Tony Fadell on Taste, Opinion-Based Decisions, and Refusing to "Cognitively Surrender" to AI
Lenny's Podcast
Tony Fadell led the iPod, co-created the iPhone, founded Nest, and was part of General Magic. He now invests in and advises deep-tech startups through Build Collective. In this conversation with Lenny Rachitsky, he returns to one question from several directions: when a product is genuinely new, how do you decide what it should be? His answer is that first versions depend on informed judgment rather than data. A product also includes its marketing, its distribution, and its story. And because AI makes building cheap, he argues, well-considered work will stand out more than before, provided builders don't hand their judgment over to the machine.
The iPhone keyboard: when the data doesn't decide
Lenny opened with the BlackBerry movie, which ends with the BlackBerry founders dismissing the keyboard-less iPhone. Fadell said that inside Apple, the keyboard question was "the most heated conversation and it dragged out the longest."
One camp saw BlackBerry users as the market to win. The other camp noted that only 1–2% of mobile phone users at the time had a BlackBerry or even knew what one was, and asked what the other 98% would want. Fadell was cautious at first. He had worked on virtual keyboards and handwriting input since General Magic in the 1990s. That work used single-touch resistive displays, so he knew their limits. Multi-touch at the time existed only on a table-sized prototype ("a big ping pong table"), not in a form you could user-test.
So the team built tests. How fast can a given text be typed on a hardware keyboard, and how fast on a multi-touch virtual one? They measured error rates as well as speed, and how errors got corrected. Over several months the virtual keyboard's numbers crept upward. Getting there meant repeated changes to hardware, software, filtering, and on-screen graphics. Fadell eventually convinced himself that it wasn't "as good as a hardware keyboard," but that it was "good enough." Others reached the same conclusion. Some stayed adamant that a physical keyboard was required.
Fadell uses this as his example of what his book Build calls data-versus-opinion decisions. The data showed pros and cons on both sides and did not settle the question. Steve Jobs made the call. As Fadell recalls it, Jobs told the holdouts that if they couldn't get on board, they could leave the room and work on another project.
Why a 1.0 needs "tastemakers"
Lenny raised a graphic about functional versus dysfunctional organizations: repeated "unkind truths" produce functional systems, and repeated "kind lies" produce dysfunctional ones. Lenny also raised Fadell's defense of micromanagement.
Fadell's case starts with the nature of first versions. For a new category or a device the world hasn't seen, there are few analogs to base data-driven decisions on. If you insist on data at every step, he says, you either copy data from some existing product and end up undifferentiated, or you end up with "just data." Most 1.0 decisions are therefore opinion-based. One person or a very small group has to own them and take a blank sheet to an actual spec. He calls this "a benevolent dictatorship": the team won't know what it doesn't know until it ships and hears from users.
He says this is hardest in consumer products. Consumers can only judge a product in full context: how they discover it, how the marketing presents it, what the key features are, and what it's like to use. They also need to have spent their own money on it. A truly new product therefore can't be validated by consumers before launch. The whole ecosystem has to be built and shipped before the feedback means anything. So the small decision-making group has to look at marketing, engineering, and sales angles together. They also have to explain their reasoning well enough that the rest of the team follows. Fadell's view is that if the leader has "an informed gut" and can articulate it, the team usually aligns. Only when the team is fully opposed does it "maybe" have to get unkind.
He contrasted this with what he says he saw many times at large corporations. Leaders or boards hire consultants and run user studies without the full context, get data, and use it to "cover their ass" rather than take responsibility for a decision that might be wrong and have to be corrected later. When Lenny summarized this as the power of a singular leader's instinct, Fadell added a qualification. The leader's decision rests on "a lot of informed judgment from all the experts around," plus questioning, refining, and prototyping. It is not something that comes to you "one morning."
Micromanage the decision, not the operations
Fadell reframes micromanagement as "sweat the details," applied selectively. Early in his career, he says, he thought everything mattered. He drove himself and everyone else "nuts" and wanted things done exactly his way. He later concluded that only a few things need tight control. Those are mostly things the customer experiences, plus some manufacturing, cost, or long-term-vision issues. Everything else can be delegated.
By micromanaging he means micromanaging the decision: specifying exactly what data is needed to inform the gut, as with the keyboard tests. He says it also applies in a crisis, and in system-level problems where a low-level change ripples through several layers. In those cases every group finds reasons why it can't change its part, so someone has to keep asking why and act as "the orchestrator" of many components. The keyboard needed hardware, software, filtering, and graphics to change together. He sees that kind of coordination as the legitimate case for close management.
Nest Protect, orphaned products, and the AI home that could have been
Lenny asked whether the Nest smoke alarm had been discontinued. Fadell confirmed it and said it hurt. He called it one of the hardest products he and the team ever made, "an ultimate constraint kind of product to actually innovate in," and said it was the best in its category for a decade. He says people now tell him their units are expiring and ask what to buy, and he has nothing better to recommend. His explanation is that it became "an orphan," a "stepchild" inside Google. It needed a lot of love and attention, and nobody wanted to put in the effort. He believes the Nest organization as a whole suffered from cultural and probably business mismatch. Lenny mentioned the alarm's spoken warning before it gets loud. Fadell said the team called that feature "heads up" and designed it so people wouldn't get "PTSD" every time the alarm tested itself.
Fadell thinks that if Nest had kept investing, its devices would be central to today's AI assistants. His reasoning is that AI needs context, and in a home the best context comes from well-placed sensors. Those sensors can pick up comings and goings, who is in a room, and audio without being invasive. That would enable an assistant that "really knows what's going on." He says this was Nest's vision from the start. The Nest learning thermostat was really an AI thermostat, but in 2011 calling it that "people would have freaked out." AI was a foundational piece of the company from 2010, though "obviously not LLMs." He believes the vision was simply about 15 years too early.
Asked whether there's room for a new Nest, he said "for sure." He says he is receiving business plans pitched as "Nest 2.0." He also mentioned that Ring is attempting something similar, which he doesn't consider very privacy-focused.
Pain plus new technology: deciding what's worth building
Hermann Hauser, co-founder of Acorn Computers and co-founder of ARM, asked through Lenny how Fadell decides what is worth building. Fadell says he always starts from pain: pain people have now, or pain he can see coming. Those pains usually exist because the original product had unintended consequences or was limited by the technology of its time. It then evolved without ever being rethought. People got used to the pain because the product relieved something worse.
The second half of his formula is whether a new technology can now solve that pain. For Nest, the pain was that heating and cooling made up about 50% of a household's energy bill. The devices controlling it had arcane interfaces that people ignored. Programmable thermostats existed, often subsidized by utility rebates, but nobody used the programming, which Fadell compares to programming a VCR. The new technology was AI that learns when you're home and what temperatures you like. He called the pricing "the crazy opinion-based decision": $249, five to six times what existing thermostats cost, justified by an estimated saving of $800–$1,200 a year.
He stresses that the innovation went beyond the device. Thermostats had been installed by third-party installers and bought through them, not at retail, so Nest had to reinvent installation and purchase too. He says the iPod similarly meant iPod plus iTunes plus the iTunes Music Store, and the iPhone meant iPhone plus the App Store.
Lenny described the second half as the "why now." Fadell agreed and listed the technologies behind each product. For the iPod: portable battery-powered mass storage, digital music and MP3s, the first lithium prismatic polymer cells, and low-power ARM processors. For the iPhone: multi-touch, processors just fast enough, widespread Wi-Fi, 3G on the way (the phone launched on the slower "2.5G"), digital cameras and video, and YouTube. He contrasts this with BlackBerry, which he calls "really just a texting machine."
The three-generation rule
Lenny asked how to tell when an idea isn't big enough. Fadell answered that the iPod "wasn't big enough" either at first. The first generation sold mostly to Mac loyalists, less than 1% of the market. Each launch quarter would sell out, and then sales would die. The second generation did the same. Only the third generation took off, when it worked with Windows and had the iTunes Music Store.
Windows support was itself a fight. Fadell's team wanted it right after the first iPod shipped. He says Jobs responded "Over my dead body," because the iPod was meant to sell Macs. A skunkworks project kept Windows support going in the background. The team's argument, as Fadell tells it: without Windows, the iPod doesn't cost $349, it costs $3,000, because you have to buy a Mac and move your digital life over. And customers weren't going to take that risk with a nearly bankrupt company. At $349, people could try the brand. Fadell believes that without the iPod "there would have been no iPhone," and probably no Apple, given how close to bankruptcy it was in 2001. He notes Apple had no retail stores then.
He described another skunkworks example: the stylus. Jobs, he says, never wanted a stylus on the iPhone or iPad. He feared a pen-dominant interface like Windows pen computing. Fadell argued that business uses such as form filling would need one. It was added through a separate skunkworks effort and is now a significant feature for professionals, artists, and hobbyists. His lesson is that some work should continue even when the opinion-based leader disagrees, if you can see where things are heading.
The iPhone wasn't an instant hit either, Fadell says: it was AT&T-only, 2.5G, and US-only. His rule from the book is that everything needs three generations: make the product, fix the product after customer feedback, then fix the business, meaning margins, volume, and reliability. He says Apple made no money on the first iPods or first iPhones. Nest needed two generations of the smoke detector and several of the thermostat before the business worked. Asked how often Jobs was wrong, Fadell said everyone was wrong at times, and the big hits overshadow the misses. He cited Jeff Bezos's similar view: you only fail if you stop, and otherwise "that's called learning."
Marketing is part of the product
Fadell repeatedly returns to the full customer journey. He argues that builders live inside their product's context and even adopt personas: a single mom, a dual-income couple without kids, seniors. Real customers, though, aren't aware of the product within their own lives. Marketing has to put the product into their context in visuals and words so that they feel "Oh, they get me," before they ever touch it. He regards word of mouth from trusted early adopters as the best driver. Those early adopters are not the "wacky George" who tries everything, but the people others listen to. He says his book updates the Crossing the Chasm framework: messaging changes with each product version as it reaches later adopters, and the language for laggards may be entirely different.
His main example is the iPod in Europe. Apple initially sold mostly in the US, some of Canada, and Japan. By around the fourth-generation iPod, its US messaging had been refined for late adopters. When Apple pushed into Europe, it ran the same marketing, and sales didn't respond. European audiences hadn't gone through the early-adopter phase, and Fadell says they adopt technology more slowly. The team had to redo the marketing and seed word of mouth from scratch. His conclusion is that faster global distribution doesn't speed up awareness and understanding. You can't address newcomers in the language of people who've known the product for three years.
On "1,000 songs in your pocket," Fadell said he doesn't know the backstory. Apple's functions were separate, with Jobs as the hub, and the engineering team first heard the line as a finished tagline and thought it was "genius." The first iPod was a sprint of roughly five to six months, from April to the end of October. The iPhone was a 2.5-year bet with more debate. For example, the team discussed "iPod phone" versus "iPhone" because Cisco held the iPhone trademark.
