Tony Fadell: The Gospel According to the Creator of iPod, iPhone, and Nest

Guy Kawasaki:

I'm Guy Kawasaki and this is Remarkable People.

Becoming remarkable is a difficult and painful process.

We're on our mission to shorten that time, relieve that pain, and make you remarkable.

Helping me in this episode is a remarkable Tony Fadell.

Do I need to say any more than he guided the development of the iPod, iPhone, and Nest thermostat?

Time Magazine has called his inventions three of the fifty most influential gadgets of all time.

Tony is the author of a new book, Build: An Unorthodox Guide to Making Things Worth Making.

If you are an entrepreneur or someone who's trying to build great products, it's inconceivable to me why you would not read this book.

In this episode, we merely cover mission driven versus eagle driven assholes, what it was like to work for Steve Jobs, the pearls of data driven decisions, the difference between parent CEOs and babysitter CEOs and why companies make crappy products.

If you love great products, you won't want this episode to end.

I'm Guy Kawasaki, this is Remarkable People and now here is the product designer, extraordinaire, Tony Fadell.

Why do you live in Paris? Obviously you could live anywhere, but why Paris?

Tony Fadell:

It's a great question and my answer is porquoi pas, why not? So no seriously, in 2009 went on a round the world trip and experienced different cities and went to different places and lived in different apartments and houses and villas and things of that nature.

And thought I was going to be here for only two weeks because it wouldn't be good enough for the kids. In Paris, it turned out to be great for the kids and stayed for eight months.

Then just through that positive first experience and at that same time during that eight months, wrote the Nest Business Plan and designed the Nest learning thermostat, all that stuff.

So there's this kind of place in my heart for it. But then also over time, we got more friends, we bought a place, these kinds of things.

Then ultimately, we got done with Nest and then moved to Paris because at that point, twenty-six years in Silicon Valley, forty-six years in the US and the world is a very big place.

So I think that was enough time to say, "Okay, it's time to go have different horizons and expand your influences."

Guy Kawasaki:

Man, you are just living the dream. So you live in Paris, you have a house in Bali. Can you adopt me? I'm available. Madisun is probably available, too.

Tony Fadell:

I'm sure she wouldn't mind dropping in Bali.

Guy Kawasaki:

So now that you've been outside of America, do you have a different perspective on what's going on here?

Tony Fadell:

Leaving the US pre-Trump, pre Brexit, pre-Macron, pre all kinds of things and now looking back, yeah, I think that the biggest thing to know is that there's great people everywhere.

Technology is spread everywhere. When you look at the open source movement and a lot of the tools and we have cloud computing everywhere now and the internet for information. You can find great teams anywhere in the world really.

A lot of them might be they were educated in the US and then they moved back home, or even some of them are natives in terms of they live and work and we're trained all here in France. But they've gotten enough influences from outside that it's been refreshing.

I'd be in Indonesia or in Singapore or here in France and when I'm talking to entrepreneurs, I swear they're like straight out of the valley.

It's wonderful because it was used to be Silicon Valley and the rest of the world.

Now when you talk to people it's, "Oh, they might have got trained or they worked at a Silicon Valley company, but they weren't in Silicon Valley. So they got some of the cultural experiences."

So the world in terms of technology and the Silicon Valley at the pinnacle and everybody else's way down here, it's starting to really flatten. Silicon Valley's got it's ... don't get me wrong, it's a great place and it's still got its advantages.

But those advantages are starting to diminish over time because there's so much more money and so many smart people everywhere. Access to technologies is basically flat for the most part, unless you're in North Korea or something.

Guy Kawasaki:

I've noticed the same thing. I've met entrepreneurs all over the world and other than their accents, you really can't tell them apart. They're very similar perspective.

Tony Fadell:

Some are more driven. I've seen incredibly driven people and they never were in Silicon Valley. They seem like they're straight out of when I was in Silicon Valley in the nineties, when it was the small team, were going to make it happen against the big guy. It was just, it's so refreshing.

Because Silicon Valley's changed a lot since I got there in ninety-one and you got there before that. So you must have seen those changes too.

Guy Kawasaki:

I think the ideal entrepreneur in America is second or third generation American. The fourth and on, they already have the entitlement kind of thing.

But the second and third, their parents came over in a helicopter from South Vietnam and landed in Sacramento and ran a Seven-Eleven and they went to-

Tony Fadell:

Or a donut shop.

Guy Kawasaki:

First of all, I love that you just ripped massages in your book. That was just the best chapter. Oh my God, I love that. I was friends with many of them, but I never really got the inside story.

The nature of a podcast is sometimes you have to ask questions that you've read the answer to, but obviously you want to get it on audio.

Tony Fadell:

Sure.

Guy Kawasaki:

So you got to explain to us. General Magic, with the world's greatest engineers, infinite money, all the good stuff of all companies.

Why did General Magic fail?

Tony Fadell:

You were there, you saw it. In the nineties, why did General Magic fail?

Look, we had an, as you said, amazing team. "These are the guys who made the Mac."

Steve wasn't there, but everybody else who made the Mac was there. We had Susan Kare and Joanna Hoffman and Bill and Andy, you have the best people.

I'm like, "I have to go work with him."

So they were building this thing, this iPhone, fifteen years too soon. Really what it boiled down to, the vision was right on, was spot on. If you look at so many of the documents, you look at the drawings, everything, we were spot on.

Technology wasn't available. That means mobile networks, there was no internet. When it was started, there was no internet. There were no mobile networks.

The best thing we had at the time, if you could even call it, it was a pager network.

There were mobile phones, but those were all analog. There were just now two way pagers that turned into the Blackberry, was just starting to exist.

So technology wasn't even there. But even more importantly was society wasn't ready. We were solving problems that people didn't even have yet. We didn't even have them yet and we were geeks.

