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This week on the Ventured podcast, Randy Komisar sat down with Tony Fadell, father of the iPod and co-founder of Nest. Tony recently announced he was leaving Nest and Alphabet to pursue other opportunities. Before letting Tony off the hook to focus on the future, Randy wanted him to sit down and share the insights he gained from his work at General Magic, Apple, Nest, and Alphabet. He didn’t disappoint.
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00:00:00Kleiner Perkins you're listening to ventured a podcast for startups Founders and capital collide
00:00:11on Venture what is CNC jobs that was so special he wasn't about impressing the peers he's there about impressing customers and getting them empowered the way that made them feel that they had superpowers that they never had before us would you give to an entrepreneur if you don't have butterflies in your stomach everyday that little sense of doubt you're not trying hard enough or you're not paying attention
00:00:42I already, sir and this week we have a special episode of ventured with Tony fadell father the iPod and co-founder of Nest Tony recently announced he was leaving nest and alphabet to pursue other opportunities before letting Tony off the hook to focus on the future we wanted him to sit down and share the insides he gained from his work at General magic Apple nest and finally off the bed he didn't disappoint hope you enjoy the show
00:01:10Tony you you're known really as a product very few Prada Cruise in the valley right now explain to me a little bit about how you think about product design it what what you think differentiate you from the people out there today with my teams I tell them this all the time is that you know once you learn something and you learn something about looking at the details you look at the the nuances the insights that customers can give you you can't forget those things if you take those with you so this is been a maturation process that I've had of looking at the world in a specific specific Way Through The Eyes Of Incredible experts that I've ever had the privilege of working with since coming to Silicon Valley 25 years ago it's really hard for me to think that and at the end of the day
00:02:10who I am is about what I know but it's about who you know and what they taught me and the mentorship they've given me you know starting a gentle magic it really was sitting there with Susan care and Andy hertzfeld and Bill Atkinson Joanna Hoffman and just seeing the world through their eyes and being trained by them to look at it very different then I did coming out of college you know I was trying to certain way at the end of the day with all about looking at the marketing aspects looking at the user design aspects looking at the engineering aspects and time does all together in a way that would really bring out a great emotive experience for the person using it then right through Steve and to their incredible experts at UI design would have you would apple and so all of these people have been able to educate me what is she and Steve that was so
00:03:10special
00:03:13Steve had a way of looking around the corner or stepping back in a way that
00:03:19was very unique blend he had so many different talents you know he wasn't the strongest technically but he was incredibly strong at marketing and consumer insights and messaging and getting people to understand the value of something and also understanding that you can put too much into dilute the really great things that a product or up as a piece of software a service that he was really good at the critiquing the editing and to really making sure we sharpen the message and sharpen the details on just the things that really mattered and not going going to be on because that's what would impress the competition or that's what impress an engineer or another marker he wasn't he wasn't about impressing the peers that he had and he didn't very very many if any is there about impressing customers and getting them empowered with technology in a way that made them feel good that they had superpowers that they never had
00:04:19simply are there times when Steve was simply wrong what happened in those moments you know this is going to sound controversial but if you look back at the track record I miss this goes for myself too and many people in the valley which we say you know failure is Izzy long as you learn from it is successful for the next thing you do in terms of success versus not successes and failures cuz he learned from them and we all learn from them he was probably batting 50/50 3500 were so great that they minimized any of the other Unity other failures that turned ultimately into those grand slam successes you're never going to do everything perfectly no one is you can try to be a perfectionist but whatever you do is not to Miss Celie be perfect and may not work out at all but learn from it and so Steve
00:05:19did you know that iPod Hi-Fi which was this amazing really expensive pair of speakers or up iPod now none of that stuff worked commercially they were some of the critical success from applied perspective and we killed the businesses because they didn't really work out but it's Community the developers to do incredible things and now there's $10,000 iPod or iPhone you know speakers out there but that gave it away but we learn from that and we were able to create something like the iPhone so you have to remember not everything you're going to do is great that everything's be perfect to learn from it because she had an idea in your head for how did to make an iPod while I had the idea what it would mean to create a product that could basically take CDs turn them into mp3s and then put them into one place with a great user interface