OpenAI, Netscape, and "working backwards"
Fadell applied the marketing argument to AI companies. In his view, OpenAI started as a viral technology demo without a clear answer to "what does it do for me" every day. It then spread across Codex, Sora, and plans for "sex chat" until users could ask "what are you?" He compares it to Netscape Navigator: everyone got the tool, but its purpose had to develop later. He says Anthropic had a clearer answer in Claude Code, and he claims Anthropic is now valued higher with more revenue. He thinks OpenAI added product thinking "too late." His underlying point is that thinking about marketing early forces you to think about the product.
This is why he recommends writing the press release before starting a project. Lenny compared it to Amazon's "working backwards." Fadell objected to the name. A film starts with a script, a treatment, and character development, and nobody calls that backwards. He says it only sounds backwards because tech is technology-led, which is how he thought at 20. The press release also enforces limits: a customer can absorb three or four key features, beyond which it becomes "gobbledygook." That affects decisions like refusing to add five more features, or noticing that cutting two of three tentpole features leaves nothing to sell. "The technology's in service of the customer," he says, not something to "jam … down the customer's throat." He points to General Magic as the counterexample: "we made the iPhone 15 years too early," building cool things nobody needed.
Builders, product managers, and AI-generated code
Asked whether product management, design, and engineering are merging into a single "builder" role, Fadell described product management as the discipline sitting between marketing, sales, distribution, sometimes manufacturing, engineering, and customer support, and stitching them together. Prompting an AI and getting output doesn't remove those functions. Each represents a distinct perspective on the customer.
He drew an analogy to AI-written software, using the leaked Claude source code from about a month earlier. According to Fadell, Dario Amodei had said 90–100% of Anthropic's code was written by Claude. When the code leaked, he says, experienced software architects who looked at it "threw up": the main loop was brittle and unreadable, and should have been layered into "12 or 15 different sub functions." People responded that "the AI knows it." Fadell asks whether such code is secure, maintainable, and possible to roll back and understand when something breaks. He argues that good code needs a mix of expertise: architects, optimizers, general coders, and security reviewers. Without that structure you get "short-term gain for very, very long-term loss," meaning technical debt.
The same applies to product work, he says. A product manager who prompts for a result without strong marketing, communications, architecture, or manufacturing expertise is building on "a really crusty foundation." The claim that the AI will get smarter and fix it "is not proven." What works, in his view, is for humans to architect and lock in the structure, then have tools like Claude Code work within limited, well-scoped pieces. He compares the alternative to fast fashion versus luxury goods and calls the result "fast software." If you're building a real company, he says, it "can't be throwaway." He recommends using AI coding agents heavily for prototypes, to build the informed gut, and then architecting deliberately.
Lenny suggested that as building gets easier, product judgment becomes more important. Fadell agreed: if you're selling to humans, you still have to boil the product down to three features they understand. His example is the flight-tracking app Flighty, which he calls "luxury software." A version two could perhaps be vibe-coded by pointing an AI at Flighty. The original could not, he argues, because a highly differentiated first version has no model in the training data. Some sub-functions might be generated, "but the whole thing and the architecture … I don't think so." He called this "one old guy's point of view."
Storytelling: truth, rehearsal, and the infomercial lens
Fadell calls storytelling fundamental to humans: it is how we pass on information and get people to commit. He cited Dave Chappelle building a 20-minute story to a punchline, and the best teachers who explain why a subject matters. Great marketing and sales come from that. The best version is when the story is expressed through the product itself, as with the love and care in the Nest devices, rather than perfume on a pig.
He learned from his father, a Levi's salesman, who sometimes talked customers out of a purchase, even sending them to a competitor, to build a relationship. Fadell ties this to Jobs's view that "the best marketing just tells the truth." During the iPhone's 2.5 years of development, Fadell says, Jobs honed the story every day. He kept it away from marketing, focused on the key features, and pitched it to smart outsiders repeatedly, so that on stage he had told it "10,000 times" at least. Fadell says he did the same with Nest, starting with a "virus of doubt": do you know how much you spend heating and cooling your home? His summary: tech-led teams "talk about the what" when the story lives in "the why."
He also offered a lens he says isn't in the book: study late-night infomercials. They exaggerate pain (the cheese grater that bloodies your knuckles), then show ease of use, purchase, and return. He doesn't recommend copying their overhyped expectations. But he suggests studying their psychological and emotional techniques and then applying them "with truth." Lenny joked about writing the infomercial first. Fadell said that's what you don't want to do, but Lenny proposed it as a way to go to the extreme and then pull back to what's honest.
The next iPhone: voice first, but still a screen
On what AI device follows the iPhone, Fadell separated the long term from the near term. Long term, barring brain-computer interfaces or retinal projection, he believes we'll still need a display, likely a smartphone-like slab, possibly foldable. He cites Humane as evidence against tiny screenless devices. A palm projection is "different, not better," he says, and still needs a surface to project onto. You can't navigate by voice alone: after "turn left in 100 ft," you just want to glance at the map. He noted that the film Her also has glass screens.
What should change is the input hierarchy. Today phones put touch first, keyboard second, and voice third. Fadell wants that inverted, with voice primary and everything built around it, then keyboard, then touch. He says he always wanted to remove displays at Nest. Voice has lagged because it was bolted on, as in cars, and became a gizmo like early Alexa or Siri. Good transcription like Whisper Flow isn't enough; voice needs intelligence and memory behind it. Other inputs will remain as a crutch because voice "has never been able to deliver."
In the near term, he expects devices to look much like today's smartphones with app interfaces, because people don't yet trust AI with that much. He compares the trust gap to General Magic and points to stories of coding agents deleting source code. He also doubts consumers will keep paying $20 or $200 a month for AI unless it becomes incredible. Many are getting a "Siri 1.0" experience. He compares it to paying for full self-driving and still waiting 15 years later. Social adoption and trust will take many iterations.
Hardware is back, and what Fadell is betting on
Fadell is amused by the renewed enthusiasm for hardware. He says he built hardware in 1995–96 when the Valley told him "it's all about the internet," pitched hardware businesses in 1999–2000 that were called "the stupidest idea ever," and saw software-only thinking return after the iPod. His view is that each new level of software needs new hardware: mobile networks with mobile software, MP3 players with the MP3 format, and now AI with data centers and edge compute. Now that investors say vibe coding makes software-only companies worthless and fund only businesses "with atoms," his reaction is "Duh." Full-system products cost more and scale more slowly, he says, but they have staying power and enable features software can't. He cites Waymo as a hardware platform that will host other uses. Lenny noted Evan Spiegel had said much the same about Snap's Specs.
Among his portfolio companies, Fadell highlighted Simbe Robotics, which runs retail inventory robots. He says it has been at this for seven or eight years and "is just taking off." Greyparrot uses AI and cameras to sort recycling. Another company uses AI and cameras to catch weaving and color defects in textiles, which would otherwise lead to finished products being incinerated. He mentioned Recursion's roughly ten years of AI drug design. He also mentioned a clean agricultural fuel and oils company he says is cleaning up farms across Central America, and early bets on Grok and Cerebras. He prefers "really good AI that you can trust," scoped to real problems, over "pipe dream AGI." He also criticized current venture pricing: investing at nine- or ten-digit valuations can't produce venture returns. Lenny quoted Esther 4:14 ("made for a time like this"). Fadell connected it to General Magic: stick with an idea, because by the time something is hot, "it's already too late."
He described Build Collective as investing in deep technology that can "unseat the incumbents" by being fundamentally different rather than competing on features, with a focus on environmental, societal, and health benefits. He said the portfolio has at times exceeded 200 companies. The firm also advises on product management, operations, financing, org development, and especially marketing and communications, so technical founders reach a viable product closer to version one or two than version four. He has also just finished his first year as designer in residence at MIT, teaching students to ask who they're building for and why.
Ethics, addiction, and "digital food"
Fadell raised ethics himself. He asked product builders to hold real principles as firmly as they would hold to good interface design: don't try to addict users, and if your employer does, "there's always other jobs." He believes users sense and reward this, citing Apple's privacy stance as a "double-edged sword." He recounted a meeting when the iTunes Store was expanding into video. Someone said "we should have porn, of course," and Jobs shut it down by asking whether that was the world they wanted their kids to grow up in. Fadell contrasted this with companies offering "sex chatbots for everyone." He worries that AI companionship turns personal connection into a product, offering a "perfect interaction" in place of messy human ones, so that "we're losing humanity." He took care to say he isn't calling for moralizing, and "I'm not MAGA."
On whether the iPhone itself is too addictive, he said it wasn't designed to be. Social media was an unintended consequence, though Apple distributes the apps. He compared it to junk food: physical food has nutrition labels, warnings, and age rules, while "digital food" has none. He thinks Apple and Google could do much more with consumption tools and information. In his analogy, the phone is a refrigerator: you can stock it with good or bad food, and you can still open it every five seconds. People need habits, regulation, and tools, because making customers unhealthy eventually leaves you without customers.
Closing: don't cognitively surrender
Asked how listeners could help him, Fadell pointed to buildc.com and the marketing his portfolio companies have produced as examples. His main request was that people read, hone their craft, and make better products, "because the world only gets better by the things we make." On AI, he said to use it for what it can help with, but "don't surrender to the machine. We can use the machines, but don't cognitively surrender." With better tools available, he hopes builders will make things better than he or his teams have.
You still need humans in the loop. Don't surrender to the machine.
We can use the machines, but don't cognitively surrender.
Because it's so easy to build, the things that stand out are the things that are really well thought through.
Today in the AI world, I can just make a prompt and all of a sudden it gets spit out.
You're building on a really crusty foundation. You're getting short-term gain for very, very long-term loss. If you're going to build a real company, it can't be throwaway.
One of your colleagues, Hermann Hauser, that ask him how he decides what is worth building.
I always start from pain. Are there new technologies to solve that pain?
Bring innovation in, revolution in, and redefine the space.
What's the threshold? What's the sign of, okay, this isn't big enough?
Well, the iPod wasn't big enough. It took three generations of the iPod before it became successful. You got to fail a few times till you find your way.
You are so into marketing, that piece of building that I think a lot of builders don't think about at all.
The technology's in service of the customer. Not we're going to jam the technology down the customer's throat. A customer only sees what they see through the lens of marketing.
You often come back to the value of storytelling for product builders.
Too many times when we're technology led, we talk about the what. We don't talk about the why.
The why is storytelling.
When I watched Steve, he was honing the story of the iPhone every day. And so when you saw him come on stage, it was just... cuz he had done it a hundred thousand times.
Today my guest is Tony Fadell. Tony doesn't know this, but ever since I started this podcast, he's been near the top of my wish list of people that I've dreamed to have on this podcast. And that's because Tony is the epitome of what most people listening to this podcast want to become. He co-created some of the most innovative and beautiful and popular products in history. The iPod, the iPhone, the Nest thermostat. He's also famous for being part of the legendary team at General Magic. He's co-authored over 300 patents. He also wrote one of the most important and valuable and inspiring books for builders called Build. Tony is currently an active investor and advisor to deep tech startups with his team at The Build Collective. He was recently named the inaugural designer in residence at the MIT Morningside Academy for Design.
There's so much gold in this episode. I could go on and on. I'm going to leave it there. Before we get into it, don't forget to check out Lenny's Podcast dot com for a free year of some of the hottest and most well-crafted AI products in the world available exclusively to Lenny's newsletter subscribers. With that, I bring you Tony Fadell.