Almost nobody at General Magic had a mobile phone and nobody was doing texting. So there wasn't even mobile messaging back then.

So when you put it all together, you're like, "Wait a second, they are building this thing that sounds really cool."

We didn't know that technology wasn't right, but the technology definitely wasn't right, processors, screens, everything wasn't right.

But then even more importantly was we were solving problems that even we didn't have, even us personally, usually you've designed Geeks for Geeks.

We were lucky enough to have some international emailing. We didn't have texting. We created emojis, but what do we need emojis for like some animated email. We were doing downloadable games.

In fact, when I left General Magic, Amazon was just starting.

So it was just a crazy amazing smart set of people working on something of a problem that really didn't exist for another fifteen years in the future. That was wonderful because we all got to experience it and learn from it. But it was definitely a huge disaster.

Guy Kawasaki:

It sounds like it was the second coming of Xerox PARC.

Tony Fadell:

Well, I don't know about that exactly because I wasn't at Xerox. But I will say that it was a really fun time to learn a lot and it set the stage. And look at all the people, there's a whole movie called General Magic: The Movie that your listeners should probably tune into.

I don't know if you saw the movie, but it's really worthwhile to see the anatomy of a disaster and failure. Then ultimately, where all these people ended up and what they were able to accomplish through that real trying time.

Guy Kawasaki:

Do you think that there are too many similar people there? I.e., male nerd engineers?

Tony Fadell:

Actually, there are a lot of women. A lot of women engineers. On our hardware team, it was a smaller hardware team, might have been six, seven of us. We had three women on the hardware team.

On the software team, on the app time for Silicon Valley in the early nineties, we had way more women, which was great. But at the same time, I don't think it was because all these people got together and did something in the past that they were guaranteed success. No.

But what I do think that happened was there was a bunch of stuff like, "Oh, we wished we would've done this in the Mac version 1.0." "Oh, I wish we would've done this and this."

So what we had in General Magic's version 1.0 was what the Mac probably should have been on version 5.0. But we decided that we were going to just keep adding all of this capability instead of getting it to market.

They were worried about this platform's going to be such a success, make sure we have all the platform components, as opposed to, let's get it out in the world, test it and then change things based on getting product market fit.

So I think that was one of the only things that was legacy that might have hurt us, which was, "Let's get everything we possibly can in the platform now. Because if we don't get it right, it's going to be too hard to change later."

So that was probably one of the reasons why our schedule kept slipping out year by year. It slipped out at least two if not three years from our original ship date.

Guy Kawasaki:

What's the lesson? Don't be too early.

Tony Fadell:

There are so many lessons here.

One is, you really got to understand the customer journey and why are you creating something.

What was going on inside the team was, it was geeks impressing other geeks. So we're creating all this stuff to impress each other. But we never really asked the fundamental question of, why? For us, the answer to the why, is cool, that's why.

As opposed to, who's the audience? Who's going to buy it? What are the key pains that they have? How are we to solve those pains? So you need to have more and more and this goes into the book in Build, the discussion of why should this exist.

Not just for the people on the team, but why should exist for subset of the population? What are the superpowers? What are the pains that we're going to kill? All of those things. We never had that concept. We were just thinking platform, platform.

And it's really cool and the why was because we know it's cool.

Guy Kawasaki:

Bill Campbell never came over and slapped you guys on the side of the head for going down this path?

Tony Fadell:

Yeah, Bill was not at General Magic, not as far as I remember.

Remember, Bill was doing Go and EO. So Bill was at Go and EO at the time or I think it was just EO. I don't know whether he was Go or EO, I can't remember, it was so confusing way back when. But anyways, Bill was running that and so there was no way-

Guy Kawasaki:

Competitive.

Tony Fadell:

In fact Alain Rossmann, I think he was at EO, he was married to Joanna Hoffman-

Guy Kawasaki:

Joanna Hoffman, yeah.

Tony Fadell:

At General Magic. So they would tell us stories about how those two have two separate offices that neither could each go into each room. They had separate keys to keep all this confidential information and they couldn't talk about it at dinner or family things or ever.

Because they really had to keep the two companies separate and the proprietary information because we were competing with them at General Magic.

Guy Kawasaki:

They have quite the house. So-

Tony Fadell:

Yeah, yeah, it's a beautiful place.

Guy Kawasaki:

They definitely could pull that off.

Tony Fadell:

Beautiful place. Beautiful place.

Guy Kawasaki:

So my second favorite chapter of your book was the asshole chapter. Just to be perfectly blunt, was Steve Jobs an asshole?

Tony Fadell:

Steve Jobs was a mission driven one. He was a mission driven asshole. He wasn't but ego driven asshole, not at least from what I can see. He cared that the mission was right and right on. So that's what he did. I consider myself the same.

Which is we micromanage on the things that matter for the customers. You don't judge the people, you judge and critique the work that those people do.

You make sure that you're doing it in support of what's going to be the best for the customer and educating.

But you're going to be relentless. You're going to make sure that the team just doesn't take second best. They go find the best. Literally drive every single of the details that matter.

Not micromanage everybody and what they do day to day. I think Steve learned that back in the Apple two and Mac times what to do and what not to do. So he wouldn't do that when I was working with him. But I don't know what he did previous.

I had lots of stories and war stories from the General Magic team and everything.

But for the time that I had with him and then it was a very precious time, I wouldn't trade it for the world. It was difficult. It was the best of times, it was the worst of times.

But man, did I learn a lot and it really mattered when I went to go do my own company like Nest.

Now how I think about how I do mentorship, how Build was written, the book. But how we go in and help the companies that we invest in today.

Guy Kawasaki:

So have you come to the conclusion that it's necessary to be an asshole to succeed?

Tony Fadell:

I think you need to be a mission driven one, for sure, yes. I think you do. Because if you don't, people don't know ... if you want to work to a certain world class quality level, you need to because you have to set the tone at the top of how things are going.