00:06:19difference was it wasn't portable because hard drives at that time small ones available what we were making was a rack-mount unit or something in your living room you know we don't have those anymore so you know just so we were making something for that. That was what was available with the technology and then small hard drive came out and that's when we could take all the same principles and then apply them to a portable device how did Steve in Rich you're thinking on the product as you went through the process what was that interaction like first interaction that we had was really showing off a styrofoam model of the of the of the device that you know I created a thermostat
00:07:19Monster Garage. I really like and you know what he did specifically was talk about the vision and talk about how we would compete and what were the specific means that we would compete on not just from a technical point of view from a marketing Point brought the really down to the customer experience with an apple brand. How could it be so unique that it could be transformative for the industry in for a customer and so that was really his thing and you have to remember that time Sony locked up every audio category weather that was home components portable components Walkman headphones they owned audio
00:08:192000 right unassailable and so I in the back of my mind was going you know and I have enough challenges and failures that I've learned from my career but you know I have a decade of them and he was he was able to articulate why we could be Sony and gave us the strength to say we're going to overcome just keep stay at the top of that the mountain we're going to take them off the top of the mountain and when you have somebody was just you know going out and stand committing full-bore that allows you to commit for the board of making that product and putting every Amino ounce of your soul into it and the chicken story that he saw what he really saw that they were going to be conflicted because they were both on music label and they were also a audio components producer and so it made it anything that way
00:09:19to MP3 if they did anything that hurt the music business right there was going to be internal strife so they had to play status quo along the way and in this case we didn't have that to play Right mp3 were already decimating the music market so he was trying to keep the Old Guard keeping the old way Steve saw that that was there wasn't just technology-driven through MP3s through my hard drive he also said the consumers driving a new mode using and consuming music and I can imagine generation that not all the very very patient and those had to be shipped and or or that product simply wasn't going to be successful at some point before the iPhone the iPod was 50% of Apple's Revenue right and so it was critical that every holiday season we had a
00:10:19new revenue-generating product coming out because if not we were public company we would have a quarter or year-over-year Compares that would work out we had to hit those because the holiday season for iPod I think was over 40% of all sales for the year maybe in some cases over 50 some years and so it was incredibly important was great for the team it was it was so important the team that we make it out there in time because we were always work Sony was going to come around the corner to take take it away you know that was the first meeting right and so every year we thought so he's going to come he's going to come off the hill amazing education in operations to be able to deliver those products on time but you had to move a small army every year
00:11:19get a person in charge of all the operations team but we were a rag tag team her small one Peter the first year was very modest and the end of the second year was very modest because the product is only compatible with Macs and remember Max have 1% market share in 2001 2002 operational difficulties to play with your 3-year for when we had PC compatibility volumes went skyrocketing last of the mixed with the iPod Nano and that means we had to Marshall and work with Samsung to build factories for Flash and then once we have the plastic we had to work with box count to build factories to build the iPod because it was a tremendous logistical and Debra what's the product was designed and tested appropriately for that kind of scale 1 fault you know when a thousand was going to be a big consumer customer nightmare so we had to make
00:12:19we got it right so we had to build millions of them and keep them in secret starting in like May and we have to wrap these lines up so we may be used in the world before we ship Millions to the millions to the store so the operations team incredible job and that was led by Jeff Williams and was now Apple CEO incredible guy to Marshall that are me to create the Army Marshall and make sure it was happening because if we had one problem that means we were we were bringing back tens of millions of units back to it it would be a fiscal disaster so needless to say we were white knuckled for so much on what we said go on the production and Jeff was so efficient at building them