Tony, thank you so much for being here and welcome to the podcast.
Thanks for having me. I appreciate it.
I have a bazillion questions I want to ask you. I feel like I could fill 4 hours of conversation with all the things that I want to get out of your head. I want to start with the BlackBerry. I was just watching the BlackBerry movie recently and it's kind of this journey of the BlackBerry founders and their story. And then at the end they're like, "Oh, and this iPhone thing launched." And they're like, "Nah, this is dumb. It's like no keyboard. This is not serious. Can't do anything with it." I've always wondered, just being on the other side of this, being within Apple building the iPhone, how much did you guys actually doubt that, okay, maybe they have something, maybe we need to add a keyboard?
It was the most heated conversation and it dragged out the longest. There was one way of looking at the BlackBerry, which was that is the market we want to go after and we want to win. And then there's the other side, the flip side of that argument, which is only 1% or 2% of mobile phone users at the time had a BlackBerry, knew what a BlackBerry was. So, what about the other 98% of the people? What would they want? What would they need? Why are we going to go after winning this very loyal and, you know, incredibly passionate user base and try to pull them away from something?
And so, there was this basically head-to-head competition between a display keyboard or virtual keyboard and a physical keyboard. I had been doing virtual keyboards for a while since General Magic in the '90s. And I knew what handwriting and keyboards were like on these touch screens. But I was only doing it on a... and I was writing software and calibrating them and trying to make them work with a single touch display, resistive or what have you. And so, I knew what the limitations were of those kinds of things. So, I was like, "Hmm, this is really going to be difficult." And we hadn't, you know, multi-touch was just on a big ping pong table. It hadn't been scaled down. So, it wasn't like something in a consumptive form where you could really do user tests with it.
And so, we set out a set of tests. Like, okay, how fast can I type this text? How fast can I do this on a hardware keyboard? And then, how can we do this on the virtual one with multi-touch? And it was a hardware-software integration challenge of how we could get this to work. So, we were going back and forth and back and forth. Oh, that doesn't quite work in the software. Oh, we need to change this in the hardware. And so, this was over a set of months. Okay, the hardware keyboard's here, and, you know, it depends on how much you've been using it, but there's this margin of error and we could really understand it. This over time started way down here and then, you know, we got a little faster and a little faster and a little faster. And how many errors? Not just how fast, but how many errors and how do you correct the errors and all of those things.
And at the end of the day, I was able to convince myself it wasn't going to be a hardware issue. And I was convinced at some point that we were good enough. Were we as good as a hardware keyboard? No. But were we good enough? Yes. And then other people came to that conclusion. But at the same time there were other people who were adamant that the hardware keyboard has to be there. And they were unrelenting.
And so it came down to... this was a, you know, classic, like I say in Build, data versus opinion-based decision. And if you think about it, you had data that said there were pros and cons on both sides. And what happened was the data was not clear that we should choose one over the other.
And Steve said, "We are going this way." Enough other people kind of said, "Yeah, that seems like that's the right thing to do. We're going to get close enough to get there." And then other people were like, "No, my opinion is this." And guess who wins at the end of the day? Steve Jobs' opinion does. And he was like, "If you're not going to get on board, get out of this room and you can go work on another project, but you're not going to work on this one."
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One direction I want to get into here is this idea that you talk a lot about, about micromanaging being actually really important and powerful. So, there's this image that's floating around Twitter that I don't know if you've seen. I'll show it on the screen as I'm describing it and hopefully you can visualize it. It's a functional system versus a dysfunctional system. Basically, a company that's doing great versus not great. And there's this chart that goes up to more functional that is basically unkind truth and then another unkind truth, another unkind truth creates more functional systems. Kind lie followed by kind lie followed by kind lie leads to dysfunctional systems. Something Steve Jobs is very famous for. Yeah, in your book you talk about mission-driven are actually really... You want a mission-driven... There's certain types of that are great. Talk about just the importance of somebody being very direct in what it takes to build great products.
When you're doing a 1.0 of anything, if you're doing anything that matters and it's a 1.0 and it's a new category or it's a new device the world hasn't seen before, you have very few analogs that you can use to make data-driven decisions. And so, if most of your decisions are going to be opinion-based decisions for a 1.0, you have to have one or two or a very, very small set of people who are in charge with making the opinion-based decisions and can actually get you from point A, from a, you know, a blank sheet of white paper or whiteboard, to an actual 1.0 spec.
Because if you try to do data-driven decisions all the way along, you're either not doing a differentiated product because you're taking data from another thing or you're just getting just data. Right? So, you're going to have to figure out how to get opinion-based decisions to happen, and that means you have to have, you know, for lack of a better word, tastemakers. This is what we are doing. We are the person or the team who is going to make those opinion-based decisions. Of course, some people aren't going to like it, and it's going to be like, "I'm sorry, this is a benevolent dictatorship. This is what's going to happen, and this is the vision, and we don't know what we don't know until we ship it and we get opinions from, you know, the users."
Now, it's very different when you do this in a B2B context versus a B2C context. And so, the hardest environment to work with when you have these opinion-based decisions is in a B2C context because you have to see these decisions in the full light, and a consumer does. They have to see it from the marketing, from how they discover it in the marketing, the key feature sets, the ability to use the product, all of these different things for them to actually come up with an opinion of what they like and what they don't like and being able to critique it.
And if you're doing a 1.0 and the world hasn't seen you, you're not going to get that from consumers, ever. You have to ship it, and you have to build the entire kind of ecosystem so those consumers see it in the fullness, so that when they do the evaluation and they spend their own money, then you're getting real feedback. When it comes to consumer hard atoms-based products, with services or not, whatever it is, you have to build the entire thing and visualize the entire thing to be able to make those opinion-based decisions.
And so, you need a small team who's looking at the marketing angles, the engineering angles, the sales angles, all those different things to go, "Okay, that's the way we're going." And there's only so many ways you can do it because the rest of the team doesn't see this either. And so, you have to be very articulate about what that opinion-based decision is made for, why, how it might affect the market, how you do it, and make sure the team understands it. Now, if the team is just fully against it, well, then maybe it has to be unkind. But hopefully, if you've done a good job and you really, you know, have an informed gut and you can articulate that, you can get everybody moving in the same direction, even if it's going to be risky.
You're right, you got to know that you got to take risk, cuz most people in those other functions, they don't want to take any risks. And so, there's someone who's got to be the target, right? And today, you know, in many contexts, people go and hire consultants. Right? They go and hire, okay, we're going to do a user study, or we're going to do all this, and they don't have the full context like I was just describing. They don't go buy the product, and what have you, and then they get data.
And that's because the leader, or whoever's in there, or the board maybe, it's like, we need data to make sure this 1.0 is going to be a success. And I saw this so many times at all these major corporations. So, they're just kind of covering their ass with data, and not really doing the hard work of saying, I'm going to make this decision, and we are going to select this, and yes, I might be wrong, or we as the opinion-based decision makers are wrong, and we will correct it later. And we'll take the heat for that. So, a great product manager, a great person who's leading this thing, has to understand that's what they have to do if they're really doing something innovative.
So, what I'm hearing here is just the power, especially in a consumer product, of a singular vision of a singular leader that drives it, that basically relies on their instinct and their taste and their experience.
They, and, again, a lot of informed judgment from all the experts around, asking questions, refining, prototyping, these kinds of things to then make a decision. So, it's not just like, I woke up one morning and, you know, now we're going this direction. No, there's a lot of work to get there.
I want to come back to the idea of micromanaging, which for a lot of people that word is bad. Don't be a micromanager. You advocate that for creating great products, you need to actually be really micromanaging. Just speak to that. What do you think people miss about the importance and power of micromanaging as a leader?
You know, we've heard the term sweat the details. It's micromanagement of certain details. And then there's the kind of hands-off of other details. You have to really understand the blend of which things really matter, which things don't.
When I was early in my career, I thought everything mattered. And I drove everybody nuts, drove myself nuts, the people hated it, like, you know, and it became like everybody's got to do it the way I would do it. It's like no, no, no. There's only a few key things, mostly for the customer, or maybe some certain things for manufacturing or cost or something where it needs to really be very clear, or a long-term vision.
But then you can delegate other things, but certain pieces of it you really need to... And when I mean micromanaging, it means micromanage the decision, not necessarily the operations of doing it. Making sure you're getting the data, like we did with the keyboard on the iPhone, to make sure we're getting the right data to help us get the informed gut to make that opinion-based decision.
And so it's the micro specification and delivery of those certain data pieces that you need. And maybe it's also to get out of a crisis. Or maybe it's a system-level thing where you have to worry about this thing at the low level changing up here and here, and like, we could do that, but only if they do this, and this is like, "Okay, guys, we're going to fix all of those things at once." And
you have to micromanage it because everybody wants to find excuses why they can't do that or they can't do that. So you have to ask why a lot. But it's all in service of some really key detail that needs to get delivered or some innovation that needs to be delivered. Just like I said with the keyboard, we had to do the hardware, we had to do the software, we had to do the filtering, you know, we had to do how the graphics were done on the screen. So, you had all of these layers that had to keep constantly changing and adjusting, and sometimes you have to micromanage that because there's just too many variables and someone has to be the orchestrator of this huge orchestra of many different components to kind of make it all come together and be harmonious.
I want to go in a slightly different direction. I want to talk about the Nest.
The thermostat, I'm assuming.
Thermostat, yeah. Versus what, the bird?
There were many other Nest products.
Right. All right. Yeah. Man, the smoke alarm, is that discontinued, by the way, the smoke alarm? Yeah, I just
Oh, you just... Why do you want to stab me in the heart? Like 2 years ago. That was one of the toughest products I and our team at Nest and other people who were on the team have ever made in their life, because it's so hard to make something like that. There's so many constraints. That's an ultimate constraint kind of product to actually innovate in. So, yes, it unfortunately is discontinued. But it was the best product in the space for a decade and no one changed it, no one invested in it. It is so crazy. It pains me and it pains everyone. People are like, "They're expiring around me. What do I do?" And I'm like, "I wish I could tell you there's something better." No one replaced it with something better. It's just mind-boggling that the number one product with revenue and everything, you're just going to toss it away.
Why do you think that's happening?
Because it was an orphan.
It's just not a big enough business within Google and they got that merger.
No, no. Yeah, it was a stepchild. You really had to pour a lot of attention, a lot of love to make something that was that crystalline. And it had to be well-formed and nobody really wanted to put in the effort. So, they probably were like, "Who wants to do this? Who's excited by it?" Nobody was probably excited and they just said, "Yeah, okay, it's not that big a deal at the end of the day," whereas if it was invested in, I think it would have been a critical piece of the next generation AI assistant in your home.
I want to hear more about that. And just on the smoke alarm point, my favorite feature: I was at an Airbnb once and instead of going straight to beeping, it was just like, "I'm about to make a loud noise." Like that. It's just warning you that it's going to get
We call it heads up.
I love that feature so much. It's like, "It's about to get very loud." You were telling me. That was so good.