Once again, that doesn't mean that you're going to demean people, you're going to judge people, you're going to name call people or whatever. You can judge the work, not the person.

Guy Kawasaki:

So this is not a chicken or egg situation. I.e., being a mission driven asshole enables you to succeed versus if you're successful, people tolerate that you're an asshole.

Tony Fadell:

Yeah, I think that's totally different. First of all, anytime you start a company or you have a new thing you want to do, whether you're starting a company inside of a company or a project inside of a company.

If you don't believe in it and you don't show all the emotion and your belief in this thing, why should anybody else? So in other words, you need to have that passion, you need to have that, "Hey, I'm going to make this happen."

Kind of viewpoint and we're going to do this together and here's the reasons why it should happen. All that stuff. You get people behind it.

Success only happens when you have that kind of motivation and that kind of attention to detail. It's a prerequisite, it's not a guarantee. But it's a prerequisite, you need those things to drive to that level of detail to get to success.

But you shouldn't let that success allow your ego to get filled up so that you become this tyrant or whatever. You can't do that either.

Again, ego driven, am I trying to make it better for me? Mission driven, am I trying to make it better for the customer? If you're on the customer's side, your team will understand that, you're going to be able to communicate from the customer's point of view.

It's not just you giving orders, it's you telling the people why that needs to happen and what it is. They can push back, they can find other suggestions and all the other stuff. But we have to really understand the difference between ego driven and mission driven.

Mission driven always starts with a great mission and that person who's going to lead it into the future and other people getting onboarded, you staying that way. But you need to have some ego and you have to have belief in what you're doing and it doesn't come after you have success. It's well before.

Guy Kawasaki:

Can you explain what made Steve, Steve?

Tony Fadell:

Again, attention to detail and storytelling. I think the first one was storytelling. Over time, he became ... and this is what I learned, which was you go from product experience to customer experience.

In other words, what are all the touch points of the customer along way? In the book, there's a whole thing about the customer journey. So you have to understand all the customer touch points, whether it's a B2B or a B2C business.

Understand what all those customer touch points are. From the moment they hear about your brand or your product, all the way through all the details to testing it, trying it, buying it, installing it, all that stuff. Then also loyalty. What happens when keep them interested?

So I think the big thing for me with him was, why does this need to exist? And touch making sure that why is present in every part of the customer journey and making sure it's seamless, that it works really well. That was the biggest takeaway for me.

Guy Kawasaki:

How do you think Elon Musk stacks up against Steve Jobs?

Tony Fadell:

Elon and Steve are very different people. Elon is very technical and engineering focused and sometimes first principles. Where Steve was all marketing. Steve was all marketing and sales and customer experience, and seeing from that point of view. Steve tried to be technical and in the late seventies and early eighties.

But it was clear that he was never going to get there, that was just not his strong suit.

Whereas Elon's much more on the technical, on the engineering side, the that looking at it through that point of view, not from the marketing side. Even though he's got a very interesting way of marketing and the way he does it. But Steve had a press team, Elon doesn't.

Steve paid for lots of marketing and big money advertising. Elon doesn't. So it's a very different way. Not to say that Tesla's not successful, I'm not saying that at all. They are. But the two different styles, once much more marketing and story led, and the other one is very technical and first principles led.

Guy Kawasaki:

Do you think that Steve had this rare ability to foresee what people would want and build it? Or Steve built what he wanted and then convinced people that they wanted it too?

Tony Fadell:

Oh, it was very clear. It was very clear that all of this was driven by what he wanted or what we wanted as a collective. As we got to learn, which is people will buy anything, at least in a certain amount of quantity. If you believe in it and you make sure you wear those beliefs on your sleeve.

So in other words, it'll resonate with certain people and they'll see it in the product. So we were creating products that we wanted, but we knew a lot of other people wanted.

First they would start as early adopters, whether it's the first iPhone or the first iPod or whatever. Then over time, with the third generation or the fourth generations of those products, then it became for a much wider set of people.

Because then we started embracing and made it easier or putting another applications or other things that people needed so that those later adopters could then see what was important to them and they could also see that the other things were working well enough because they see a lot of other people. Yeah, no, we were building for ourselves as well as a set of early adopters who we thought would get it, not just solely for ourselves.

Guy Kawasaki:

I think you just stated exactly what Mike Moritz of Sequoia would say. That he's looking for two guys, two gals in a garage or a dorm room, building the product they want to use.

Then you just hope that they're not the only two people in the world who want to use it.

Tony Fadell:

Yeah, making sure you had a big enough market.

Guy Kawasaki:

So what do you think is the richest vein for great ideas?

Tony Fadell:

Pain. Wherever there's pain, that's a great opportunity. Right now, we can see with the climate crisis, lots of pain. We need to experience more of it. We're experiencing it, but it's not resonating as much till it hits our backyard.

But I think pain is the biggest thing. Because with pain, you can create painkillers. Assuming there's new technology and whatever to address that pain.

It's a lot easier than being a vitamin. Say, "Oh isn't this interesting and nice and new?" You could try this and it make things better. But if you don't have pain, people will solve pain much more before they'll take a vitamin.

So in other words, people will take a pain killer right away, whereas a vitamin, they're like, "Ah, do I need it? Do I want it?" Pain, that's a really good way to target customers.

The other one is it's not just pain and removing the pain with a pain killer. But also turning it into hopefully a superpower. So in other words, you've removed the pain but now you've given them some new thing that they never thought they had.

You didn't just remove the pain, but you're like, "Oh my god, I have a superpower." And they're like, "Oh my god, they got rid of my pain and I have this new capability." They love you and they will keep talking about your products to all their friends. "Have you tried? This is the most amazing thing."

You get word of mouth. So if you can get both, both the rational piece of the pain killing and the emotional piece of the pain killing with a superpower and a big enough market, of course. You might be able to really change things in a traumatic way.

