Stepping down was a hard decision, but the ‘right’ one: Lazaridis
By Rose Simone, Record staff Fri Jan 27 2012
WATERLOO — It was a day that had been coming for years and Mike Lazaridis knew it had to happen.
But as he gave up his co-chief executive officer position at Research In Motion, the company he founded in 1984, it packed an emotional punch.
“It was very hard,” Lazaridis said in an interview with The Record this week. The company announced late Sunday night that Lazaridis and co-chief executive Jim Balsillie had stepped down and passed the torch to chief operating officer Thorsten Heins.
Although they have positions on the board and Lazaridis will chair the board’s new innovation committee, it means they are no longer involved in the day-to-day operations of the company they built.
In the logical part of his brain, Lazaridis said he knew, beyond any shadow of a doubt, that handing over the reins to Heins, who is now president and chief executive officer, was the right thing to do at the right time. “I absolutely know he will take this company to new heights.”
But it wasn't easy.
“Stepping aside, as a founder, after 27 years, I would be lying if I said that wasn't emotional for me, and for my whole family,” he added.
Asked if he has any regrets, Lazaridis cited only one. “Working so hard, with a 24-by-7 workload for so long, my biggest regret was not having enough time for my family. I need to correct that over the next few years. My kids have not gone to university yet, and so hopefully, I will correct that before they leave,” said the 50-year-old.
The change in leadership came after more than a year of enormous pressure.
RIM is still profitable, and has 75 million users worldwide, but as the iconic BlackBerry lost market share to the more popular iPhone and Android, RIM’s stock price plunged and investors called for blood.
They wanted heads to roll. Some even called for the company to be split up and sold for parts.
In the midst of the storm, Lazaridis is registering his vote with his pocketbook. He is buying an additional $50 million in company shares, on top of the shares he already holds. “I am a major shareholder,” he said.
“This company has a strong balance sheet of $1.5 billion. It has strong sales of over $5 billion a quarter. This is a strong organization with a strong global brand, an iconic product and a strong future,” Lazaridis said.
Whatever the future brings, the legacy will remain.
It started with Lazaridis and his Windsor high school buddy Doug Fregin in a tiny 500-square-foot office on the top floor of a strip mall on Erb Street in Waterloo in 1984. It became a global company that now has more than 17,000 employees, about 8,000 of them here in Waterloo Region.
Beyond creating a global company, Lazaridis and Balsillie, who joined RIM in 1992, have poured hundreds of millions of their own money into creating institutes such as the Perimeter Institute for Theoretical Physics, the University of Waterloo’s Institute for Quantum Computing, the Centre for International Governance Innovation (CIGI) and the Balsillie School of International Affairs.
These institutes are now known all over the world, and together with the BlackBerry, have put Waterloo on the map.
But when he was 23 years old and starting Research In Motion, Lazaridis had no idea how big the company would become.
“I think my wife (Ophelia), who had been a friend and then later we started dating, somehow saw more in it than I did,” Lazaridis said. “I just thought it was fun.”
At their high school in Windsor, Lazaridis and Fregin were teenage boys who liked tinkering with wires and tubes in the shop. “We would be taking tuners out of televisions and converting them into ham radio equipment,” Lazaridis recalls. “So we were getting a sense of transmitting information and then we were building computer processor units ourselves.”
In fact, just as Lazaridis and Fregin were getting really excited about computers, a teacher remarked: “You know, whoever puts computing and wireless together will really create something special.”
That was truly visionary, Lazaridis says now. “He saw this, when, 35 years ago?”
Besides his teachers at W.F. Herman Secondary School in Windsor, Lazaridis credits the University of Waterloo, which he says provides a strong mathematics and engineering foundation while introducing students to the world of digital signal processing, computing, networking and wireless data.
But it would be a long time before wireless e-mail could happen. Today, Research In Motion is known for the BlackBerry, but RIM was established long before it made its first BlackBerry.
For many years, the company engineered other devices and services, starting with the Budgie, a video display terminal used for store advertising. Then, it achieved fame for something completely different. It won an Oscar and an Emmy Award in technical categories for its DigiSync Film KeyKode Reader, an electronic film counter that made finding specific footage much easier, and was used in editing numerous popular television shows and movies.
Through it all, the fascination with the wireless transmission of data stayed with Lazaridis. In the early 1990s, RIM worked with Swedish high-tech giant Ericsson on the Mobitex wireless system of transmitting data and e-mail between computers.
“We knew this was the future. We could see it. All we had to do was just keep investing in that future long enough to intercept it,” Lazaridis says.
They put everything else aside and created the very first interactive pager device in 1996. The first BlackBerry e-mail device as we know it hit the market around 1999.