You know, it's so that you don't get PTSD every time, because you know when a smoke alarm goes off. You're like, "Okay, everyone calm. We're going to do this now." Especially when we're doing tests and stuff, because people are supposed to test it, or it's supposed to test itself. You know, like, "Everyone stay calm. It's going to be good, children. We're just going to do this one thing. You'll get through it. Don't worry."
That's so good. I was like, "Thank you so much for telling me."
There was a lot of love and care poured into that thing.
So, I was going to ask specifically about the Nest. The Nest thermostat is still the best thermostat out there. I use it everywhere I go. It's just the best. The app hasn't evolved. Nothing's changed for a long time. Is it the same reason you just described? It's just not a priority?
It's definitely not. Yeah, you know, the whole organization was a stepchild for whatever reason. You know, there was cultural mismatch. There was probably a business mismatch. I think if Nest was around and alive today like it was, it would be a whole different thing, with Google and Gemini, and Google I/O was what, yesterday or the day before. You know, it would have been, I think, one of the centerpieces of what you could do, because AI needs context. AI needs a lot of context. And in a home, you want to make everything very seamless. And the way you get the best context is by having sensors properly placed around the home that don't necessarily invade privacy, but allow you to pick up a lot of comings and goings and who's who in the room and your voice and these kinds of things. Audio, I should say, not voice. To be able to give AIs context so that you can have an anywhere assistant that really knows what's going on.
Is there space for someone to launch the new Nest, do you think?
Oh, for sure. For sure. People keep asking me, "Why aren't we going to do it?" It's like, no, absolutely. Now's the time, if it isn't already happening. I'm actually getting business plans from people who are like, "Hey, is this interesting to you? Want to invest in it? You want to come and help us build it? This is like Nest 2.0." So, you know, they're trying to do stuff like that at Ring, not very privacy-focused, I don't think, but that's what they're trying to do. That was our vision in the beginning, to tell you the truth. We were like, "You're going to need lots of context in the home." Because remember, the Nest Learning Thermostat wasn't the Nest AI thermostat. It could have been called that, but we couldn't call it that in 2011 because people would have freaked out. Now, you would have called it the Nest AI thermostat, right? And people would have bought it. And so, we knew what AI was, right? So, since 2010, one of the foundational pieces of the company was AI. And so, that's how we were able to do a lot of the things we were able to do, but it was obviously not LLMs, but smaller stuff. And we said, "Okay, we can see this world growing in this AI assistant." Then voice assistants came, then there was Alexa and all that stuff that happened later on in 2013, '14, '15. It's like, "Okay." And that was Gen 1, but we could see this kind of blossoming and, unfortunately, in the fullness of time it takes 15 more years from the time Nest launched for that vision to come to fruition, but it is there now. And if we pitched it that way, we were just too early.
Let me follow this thread around how to know what to build and how you come up with ideas. So you emailed a bunch of people that know you and asked them what to ask you. One of your colleagues, Hermann Hauser...
Hauser, yeah.
Hermann Hauser. So his question he wanted me to ask you: he said, ask him how he decides what is worth building.
Okay. Well, Hermann's great. I've known Hermann since 1987, probably before most of your listeners were even born. But just for context, Hermann was the creator of Acorn Computers, which was the Apple II of the UK back in the '70s, and then he created with his team the ARM processor. ARM means Acorn RISC Machine, from Acorn Computers, and so he was one of the founders of ARM. Anyway, so Hermann and I go way, way back.
So the thing is, how do you figure out what is worthy to be built and what's not? The first thing is I start from pain. Some people start from other directions. I always start from pain. That's what I learned: what are people's pains right now, or you can see on the horizon they're going to have pain not too far away. But how do you solve for that pain? And typically those pains were there because when those products were created, either it was an unintended consequence or it was a limitation of the technology at the time it was created, and it kind of just evolved but it never revolutionized itself. And so, it just evolved and that same pain kind of was there, but it gave you enough of a painkiller for the other problem that having this new pain was worth it.
And so, I always kind of start with, okay, where's our current pain and are there new technologies to solve that pain? And like in the thermostat case with Nest, we could use AI to learn. So, it can learn when you're there, when you're away, what temperatures you like, so you don't have to program it, so you can save energy. So, the big pain was being either comfortable or saving money, because 50% of your energy bill was in this heating and cooling unit that you hated the interface of, you didn't know what it was, you just paid the bill. And so, it started from that pain and said, okay, well, programmable thermostats weren't innovated, but they weren't used. A lot of people had them because the energy company would give you rebates for it, but no one knew how to use them because they were arcane. It was like programming a VCR. And so, what I said was, oh, wait a second, what if it could learn your patterns? And that was AI. And so, now let's put that together in a much cooler-looking, attractive package that costs five to six times more than the things that you're buying today. That was the crazy opinion-based decision: okay, yes, it's going to cost $249, but it's going to save you $800 to $1,200 a year. So, it could pay for itself literally within a year or two. So, that was the big idea, and AI was brought to bear on that old problem, to hopefully solve it in a new way.
So it starts with the pain, long-time pain, maybe habituated-away pain that you have to discover, and new technology bonded with that to then bring innovation in, revolution in, and then redefine the space, which is what we did. And that's not with just the product, but how you installed it. It was always installed by third-party installers as opposed to yourself, and how you bought it, which was through the installer; you didn't buy it at Best Buy or somewhere else. So, we had to reinvent many different pieces of the puzzle to get Nest to be the Nest. It wasn't just the product. It was all the other things. Just like the iPod wasn't just the iPod, or the iPhone wasn't just the iPhone. It was the iPhone plus the App Store, iPod plus iTunes and then the iTunes Music Store. So, you have to think about the full thing you're trying to build, not just the one piece, even though that's what you might remember. You have to remember it's a system that you're going to innovate with.
So, there's this two-part kind of formula you shared here with pain and new technologies. The second part is really interesting. Essentially, it's like, what's the why now? What's the new tech that has emerged that now allows us to solve this pain? It feels like that's a core part of... Okay. It's interesting because when you talked about the iPhone keyboard, it was a similar story of like, okay, we can actually sort of do the virtual keyboard for the first time in history.
Right, exactly. It could be done because of multi-touch. That's really what it was, and then we were just on the verge of having fast enough processors, right? We were just on the verge. If you look at the iPhone or Nest or iPod, you can see where all these technologies were just coming to light. In the iPod, it was just now mass storage that was portable and battery operated. That was really what it was, and it was also MP3s, or digital music, right? And we were also the first products to have high-density lithium-ion, or lithium prismatic polymer cells. So, it was new battery technology, new portable mass storage, and this new generation of digital music. And we had ARM processors, right? And they're really, really low power. So, all of those things had to come together to do that.
And then on the iPhone, it was multi-touch, but it wasn't just that, it was also the fact that now we had Wi-Fi everywhere. And we knew that 3G was coming, because it was only 2.5G at the time and that was very slow, but we had Wi-Fi. And we had cameras, right? Digital cameras. We had digital video; we had YouTube at the time. So, it was all of those things just on the verge, to say this is going to be very different than what just came before it, like a BlackBerry, which was really just a texting machine and nothing else.
I'm going to close the loop on your advice on finding a great idea. I'm curious about the flip side of when it's not good enough. There are so many gadgets out there that are solving some pain level. Maybe there's a new technology that they integrated, but it's not a big business. It's not a real company. What's the threshold? What's a sign of, okay, this isn't big enough?
Well, you know, the iPod wasn't big enough. It took three generations of the iPod before it became successful. Anyone who remembers the iPod before the iPhone... because the iPhone swallowed everything. It's like the black hole of everything. But, you know, the first-generation iPod was only successful with the Mac geeks, and the Mac geeks were less than 1% of the market. And then the second generation was also that way. So, we'd sell everything we could, for the most part, in the first quarter, and then it would die, because it was just the Mac aficionados, the loyalists, who'd come and buy everything. And it wasn't until the third generation, where we made it work on Windows and we had the iTunes Music Store, that it actually started to take off.
So sometimes you have to say we're on the right thing, but we need to make some changes to get this market going. And that was a real opinion-based decision. The team that I was running, we were really clear that we had to have Windows connectivity out of the gate. Or not out of the gate, but just after the first iPod shipped. And Steve said, "Over my dead body, no way. This is going to help us sell more Macs." And then, you know, we're like, "Okay, we're making the second one. Oh, we're going to keep it Mac only. We just got to fix a few of these things and then all of a sudden it'll take off." And it didn't take off. It's a long story about how we finally got Windows connectivity, but there was always this skunkworks project behind the scenes doing that.
I did the same thing with the stylus. Steve never wanted a stylus on the iPhone or the iPad. He never wanted it. He's like, "Your finger is good enough. If we can't do it with the finger..." And I'm like, "But we're going to have a B2B context and we're going to have form filling and people are going to write." And he's like, "I don't care. That means we're going to get to like Windows pen." Because he thought it was going to be like Windows pen, where you had to use the pen for everything as opposed to using your finger. So it was like, instead of pen dominant, I want it finger dominant. That's what he was saying. But then when we added the stylus, which was another skunkworks project, all of a sudden it came out and it was like, "Well, we had to have a stylus, right?" And now it's a big feature of the product. Not everyone uses it, but it is a big feature for certain professionals who really want that, and artists and hobbyists and stuff. And so sometimes you have to have those skunkworks things that, even if the opinion-based leader doesn't like it, you're like,
"That seems like the right thing. Maybe not right now, but it's going... You can see it on the horizon." So you just keep working on those things.
So, like I said, the iPhone wasn't a hit right away. It was kind of like, oh yeah, it worked on AT&T and it was 2.5G and it was this and that and, you know, it only worked in the US. So we had to get multiple versions till we got out. And that's in my book, it's called... I think it's three generations. Everything needs three generations. There it is. Three generations. I've learned you make the product, you fix the product, and then you fix the business.
So there's no... I've never seen anyone get it all right the first time. You would like to, but you get close. But make the product, fix the product after you get customer feedback, and then make the business, which means make the margins. Like on the first iPods we weren't making any money. First iPhones we weren't making any money. Right? The second iPhone, or I say the second iPod, okay, we start getting a little bit better numbers. But we got more or less the features sort of dialed. Third one was like, okay, Windows, we got the margins, we're getting up the volume, we got all the right... and like, go. Right? Reliability, whatever else it had to be.
So you need to stick with your idea even if it's not necessarily going the first time, unless there's something really severely brain damaged about whatever it was. You have to restart, but sometimes you have to hang in there. And same thing with Nest, we had to hang in there with two generations of the smoke detector and a few generations of the thermostat before we made the business work. Right? Not just make the product work.
There's so many directions I can go here. One that's interesting is how often Steve Jobs was actually wrong. And how many times you had to...
You're like, takes a year still, like, okay, finally.
We all were wrong at certain times, but you know, when you hit it big, when you get the right ones, they overshadow all the other stuff. But that's how you have to try and iterate. You know, Jeff Bezos says the same thing. I believe in the same thing. You got to fail a few times till you find your way. But you only fail if you stop. If you keep iterating and keep going, well, then that's not failure. That's called learning.