Guy Kawasaki:

So if your house wasn't cold in Tahoe, you might not have started Nest?

Tony Fadell:

Yeah, absolutely. Yeah, the pain of a cold Tahoe house in the middle of the winter and suffering for twenty-four hours, that was definitely a lot of pain. Over multiple weekends of trying to find solutions where you're like, "Wait a second, why does nobody have something like this? It seems like duh, no brainer."

Guy Kawasaki:

In a sense, Honeywell was your Blockbuster. Honeywell, just total denial, didn't get it, couldn't get it, wouldn't get it, et cetera.

Tony Fadell:

Yeah, no.

Guy Kawasaki:

What's up with that?

Tony Fadell:

Look, this is what happens. When little companies show up with some kind of innovation in their space, in the big company space.

“We're the Mr. Big time, we know everything in this space. Come to us because we're the leaders.”

This happened with iPod, this happened with iPhone, it happened with Nest. And what happens? The biggest names in that space are like ... they're like, "Oh, that's just a joke. These guys don't know what they're doing." iPod was laughed at by Microsoft. iPhone, Microsoft, Nokia, Blackberry, everyone. Nest was laughed off by Honeywell and couple of other people.

First they laugh, then they get angry, then they start trying to do things and typically they can't make a new product. Or at least not one fast enough. So what do they do? They start to suffocate you at the channels, installation or retail or somewhere else or try to change the partners, the people you work with, trying to turn off the taps of certain technologies or something.

So they sit there and try to mess with you to slow you down while they try to figure out how to make a new product in two or three years. Then they get angry because you keep making new products and then they sue you. So iPod, we got sued, iPhone sued, Nest sued.

So laughed, got angry, slowed us down in the channel, then sued us, and then they still couldn't come back and look at all those companies today.

Guy Kawasaki:

I don't think you're making the case that everything that people laugh at are necessarily going to succeed.

Tony Fadell:

No.

Guy Kawasaki:

So for example, I think a lot of people, myself included, laugh at crypto that you say, "So what you're telling me is, you are going to put your assets in an asset class where some mysterious Japanese guy promises only going to be twenty-one million of these and it's a hedge against hyperinflation."

So that's the negative aspect of crypto. So how do you decide? I mean, people laughed at the internet.

Tony Fadell:

Sure. Look, for me, because I have enough technical expertise and knowledge and a network of people who I can call up and ask, I can make a decision and come up with my own judgment instead of reading what's in the popular press.

When it comes to crypto, I bought crypto back in 2013, 2014, and then again along the years. I think crypto, whether that's store of value or the blockchain or something like NFTs, I think these are incredibly powerful technologies you can't ignore.

As long as they're also implemented in the right way to help the planet, not hurt the planet. So we're seeing what's happening with the merge on Ethereum, which I'm glad to see happening. That's great.

I think these technologies are very important. What I haven't liked is the culture around them. That bro culture, fast, fast, money, da, da, da, you can trade, swap, do whatever. I am glad of what has happened over April, May, June to this point of this whole ... it reminds me of internet 1.0.

So with internet version 1.0, back in the late nineties, it was a gold rush. Everyone's like, "Oh, you're going to make tons of money, you're going to make money on internet."

And then April 2000 came and that whole culture went away, but the technology of the internet turned into companies like Google and Facebook/Meta and obviously set up the stage for Apple.

So you got to separate the culture from the technology and that's exactly what you have to do in the crypto world.

So I'm glad that this first generation culture of fast money is receding now and we're starting to see the real benefits of the technology. We're starting to see real people who really believe in it and are investing more in the technology and creating valuable companies around the technology.

It's going to take some time, it's still going to take two, three, four years to get there. But we just have to let that culture go away and really do what we need to do.

Just like when we went to internet 2.0.

Guy Kawasaki:

You have a whole maybe diatribe, it's too strong a word.

But you're definitely not big data decision making. Would you explain the role of data and decision making?

Tony Fadell:

All right. Data is a great way to gain insights. It'll help you somewhat to make a better decision. But if you just drive decisions with data, then you have to ask, how good are the questions you're asking?

Because if your questions aren't good enough, then it's not going to help you to make better decisions. You're just getting some data that you have to factor into this overall context. What are the options for making a better decision?

Not just, is it A and B? But it could be A, B, C, D, D Prime, whatever. Or it could be an environment change, it could be lots of different changes. The data just helps to inform you on certain well asked questions to help you narrow your decision making choices, not to make the decision.

So too many times, especially with versions 1.0, new companies, new products, and especially ones inside of big companies. Too many people want to turn every decision into a data driven decision.

Why is that? Because it's always easier to make a data driven decision and your ass isn't on the line when you make that decision.

So you're like, "I'm management, I'm making a decision, I've seen this data, so based on this data, I'm making this decision." When it comes to version 1.0, something that the world's never seen, you can't get any data to give you a definitive decision of whether you should go for this new product or new service or what have you. You need to actually build it, ship it, get feedback, and then make changes to it.

Too many times during 1.0, again in big companies, they want data. They want data for every decision because that's what they're used to. They're in maintenance mode on their existing lines in business and everything's data driven. What we're sales last quarter? What was this? What's a profitability? Da, da, da, da. They keep optimizing for a local maximum.

When you are innovating, you're trying to find a new local maximum or a global maximum that the world's never seen before. You're not going to be able to use those same techniques for something that's in maintenance mode to do something new.

You have to remember that, and management has to remember that, and boards and investors have to remember that. Same as employees in the team.

So you have to understand the difference between opinion-based decisions and data driven decisions. Typically in a new company, a new product, new process, whatever it is.

Many of them are going to be opinion-based decisions and you have to trust your gut and don't have analysis paralysis on every single data point to try to help you make a better decision.

