Speaker 1:
From the Library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership, and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSE and at ICEs, exchanges and clearinghouses around the world. And now, welcome inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
Sometimes I start this show by dating myself, and here it goes again. I was pretty early to mobile phones. In the 1988 presidential campaign, I carried a Panasonic contraption over my shoulder that had a handset, connected to a cord, connected to a transceiver, connected to a big battery, and on my belt I carried what was called a sky pager. Anyone could dial an 800 number, 800 SKY PAGE for convenience's sake, key in a telephone number to display, and that number would show up in a red or green backlit digital readout on a tiny LED screen. That was the number that I then had to use my bulky Panasonic contraption to call the person back. It would be the carousel of progress, as Walt Disney might say, of this advance over the payphone and the fax machine.
At the White House in the 1990s, we had it even better, more secure system. The good folks at Motorola supplied everyone on the staff with an alpha numeric pager so we could actually see words instead of just numbers and installed a big brick of a device with a keyboard that we would call a Page Boy in every staff office. No matter where we were, anywhere around the world, the encryption keeping the typed out messages hammered out on that device secret to everyone but our minders at the White House Communications Agency. Then one day toward the end of the decade, my friend Mike Feldman, who worked for the number one geek in the administration at the time, Vice President Al Gore, showed off his newest toy that got my mouth watering, not larger than a bar of soap with a few lines of LED screen, a track wheel, and a typewriter style QUERTY keyboard.
This device from a Waterloo, Ontario company named Research in Motion allowed two parties to communicate in text to one another as long as their thumbs were nimble enough to do what 10 fingers had done ever since Christopher Latham Sholes of Milwaukee, Wisconsin invented the typewriter in 1867. Yes, the Blackberry. This is how the Wall Street Journal reported on the company's growth in the spring of 2005. I'm going to quote for you here. "Every day more than 100 million emails sent from across North America course through a data center hidden somewhere in the small university town. The location, kept secret for security purposes, belongs to Research in Motion, a newcomer that has struck gold with its Blackberry wireless email device." This unlikely spot is now the epicenter of a battle between some of the tech world's biggest players. More than 42,000 organizations have a Blackberry email server and 2.5 million people keep the gadget within arms reach. Oprah Winfrey, it was said, was one of them. That was Blackberry's past.
Our guest today, John Chen, the CEO of Blackberry, that's NYSE ticker symbol, BB, has led and radically transformed the company since 2013, changing it through his leadership from a struggling device company. It's now out of the device market all together, into a preeminent cybersecurity software and services business that's helping companies, organizations, and governments secure their digital and encrypted assets in an increasingly connected and vulnerable world. Our conversation with Blackberry CEO John Chen on Blackberry's present and its future, the state of cybersecurity and his career as a turnaround specialist, it's all coming up right after this.
Speaker 3:
Connecting the opportunity is just part of the hustle.
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Opportunity is making the dream of home ownership a reality.
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Opportunity is setting a goal.
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Sometimes the only thing standing between you and opportunity is someone who can make the connection.
At ICE, we connect people to opportunity.
Josh King:
Our guest today, John Chen, is the chairman and CEO of Blackberry, NYSE ticker symbol, BB. Prior to joining Blackberry, John served as the chairman and CEO of Sybase, Inc. leading to its successful acquisition in 2010 by SAP. That's NYSE ticker symbol symbol SAP. Welcome, John, Inside the ICE House.
John Chen:
Thank you very much.
Josh King:
As we record today, you're going to be heading into the boardroom for what I think is going to be your 12th bell ringing ceremony. Does the experience ever lose its spark and how do you decide who's going to be in the podium with you?
John Chen:
Never. Never. This is the most amazing experience people could have. You see it on TV every day, at least on trading days, all around the world and it just feel very different every single time. It feel like real, it feel like the very first time. I extend the invitation to my direct reports and that's about it because you can't go beyond that and there'll be too many people and the people may be offended, but that's the rules. And we don't have 14 of us here today.
Josh King:
I listened to your podcast with John Chambers, his conversation with you. You relayed a story where your turnaround of Sybase giving birth to a phoenix, I think was exemplified by your ringing the bell of the New York Stock Exchange bringing Sybase back from the death in some respects. What was that experience like for you?