The other interesting part of the story you just shared here, with some of my favorite stories in your book, actually. You kind of implied this, but basically the first iPod was, you had to have a Mac to use it. And the idea is you want to sell Macs. This is a way to get people to buy Macs. And the way you tell it is basically this ended up saving Apple eventually. Not selling Macs, but people buying iPods. And that became the big part of the business.
Yeah, the mantra was, Steve, you know, if we don't have Windows connectivity, the iPod doesn't cost $349. It costs $3,000 because you got to buy a Mac. And you got to move all your digital life over to it and everything else. People are not about to take a risk on this company that's almost bankrupt for $3,000. So how are we going to do that? Like, okay, let's make sure it is only $349 and that they can try it. And once they try the brand, they go, "Ooh, that's pretty interesting. Maybe I should try other products from this company and, you know, give them a shot." Because that was just such a sublime experience. And that's how it all changed, and that's how iPhone was able to be created, 'cause without the iPod, I'm pretty sure there would have been no iPhone. There would have probably been no Apple. Because it was close to bankruptcy.
Wow. That's crazy how close it was to that if some of these decisions went the wrong way.
Yeah, very close. Remember there was no retail back then, Apple retailers, none of that stuff. You know, most people don't know how on the ropes Apple was back in 2001.
So many stories, but I want to come back to the customer journey thread that you touched on, which I think is really, really important for people listening to this podcast to hear. Something that you kind of reinforce again and again in the book, and you have this awesome image that we're going to show of the entire customer journey. And the point that you make is so many product builders focus on building the product and think, build the best product, we're going to win, and you have this very important advice of, there's so much more to it. Talk about especially the marketing piece. Talk about what you think builders don't really get, even though they hear this advice in many ways.
When we build products, we define products, when we build them, we have a good sense of the context when we are defining those things. We're living in that world. Okay? And so we're like, oh, we're like this and these are our issues and this is who we are and, you know, maybe you put on personas. We would strip out and figure out who our target customers were with their personas. You know, is it a single mom with kids, or is it a dual-income, no-kid family, or is it senior citizens, or whatever, and we would come up with these personas and we would kind of live inside them as we're thinking about the product.
But you have to also remember that these people, they live in the context, but they're not aware of your product in their context. And so you have to bring it home to them and meet them where they are. And so your marketing, your website, your Instagram ads, your earned and owned media that you do, you really need to put your product in their context and make the visuals and make the words and everything sing to them. And if not, they're not going to get it.
Right? And so too many times we just say, only if we just make the perfect product. No, you have to put all... for a consumer thing specifically, and it's also really good for a B2B product as well, is make sure you understand your customer, and when you say the right words, they go, "Oh, they get me. Oh, I want to listen to these more." And this is before they ever got the product. You need to get them to convert in some way, and they need to hear that you've already thought about their issues, or you know and you're living in their shoes, and they're like, "Yes. Yes. Yes, more of that." Is this an emotional point? Is this a rational point? And you're weaving this tapestry to get them to come to some kind of trial or purchase or conversion or something of the product.
And the best way to do that is word of mouth, right? By other early adopters. But you got to do the same thing for the early... you know, not me, not the earliest early adopters, but the early adopters who other people trust to talk to, 'cause a lot of other people who are late adopters, they know, "Oh, well, that's wacky George. He tries everything." And then like, "No, no, no." But if so-and-so's tried it, "Oh, I should take notice of that."
Right? And so what you want to do is make sure you understand the gestation of your customer and where they are in the thing and who you're trying to... I also updated the Crossing the Chasm graphic in the book, saying how we go about this in our product developments. Because you really have to think about who your target user set is and your target marketing based on the version of product you're in and how you're going to get those higher and higher volumes.
And it really means speaking the context. So maybe when you first ship, you can speak to those early adopters, and you can put it in enough words that they're going to convert. But then the second version of the product, you're getting these later adopters, and you've got to speak in their language. And the third set of adopters, who are really laggards, you've got to really speak to them and, you know, go through that, and it could be totally different.
And so this was a very interesting story that was so emblazoned in my mind. Back in 2001 to '03, you know, still when Apple had no presence outside of the US. Apple was really selling in the US, some Canada, and some in Japan. But that was it, and that was the Macs. So we were selling iPods into those areas. And so we had kind of the early adopter, and then we had some other language, and by the third, fourth version of iPod, we had some really refined language for those kind of late adopters.
So then we said, "We're going to go back and get a push into Europe." 'Cause iPod hadn't taken off in Europe. So we're going to push iPod into Europe. And so we were on, I think, the fourth generation or something like that. And so what did we do in Europe? We ran the same marketing as we were doing in the US in Europe. And the thing is, it didn't resonate with the early adopters. It didn't resonate with the later adopters, because we didn't have the same messages. We were going for a different set of people. And we're like, "Ding ding ding ding ding, sales aren't working." He said, "We got to change the marketing. We got to meet those Europeans where they're at, 'cause they're slower to adopt technology, versus it starts with the coasts and goes inward in the US, right?"
And so we're like, "Oh, we got to change things up." And so, you know, sometimes when you get to new areas, you have to rethink your marketing for that area and remember to meet them where they're at. And if it doesn't have an installed base for word of mouth, you're going to have to get that word of mouth started. So work with those people to get that going. Now it's different with all software products and all these things, and many products can go global right away, but marketing, you still got to tell a story. So it just reminds me that even though we maybe compress the time for some pieces of the adoption puzzle, you know, because we can distribute faster, doesn't mean the awareness can get accelerated and that we can get people to intelligently understand this product faster if we just say the words of somebody who might have known about the product for 3 years.
I got to ask about maybe the most famous, I don't know, tagline of all time when a product was launched: a thousand songs in your pocket.
Songs in your pocket.
Is there a story behind that?
Back in the day at Apple, and I think it's still that, maybe it's changed now, but back in the Steve days, there were different functions of Apple, and because they were all lean, because the company was only 4,000, 5,000 people, and it was already doing Macs and everything, each function was kind of very, very functional. And so the marketing didn't get into the engineering and the design folks. It was separate. Steve was the hub, and he was in each of them putting them together. Like I said, the opinion-based decision-maker.
And so when we heard the tagline for the first time, I was like, that's genius. Now, how that happened, what was the behind the scenes? We were just a tiny team, you know, we were getting this done in 10 months. So everybody was just running for it, right? Versus iPhone, where we had discussions of, should we call it the iPod phone or should we call it the iPhone, 'cause Cisco had the iPhone back in the day and there were copyright issues and trademark issues. So we were into that because it was also a two-and-a-half-year development, and it was betting the farm, and we were going to cannibalize iPod, right? So there were a lot more discussions. But in those early days of 1,000 songs, it was everybody running, in literally less than... it was really 5 to 6 months everything got done. 'Cause we really started it in April and it shipped at the end of October.
So I think one of the core takeaways from what you shared here is, even if you may have the perfect product, the marketing may be the gap, if something isn't working...
Absolutely. And the thing is, I think we're starting to see the cracks of it. It might be more than cracks now. With, like, OpenAI. What is it? It's like, oh, it's your answering machine, whatever. You're like, well, what does it do for me, and now I got to keep paying you? Like, it was fun as a demo, but what am I using it for every day? And like, oh, Claude, it does Claude Code and it does, you know, code. And then what happens? OpenAI is like, oh, we have Codex now. But then they were Sora and they were, you know, this and they were that, we're going to do sex chat, we're going to... like, what are you? And so it's like, oh yeah, you're the great first... you know, like Netscape. Everyone went out and bought Netscape Explorer or whatever it was called, like Netscape Navigator. And then all of a sudden it evaporated. Like, well, what do I use the net for? I got the tool to get onto it, but what do I use it for daily? And it had to develop. And so OpenAI is now shifting, like, oh, we got to get product teams and we got to start about product marketing. So, you know, that is, to me, it's marketing. But if you are already thinking about the marketing, you're already going to start thinking about the product. And that's the thing: when you're just thinking about the product... and it was really just a technology demo that went, you know, viral. And they're like, "Oh, yeah." And they still keep winning on that. They never put product in till it was too late. Now, Anthropic's where they are, and valued more, and higher revenue, and all that other stuff.
So, you know, it just... even if it's a software-only product, yes, there's lots of hardware and the servers and all that other stuff, you need to think holistically, and you need to think about the entire customer journey, the marketing, the sales pieces, the distribution pieces, the product definition, messaging, the target markets early on. You can't leave it till later and then back-calculate it. And that's why I say you should really make the press release before you more or less start the project.
Yeah, there's a whole chapter on that. Amazon's also very famous for that. There's a whole book, Working Backwards, that goes really deep on this approach.
But the weird thing is, it's "working backwards." See, the thing, saying working backwards... would a movie be created that way? Is it called working backwards when you say, I'm going to make a script and I'm making the treatment and I'm going to really know what it is? I know what my characters are and how I do character development. Like, is that really working backwards? It sounds like it's backwards. It's like, no, that's the way you do it. It's just because it's so technology-led. And this is what I thought when I was 20. It was like, yeah, now it sounds backwards. It's actually, no, that's actually insane. It's not working backwards. It's just an insane way of working. Like, come on. Let's really think through this.
It says so much that you, as one of the, I don't know, most successful, insightful builders, are so into marketing. I think that's a really important takeaway for people. Just how obsessed you are with that piece of building that I think a lot of builders don't think about at all.
Well, when you live in that world and you live in the customer, 'cause you're coming from a customer point of view. So you have to see the lens, and the customer only sees what they see through the lens of marketing and sales, right? And so you have to be in their shoes and you go, "Okay, like when I do
When I do the press release, I can only have three or four key features. After that, it becomes gobbledygook for a customer. So, you're like, "Okay, what are those three or four things? Okay, what is that? That's what we're going to focus on." And so, no, we're not going to add five more features. That's not going to make it sell better. Right? Or, oh, no, we're going to cut these two features and ship it. It's like, "Well, wait a second, we cut out two of our three key tentpole features. How are we going to sell that anymore?"
So, it's a holistic design. It's not, you know, like because we think the technology... The technology's in service of the customer. Not we're going to jam the technology down the customer's throat and they're going to figure out how to use it. There's too much noise. You got to make it frictionless and you got to fit it in their world and see from their point of view. You go, "Oh, that's what I need." General Magic was the perfect story for that. You know, your viewers should definitely watch the movie General Magic cuz
Absolutely.
we made the iPhone 15 years too early and that was a classic case where we were just making the things that were really cool, but nobody needed it.
Yeah, that documentary is incredible. It's like such a... I like the very young version of you.
Yeah, very different. Probably people won't recognize me.
Yeah, you have a whole chapter about just not overworking in your career based on that experience.
General Magic was for me, yeah.
Yeah.
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I want to talk about something else around the evolution of the product management role in builders. What's really interesting, this is kind of going in a different direction, but it's all connected. I feel like you were so ahead on this idea that we are builders versus product managers, engineers, design. Like, I have your book right here. It's called Build. And this is what everyone's starting to call product managers, people on product teams. I'm curious just what you're seeing with that, this kind of converging of these roles. Do you feel like everyone just becomes a builder and there's no more designer, engineer, product manager? Do you think they'll continue being these functions but more merged? I don't know. What are you seeing with the discipline of product management specifically?
