CEO John Chen on BlackBerry’s pivot to cybersecurity, his undying love of keyboards, and why he doesn’t know his stock price

Eight years after John Chen took over as CEO of BlackBerry, the venerable tech giant from Waterloo is still coming about to a new heading. Caught between its own reinvention as an enterprise software company and the headwinds of a global microchip shortage, BlackBerry has had to make some drastic course corrections well into 2022.

In January, BlackBerry announced it was shutting service for nearly all of its old phones. BlackBerry’s anticipated 5G smartphone reboot by OnwardMobility was cancelled. (The Austin-based company has since folded). BlackBerry sold off $600 million worth of legacy IP.

While Chen has admitted that BlackBerry’s transition is taking longer than anticipated, he remains sanguine about the process. He spoke to the Star from San Francisco:

BlackBerry discontinued the service of a lot of its older phones earlier this year. Do you miss yours?

Not quite. I’m using one. I don’t know what I would do without a keyboard, I’ll be honest with you. I do have a Samsung that I was trying out. Typing on the glass, it’s just — I make so many mistakes on a continuous basis. Very stressful. With this one, I just type without looking.

This is the Key2, the secure Android version of our phones. You cannot buy it anymore, unfortunately, because there’s no more production for a while. But just like every BlackBerry phone, it lasts forever — knock on wood. I don’t know what to do when this thing goes. We’ll see.

When a lot of our readers hear “BlackBerry,” they immediately associate it with the phones and nothing else. What does BlackBerry do these days?

We are a security software company. We have two major businesses. One is cybersecurity — protecting bank infrastructure and government infrastructure. The other one is on secure software for internet of things devices. Most of our market penetration is in automobiles. We have about 200 million cars running around the world, right now, using our software for safety reasons, for process control and lane changes.

The auto industry is really plagued with chip shortages, as is everyone else. Is that a worry for you as BlackBerry moves into that market?

I’m quite comfortable in telling you that we are the number one market leader in that software for auto. We’ve been in there for many, many, many years. Not being in this market is actually not an option. We provide software for 24 of the top 25 electric vehicle makers. We’ve got 200 million cars driving around with our software. We can’t really just say, “Well, it worries us and I’m not going to be in the market.”

That said, we saw a pretty big impact from COVID in early 2020. The automotive companies — we call them the OEM — stopped production of cars around the world. It really hurt that. And then, as the COVID pandemic eased up, we recovered, and then we had the chip shortage. We are affected. However, having said that, we have been beating our numbers in the last few quarters — particularly the last quarter — because we have a lot of big design wins.

We announced not long ago that we won the contract for all the Volvo commercial cars, trucks, and so forth. The most recent one we won was BMW. The design wins gave us some level of revenue that was offsetting the reduction of production due to the impact on the supply chain. Touch wood that we’re doing OK and that the fundamentals are very strong.

BlackBerry phones were renowned for their security. What’s it been like translating that experience into cybersecurity? Has there been a learning curve?

I think the fundamentals are quite similar. The customers that speak to us and engage with us now expect security from us in software, rather than a handset. We’ve always been known to provide a secure and reliable system. But now, we’d say you could put it on anybody’s handset but have the same reliability you always enjoyed and expected of a BlackBerry. People buy that.

However, from a technology point of view, we do have to step up in a couple of different areas. We used to just be operating systems. In order to supply software on everybody’s stuff, we not only need to know about operating systems — we need to know about middleware, applications, AI technology, about much broader areas. We have built a lot of our software ourselves, but we have also bought a lot of companies and integrated them. They had the know-how we actually needed. I think what we needed to change was moving up the stack and building on our basic security expertise. We didn’t start from scratch. We had to come a long way.

BlackBerry’s faced a bit of criticism about its business plan — that there isn’t a lot of transparency on how you’ll grow the company. What do you say to people who say that?

Sitting in my shoes, obviously, I would think that’s unfair. People who make the criticism probably think it’s very fair. Eight years ago, we had to decide how to survive. Five years ago, we had to decide what the future looks like. In 2016, we decided that hardware and phones could not be our future. But we had to move up the stack.

