platform. You have seen that in search with contextualized ads. You have seen it in the software basis for routers by Cisco. You have seen it in the PC. You have seen it in many different businesses. It's not a zero sum game. But, there could be dramatic swings and the carriers are leveraged models and so if the revenue leverage is up 20-30% you're down to 20-30% based on that. That's everything. That's between losing a wack of money and making an enormous amount of money. Even though it's only a 20% split? that's everything right?...

MCV: Let's talk a little about your company and product. Some say that you focused on one thing and did it really really well.

Jim: What is that?

MCV: Push Email.

Jim: We focused on pushed packets, so we made the carrier a managed service of secure pushed packets. And to be pushed, we had to build a DNS infrastructure because there is dynamic IP addressing in GSM as well as in IPv6. And then we interfaced those packets on the backend to a MAPI interface on the desktop, and then we interfaced to a messaging or a PIM client on the handheld because of this horizontal and voila, you have push email. But really, we took a session pull environment application on email (made a sessionless push) but really what we did is create a secure push packet tunnel which is the interface to kind of a horizontal known app for collaboration. But 80% of blackberry servers do have applications beyond email, and huge activity with SAP...all the SAP employees, government, database things, IT management, mapping, IM, voice. So you know, it's just easy to pick up email, and that is a horizontal app, but its really about push packets, to any packet store, that has any amount of immediacy elements to it. If there's no immediacy then wireless does not help that much.

MCV: Will we see more of VOIP, richer IM, and a richer Internet experience in the Blackberry ecosystem?

Jim: Absolutely, you're going to see more web services, all kinds of messaging protocols, VOIP has to happen over Wi-Fi. It's inevitable. That's why the carriers have to keep being a service platform, and keep growing and keep evolving. You have to go with those trends or what will happen is it will just get side swiped. So these kinds of things, you still need a wide area carrier, you still need a cellphone, you still need a voice account, you still want a text, but you also need a data platform from someone, hopefully the carrier, to avail of your social networking apps, your content, your workflow, your VoIP if you will, you know, where you see a lot of ecommerce, stored value, gaming...and it's exciting. I mean, let's make sure we are looking at all these challenges and turbulence, and we count our blessing. There's nothing like being a sector with huge opportunity. We are in a sector with huge opportunity and we are very fortunate for that.

MCV:What is your idea of a perfect converged device today? I have seen the floor, and the sites. I hear rumors of a touch screen Blackberry and clamshell too. What is your idea today?

Jim: For me, probably the perfect device is probably the Curve with GPS and wi fi on it on an Edge network with multimedia, the 3mm jacks so that all my good headsets work. That is probably the best device.

MCV: I do have one!

Jim: But the key thing is, the device and the transport gets disproportionate attention sometimes. Oh, this is the air link, this is the device, we all pray to that.

MCV: It’s the emotion of the touch!

Jim: yes, it's there's the emotion of the touch but what we really buy is the service. Yes, and that is the funny thing. The emotion is the touch. But value is the service. And so in a sense, what do you do with this is the question, but you are absolutely right, there is an emotional part and that is why it gets disproportionate identity.

MCV: This question is for the mobile developer community, do you see yourself more like Microsoft or more like Apple, i.e., with a broad platform strategy versus a vertically integrated platform strategy? And if different how so?

Jim: If you had to say parallel ourselves with one of them? Or who do we compare more closely to? I don't think we are a parallel to either one of them. But the truth is Microsoft is much more of a developer community centric, and they made the PC successful because they had hundreds of thousands of developers who are making tens of thousand of applications and we view and aspire to that. And so did Sun with Java. And we believe that the developer community on the back end services world tailored to the developer of the presentation layer is absolutely the future of that, whereas, Apple is known more as a closed environment. If anything interesting happened, they subsumed that into a product offering. So anyone with a large developer community strategy, that would be the kind of company we would consider ourselves soul mates with in the strategic imperative of getting developers into our world.

MCV:Since you are entering more into the consumer device space, do you think any differently about Apple now. Is it a competitor now

Jim: Well in technology, substitutes abound. Wireless is an open environment. Customers benefit from all the innovations, all the open standards and the value proposition, the alternative basis, and in tech and telecoms substitutes abound. And so everything is a potential cooperator or a potential contender, just depending on how you look at it. So in essence, is a piece of paper a competitor or is a newspaper a competitor to a Blackberry? Or is a game competitor to a blackberry or as you say like Apple. You know you can define it pretty broadly or define it pretty narrowly but the key is to focus on your value proposition in that crowded tech and telecoms space.

MCV: Last question. What advice would you give a young start-up in technology today?

Jim: Trust your original thought. You are trying to look around corners and anticipate what's happening and do original thought. And from that, from the view in the world, there are opportunities going and so you have to form your own thoughts, trust your own thoughts. I think always stay with passion and enjoyment, focus and intensity because that will give you persistence. Sometimes these things are more difficult, sometimes they take longer so, you need to have a focused and energetic approach to it. And the other thing I would say, always, you will have many opportunities where you'll have to make a choice on a short term approach versus a long term approach, or an ethical compromise or not and I found it just being honest and being straightforward and taking a long term approach. You sleep well and it pays rich dividends, and so never lie, never cheat, never take a short term approach...though sometimes it's tempting. But I've seen it and it's not a way to do business and not a way to live. It's actually not very smart because it comes back to you. So whenever one of those reasons is going to motivate you, take a long term, honest (approach)...If you cheat somebody, they basically say this is not someone I can trust. So take a long term, honest approach.

MCV: Thank you very much!

The views of the interviewer or the interviewee do not necessarily correspond with those of the GSMA. For comments email myla@mdi.net.ph.