John Chen:
That was a great experience because there's a little bit more history behind that. When I first started at Sybase was 1997 and Sybase literally was at its last breath. At that time, two articles very prominently came out on Sybase. This is, of course, after I joined already. One article was by Forbes Magazine and it literally say, somebody tell this guy, my picture's there, somebody tell this guy that turnaround of software and technology company, it's a myth basically. It can't happen, it won't happen. And they go into all the details analysis of why Oracle and Microsoft has already pretty much took the market and so forth. Then the other article would say, very well regarded analyst firm Gardner. And Gardner put a likelihood to fail at 0.7. Now, 0.7, one, is something that already happened. 0.7 pretty much is soon to happen. That, of course, impacted the buying decision of our customer base and that was quite dramatic in a way.
So fast forward, I remember one time I was here ringing the bell and we were doing quite well at the time, and thankfully, a new article came out on the same Forbes magazine and said something about rising from the ashes, the phoenix and all that. So I felt, obviously, very proud at that moment. And for the team to be able to deliver this, that's quite some, that's kind something.
Josh King:
And you and the team on the podium ringing the bell is the perfect embodiment of that.
John Chen:
Absolutely, absolutely.
Josh King:
So going back to what I talked about in the introduction, if that was 97, were you an earlier adopter of the Blackberry? Do you remember your first Blackberry?
John Chen:
Very much so. Like most people, when I made manager, I was given a Blackberry and at that time is really a status symbol, meaning that if you're not that important they won't give you a real time device so they could reach you or send you messages. And the old pagers, that you pointed out, it wasn't even a phone then, it was a pager. So it's kind of the management rank gets this, not everybody else. This was like, I remember I kept the box and everything else. Anyways.
Josh King:
Still have my original and it's in my trophy case at home and it's next to maybe my iPhone One and my Blackberry One.
John Chen:
Oh God, yes, that's the moment. And everybody remembered that and I was, obviously, very proud of it.
Josh King:
So before we really dive into the story that we're going to be talking about today and really why you are here for the security summit, we did a show last week with Dwight Chapin on the 50th anniversary of President Nixon normalizing relations with China, his trip there. Yesterday, I spoke with Deputy Secretary of Treasury, Wally Adeyemo, about his recent visit to Asia Pacific and the issues that are coursing through there. You have chaired the US China Policy Advisory Roundtable for the Centers for Strategic and International Studies, also served on the board of the National Committee of US China Relations since 2012. So John, I watched some of the video coming out of the 20th National Party Congress in Beijing over the weekend, president Xi Jinping appointed to a third five-year term. Where do you rate the status of Sino-American relations here at the end of 2022 moving into 2023 and its implications for us?
John Chen:
Interesting, you talked about the last 50 years earlier, we're probably at the lowest point in the last 50 years. And the part of the reason is both sides, to the best of my knowledge, doesn't have people talking who advocate a better outcome today. And that's troublesome. It's kind of like if you and I are in disagreement, but we are still chatting away about how to improve it, maybe compromising then, at least, you have a hope. At this moment in time, again, I'm not an insider, but when I ask the questions, who are the constructive forces that wanted to make things happen on both sides, I normally get a blank back. And so I would say this is troublesome.
However, having said that, I think the people, Congress is now become history, new leadership, get to establish their new agendas and I'm sure that you know US China relations, the Taiwan situation, the trade situation, the basic economic situation, the addressing of the COVID pandemic and all that are on top of the list. And now we're going to have to see what the attitudes going to be. This is a much longer term, much broader issues. And it also affects our allies too.
Josh King:
Yes, certainly.
John Chen:
So I'm hoping that after that, both sides say, okay, we have a new set of leaders, new ideas, a new attitude. Let's hope that it connects in some ways. On this thing, I'm kind of a half full kind of guy, so I'm just hoping for that conversation to start.
Josh King:
That's really what Nixon said. He said 50 years from now, in 1972, we will be adversaries, so we have to at least be able to talk to one another.
John Chen:
Absolutely.
Josh King:
Talking about talking to one another, John, the NYSE was recently proud to host the Cybersecurity and Infrastructure Security Agency and also to mark Cybersecurity Awareness Month. But we also do a lot more in the space, including supporting Blackberry today as it hosts its annual security summit right upstairs at Freedom Hall. Now, due to COVID-19, this is a annual event that you would've held here every year, but it hasn't happened here since 2019. How does it feel to get everyone actually back together in person and why is that important?