After that, RIM’s rise was meteoric. During the 9/11 terrorist attacks in the United States in 2001, when cellphone networks were down, the BlackBerry worked, and newscasters far and wide praised it. Oprah Winfrey announced it as one of her favorite gadgets of 2003.
In 2008, RIM was briefly Canada’s most valuable company of any kind, with a stock of value of $70 billion. It was worth even more than the banks.
Then there were the troubles, including the five-year patent battle with NTP Inc. that cost $612.5 million US to settle in 2006 and the Ontario Securities Commission fines over backdating of stock options in 2009.
Yet the biggest blow to RIM was the sheer force of competition, particularly in the years that followed the launch of Apple’s popular iPhone in 2007.
Despite that, Lazaridis remains confident.
“We have always had competition,” he said.
Lazaridis said he believes in the company’s products, and looks forward to the next generation of products. “Would I be buying $50 million worth of shares if I didn’t?” he asked.
In recent years, the company has made important acquisitions, including QNX Software and Astonishing Tribe (TAT) last year and Torch Mobile and Certicom in 2009, all in order to be able to launch the next generation of the BlackBerry platform and products.
“The fact is, we have met every challenge we faced to keep this company going. It has excelled,” Lazaridis said. “We have built an incredibly strong, talented and experienced workforce. We have built a strong and experienced leadership team. So we know they can do it. We know they are ready. Going forward, it is up to them, but everything they need is there.”
The love of technology and engineering was what got him into the business. But he said he also enjoyed the customer visits and getting feedback from customer advisory council members as products were developed. “We would propose ideas to them and they would give us feedback about what works and what would work better. I cherished those meetings.
Even though he is no longer running the company, he can still say, “I love the company. I love these employees. They are my extended family.”
He also feels strongly about the future of the community and the country where he has been a force behind the future of scientific progress. He’s donated more than $150 million to the Perimeter Institute of Theoretical Physics and more than $100 million to the Institute for Quantum Computing.
“People ask me, ‘Why did you want to build a physics institute in Waterloo?’ The obvious answer is: I live here. I decided to raise my family here. I feel safe here,” Lazaridis said. Besides, the University of Waterloo has the world’s largest mathematics and computer science faculty, so this was the obvious place to put it, he added.
Theoretical physics is special to him. “Understanding physics well is what has allowed me to steer the company over the years into the right technologies and the right markets,” he says. “It is not the only thing that drives you forward, but it forms a foundation.”
Moreover, it was actually the limitations of the technology today that inspired him to invest in physics. “I realized that our current understanding of reality was limited, and as long as it remains limited, we are limiting our options in the future,” he said.
Although last weekend’s announcement that Lazaridis and Balsillie would be stepping down was a shock to many, Lazaridis said there has actually been a four-year process of having Heins taking more and more responsibility in the company.
Heins, a 54-year-old native of Germany, was recruited to RIM in 2007 after 23 years at German electronics giant Siemens. Over the last four years, he took on more and more responsibility to prove he was the right person for the job, Lazaridis said. Before moving to the CEO’s post on the weekend, Heins was the chief operating officer responsible for product and sales.
“Bringing someone in from the outside would have been a guess,” Lazaridis said. “That would have been like going back four years and saying, ‘Well, we think he is a star but now he has to prove himself.’ He has proven himself.”
Lazaridis said the succession planning was started with the knowledge that he and Balsillie would eventually move on. Building an executive team and recruiting good people is hard. They need to know that there is a career plan for them, he said. “If we had created a glass ceiling, it would not have been anywhere near as attractive.”
With the company launching new products and a new platform later this year, this was the right time to do it, he said. “This was the perfect opportunity, and we knew that Thorsten and the executive team were ready.”
Although it was sad to let it go, Lazaridis said that in every major company there comes a time when this has to happen. “Founder-based companies, if they are successful, they get to this point.”
He will take on a new role as vice-chair of RIM’s board and chair of the board’s new innovation committee, but he said he wants to be very clear: “Thorsten is in charge here — there is no doubt about that.”
Lazaridis still hopes to be a mentor to young entrepreneurs who aspire to follow in his footsteps and build the next big Canadian technology company.
“Don’t hesitate,” he says to the next generation of entrepreneurs. “If you fail, try again. You can change course, you can change paths, and you can change strategies, but never give up.”
He also encourages Canadians, as a whole, to believe in this country. “I think the biggest mistake we make as Canadians is underestimating our abilities and underestimating the great institutions that we have built.”
“It is a cliché but it is true that the No. 1 renewable resource we have in our country is our people and their education, and their intellectual abilities and their training. I think that as long as we focus on that, they will do the rest.”