Guy Kawasaki:

I think that's partially the explanation of Steve Jobs's brilliance because I mean with him, yeah, maybe his decisions were gut decisions based on data or vision, but he definitely made a decision.

There was no paralysis of analysis or analysis by paralysis or whatever.

Tony Fadell:

Yeah, no, absolutely.

Guy Kawasaki:

He made the call.

Tony Fadell:

Yeah, sometimes it took us six to eight weeks to make a decision, sometimes twelve weeks because we had to pull enough of the engineering data, the component data, the costs and all the other stuff.

But it was still, we're going this way, this is the vision. What is it? Close enough. Even if we weren't profitable on a product, we knew it was the right thing to do.

So we would go and build it because we trusted that the market would come and we knew the dynamics of electronics and different things that the prices would come down over time.

So a lot of companies always want the first product to be really profitable, like their lines of business that they did that they're managing every day, they're like, "Oh we get normally thirty points for gross margin, for all of our things that we make. So everything we do, even our new products need to."

And that's totally wrong. You have to make a bet and then over time, optimize to get to that point.

Guy Kawasaki:

Have you ever wondered why companies are so stupid they don't even copy good stuff?

Tony Fadell:

You mean they copy badly?

Guy Kawasaki:

They either copy bad things or they perpetuate their incompetence. My example is, I think one of the brilliant moves that Apple made was the Apple Genius Bar.

You know with almost total certainty, you've a problem, you go to an Apple dealer, there's a genius at the Genius Bar and he or she will solve your problem. Now, wouldn't you think other consumer electronic companies, car manufacturers, Kaiser Foundation, wouldn't you think everybody would say, "Yeah, Genius Bar is a good idea. We should put Genius Bars in."

So why don't they copy obviously good ideas?

Tony Fadell:

That is a great question. So I've seen so many bad copies of things out there. Something like the Genius Bar, what normally happens ... and this is the difference between a parent CEO versus a babysitter CEO. And that goes in the book.

A parent says from the top down like, "We are going to do this. This is the vision, this is the reasons why. I don't know what the economics are, but I know this is what our customers want. We need to go and figure out this solution and don't give me no for an answer. You're going to tell me the options and then we're going to select from the options, even if none of them are good. We're going to select to try to make this vision happen or make some changes."

But that CEO, one is, in that slot for a while because it's like a government in some of these large corporations. Usually these CEOs get switched out every three, four years. They never have time to make changes because these big battleships that our companies takes a long time to turn in a new direction and get management to change to think this way.

So one is you have to have a longevity of leadership, two, a leadership who is willing to tell everyone, even if we don't have all the answers, we're figuring it out because this is the best thing for the customer.

Then to have air cover. In other words, the teams that are working on it, they go in and defend, that CEO defends that team and says, "No, you're going to give them everything that they need to get this mission completed. I don't care if it gets in the way of your bonus or if you don't have enough people on your team. You're going to make it happen. This is a companywide goal."

Typically what happens is someone has this idea, "Oh, we should make Genius Bars." They give it to somebody in a team. It's not driven from top down and then all of a sudden it just becomes one of the millions of projects going on in these large companies and it's never prioritized.

Then the CEO shows up six months later, "What's going on?" Well, we ran into this stopping block, we ran into this stopping block. Whether it was the iPod or it was the Genius Bar or Apple retail or any of these things. Steve was there every other week, if not every month, watching over it saying, "Where is it?"

There's certain things he didn't care about and he didn't get involved it with, but the things that he really cared about, he did. He was mission driven on it and made sure that it happened and helped to make the teams understand that this was important and clear the way for them to make sure that they could be successful in some regard.

Guy Kawasaki:

So maybe you can explain one more corporate stupidity to me.

Why are companies so stupid that if you look at the UI of their products, you have to come to the conclusion that nobody in the company uses the product?

Tony Fadell:

Yes. Look, this again is a top down thing which says, "What are we doing that's best for the customer?"

What typically happens is if you don't have somebody who's lording over the user experience, and that doesn't mean just of the product, but of the entire customer journey. You're going to get all these gaps, you're going to get all these gaps.

Because what happens is that a lot of these UIs, they're designed by a committee and a lot of UIs are opinion based decisions, until they ship and then they get changed. But they're usually designed by committees. Sales goes, "I need to have these things in it." Customer support says, "I need to have these things in it."

Marketing says they need this. Engineering says they need these things. It becomes this design by committee.

As opposed to who's the one person or the small team who has the vision of what the customer wants and needs to experience? Then prioritizes sales needs and marketing needs and engineering's needs, all of those things and tries to do that.

Typically what happens is, it means they don't have a very good product management function. So that's what I have also in Build. You have to understand what product management does. They are the voice of the customer, they're not the CEO of the product.

They always are watching out for the customer. So whenever I see a bad product, I usually point to bad process inside of the company and leadership, who doesn't know what product management is, why it's essential and why it's as important as engineering or design or legal or finance or any of those things.

Product management needs to be reporting the CEO and those are the people who are the voice of the customer and they need to have their voice elevated as high as any of those other disciplines.

Guy Kawasaki:

This is turning into the gospel according to Tony.

Tony Fadell:

I've seen it for thirty-five years now. And I've experienced ten years of utter failure in large companies, small companies of product disasters and why.

So that's why I was able to go back and think about them and put them in the book to show what I've seen work. I'm not saying it's the only way it works. But I've seen that way work versus all these other ways that have failed.

So maybe somebody also write another book that has a different way of being successful at making products. I just know that I've done ... I don't know, thirty, forty, fifty products in my life and this is the way that works for me and the teams that I've worked with.

Guy Kawasaki:

I would say that someone who can says, "I did iPhone, iPod and Nest." You pretty much ... it's the trifecta of credibility in product.

Tony Fadell:

I try.