John Chen:
People are a social animal, as you know very well. It deepened the relationship much more than on a Zoom or a WebEx or a Team, whatever the media is. Those are productive tools that are very specific. You don't build a relationship. You and I'm not going to get on a Team or call and then start saying, "How you doing? What could we do together?" We will be very specific. And I think in the last three years we have gone through that whole motion and attitudes. I was with a bunch of customers this morning, our executive advisory board. It was great. You could tell from everyone facial expression, they're happy to be here. They could speak freely and we could have a good interchange of ideas. So people are very happy to be here. Although we have limited the attendance, by the way. We're trying to figure out how do we do a classroom-style with every other seat empty, just in case on a cautious side. So I'm looking forward to continue expanding this on an annual basis.
Josh King:
So I walked downstairs, looked around, the setup is all ready to go. It looks fabulous. The team is presenting findings from a study of supply chain cybersecurity. The headline, from what I've read so far, is that 80% of supply chains were exposed to cyber attack in just the last year. What does that mean for companies, clients, and even broader, national security?
John Chen:
I just want to say that it doesn't matter how much money and effort that we have put in, the country, the world have put in in managing cyber threats, the numbers and the challenge is really out there and in a very big way. So our study review that in a supply chain, particularly in the globalization, we are all dependent on each other nation to nations. We actually don't know most of the time where the real sources of all these things are because they start integrating their supply chain. And so it's not surprising 80%, actually, I would say the other way around. I think it's more surprising that 20% we actually know from top to bottom where all the supply chain sources are. So there's a lot of work to be done. The market is, obviously from a business perspective, lots of opportunity. But on the national security level, we better get at those issues quickly.
Josh King:
On the national security level, as you said, the challenges are out there in a really big way. This week Blackberry announced that the NATO Communications and Information Agency has awarded cybersecurity accreditation to Blackberry's SecuSUITE for global use in official NATO secure communications. There have to be a lot of people, John, around Brussels trying to penetrate NATO's networks to figure out where the next arms shipments to Ukraine is going to land. How do you harden a communications network like NATO and all those countries that are involved?
John Chen:
The secret sauce is our encryption and the key generation of that. We have the ability in our algorithm to generate over a billion combinations of keys. So if you want to eavesdrop into our customers, you're going to have to have a pretty sophisticated quantum computer to address that. And by the way, that's assuming your phone call will take that long. So we're very proud of the certification, the ATO authority to operate and it means a lot to us.
Josh King:
We've spoken to a number of CISOs and other cyber experts who said that it no longer is enough to build a moat, which you think is the right thing to do. Let's surround ourselves with a protective watery canal that no one can get over and hope that the bad actors are going to stay away from that canal. How does Blackberry's Cylance AI-based cybersecurity portfolio give multiple ways to detect, repel, and monitor the threats?
John Chen:
I think this is really more about paying attention at all time. It's a very common term now out there called zero trust. Zero trust is really not a product, it's a process and a mindset. So now the difference is what kind of product do you apply when you have that mindset. We do continuous authentication of everything. It just continues. We continues to check whether you are still who you are after you lock into a session, whether your behavior is the same. We could even tell, in some cases, whether you're left-handed or right-handed and then determine whether there's anything out of the ordinary and then make that prediction. And of course, we use machine to address it. This is a big deal, because as you all know, the surface of attack is increasing with the IoT in a very dramatic fashion. The sophistication of the people who attack are getting down to hacker for hire, state sponsored, pretty sophisticated.
So if you use a manual process, a whole bunch of the OTV movies and stuff, everybody sit down from a monitor and looking at the monitors and try to figure out what's going on, that absolutely no longer work. You need the machine to go figure out, this is where the AI and ML and all that buzzwords come in to figure out whether you are actually having an event that you shouldn't be having. And a lot of these attack are Trojan deposit four years ago. So there are the real-time issues and there are the enemies already in your camp issue. It just haven't been woke up yet.
And so what we do is we have mindset and algorithm to address both situation and a constant vigilance of looking out for things that doesn't look like it makes sense or redundancy or things that are there for no particular reason and nobody could explain it, that kind of thing. And we err on the fact of being overly cautious and we will inform our customers and address it.
Josh King:
And sometimes, John, it takes more than one company like Blackberry and one customer in the private sector to get the job done. You really have to sort of involve national security apparatus to help and create the kind of partnership that's needed. Let's listen to a recent bell ringer here at the New York Stock Exchange. It was the Director of the Cybersecurity and Infrastructure Security Agency, Jen Easterly, talking to my colleague, Judy Shaw.