Well, the discipline of product management sits between all of these functional roles. Okay, whether that's marketing, sales, distribution, yeah, sometimes manufacturing, depends on what the product is. Engineering, obviously. And customer support. So, when you sit between all of these things, you know, maybe those roles shift or change, especially depending on what it is you're building and that kind of thing. But you have to interpret, you know, what's going on between all of them and stitch them all together to make this thing sing.
And what we're saying, you know, is, oh, today in the AI world, I can just make a prompt and all of a sudden it gets spit out and you don't know what all those little functions are. If you are not aware of each of those functions, even in AI world, of what those things are, they are very clear definitions of certain points of view for the customer and you have to consider them. And to say that they're going to get washed away and an AI is going to come up with it.
It reminds me a lot of how software coding is getting done with something like Claude today. You know, maybe it was a month ago when the Claude source code leaked. Right? Claude source code leaked. And everyone was like, oh my god, it leaked. And at the time, and I'm sure, and maybe, I don't know, maybe they changed it, maybe they didn't, but at the time Dario was saying, you know, 90 to 100% of all our code is written by, you know, Claude. And you know, we just monitor it and watch it. We're like, oh, well, that's really interesting.
And then the code leaks. And then if you looked at the code, anybody who looked at the code, who's a real software architect and engineer, threw up. They were like, it made what? They're like, this stuff is brittle. Engineers were looking at it like, this should be layered in four or five, you know, actually 12 or 15 different sub functions. This is the main loop of Anthropic's Claude. The main loop. Not just something off in the... This is the main loop and people are like, how can you do this? This looks brittle. It's unreadable. And they're like, "Well, the AI knows it."
But when you think about it and you have to maintain it, you can have an agent make code for you and it could work and it could test, but is it secure? Is it maintainable? If there's something going wrong, can you roll things back and understand what's going on? There's so many other aspects to writing code and delivering a product thing that you still need humans in the loop.
And so when I think of product design, I think of software code with AI. And when you look at AI, if it's not architecting things and it's not segmenting things and looking at each of those things like I was saying, you know, like there's software architects and then there's software optimizers and then there's just general coders. And then there's security reviews. And if you don't have those different mixture of experts around the code structuring it so that subsequent generations can get better and better, it just kind of devolves into this mass of things you don't know. You're getting short-term gain for very, very long-term loss and that's, you know, that's called software debt, right? Technical debt. And everybody hates technical debt. So you might be fixing something, but it most likely is giving more technical debt, especially when you're at the high level.
So now, how does that map to product management? So if you're a product manager and you type this in and you get some result, but you don't have a really good marketer, a really good marketing communications person, a really good, you know, architect, a really good manufacturing manager, all these different things in this thing that you're getting
foundation, and people think, well, my AI's going to be smarter. It's not proven to do that. What's proven is if you properly architect it and have Claude Code go into certain sub segments or have Claude help you build the architecture, you modify, refine it, lock it in and say just work on these few things, and, you know, on these more limited scoped things, yeah, you can make that work. And I think that's the way we have to consider how we use these tools in product management capabilities as well.
To just say it's all abstracted away, it's all going to be better, and when you ask specific pointed questions and you want this thing fixed in your marketing thing or whatever, they're going to be like, well, the AI should just figure that out, too. It's like you have given up so much. To me, sure you can write code, but there's going to be the difference between, you know, it's like the difference between H&M and a luxury brand.
You can go get certain things that look like that and copies that, but it doesn't last more than one washing or one season, and you throw it away and it's cheap and blah blah blah. Or you go to the luxury thing and you pay more and it's crafted, it's handcrafted, and you know it's going to be around for a while. There is this dichotomy, like fast and throwaway. So, you know, like what's called fast fashion, we got fast software. But software, if you're going to build a real company, can't be throwaway. Maybe it can, but I don't think it can be, if you're really going to do this, cuz you get just technical debt and you got to start over again.
So, you've got to really understand how you're using these tools. And a lot of these things that these AI coders can do, agent coders can do, can make you incredible prototypes. Do more prototypes. Do more of those things to help you get that informed gut to say we're going this direction, architect that in and then work on the sub segments below it, and all the expert things that you need in each of those domains.
Yeah, and I think what you may also be saying here, which I think is really, really important, is that because it's so easy to build, people can just build all these features and additions, and the value accrues to build something awesome, and the product mind becomes more important to help push this stuff from just a sloppy every feature, every checkbox to something awesome that people actually use.
Because at the end of the day, if you're building it for yourself, whatever, go have fun. But if you're going to build it and you want to sell it, and, you know, you only need three key features to sell it to someone, it's going to have to be boiled down. It's going to have to be figured out cuz you're still selling it to a human who needs to understand it. Now, do you think you could vibe code Flighty?
Mhm. Probably.
Maybe now that Flighty exists, you could.
Copy that.
Like, you could do version two of Flighty, maybe vibe code it cuz you say, "Look at Flighty." But the original Flighty? To me, that's luxury software. Right? It was understood how the pixels are done. So, you got to remember, is it version one or is it version two, three, four? Because an opinion-based thing on highly innovative, differentiated stuff, it doesn't have a model for that. There's not that stuff in there. You still need the very version one to be done. And maybe you can prototype with these things. So, I could go on for hours, but whatever. That's just one old guy's point of view.
I think it's really important, this insight that as it becomes easier to build, the things that stand out are the things that are really well thought through and great and luxury, almost as you described.
And you can feel it, right? And you go, "Oh my god." And, you know, I'm one of the biggest proponents of Flighty. I like telling them, "Flighty, Flighty." Cuz all the people in my sphere, they're all flying. I'm like, "Have you tried it? It's insane, you know?" And then you get the word of mouth and things take off because there has been that level of care and craft to it. And yeah, maybe a lot of the sub functions of Flighty could be built from Claude Code or whatever, but the whole thing and the architecture and everything, I don't think so.
And if someone hasn't tried Flighty, clearly download it and play with it. I love that this is the example of an amazing product. That's a really cool product.
All software. It's all software.
Yeah. Something along these lines. As people hear you talk, clearly you are an amazing storyteller. And in your book, you often come back to the power of storytelling, the value of storytelling for product builders. I guess one is just why is that so important, do you think? And two is what's one tip you could give people to get better at storytelling?
Storytelling, that's how we passed information down or got people to commit to doing something. Stories are so who we are. We go to the movies for stories. We have books. We have all this stuff. And it's just so essential to who we are because we like to be taken on a journey. And hopefully when you're buying a product or, you know, licensing one or whatever it is, you're subscribing, you're taken on a journey that meets your expectations or is better than the expectations that were set. It's outsized.
And so, you know, Dave Chappelle, when it comes to comedy and storytelling, the way he weaves it, he can weave a story for 20 minutes to get to the punchline and you're just in it, right? I just love his comedy as opposed to the punchline guys who just, you know, are the short ones.
It's something in our nature, human nature. You know, we were told stories when we were a kid, we read the same or watched the same movies a hundred times when we were kids. There's something about being taken on that journey that we love. And people love to be educated that way. Right? Your best college professors, high school teachers, whatever, they taught you why you should love, you know, certain math or certain physics or whatever and took you on a journey of why it mattered and then you're like, oh, now I get it.
You know, you can learn all the basics of how to do something. But that doesn't really tie it into something that's meaningful. And so when you tie it to something that's human, right? That's when it becomes accessible for humans and it's relatable. That's when it goes, and it can be for anything. And that's when great marketing, great sales happens. And great storytelling through the product design, that's even better, right? Because it wasn't just perfume this pig, and you put some on this bad product and you can say, oh, yeah, try it, and then it doesn't meet the expectations.
But when it sings from the depths of the product, like you were bringing up with, you know, the Nest Protect, the thermostat or the smoke detectors and stuff. When we had all that and then you could feel the love and care, that's when people go, oh, I love this and I want more from that brand or from that company or that team. That's what they want.
And so to get better at it, I've learned it because I watched my dad, he was in sales, right? So I watched how he would sell Levi's. And I would watch, and he wasn't always selling to sell. Sometimes he was convincing them not to buy something because that wasn't the best product they had. Buy this one instead. And actually go to my competitor down the street. Because he was building a relationship and story time, because these people loved what it was. So it sometimes is not just setting expectations and telling a story, but it's also saying, "Hey, maybe I'm not for you." And that's truth. That's also truth. And so, like Steve always said, "The best marketing just tells the truth." Now, it might put nice words around it, nice creative and everything, but it's telling the truth.
And so, when I watched Steve prepare for, and like I said, when we did the two and a half years with the iPhone, he was honing the story of the iPhone every day. He didn't give it to marketing. He knew what that thing was and what those key features were, like we talked about, and micromanaged those features cuz he knew those were the things the world's going to take notice to. And he would refine the story and then tell other people who were unwatched by, like friends who are really smart, and say, "I'm going to give you the pitch." And give you the pitch. And he would refine, refine, refine.
And so, when you saw him come on stage, it was just because he had done it, you know, 100,000 times or at least 10,000 times, right? And he knew it like boom, boom, boom, boom, boom. It just came off. And so, I watched and I learned from that. And that's what we did for like the Nest Learning Thermostat. That's what we learned, you know, we did for each of those things.
It was just that same storytelling over and over. What does it matter? Why does it matter? Why does it matter? Because too many times when we're technology-led, we talk about the what. We don't talk about the why. And the why is where the storytelling is. Because you want to take the journey of why it matters to you. And, you know, if you're talking about the what, you're just talking to another geek. Love geeks, no problem. I'm one of them. And we can relate on that level. But generally, most people who are not in the technology world, they want a story and they want something that touches them in some way.
One of the lessons I'm hearing from what you just described is telling the story over and over and over and refining it over time is where the best stuff comes from. Not just, here's, I just came up with this and it's going to be amazing.
Yeah, oh absolutely. Because you need, and telling it to other people who don't... It's to see if it resonates. I remember the number of times I told the Nest story before Nest came out because I was like, "This is crazy, this thermostat thing." You know, I'm like, "Okay, let me set up the virus of doubt," which was, "Do you know how much you spend on your energy bill every year for your heating and cooling? Don't you hate your, you know, thing?"
Now, there's another way to look at the storytelling. And this is, I put this in the book. Oh, I don't know, I didn't put this in the book. We all have seen infomercials. Right? You know those ones that drag on for a half an hour, an hour on late night TV, you know, on some random, every channel now, right? And they just sit there and they tell you the story from all the different directions. They give you the virus of doubt. They're like, "Oh, here's this cheese grater. And you know, when you have this bad cheese grater, your knuckles bleed and, you know, whatever, and it's hard to clean," and they over exaggerate everything and they show you all the pain points of it. And then they show how wonderful and easy it is to use this whatever they're selling. And then it's easy to buy and then it's easy to return, and it's overly dramatic.