We went from a consumer hardware business of making phones, to an enterprise software business that provided software infrastructures. Everything changed. We went from manufacturing to a software life cycle development. We went from distribution through stores into enterprise partnerships where we’re dealing with banks and the government directly. We had to rebuild everything from scratch. Thank goodness we’re well on our journey. We’re not done yet, by any stretch, but we’re well in our journey.

So, sometimes, we cannot be very specific because we’re still figuring it out ourselves. It’s not a lack of transparency. It’s a change from hardware to software. It’s consumer to enterprise. I don’t want to make everybody feel like we’re heroes or anything, but there was a lot of changes — and we learned a lot along the way.

OnwardMobility decided to not go through with its 5G compatible keyboard-equipped smartphone about a week ago. I saw reports that you had a change of heart around putting the BlackBerry brand on another smartphone. Is that true?

I can’t comment on that. I’m going to try to figure out where to get my next phone — it would be nice if it has a BlackBerry keyboard. But I’m not making any announcement. In the case of OnwardMobility, it is a good partner that tried very hard, but it has taken way too long. For a whole host of reasons, we believe it is in the best interests of the company and the brand that we do not continue the licensing.

They worked very hard. I cheered OnwardMobility on because I needed their product — personally — but on the other hand, I do have to protect the BlackBerry brand. If it is continually delayed, and if it is no longer competitive when it comes out, that’s a bad thing for our brand. So, we decided that, unfortunately, we should part ways.

You plan to sell $22 million worth of BlackBerry stock over the next year. I understand part of the reason you hit your performance targets was the meme stocks craze that hit BlackBerry last year. What was it like to watch your company’s stock triple in price within a couple days — knowing your bonuses rely on that?

You can never expect anything like that. When I made an agreement with the company and the board, the payout only comes out with a pretty high stock price. At the time that contract was signed, in 2018, nobody imagined there would be this so-called “meme stock.”

What was it like? I just had lunch with a banker. We were chatting about this, and he said to me, “You’re pretty cool about these things.” One thing you need to know about me — I don’t actually look at our stock price. I actually don’t know where my stock price is at right now. To me, my number one job is to build the fundamentals of the company stronger, not the short-term stock price. The short-term stock price has nothing to do with anything. It really is — do you have value? If the foundation is good enough, could you last for a long time? That’s what I worry about.

I worry for our customers. I worry about our employees, whether their paycheque is safe to the extent that I could provide that. We’d all love a high stock price — it would be rewarding to the shareholder — but it will come. It will come as a result of execution. So, I felt nothing.

You said you don’t watch your stock price, but it’s a big part of your compensation.

For the eight years I’ve been here, I have never sold one share outside of tax withholding. To me, my long term is long term. Eight years and I haven’t sold a share. In fact, I have bought shares on the open market. I’m not a short-term trading type of person. Yes, it is part of my compensation, but I figured that if I build enough value with a company, those shares will be worth a hell of a lot more than today.

Why sell now?

BlackBerry is a lot smaller than it was when you took over in 2013. Do you still consider your tenure a success?

When I took over — without being dramatic — we were on the verge of going out of business and collapsing. BlackBerry is smaller, but we’re alive and kicking. Would I want the company to be bigger? Absolutely.

I would admit that the process of change has been quite extreme. It’s taken longer than I expected. But we are definitely making progress every day. We’re in two very high growth markets — cyber and IoT (internet of things). We have a position in each market that isn’t just trivial. Everybody knows QNX, the brand (the BlackBerry OS used in the majority of electric vehicles). We have a very strong position. We need to work out a few things and then, we’ll be growing.

The most important thing is consistency and making sure that the financial underpinning of the company is strong. This year, we have spent cash and carried a loss because we’re making a big investment in both of these businesses. We will continue to do that until we see solid growth. Whether I’m a success here, or not, for the last eight years — I’ll leave it to the audience to decide.

If I had to defend the team, I think we’ve taken something that was unfortunately on its dying breath into a strong and kicking company. Yes, we would want it to be a lot bigger. No question.

This interview has been edited for length and clarity.

Brennan Doherty is a Toronto-based writer. His work has appeared in the Toronto Star, VICE World News, TVO.org and Maisonneuve. Follow him on Twitter: @Bren_Doherty