Jen Easterly:
So the only way we can do this is for the government to work hand in hand with the private sector. It's why at CISA, we established what's called the JCDC or Joint Cyber Defense Collaborative. You can remember it because it's like ACDC, but with a J. I'm a big eighties rocking roll fan. So I had to come up with something that sounded like good rock music. But essentially what it does is it brings together on one platform the entire federal government cyber ecosystem, so CISA.
Josh King:
Like an eighties rock band, John. JCDC also includes a lot of companies including Blackberry. Why did you decide to join the new agency and why are public private partnerships so important to the cybersecurity?
John Chen:
Oh, absolutely. The issues are so broad and so dynamic. The issue is not about fixed issue. The issue changes on a regular basis. In addition to that, obviously, the ransomware attack of our infrastructures are happening daily by the minute, by the second. Jen, by the way, is doing a fantastic job. Private sector company seldom praise public sectors, because we all look at them as, "Oh God, another set of rules", but they are really doing a great job and so is the National Cyber Center. So because of the broadness and the dynamism of the issue that we'd have to deal with to get ahead of the attack, to get ahead of the danger, this has to be a national movement and all international. That's another dimension of that. I mean I remember speaking to the APAC group most recently and I wish that they were organize it in such a way that they could also share the cyber attack information and incidents US is leading.
But I'm sure if you ask Jen, Jen would tell you it's still not fast enough, broad enough. And I think the EO or the executive orders, sorry, the executive orders that President Biden signed, it's a good order. Recently we got the dates of implementation, which is a big first step and for us it's going to be June of next year that we need to certify and attest all the supply chain security. I do believe there's a big job. I do believe it's a private public sector job. I wish that it could be a international job, but he will get there.
Josh King:
John, before we get too deep into the story of Blackberry and what is happening at the Exchange today, I do want to maybe pivot a little bit and go back into your background for our listeners. Your parents originally were from Shanghai, but fled to Hong Kong where you were raised. How have your parents influenced your career and did you ever decide to think about going into accounting like your father?
John Chen:
Yes, my parents escaped, at that time, the bamboo curtain and so went to Hong Kong. And how it influenced, I was born and raised there under the British. My first passport is actually a British passport. I witnessed, when I was growing up, very committed people struggle, struggle to make a living, struggle to make a life. And that rubbed off on me and taught me that nothing is given, nothing is easy. You shouldn't complain, you just should go do. And because you could complain, there's no use, nothing will happen. So I could see that and I see that all around me. Growing up rather poor is actually not a problem, it's actually a blessing.
The other good thing about it's most people around you is also poor because the background is the same. Their parents are all immigrant. They have study, they have education. They study Chinese in a English world where my father's accounting certification was not recognized so he couldn't be a CPA, so to speak. I'm very fortunate. I'm very fortunate to appreciate the journey and the accomplishment. So anyway, I think that's the most influential to me.
Josh King:
I mean, appreciating the journey, John. Let's talk about that journey a little bit because the 50th anniversary of Nixon's trip this year, next year will be the 50th anniversary of your moving to the United States. How did a conversation with Brother Michael after a soccer game lead you to fulfill those dreams of getting to the Ivy League?
John Chen:
For the audience here, Brother Michael was my college advisor in my high school. I thought it was a good conversation and changed my life at that time. Of course, I have to be truthful, honest, there's a little part of me at that time just felt like, I'm doing all these things well for nothing, kind of going through the motions and going to the library and go figure out from the Princeton guy who are the best school to go to, and so forth. But on the other hand, I have enough respect for Brother Michael that I really do need to go check it out, so to speak. I am so fortunate. It's always about timing of things. I was so fortunate that I was there and ran into him and started the motion and allow me to broaden my horizon and be in the United States and stay here and love the country and grew my family and so forth. So it certainly changed my life completely.
Josh King:
How was Brown University, Providence, Rhode Island, why there and then headed to California Institute of Technology?
John Chen:
So that goes back to Brother Michael's conversation. Brother Michael's conversation have two messages in there. Number one, it's okay to stay in Hong Kong and go to university there, but I should expand my horizon. Particularly, the study that I want to do is in math and engineering and science. That's number one. Secondly is that I wasn't good enough to get into a Ivy League from Hong Kong, so he came up with a strategy or an advice, why don't I come to the United States and finish my high school in a prep school? And accordingly, at the time, and I don't know if it's true anymore, that prep school is the feeder school.