Guy Kawasaki:

I know a lot of people, and of all the dozens or hundreds of people I know, many of them are tech savvy. Only one uses a digital camera today and that's my daughter and she borrows mine.

Tony Fadell:

How old is she?

Guy Kawasaki:

So let's say that ... she is nineteen.

Tony Fadell:

Okay.

Guy Kawasaki:

So let's say that the CEO of Sony or Nikon or Canon calls you up and says, "Listen, everybody's not using cameras anymore, they're using their phones. What should we be doing right now so that we don't become a Honeywell or a Blockbuster?"

What does Tony say?

Tony Fadell:

First, we had this discussion at Apple after the iPod. Which was, did we want to make cameras and video cameras and other kinds of consumer electronic devices? So we went through all kinds of different ideas.

So when I thought of new hardware products, I was always going back to the new technologies. What new technologies are coming that either cell phones can adopt or maybe adopt over time, but needs to be its own camera outside of cell phone for a while at least until it comes in.

So I always start with the technology. So what is going to disrupt the market as it exists today?

What we've learned is convenience trump's quality. The same thing happened in audio. If we look at audio, it was high resolution, zero lossless audio on a CD. Then it turned to MP3 and everyone's, "Oh no, no one's ever going to listen to this." What worn out was a thousand songs in your pocket, not MP3 versus CD format.

If I look at the cameras today and what it started with the iPhone, it was all about convenience. The best camera to take a picture with is the one you have with you. So we have one company called Matterport who just came out with a new camera last week, a standalone camera.

Matterport, what they do is they 3D capture the world. So the insides, interior spaces, exterior spaces. So they made a 3D camera that has such high resolution and so easy to use that anyone can get these incredible immersive 3D captures of spaces.

That is a good reason to make a new camera was because you're not going to be able to fit that kind of technology inside a phone. It does a little bit, but nowhere near the level of quality.

So in that case, we worked together and we said, "Yes, the best thing to do is make sure we make new cameras that work with the Matterport software stack so we can get more people capturing these volumes of photos."

But then if I switched the cell phone side, what would I say? I would look and saying, "What are the things that we could bring to the smartphone camera?" Whether that's technology, hardware technology or software technology, that allows our brand to keep existing.

We saw that with Hasselblad and we see that with various other lens people. They're actually working with smartphone companies to get their lens technology on for that they usually used on digital cameras or on analog cameras, onto the smartphones out there because people need more lenses.

So I think you have to look at where we are in the state of time and figure out what market you're trying to address and where the technology really lies, to figure out how you as a company can move forward.

But to say, I'm going to go make a smartphone that has all of our camera technology in it and I'm going to make a better smartphone than Apple or Samsung or something like this. That's pretty misguided, especially fifteen years down the road.

So you have to balance what you have versus where you are versus where the competitors are to really understand what you can bring to the market successfully.

Guy Kawasaki:

Got it.

So what is your concept of the product cycle these days? Specifically introductory process. It used to be a Jeffrey Moore theory that you get the pioneers, then the early adopters.

And then if you cross the chasm, you get main street and ubiquity. So do you still believe that new products and technology flows that way?

Tony Fadell:

Absolutely. Look, there is still early adopters in that whole adoption curve. We have early adopters and late adopters. Those people still exist because those are mindsets, those are frames of mind.

So there's some people who will try anything and there's some people who only try it after everybody around them tried it and everything in between. So you always have to be able to understand that.

The one thing that's different, and this is not in the book, is you really have to think about mind share. So there's market share, which is selling into the target customers and getting ten or twenty or thirty percent of the market, what have you.

But then there's mind share. What mind share is all about is you leading you as a company, leading the conversation on some new area. Even if the early adopters are buying your product, but the late adopters aren't buying your product.

You need to have the mind share out there so that you can educate the late adopters on what the early adopters are doing to show validation for what it is. So that hopefully you bring those late adopters into the market.

So you got to always think, market share versus mind share. At the beginning before you're selling anything, it's all mind share.

Sometimes the right thing with mind share is to do what Apple would do, which would be keep it totally under wraps till the day it can go on sale. Then there's other people who will, let's say it was SpaceX or Tesla or whatever. Talking about cars years before they're ever available, cyber trucks one of them. Then they're finally available.

So you got to think about the right way to do your mind share and what your competitors are doing. But you always need to be thinking mind share over market share even from the very beginning, so that you can set yourself up for getting the best employees before you're shipping, the best investors, getting the best ideas, the best partners before you're shipping. You have to figure out what the right ways to do it.

Sometimes that's fully public, sometimes that's totally under NDA and everything in between.

Guy Kawasaki:

I would say that for years, and maybe it's still true, that Tesla owns the electric car mine share. But do you think eventually Mercedes and Ford with their incredible dealer network, manufacturing, experience, et cetera, et cetera, will catch up to Tesla and take away the mine share?

Tony Fadell:

It always will. That's what always happens as these markets grow and expand. Is that there's always going to be the company to beat. Right now you could say in smartphone the company beats always Apple and then maybe you get Samsung.

So as long as the leader stays the leader, then everyone compares to that leader.

So Elon's got to keep bringing that mine share component around cars. It can't just be, now we're doing the Tesla robot and then the cars are going to get it. Because the car or mobility focused competitors are going to drive so hard on that message and they're going to start spending so much money on marketing that Elon can fall by the wayside.

So he's going to have to start playing more of a traditional marketing game, especially as he goes beyond the early adopters and the first time people tried EV.

It's going to turn to be much more of a ground war because I look at people are now selecting EVs based on the interior product quality. So interior seats and steering wheels and the audio quality. It's no longer is it just an EV, it becomes all these other things.

Just like it is in the smartphone world. You don't just buy an iPhone because it says Apple iPhone because that was all you had back in the early days. Now you're worrying about the camera and the speed and the processor and the media connectivity and all these other things.