And we all know, you know, it's like wrestling. It's all an act and whatever. It's not, you know, there's probably no real list there. But it is storytelling in a way. And not that you should do that, because they overhype the expectations, but look at the techniques that are used, the psychological techniques, the emotional techniques to get there. And then dial it back and go, "Okay, I'm going to do that but with truth." And that's when things start to go pop pop pop pop. Or at least that's what I've seen. And so I always use that as another metric. And it's not just telling the story over and over, it's what story you are telling. And so I try to think of that as well. It's obviously clowny and cheesy and everything else, but it is a caricature of doing good marketing.
I feel like this is a really interesting lens into the press release first or working backwards ideas: create the infomercial first and just go to the extreme.
Sure, you could.
Oh my god.
No, what you don't want to do for sure.
But it's like a cool lens to go really far and then kind of pull back the best parts and make it honest. I think we just came up with a really good idea here.
I want to come back to the iPhone. So I think it came out like 20 years ago almost at this point, right? It launched 2017, 2007, something like that.
So what's crazy is people are still trying to build the next iPhone, especially with AI. Everyone's just like, what's... We've had this thing forever. What the hell? Like, hasn't anything changed? I imagine people ask you this question. I'm curious, just like, what do you think the next iPhone may look like with AI? What's the device that you think emerges over time? Do you have a vision?
Okay, there's what it could look like long-term and there's what it could look like soon. And so a lot of people are like, "Okay, there's the long-term thing," and when we can trust the models and when they have memory and when they do this stuff, then we're still going to need a display, because sorry people, unless we're plugging it into our brain like a BCI, brain computer, or there's some laser thing going into our retina, we're going to need a display. So barring those kinds of technologies, we're going to need a display. And so the best display that we have is a smartphone-like thing, okay? It's not going to be this tiny thing. We saw what happened with Humane and all that other stuff. So you're going to have some kind of, because the best way to visualize visual information is with a display, right?
So, we're going to have some kind of small slab, maybe it's foldable like we see today, whatever, so that you can access it. Maybe many things you don't need a display for, but a lot of things you still do, right? Because you might not be tapping and swiping and all that stuff.
So, I am of the opinion that long term, if you look at how a device is layered today, and this is many, many devices, and iPhone specifically started this, which was, you know, tapping and swiping. Right? That was the first thing, you know, you use your finger. Then after that was keyboard. And then after that, the tertiary thing was voice input.
We need to flip it. We need to absolutely flip it, and we have to say, and this is what I always wanted to do with Nest, which is I want to remove displays, and we need to have voice as the number one primary feature, and you build around voice. Then we have keyboard if necessary, and then we have tapping and swiping. Okay? It should go exactly the opposite.
And the problem why most of us don't go around talking to our phones and everything, and we saw this also happen with cars, there were tactile buttons, and then there were the touch screens, and then they also added the voice in, but nobody really uses voice in the car unless it's some accessibility thing, right? Because voice was always added at the end, because it was always like, well, it sort of works, and it's a gizmo, but it's, you know, it's like Alexa was for person 1.0 or Siri was, whatever.
But when we actually have really good voice input with not just, it understands, just like Whisper Flow or something, because that's great, what I'm saying is the intelligence behind it with memory and everything else. So then we can start to use that much more specifically and then deprecate those other things. But we've always had to have them there as a crutch for voice because voice has never been able to deliver. So, that's the long-term thing. So, it'll have some kind of display, but it's going to be much more voice primary, and then you're going to have the other things as secondary and tertiary.
In the middle, now or sometime soon, it's going to look much like the smartphone is, because we're not going to get away from the all-app interface anytime soon. We're not going to get, you know, we'll move some things, but we don't trust it yet. It's going to take a while till we trust it. And we are literally turning over a lot to this trusted thing. Right? Because tapping and swiping, we know what that is for the most part. We know that we can trust ourselves when we're tapping and keyboarding or whatever. This other thing we don't know. And so, it's going to take a lot of time, it reminds me of kind of General Magic in a way, for us to be able to get en masse to trust it.
And we're already seeing this with coding agents and everything else, you know, "Oh, they deleted my source code." And again, I'm not trying to be an old guy who's saying it's not going to work. Sure, it's going to work in certain things. I'm saying for consumers every day, in the things they want, and it's cheap enough so it doesn't cost them a lot. Right? Today, people are like, "Yeah, I'm going to try ChatGPT or whatever it is, $20 a month or $200 a month." That is unsustainable if you think consumers are going to pay that. There's just no way. Unless it's incredible. But they're not going to, you know what I mean? Like, they tried it and now a lot of them are getting their Siri 1.0 with this. Like, I paid for it, but it's really not all that yet.
And it's like full self-driving. Like, I paid for full self-driving. It's 15 years later. I'm still waiting for full self-driving. So, I think we again understand what we think we want, but where the technology is, and the social adoption and the social trust that needs to be created around that, is going to take a lot of time, and it's going to take a lot of iterations to get there. Especially if you're going to have to pay for it.
It's really interesting to hear you say that long-term we'll even need a screen. Because I think a lot of people are trying to go to just like an AirPod or some kind of magical AI device.
Surely, and like, how are you going to look at a map if you want to look at a map? You're going to just listen, like put on the voice stuff in your car and never look at the map in your car and say, "Oh, turn left in 200 ft. Turn left in 100 ft." You're like, "Shut up. I can't hear you anymore." Like, I just want to glance over. So, I don't buy it. Like, unless you have a jack in your brain or in your eye or some other way it's getting into your cortex.
That is so interesting. And you're not a fan of like the Humane approach, I think it was like a little projection on your hand as a screen replacement. Right? Was that part of it?
Yeah, why? What? It's just a... It's different, not better.
Mhm. So funny. I guess the advantage obviously is it's like a small little device you could just put somewhere versus like a screen, but yeah.
Yeah, and you're like, "Oh, it's like, you know, the hologram projections of Star Wars or something." You're like, "Yeah, that's cool, but you still need, you know, a screen or something to project on." So, it is a screen at the end of the day. You've still got to project it onto something.
Yeah, well, because everyone keeps saying, "How is it possible that the end ideal product is a piece of glass that we look at?" And what you're sharing here is just like, that's actually maybe the ideal.
Yeah, and like I said, you fold it up, you put it in your thing and it rolls out or whatever else. But I still think there's going to be that thing. If you look at Her, if you remember the movie Her, they had glass. There was glass there for certain things.
Wow. I completely don't remember that.
Go back and watch the movie. It's there.
Oh my god, that movie.
Wait, I nailed it.
Oh, man.
Go Spike.
Mhm. It's Spike Jonze, right?
Yep.
I don't even know. I wanted to ask also, it's interesting that basically everyone is getting into hardware now. Like, you've been at this for so long building hardware in AI, and now it's just like the hottest thing. Everyone is building hardware. So funny. Thoughts? I don't know. How does that feel?
Look, I was building hardware when it wasn't in vogue in 1995 and '96. Everyone was like, "Tony, you're..." And this was in the Valley. "Tony, you're crazy. It's all about the internet. We don't need any hardware." And then the iPod comes, like, and I was pitching new businesses in '99 and 2000. They're like, "Well, that's the stupidest idea ever." Then the iPod comes out. "Tony, you want to leave Apple and start that business you wanted to do with hardware?" You know, and then it was like, "Yeah, okay." And then it was all software mobile stuff again. Like, "Okay, we don't need anything." But we can't get to the next level of software if we don't make the next level of hardware. And the revolution has to happen completely.
Like, you've got to have the mobile network and the mobile network software for the mobile network to work. You had to have the MP3 player and the MP3, you know, format bits to make that work. We're seeing with AI, we've got to have AI plus all the data centers and edge compute to make that work. And then over time, the hardware becomes more mundane. Like, "Okay, it doesn't change as much." But all the software starts to then, you know... So, I've always just been continually going through the things that I love to do and doing the things at the full stack level, because that's where I know innovation is. That's what we had to do at Nest. We had to innovate at the software level, the hardware level, the network level to get the first thermostat out, and then the Nest Protect and all that stuff.
If we look now, going on, people are like, if you're a SaaS company or if you're a software-only company, your software company's worthless because anyone can vibe code it. And now they're like, "We're only funding companies that have atoms in their business plan with software." I'm like, "Duh." Like, where have you guys been? So it's just funny to watch these cycles go and happen, and it's like, "Okay. All right, you guys can go chase your tails. I'm going to just keep doing these full system kind of products and businesses. Yes, they're a lot harder, and yes, they cost more money, and yes, they're going to take longer to scale and adopt and blah blah blah, but they have staying power for years, right?"
And they bring new features that you could have never had if you just did software only, because you need, especially, let's say, in robotics, where you need new sensors and you need this and new that, what have you, right? Look at Waymo, you know, it's an electric car with tons of sensors and everything. It's a hardware platform. Maybe it doesn't look as streamlined as maybe a smartphone, but it's an incredible hardware platform with an incredible software platform, and that is something that we're going to be able to innovate on, and it'll become a platform for something else, I'm sure. You know, delivery or this or whatever else.
When Evan Spiegel was on the podcast, Snapchat founder, he said exactly this. This is why they've spent so much money on these Specs, and he's just like, "This is the only way to survive in software, is you need to have a hardware component now."
Yeah, very interesting. Everything old is new again, and, you know, I've been in this game 35, 40 years. You just see it. You're like, "Okay, I was there in '99 when the bottom fell out," and, you know, AI is different, but there's a lot of similarities. And, you know, we're going to have the Gen 1 companies, the Gen 2 companies, and, you know, when people really understand product instead of selling technology platforms that people have to figure out for themselves. So, you know, it's fun to watch. It's a game.
Okay, maybe one more question before we get to our very exciting lightning round. What are you most excited about these days in terms of, I don't know, gadgets or hardware technology that's emerging? Is there anything you're like, "Oh, pay attention"?
I've been doing this AI plus hardware thing now, not just at Nest, but in many of the startup companies that we funded at Build. And so, a company like Simbe Robotics, you know, it's Simbe Robotics. We were doing robotics way back. Now, it's not a humanoid, but it does inventory of retail stores. And we've been at it, I don't know, eight years now, seven years. And now it's just taking off, right? And it does have AI and it has a robotic platform, and it really solves real pain points for the
retailers of inventory and the workers hate doing inventory, counting everything on every shelf and all that stuff. So, it really works. And like I love seeing that stuff.
You know, we're doing the same thing at Greyparrot with AI and recycling. Like it's literally figuring out what things should go in this recycling bin versus that and doing it really fast with cameras and all this stuff. It's like, and we've been at that for a few years.
And we have AI plus textiles. Like most textiles, you know, have weaving errors and color errors and defects and things like that. And so, people still make all of these products, but then they have to incinerate them cuz they're not perfect at the end because they don't catch the quality problems early enough in the product. And we're doing AI plus cameras to spot all the stuff. And again, another thing.
And we're doing this, we've been doing AI and drug design now for 10 years at Recursion and that's taking off and it's like, so I'm really interested in not just these frontier models and this whole thing, it's really good AI that you can trust. Scoped correctly with this, solving real problems every day as opposed to pipe dream AGI, you know, okay, you can go solve that. I'm going to go and build all these businesses that really matter right now.