Josh King:
Yeah, sure. It is.
John Chen:
So I went to a prep school where all the teachers are literally from Ivy Leagues. I mean they're from Dartmouth, Columbia, Princeton, Brown. My English teacher, which of course, is my weakest discipline was from Brown. So she wrote a fabulous recommendation. I got in. I got into a number of Ivy Leagues. I got in and then I was doing my tour of school to decide where to go to. She wrote ahead to the people, and I don't know which office that was, but I was having a royal treatment at Brown. And I also ran to Brown on the day that it was sunny. People were lying on the quad, so to speak. Big view and flowing, crispy, dock jumping. And I said, "Wow, this got to be a place to live." So I went to Brown for that reason.
Josh King:
And then you headed to California Institute of Technology. And then John you joined Unisys, ticker symbol from the New York Stock Exchange, UIS, as a design engineer. How did your career progress from there?
John Chen:
I actually end up joining from the very lowest rank, not for very long. I was a manufacturing engineer fixing the design problems that the engineers, that design engineers put in. So anyway, long tedious story. The one good thing about Unisys at that time, Burroughs before they came together with Sperry. They have a executive training program where they identify what they believe as the kind of the high potentials. And they may be 30, 40 of us around the company every year. And they put you through a organized multi-disciplined rotation of jobs. For example, I work six months in manufacturing, six months in sales, and six months in whatever the discipline that you need to expose yourself to, the major one. And I was fortunate to be identified as one of those people. And so they manage your career very extremely well. And that's how I end up as a design engineer and how I end up in management.
Josh King:
It's a great system, a great infrastructure for nurturing up and coming executives, but at the end of the day, there also have to be sort of individual human mentors that must have said, this guy, Chen, he has something. I'm really going to help him. What are your sort of memories of particular people who helped you get on the right path?
John Chen:
I have a number of them for all my career. In the beginning of time, the mentors are usually kind of a skip level management, kind of look at succession planning and say, oh, this guy's name keep popping up. So it was not that difficult to be identified at that time. And the good thing is, the management in the company has a very open mind. At that point in time, I was also dealing with some racial stuff, but it was quickly put away. And I think there's also another attitude, another thing is when I face the racial stuff, I don't let it get to me to the core. Of course, it's unhappy, of course, I'm mad about it, but on the other hand it doesn't affect, I don't become a bad attitude person. So I think that helps, the attitude or the way you deal with it helps a lot.
Josh King:
I read that you learned that there was this opportunity, this company called Sybase over a round of golf. Why did you decide that taking on a failing business was going to be the right step for your career?
John Chen:
Well it's actually, it's not over round of golf. I ran a company called Pyramid Technology, sold it to Siemens and up in Siemens AG in Munich and [inaudible 00:29:27] for a couple years and I decided to return back to the Silicon Valley. And it was over a dinner honoring, at that time, the chairman of Freecom, Eric [inaudible 00:29:41]. And in there, there's a whole bunch of venture capitalists, which, one of the board members was at my table and then asked, "What's your plan? Do you come back?" I said, "I don't have any plan." He said, "Hey, I have a company that needs some leadership. Would you mind taking a look at it?" And so I said, "Sure." The CFO at the time of Sybase happened to be my golfing buddy. So I got a lot of inside information from him. I said, "Okay, so tell me about a company, who's doing what and why is it going to be okay?" My interest was peaked a little bit because of that.
Also part of the reason is I came from a hardware background, so I figure if I wanted to move up, you really need to take a step back a little bit because you have to do something that's different. So I went from a hardware background to a software person. So right now, if you look at my resume in the last 20 years, you would've thought that I grew up as a software guy. Actually, I went to school in electrical engineering designing chip sets.
Josh King:
You told us that the Sybase story began with it having a 70% expectation of failure, according to Gardner. You told us that at its high point with you and your management team on the podium of the New York Stock Exchange, it was seen as the brilliant phoenix example in the turnaround. Now, the story sort of ends for Sybase in 2010 for you when it's acquired by SAP. And after a couple years that you stayed as the head of it integrating, you stepped down in 2012. And I'm going to quote the announcement that you made at the time. You said, "I've been working hard until this point and now I'd like to take a look at things." Why was Blackberry the thing you wanted to take a look at?