Is the screen foldable or not? Because I get a bigger screen. So it's going to become much more multidimensional to preserve mine share and market share as these markets mature. And Tesla is going to have to worry about that.

Guy Kawasaki:

Let's suppose that your niece or your nephew, but not your own kids. Because when it comes to your own kids, I've learned that advice just goes out the window.

So let's say it's your niece or nephew and he or she says, "Uncle Tony, I want to be a management consultant. I want to go into private equity or I want to be a venture capitalist." What does Uncle Tony tell them?

Tony Fadell:

Uncle Tony. Uncle Tony would say very clearly, "What is it you want to do long term? Are you trying to do something and learn? What is the rationale for wanting to go into ... I don't know, hedge funds? Or what's your reason for going into VCs land?"

What I always say to them is usually if your management culture, you're very early in your career, so you're trying to learn what it is you want to do in the spaces you want to do it. When you're later in your career and you want to be a VC or hedge fund, it's really about, I understand I have the network, I understand how to invest and know who the winners would be because I understand these spaces so well because I was part of them. I was operational.

I had been doing years and years of research in this stuff, so I really understand how to invest money.

What happens, though, is those are two really worthy reasons for going into either management consulting or VC or investment.

But what happens a lot is people get out of school and they just follow and chase the money. They're like, "Oh my god, I want to go work for this." And they have a great brand and it's all about the money. When you find out your mission is about making money and not the mission about building great companies with great technology, servicing a customer within a new way with a new product.

Then that's where you get off track. Because then it's really about the marketing, the brand of that company, the prestige saying, I have a big tile and an expense bone. All that stuff.

When you have no experience doing it, that is the problem. When you think you're getting paid for the experience, but you really don't have the experience. Go get the experience. Experience you need, then choose whether or not you want to be in those careers longer term.

But don't go marrying for money or chasing the money. I've seen many people chase the money because it's the hottest thing in crypto, it's the hottest thing in this, but they really didn't care about whatever they were going and they were following the money.

That's when I've seen people lose decades of their career, lose lots of money and get totally jaded as opposed to I'll never make money because they're focusing on the money as opposed to focusing on the mission.

Because when the money's already there and it can be seen, it usually means all the people who created it are the ones who are getting an unfair share of that money because they created it.

You're just following them. If you want to be a leader, you've got to go to new spaces and that's where you're going to get a unfair share of that new market that's being created because you're one of the ones creating it and you can get more than a salary and a bonus or what have you, you can get a lot more of that opportunity.

So don't marry for money, don't chase the money. Go for what you're trying to learn and the mission the companies are on. Don't focus on just the type of company or the title or the money.

Guy Kawasaki:

I guess McKenzie won't be sponsoring this podcast. Okay, so now your niece or nephew calls you and says, "Uncle Tony, I'm thinking of quitting my job. When do I quit a job, Uncle Tony? And how do I quit a job properly?"

Tony Fadell:

That's the whole, I quit chapter in the book. Really what it's about is, to tell you the truth is a lot of people, it's easy to quit. But it's a lot harder and a lot more informative if you understand what's pushing you away from the company.

Write those things down, here's what's pushing me away from the company, why I want to get out of here. And going and trying to address those things and talking to either your manager or HR or even your manager's manager and saying, "Here's the things that bug me about this company. Why aren't we doing these things?"

Not just say they bug you, but also give suggestions for how to improve it. Nobody wants to hear it, everyone complaining, give me suggestions for how I improve it and maybe things might get better.

In cases where I was going to quit, I spoke up and literally things changed and so I stayed. But there are other places that they wouldn't change, I said I couldn't and I left.

So you first need to understand what is pushing you away from the company, enumerating those and trying to address them. If they can't get addressed, then it's okay to lead. But then there's the other half of the equation, which is “What's pulling me to another company or another topic?” Or what have you.

You need to also equally address those sets of questions and understand why you're going somewhere else. Again, like we talked about, is it for the money? Or oh my God, I'm working with this brilliant team, doing something that's going to change the world.

It may not be a success, but Jesus, I'm going to learn this and network with all these people. Maybe this'll turn out to be something.

So you have to have both sides of that equation really well answered and understood before you decide to quit and whether you decide to join somewhere else or start something else.

Guy Kawasaki:

I had to literally stop and laugh. When you wrote the part about how Apple passed you up or your manager at Apple told you that you weren't going to be promoted to a VP after you did what they said was necessary to be a VP.

You threatened to quit and HR got involved and got Steve to convince you to stay and all that. When I left Apple, at that point, when you became a director or a VP, you got a car and I really wanted a car.

So I met with my manager ... I won't name his name, and I met with my manager in this review to become a director. He tells me, "Guy, the small developers, all this Silicon Beach software, all these tiny companies that weren't household names yet, they love you. But Lotus doesn't like you, Microsoft doesn't like you, Ashton Tate doesn't like you."

And I'm thinking, "God, this is going perfectly. Those three companies should not like me."

Tony Fadell:

You want them to hate you.

Guy Kawasaki:

And he said, "But for that reason, we're not making you a director." That's the moment I decided to quit Apple. We have similar stories.

Tony Fadell:

That's funny. Sometimes you just are scaring them and they're like, "Okay, we don't want them on the inside."

Unfortunately that does happen sometimes. It does happen sometimes. You're too much of a threat. Good for you.

Guy Kawasaki:

Okay.

Tony Fadell:

That's a great time, unfortunately.

Guy Kawasaki:

Yeah, it was a great time. I kind of opened up how much I loved your chapter and diatribe against massages. So people may be wondering, what the hell is he talking about?

So just explain your take on massages and perks versus benefits.

Tony Fadell:

I didn't arrange, obviously, the book to come out when it did. But it sure came out at exactly the right time about this topic. If we look back just in 2018, or specifically during COVID, everything was about, what is best for the employee? What does the employee want?

