Unexpectedly violent weather ripped up trees across BlackBerry Ltd.’s home base of Waterloo, Ont. in July, sending City Hall scrambling to protect itself from the millions of dollars of unexpected costs that come with any major disaster.
BlackBerry, which has also been dumping bad news on the city for several years now, delivered another lightning strike Monday as it said it would launch a strategic review that could lead to the company’s sale or privatization.
“We have to prepare for catastrophic damage,” Councillor Mark Whaley said at Monday’s council meeting.
Listeners might have thought the discussion was about BlackBerry, and the fact that it wasn’t shows how the city has evolved beyond dependence on the once-mighty technology company that invented the smartphone.
The company employs about 6,000 of the region’s 30,000 tech employees and is a major benefactor to the University of Waterloo. At its peak, the company had about 9,000 in the Waterloo area.
But there’s a sense of calm, as new chief executive officer Thorsten Heins presided over a relatively stable year after several quarters of frantic scrambling to get a new handset to market.
“In the last year things have really calmed down,” Mr. Whaley says. “Whatever happens at this point, whether it’s a sale or something else, there’s a sense that this management is on top of it and will do what’s best for the company and the community.”
The city’s technology community won’t say any differently. Last year at this time, an economic development agency sent speaking notes to all of the city’s major employers coaching them on what to say if asked about BlackBerry’s role in the community.
“Demonstrate continued confidence in the potential of RIM,” it said, referring to the company by its former nickname when it was still called Research In Motion. “Portray the breadth and depth of the technology cluster and the diverse economy in Waterloo region and its ability to absorb talent.”
Prompted by the directive or not, executives around Waterloo continued to tout the city’s start-up sector, which is creating and funding almost 500 new companies a year as Canada’s largest technology company fights for its life. Many of the companies have been founded by BlackBerry’s castaways, others by students who may once have crossed the street from the University of Waterloo to BlackBerry, but are starting their own companies rather than testing the job market.
“The start-up trend started before any challenges that BlackBerry went through,” said Iain Klugman, chief executive officer of the non-profit Communitech, which houses many of those start-ups in a state-of-the-art incubator wedged in an old tannery building. “There’s a sense of confidence in the world that makes people want to build something of their own. You can get a company up and started with $20,000.”
Michael Litt is one of the success stories. A former BlackBerry employee, he is now in his mid-twenties and running a company called Vidyard that employs 30 and, Mr. Litt says, is on track to hit 80 in the next year. He acknowledges BlackBerry’s importance, but said the city’s tech industry has reached a point where the company’s presence is more luxury than necessity.
“The reality is that there is a ton of value in what they have to offer,” he says. “I don’t know what happens to them, and I’d love to see them be successful. But if that doesn’t happen it wouldn’t have any impact on our business outside of losing them as a sales prospect. It really doesn’t have a lot to do with our success – although having a billion-dollar business in the community obviously isn’t a bad thing.”
Executives at the University of Waterloo may not be as cavalier. BlackBerry’s founders Mike Lazaridis and Jim Balsillie – as well as a host of other senior executives – have donated hundreds of millions of dollars to fund projects such as the Perimeter Institute, a research facility that examines foundational theoretical physics.
Those donations have been critical to the university’s success and heightened international profile, but there is a more practical concern for its executives. The company has accepted thousands of co-op students over the years, which helps the school’s graduates pad their resumes before joining tech companies around the world.
“BlackBerry built its headquarters right beside the campus,” said Kenneth McLaughlin, a history professor at the university. “They built their mine right on top of the gold.”
Back at City Hall, the city council turned its attention away from storms and toward other disasters as it considered whether the city’s fire department should receive a heads up whenever freight trains loaded with explosive materials are about to roll through town.
Councillors didn’t consider the fate of the region’s biggest tech company during Monday’s meeting – some things just need to take care of themselves.
“There are no pre-determined deals and it’s hard to engage in speculation,” Mayor Brenda Halloran said. “This is a very innovative and strategic company and we are 100 per cent behind them as they recalibrate their strategies.”
That said, she did her part to ensure any passing storms do as little damage to the local economy as possible.
“I still believe we should be purchasing and supporting Canadian-made products and services,” she said. “Such as those made by BlackBerry.”