And we're finally getting traction because people like AI and robotics and now all of a sudden we're in vogue and we've been here really working on our product market fit, working on our marketing, working on version 3.0 of the device and everything and people are adopting them and that's what's wonderful to see. So I'm excited by all that.
We have another one like AI infusion, you know, and doing that, or finally doing tons of software with chemical reactions, and now we have an agricultural, clean agricultural fuel and oils company that is cleaning up farms all around Central America. So like, and we're almost all atoms plus software in some way and so it's just nice to be sitting here and knowing that we made these bets a long time ago and we're doing it now.
We're not necessarily, you know, I was early on in Grok, you know, right? Cuz I was like, and it was cheap then and it was like, yeah, that's the right way to go, and my friends were in Cerebras and I got into that and then, you know, it's like, but these are long-term plays and they're finally coming to fruition, but we did invest in it not when it was hyped.
And it's, you know, we were doing it back when unicorns valuations were billions of dollars. Today, if you don't have a $5 round raised, you're not anything. It's like, okay, well, that doesn't work from a venture perspective. Like with those kinds of, you never get the venture returns. You can't invest in things when the valuations are already nine digits or 10 digits and you think you're going to a small portfolio, that's like, uh-uh, that's not the kind of game I want to play.
So, I'm glad that we have well positioned in all these companies that have real good product market fit, that came in the right valuations, and that we can really help and make big change and deliver painkillers. And we'll let everybody else over there play. So, that's what's exciting to me.
No, man. There's this quote that I used the other day on a different podcast that I think applies to you. It's a quote from the Bible that you were made for a time like this.
[laughter]
It feels like all the things are converging around the things that you have been doing for so long and the technology is finally getting exactly as described to actually something amazing.
The same thing happened to General Magic, right? General Magic, iPhone too early, and then I just kept adding and adding and then doing the iPhone. So, you just stick with it. Like there's too many people who chase their tail and chase whatever the hottest thing is. When it's already hot, it's already too late to be in it.
For people that don't know what you do these days, you talked about all these companies you work with. Help people understand what it is you spend your time on in case they may want to try to work with you on this stuff.
I think the first thing to know is that we invest in deep technology. So, that could be hardware, it could be software, software plus hardware, it could be chemical, could be all kinds of different stuff. But remember we talked earlier about what's the pain? And is there new technology that comes out to solve that pain in a new way?
And so, what we do is, I've learned that I invest in the deep technologies that are going to unseat the incumbents because it's going to change the market or the product in such a dramatic way that customers will choose this. So, we're not just competing on features or better marketing or whatever. We're fundamentally a different product. Now, it might take longer to get the market to shift to it, but it's fundamentally different. Just like I brought up Grok and Cerebras and these kinds of things. It's fundamentally different.
And so, at Build, what we do is we invest in those technology companies that can be that seed that can unseat things. And maybe they go the distance or maybe they are the key enabling tech that allows another startup to go the distance, that kind of stuff. And so, that's what we invest in. And we do it in the environment, in societal benefits, and health benefits. That's where we focus.
And you know, at times we've had a portfolio of over 200 companies. And we do that, but we don't just invest. When we get involved, many of the companies we advise. And we come in, help them with product management, operations, we help them with financing, we help them with org development, you know, just all kinds of different ways, a lot of times in marketing and communications, right? Because we talked about storytelling. Storytelling's really important.
And a lot of deep technology people, they're incredible, you know, engineers, scientists, researchers, what have you. They have a really good idea, but they don't necessarily know how to form the product around it or form the marketing around the product they're building or help the marketing to inform the product and vice versa. And so, we try to encapsulate that and really bring that to bear so they don't hit it on the fourth version. They try to get very close to the first or second version so they can get on that three version cycle to get to a company.
And so, that's what we do. So, we get to have a lot of fun. We get to play in all these different spaces: health, medicine, drugs, robotics, you know, chips, these kinds of things. So, that's just what's wonderful to us when we get to just be kids in the candy store and work with all these incredible smart entrepreneurs and everything. So, that's one thing I do.
The other thing I do is I'm a designer in residence at MIT. So, I just finished up my first year there with the MIT Media Lab and architecture and design, and help to, you know, give lectures and work with students, amazing, amazing, smart students with the great technology, but help them with the customer journey.
Like, try to make sure that they see this stuff early on in their career, not after 10 years and then they finally understand, "Oh, wait a second. What am I really building? Who is it for? Not just what is it I'm building, but why am I building it? And for who?" And so, we're trying to get that into some of the later undergraduate and graduate students so we can, you know, watch them change the world more quickly.
Incredible. I love just all the levels of ways you are helping people. There's the investing, there's this book, there's MIT, there's these conversations.
It's fun. It's just so much fun, you know.
I love how much fun you're having. Is there anything else you wanted to share that we didn't cover?
We should really just talk about ethics and morals and your point of view on that. And as a product manager, as a product designer, you need to really consider these things. I understand we have lots of big questions about AI and is it going to be a disaster for the, you know, for the next generation and for our societies and all that other stuff, but I think that you really need to be well grounded and have real principles when you're designing something and don't let those things go astray. Just like you wouldn't go astray with a bad user interface or something like that.
Make sure you're not trying to addict your users. And if anybody is, there's always other jobs, and there's always other better companies. And don't chase the money for tearing apart the fabric of the society that we built. Obviously there's going to be innovation, and there's going to be change. But when you're really doing it, and you can see that you're doing it, and you're like trying to get people hooked, or you're like, "Ah, I can more dopamine, or what have you." That's when, you know, you have to start really looking at things.
And a lot of times people are young, and they think, "Oh, that's great. That's what I want." But when you start to have kids, and you start to have families, and you start to see the, and you're not just about you. You're not trying to just get out of your family, you know, when you were growing up. You know, "I'm individual, and I want what I want." You know, you really need to start thinking systemically about the benefit that you're bringing to the society as a whole, not just to the business that you're in, and trying to bring in whatever revenue you're trying to do.
Because at the end of the day, users will feel that. And then I think, and will reward that, as we see with Apple with privacy, right? And people say, "Oh, they're behind because they're so private, and there's this." But it's a double-edged sword.
You know, I remember when we had a very pointed discussion when the iTunes music store, and when it was turning into video, was being specified and when we're thinking about it. And everyone's like, "Oh, this is going to be great. We're going to do movies. We're going to do TV shows. That's going to all be great. We're going to make a lot of money with this. And the studios, everybody's behind it." And then somebody goes, "Yeah, well, we should have porn, of course." Steve was like, "What? Is that the kind of world you want your kids to grow up in? And Apple is related with that? And Apple's about... Is that what we want to do?" And it was very clear, it was shut down.
And we need leaders like that. You know, we need leaders who are very clear, as opposed to I'm going to make a huge service for everyone and they're all sex chatbots for everyone. I just think, you know, when you start normalizing those things and you start telling other generations that's a value, and I understand that everyone has their own what's right and what's wrong, and here I am the old guy, you know, again. I think, you know, we can go a little too far. I'm for individual rights and for everyone to be a thing, but when major companies are doing this in the guise of certain kinds of behaviors they're trying to achieve,
you know, when we're turning personal connection into a product with AI chatbots and making them really, you know, devolve social interaction to the point where I'm going to have a perfect interaction with this thing because the world is so messy. It's like we're losing humanity with that. And we're just, for gain.
So, I wish that the other product designers out there really take it to heart. Not saying we got to be lily white and, you know, being in a church every weekend and Bible banging. I'm not saying that at all. I'm not MAGA. I'm not any of that stuff. Just saying, hey, think about it.
A lot of people look at the iPhone as this thing now that everyone's hooked on. It's gotten so good. We're just like, it's too good. And there's all this data showing all the impact it has on people and things like that. Just, how do you think about that and the impact the iPhone has had on people?
Well, the first thing is the iPhone wasn't set out to be that. You know, there's unintended consequences and the unintended consequence was this social media happened. And Apple's not a social media company, right? But it does distribute the apps or make available those apps, right?
And so the way I think about it is, you know, we have lots of junk food and we have an obese nation or obese world because of all the junk food, and it takes us to regulate our consumption to do that and get healthy tools and, you know, nutritional elements on the back of things, and if you want to make a better decision, you can. And I hope AI and these assistants will help people get better control of those kinds of things where our lizard brain is being, you know, stimulated in a way that's like consume more, consume more of physical food, right?
And now the same thing's happening in digital food, but we have digital food that doesn't have the nutrition labels, doesn't have the warnings, doesn't have the regulation that it needs to have just like we do with our physical food. Because, oh, you can't let innovation, you know, whatever, be slowed down. I'm not saying again being a nanny and all the other stuff, but we got to have some balance and it's just swung too far. And I still think that the platform companies like Google and Apple could be doing a lot more around digital consumption tools and information to help people make better decisions for themselves, for their families and what have you.
Because, you know, an iPhone's just a refrigerator. You can put in junk food or you can put in good food, and even if you put in good food, you could go to the good food every 5 seconds, right? You have a refrigerator in your kitchen. You can put good food or bad food. You can open it all the time and keep consuming.
So, we need to learn habits, we need to teach habits, we need to put in regulations, we need information, we need tools to help us monitor and manage that stuff and they need to be supplied. Just like we have rules around, you know, who can buy something when they're 21 or under 21. We need all those kinds of things. And it needs to happen. Because why? Sure, you could have a short-term gain in your customers, but if you make your customers unhealthy, you're not going to have customers.
Let me just say for folks that haven't read your book, I just want to communicate how great it is. There's very few books that are both tactically useful, that give you like, here's how to do a thing, and also just inspire you to build and make great things. And Build does that in such a great way. I think everyone knows about it. I don't know if everyone's read it. So, highly encourage you to read it.
Two final questions. Where can folks find you online if they want to maybe learn about the stuff you're up to now? And how can listeners be useful to you?
Great. Well, let's see. Well, thanks again. This was a fun interview. I really enjoyed it. I think if you want to interact with us, we're at buildc.com. So, Build Collective, but we're buildc, b u i l d c.com. You can go and see the companies we invest in, and you can find ways to contact us there.
And how can viewers help me? Or help us? I think learn about the companies, see if you can model whatever you're doing in some of the, learn from insights. You know, there's a lot of websites that we helped to create. A lot of the marketing we created for deep tech through those investments we made. So, you can see some well-done marketing. I hope you like our website for buildc to show you what we think is a really great website that, you know, only doesn't sell things
necessarily. You know what I mean? Like, you know, point and click and purchase. But, I just, get them to rebuild and apply. You know, I think that's the most important thing: rebuild, read other things like that, and really hone your craft.
Make better products, make a better world, because the world only gets better by the things we make and what we bring. And so to me, that's the most important way to help me, is by making other cool products like Flighty or other things that are like, I love this thing.
So make great stuff, people, and don't think the AIs will, you know, use them for the tools that they can help with, but don't have cognitive surrender. Don't surrender to the machine. We can use the machines, but don't cognitively surrender, and make better stuff. Make better stuff than myself or any of the teams that we back can make, because we do have better tools now, so please do.
Amazing. Tony, thank you so much for being here.
Hey, Lenny, that was great. Really appreciate it. Looking forward to seeing what your audience creates.
Same. Bye, everyone.
Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.
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