John Chen:
Sybase was a very positive experience for myself, for the team, and a very great outcome financially for everybody concerned, particularly for shareholders because we were started as a stock of $4 and we end up selling for 65, and after increasing the share count too. I wasn't looking for a traditional CEO job because kind of off my bucket list, been there, done that, let's move on to do something different. Back to the very early part of this conversation, Blackberry has such a special place in my heart as a icon, as a name, as a product, as what it represents. When that opportunity came to me, although I turned it on a couple times, long story. Ultimately, I said to myself, you know what, I really need to give it a try. A fortunate thing for me is, I'm old enough to know, or the old enough, period that I don't need a resume for my next job." So I said, "Okay, we'll see whether we could do something about it." And I don't really want to see the industry lose Blackberry.
Josh King:
We don't want to see the industry lose Blackberry. After the break, John Chen, the CEO of Blackberry, and I are going to discuss how he turned around the company and transformed it to enable the enterprise of things with technology that allows endpoints to trust one another, communicate securely and maintain privacy. That's all coming up right after this.
Speaker 5:
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Josh King:
Welcome back. Before the break, I was talking to John Chen, the CEO of Blackberry, about the Blackberry Security Summit happening today at the New York Stock Exchange and his career arc coming to this country 50 years ago as of next year. John, I mentioned the origins of Blackberry then known as Research in Motion in the intro, but how did an office above a bagel shop in Waterloo, Ontario, nearly 3000 miles from Silicon Valley become Canada's best known tech company and why had it fallen on hard times?
John Chen:
The success is really solving a problem that there's no other way to solve at the time, kind of the first to solve a very critical business problem or a communication problem. So that was the great thing. And then why did it fall on hard times? Interestingly enough, when you create something successfully, it's usually you're doing a whole bunch of things right. When a business or a system failed, it's usually as a result of you're doing a whole bunch of things wrong. It's never one thing that kills a great thing. I think top of the list, we lost track of who the customers are or were. iPhone and Android came with a focus on the consumer being the customer, meaning that they made a decision. As you pointed out earlier, Blackberry has 42,000 servers or something like that installed around the world at that point.
And these are all CIOs, CFOs, president, CEO of companies say, "Hey, I want remote assets to my email data real time. Doesn't matter where I am and I want it securely and I want it privately." Blackberry happened to be, or RIM happened to be able to solve that problem. But the buyer or the enterprise buyer, so when the power of BYOD came, one of the byproduct of that is the buyer is now individual. The people that actually enter the workforce, the university grads. There are a couple of things. They want application. We don't have application, why don't we have application? Because we're more focused on security. We don't want you to play games or open up a port that look at the banking accounts and all that, not to even mention the social media stuff. We want to preserve the focus on security and privacy, which all our customers tells us is most important.
So I think our adjustment to that wasn't swift enough. I think that's really, and then there's a whole list of other things that we have done that probably should have done it a little differently, but I always say this, you have to give credit to the founding member of this company. It created a icon. It also created the term CrackBerry, literally an army of follower around the world. It created all the head of states. When I go talk to the head of states, they all know what Blackberry is.
Josh King:
Oh, we remember the big drama of December, 2008, January, 2009. How are we going to get President-elect Obama to give up his Blackberry or to take a hardened Blackberry from the White House Communications Agency?
John Chen:
Yes, exactly. And so they're all good. When I focus on this question or answer the questions, if I learn anything from it, we do and we could talk a little bit more about that. But more importantly, I'd like to celebrate the success of how this company went from top of the bagel shop to become a internationally well-known icon.
Josh King:
And it's not just about the hardware and its arc or the software, but it's also about the people in Waterloo. When you agreed to become executive chair and then initially interim CEO, not only were you taking on this battered business, but you were the first outsider ever to lead Blackberry. How did you set to restore the esprit de corps that was going to be required to, like perhaps Ted Lasso, really believe it could be turned around and what were some of your early victories?
John Chen:
In the beginning it was actually a little bit more difficult. I think there was a lot of skepticism, not because I'm an outsider, it's because they believe that I don't know the phone business and they also believe that I came into the company not to build it, but to clean it up and sell it. So I have to overcome that, and fortunately, I did. There was a lot of changing of the guards. People get to the point that, this guy doesn't know what the hell he's doing, so maybe we should leave. It was difficult period of time in the beginning, but then gradually people see. Two things happen. Gradually, people see that I really mean to strengthen the company, not to clean it up, so to speak, and then go for a quick sale, a great exit. So that's point number one.