We have to bend over backwards to give the employee anything and everything that they want so we can retain them because the labor market is so tight.

We can't even hire the people we want with the resumes we want, with the experience we want because everybody's paying tons and tons of salary and all this stuff and we got to have all these perks to attract them.

So what happened was literally from 2012, maybe 2010 until 2020, 2021, Valley and startups in general decided they needed to compete with the Metas/Facebook/Googles of the world and offer all of these types of perks.

What happens is over time is, yeah, it's fun and neat for the beginning and people are like, "Oh, this is so wonderful."

But people get used to it. What happens is what seems to be a nice benefit or a perk, turns into a entitlement. So people are like, "I want more of this." Then you give them everything and then they're like, "I need a little bit more and a little bit more."

There's a pendulum that swings. So we have to go from the pendulum being all about the company, to all about the people, and it swings back and forth, it swings back and forth.

What we're talking about is we're talking about something that's balanced between what's great for the corporation and the customers, as well as what's great for the employees.

We're seeing this pendulum swing very quickly from this perks laden, give the employees everything, to this more balanced thing, which is let's find the right happy medium. Because most of these companies can't afford them. Even Google's thinking about cutting things back in this kind of economic environment.

Not everything is always up and to the right, profitable, everybody's doing well, there's tons of free money in the market, all of those kinds of things. We are now back to this scarcity model instead of an abundance model.

So a lot of people are going to wake up and basically this dream is over and now it's turned into nightmare that they can't get everything they want. I think it's incumbent on the boards, the management teams of these companies to make sure they find the right balance between what's employee friendly and what's company friendly and find a middle ground.

Because if not, we cannot be swinging this back and forth because then people get whiplash. You get everything, now you get nothing. We got to get a nice set of balanced things saying it's all about benefits and making sure we keep employees happy with the best benefits for themselves and their family, they're extended family.

As opposed to what just keeps them inside the office lulled and that they never want to go a competitor. Because those competitors now are trained back on all these perks too.

So we are in a new era, the same era that I had to go through in the nineties, we're just back to it. Where okay, we're going to be much more prudent with how we spend our money and the benefits we give and the perks we give. But it's just healthy, in my respect.

Any company that's still pitching perks and crazy benefits and all kinds of stuff, there's probably a company you don't want to go to because they don't really have the reality of the situation right now.

Guy Kawasaki:

How do you measure your worthiness? How do you assess yourself?

Tony Fadell:

How do I assess myself or the things that we create? That's different.

Guy Kawasaki:

No, how do you assess your life looking back?

Tony Fadell:

So looking back, on life is, it's about the journey. So have you put yourself at enough risk? Have you taken on enough risk in your life to say, "I have really lived the journey."

As opposed to just being on the escalator of life. Just kind of, eh, I'm going on the escalator, letting it drive me wherever it goes. As opposed to me plotting a course and basically bush whacking my way through the forests and the trees and charting a new course.

So to me, have you taken on risk? Have you charted new courses? Have you been able to at least try to create something that's going to matter. And try to create it with people who you can really learn from and give back to?

So have you challenged yourself? Have you worked with people who can challenge you as well as that you can challenge and they've challenged you? And have you tried to make something of value along the route?

Because it's about the journey. It's not about success or no success. It's about the people and the things you try to create and manifest in the world. That's when you look back and say, "Have I had a career of value?" Not because I changed the world with an iPhone.

But because the people and the teams and myself all tried and strive to do something that was really hard and that should be meaningful and hopefully one day will materialize.

Guy Kawasaki:

That last question is, what should an entrepreneur look for in co-founders?

Tony Fadell:

One, they don't think similarly to you. In other words, they might have similar experiences, but they think slightly differently. Like there's science and engineering and then you have somebody who, sure they might be science and engineering savvy.

But they really are looking at the business or the sales or the marketing or they're looking at other aspects of it. That the two people can come together and really try to compliment each other.

I'm not saying it has to be purely business only and purely engineering only. Matt Rogers and I were great co-founders at Nest. He stayed really on the engineering side and I stayed much more on the business marketing sales side, even though I didn't know everything on that. We just made sure we were delineating it and I knew that I wasn't going to get back in engineering.

So even if you have an engineering experience co-founder and they are the ones who are saying that they're not going to do engineering, they have to commit to doing the other things.

They can't just say, "Oh yeah, I'm going to do this stuff for a little while and then I'm going to go back doing the cool engineering like you get to do."

So make sure you're complimentary, make sure you can lift each other up when the other one's down, that you've had some kind of working relationship. And that you can really trust each other's judgment calls and that you feel good about it.

Because there's so many things you can't tell your board or you can't tell your direct reports. You need somebody there and you need to have somebody who's really a friend, a confidant, and somebody you trust, a partner, a true partner. Who you can build this, whatever it is you're building together.

Guy Kawasaki:

Thank you very much, Tony. This was a great interview. There was so much tactical and practical information in this. I tried to ring every drop I could out of you in an hour.

Tony Fadell:

Thank you. Those are great questions, we got through so much. But I hope it's going to help your listeners and that's what my goal was with Build and thanks for the time. Appreciate it.

Guy Kawasaki:

Well, if they want more, all they have to do is buy the book.

Tony Fadell:

You're right. Build. Build, baby

Guy Kawasaki:

A last, this episode must end. But now you have the information and the inspiration to go off and dent a universe, to make your iPod, your iPhone, your Nest.

To make insanely great products that change the world, all because of this interview with Tony Fadell.

I'm Guy Kawasaki. This is Remarkable People. Remember us when you make your remarkable products, no one will be happier than Tony and I.

My thanks to Jeff Sieh, Peg Fitzpatrick, Shannon Hernandez, Madisun Nuismer, the drop in Queen of Santa Cruz, Luis Magaña, and Alexis, I'm applying for college now, Nishimura.

Until next episode, Mahalo and Aloha.