Getting it completely wrong
Sitting on the plane from Geneva to London this Monday, squeezed against the window of my overcrowded Airbus by a huge Mainland Chinese guy, I was reminded of how comically fallible we investors can be in our most strongly held beliefs.
So here I am, forced to consider the East-meets-West equation in a new way, and attempting to read a Financial Times update on RIM / Blackberry's performance in recent years ahead of their results announcement. Seeing another sign that RIM continues to shine, I saw myself sitting at a public markets conference back in 1999 and listening to the RIM team pitching their wares and thinking, with absolute conviction, "these guys do not have a chance in hell". What struck me at the time was how cobbled together their server architecture and security model seemed to be, how far from industry best practice they seemed to be. I thought "first gen company that will never make it". Here were my "strikes against" as I remember them:
- device, device software AND server infrastructure: they will never pull it off ! My perception was of a clunky server solution stuck on a decent device, but a device whose main claim to fame was a highly thumb friendly keyboard. Think first gen "Apple vs Microsoft", and Apple's ill fated decision to not partner up with Linux (doh!) UNIX and stick with proprietary hardware.
- direct selling to enterprises: they will never scale it ! Think of a more horrifying business model than needing carrier partners but selling directly to enterprises, one server at a time, having to crank that demand wheel all the time. Remember at the time we still mostly thought carriers could actually sell value-added services to enterprises :-)
- clunky device and terrible phone: it will never work in Europe ! from the continent that loved pagers, here was a device that would not really ever make it through the European market.
- In one sentence from Disruption Group: "BlackBerry started in 1999 as a non-Windows compatible, non-Palm compatible, non cell-network compatible, non-phone, non-text message, non-web, e-mail only device. It was inferior to mainstream cellphones in most every way… but it did one new thing really well by solving a new problem: It gave access to instant information anywhere. And the technology was improving."
<— Remember the RIM ?
So how wrong can you be ? It turns out that a company controlling the device and the server could actually do a few things well, such as deliver on the fundamental requirement of its user base (absolutely reliable email access on the move) and getting the rest right over time (such as the phone).
My lesson from this is that what may seem to be sound strategic thinking from a VC standpoint (absolute focus on one core area of expertise, search for extreme scalability, natural preference for software and "atom-free plays") can lead you to overlook the best companies, those that go all out to crack the user's need in an imperfect but perfectly appropriate way. And yes, we passed on TomTom too…
There was also somehow a lesson about empowerment. I really did not envisage "thumb speed contests" between BlackBerry cradling investment bankers, but this is exactly what happened. Users made this device their own, including its perceived weaknesses. From folks using Skype as a baby monitoring device to families loving Ikea despite the fact that transport and assembly (the most expensive parts of furniture production) are on their dime, there must be nothing more satisfying for an entrepreneur that seeing customers appropriate your product like that.
Another useful reminder that scrutinising user behaviour and acceptance is the best yardstick for determining which companies will succeed, rather than one's grand opinions about long term market evolution or deep theories about the future of tech !