Point number two is that we, through the process of hiring newer people and executive, we bring in a different culture. We bring a different set of expertise and it's kind of continuous innovation of that. Like today, we're bringing a whole ton of expertise on cybersecurity, which we didn't have five years ago. So I am an advocate of we really need to look at your skill base. You either upgrade it yourself and or get recruited from the outside. And we made a number of acquisition that also helped to move the needle of the culture, the focus, the expertise. So long journey, but I'm glad we did it.
Josh King:
Long journey with both Sybase and now Blackberry. You transferred the company's listing from where it was to the New York Stock Exchange. Why was it important to you to trade here and how did that move and especially that ticker change to BB, help you reposition the company?
John Chen:
At Sybase, when I make that move, it's a little different from Blackberry when I make that move. On Sybase when we make that move is we really want to gain access to the NYSE's ability and the recognition on a global basis. Sybase was somewhat of a technology company out of Silicon Valley under the shadow of Oracle, Microsoft and IBM. Although we produce a lot of software for Wall Street to use, we were kind of restricted in knowing who you are. And remember, different country, when I went to France to see some customer they would call CBase. There's really not a lot of real recognition of us being a global company. It was important for me to rebrand it, basically. And NYSE gave me the perfect platform to do that. Perfect. And also I remember, NYSE also have a, at that time, had the highest standard sure of listing.
For example, you have to make money. So that's a pretty high standard compared to a lot of the other exchange where our more entrepreneur and they may not have make money or they never have a plan that they are ever going to make money, so that was another aspect of it. I want to establish confidence in our company. Blackberry is, I need a reinvent opportunity, because I dramatically move from a hardware consumer-based business to a enterprise software-based company. I need an event, I need a globally recognizable event. So this is why. So it's really different.
Josh King:
One aspect of things that people don't appreciate a lot about Blackberry. So even as people are transitioning their definition of Blackberry from phones to security, following your announcement in January this year that you were now out of the device business forever, you have seen the largest growth in automobiles for Blackberry. What's your outlook for that aspect of the business and how is your company helping really keep more than 200 million vehicles on the road safely?
John Chen:
This is not my credit. Before I came to the company, the company bought another company called QNX, which provides operating system that has the highest level of safety certification. Why did they buy the company? They were buying the company to take the operating system and put it the next generation of phones. Since strategically we have decided not to do phones, I have to do something with that company. Of course, one of the normal thing to think about is, oh, you could just sell the company and technology, but I thought it was overly valuable for it. And if you look at the future of the world, IoT devices needs security, needs safety. So when you put security in a car, it's really equal to safety. And then that company called QNX started with providing infotainment system for the automotive company.
Again, this is before my time, but the infotainment systems getting very saturated. So we decided to strategically moved to a much more higher safety operational data-driven platform. And that's exactly what we did. 2016, I remember counting the number of cars that use our software, about 16 million. We recently counted 215. These are counted by independent outside firm, so it's not like Blackberry said it's two 15. So we have a rather successful business. After the COVID, we're growing double digit every year, every quarter, and we have a huge backlog to rely on. So that piece of business are doing very well. But it's really more about what we can do for the car because of we've been there in the beginning and we're doing well, we're going to expand it and we are expanding it already. We're going to expand it into airplanes, drones, and medical devices, industrial, nuclear power plant, space station. We're going to expand where every application require operating system safety certified as well as edge to cloud computing and that also enter into the equation of the cybersecurity that the CISA organization is looking for us to do.
Josh King:
Listening to that conversation you had with John Chambers, John speculated that by maybe the end of the next decade there could be 500 billion connected devices as part of the internet of things. And I don't know if you'd think that number is low or high, but whether we're discussing vehicles, unmanned vehicles, fully autonomous machines, there are concerns about safety and how bad actors can misuse technology. How do the two buckets of Blackberry's business work together to combat those fears?
John Chen:
So first of all, our buddy, John Chambers, the number is a low number. It's low because we, the industry, will solve one of the basic fundamental issues, which is trust. Security, safety is part of trust. So it's a whole bunch of other, privacy is also part of trust. So many players in the industry is helping to address that. The two business that we stood up, the IoT and the cybersecurity business, over time will converge and it's called a convergence. I think if you go do search and you search for convergence of IoT and cyber, you will see a lot of very high quality article and more of them are coming out. The world will need to converge. And the reason they converge is the two businesses will not be that meaningful standalone if they don't have trust. The amount [inaudible 00:45:39] is going to be in the trust, where all our lives around us, whether it's the home or the business or the cars or anything else, we'll have to create that network of trust and it's going to happen.
Josh King:
You and I are sitting here in the library talking, we're getting a lot of information from you, John. You are a regular contributor to Blackberry's blog providing your perspective on the market. Why is it important for you as a manager and leader that your customers, investors, also your employees, have insight into your own thinking on topics that are governing a business?
John Chen:
Employees, we need to march on the same direction and the same line. So having kind of explain my thoughts is no more than just the old traditional way of getting a town hall together and everybody on the call and say, here's what we're doing. So we try to get alignment. For the investors, I'm asking them for patience and also making sure they know that we have a much bigger and longer term goal in mind and I hope that they will buy into that vision. For suppliers, same reason. For customers, again, like I did this morning with our executive advisory board, I explain what our commitments are. Why is this important? Why wouldn't I just drop it two years from now? Because it's part of a journey is not a point by itself and I hope I convinced them and looking at the body language, I think I did. So this is why that blogging communication is very, very important.
Josh King:
From the blog, I want to pose something that you asked in one of the recent articles and hear the answer as if you were asking yourself this own question. You write, "As Blackberry's CEO, my days are filled with lots of conversations and lots of questions. One of my favorites is about our unified endpoint management, or UEM. So what is it and why do I think it's the best and most secure in the market?" Your answer.
John Chen:
In a very short way of explaining, this is managing endpoints beyond just PC and handset. We actually believe that this endpoints are, instead of being silo, it's actually a network of endpoints. But there's a very funny characteristic of this endpoint, which is, depending on the individual and location entry into the endpoints and off fix, they come in, they leave. The management of the security of that is important. So this is really where I'm trying to get at is the endpoint management is more than just a application manager or a device manager. It's a part of the, or at least a starting part, of a cybersecurity protection layer. That was really what I was trying to get to.
Josh King:
You mentioned, as we're getting ready to wrap up our conversation, John, that one of the reasons that you're communicating so much through the various platforms that you're communicating is to ask an example of investors for patience. And I'm sure that most CEOs are looking for little patience these days as we wrestle with what 2022 is handing to us and we look around the corner at 2023 and ask ourselves if it's going to get any better or even get worse and we move into a recession. What are your thoughts about where we're headed in the next 12 to 24 months?
John Chen:
I think it's going to be slow down, the market is going to slow down. And I don't mean the stock market, I think the buying path and the capital spending is going to slow down. I actually don't believe, if you're in the business that actually create value, I don't believe, particularly about security and safety and privacy, it's not an option. I believe the spendings are going to be there. We might not be as robust as it used to be, but it's going to be a cycle of coming down and then it'll come right back up. We've seen enough of those cycles right for the last 50 years, so to speak. The up years are more than the down years. And the down years, as long as you produce value, are never horrible. They may not be acceptable to a street consensus, so to speak, but really about the longevity of the business and the quality of the company and the quality of the management.
Josh King:
You're approaching this 10th year anniversary of being at the helm of Blackberry. We certainly will welcome you back to the New York Stock Exchange for record 15th or 16th bell ringing when you hit that milestone. But what are you looking for in the next 10 years of Blackberry?
John Chen:
I talk about earlier about convergence. In a nutshell, I got two line of business that will converge over time. I wanted both line of business to do well to take advantage of that convergence and that's going to be the decade dream of Blackberry. One of the two lines in IoT, we're doing very well today and we're going to expand in other verticals to do, hopefully, to replicate the success of the auto. The other line of this is we are doing a little bit of a catch up, but we believe we caught it up and so we now need to expand our reach. So that's still work in progress, but I'm confident, the right people with the right product and it will get to the same status of a consistent growth. I laid out a five-year plan as numbers a while back, a few months back, and we intend to deliver that five-year plan.
Josh King:
Well John, I've kept you long enough. You've got another NYSC bell to ring. I really appreciate this sort of journey both through technology, the story of both Sybase and Blackberry and your own career arc. It's been a great conversation. Thanks for joining us.
John Chen:
Well, thank you, John.
Josh King:
Inside the ICE House.
John Chen:
I really enjoyed it.
Josh King:
And that's our conversation for this week. Our guest was John Chen, chairman and CEO of Blackberry, NYSE ticker symbol, BB. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet us @ICEHousePodcast. Our show is produced by Pete Ash with production assistance from Ian Wolff. I'm Josh King, your host, signing off from the Library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitution an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.