00:13:07oh my God I hope this works right when you had to wait we can have the internet back in the day when everything was connected to see if they were failing it all the price if they were failing in the field and we can see what it is. We would have to wait 6 weeks from the time they would ship to really see what the issues were in the field and you could lose almost a whole selling season for that so connected but when they're not connected and you're making so many it's very very stressful part in this Valley right now applying a soft burritos to try to get Hardware out what you see is mediocre products that are delayed for long periods of time that usually come out and don't meet the spec but you have an incredible history of getting the best products out on how do you how do you motivate and lead a team to do that in a hardware space where everything is critical but I think the first thing is
00:14:03you know there's a lot of misconceptions out there like you said about Ace Hardware easy and so you know we hear all the stuff about software eats the world
00:14:13truly and it's true but it's a revolution to happen it's Hardware plus software and Hardware plus Innovative software together revolutionize things so software kind of brings the hard way into many different domains and makes a target for all kinds of people but where you get true Revolution is when you have the hardware software combination look at that was one iPhone was another iPad was another if we go back computer it was not just an apple to a spreadsheet right or Max right so we need to write its when you get truly those two big changes happening at the same time that's when you do we get ahold of new ways of building things and changing the world and So Soft where is great but Soccer Plus Hardware is even greater
00:15:13your reader and accountability is so much stronger than I see even in my most successful software and services business and I think a large part because you got things like working capital and lonely X on product and components and an infant seasonal shipments that are going to make your business work or not work when you have to drive the ringer with the team to tell them about the story's not to scare them to make sure we understand the risks that are involved and sometimes you can get ahead of yourself and get very emotionally bullish but you got to always pull back on the reins a little bit and be prudent because you could overshoot and you could take everything that you wouldn't working on for 2 years. The team about those things and the board right as in abort abort
00:16:13it's not like a website we can change in 15 minutes if something's wrong with shut it down or whatever what type of my inventory going to channels have me pick it back so you have to make sure that you do it the right the first time we could also hurt the brat and all of the relationship so not to play it safe cuz you're taking huge risk but you got to be pretty environment like Silicon Valley today most of the products are soft Services delivered on the internet how do you identify the right talent to be able to be accountable for delivering this stop and a stand up under the pressure that you feel and then others are going to have to feel to get that product out will you look at your leaders the ones who are really going to be you want to make sure their experience in the kind of you know that there are
00:17:08they're not going to they're going to make some mistakes sure but they're not learning I'm very expensive Equity capital okay they're passionate they want to learn you know the first thing I asked
00:17:33what is it you want to learn what do you want to take away from this place after you've been here whether it's 2 years or 10 years what is it you want to learn if they want to learn that means they're willing to make me that they're going to make but they're going to fix them over time and we make sure the leaders who are report that reported to have enough experience not give them too much rope but enough rope so they can learn without impacting overall project when you and I sat down on the first when you first pitch me the formerly pitch me on Nest one of the things that most impressed me was that you had mad the room that you can identify this talent because he was an amazing talent even that probably 28 29 years old in that room 27 is so critical to your ability to deliver
00:18:33products that you deliver but every industry has to identify the amazing talent and now for me is you know what you really find me the Next Generation my generation and we are not the young men and women out there like when I came for 25 years ago can be as good as I can stand on their shoulders giving back to our community really engaged with the young people out there that was the internship really dead and still are and but now it's also
00:19:33things I make my see it you know like to see the young I also like to see when a company is not just one generation you know the reason why we can learn and do great things is because we're learning and we have the energy and I was with Ed yesterday I work start working with dimensional magic you know but we also at the same you know what the same function if we were at we had 20 20 year old little rolls and what a healthy mix of every generation in there cuz there's so much experience and wisdom you can learn how can I save his feet the young people reinvigorate the people who want to learn Hindi reinvigorating bring you ideas to the people with incredible experience right and that I can't tell you how many times the the you know
00:20:33people that are kind of experience and derogatory fashion are so I so much love working with this young town they make me feel younger and then I talked with a master's in their field in their craft cuz this is crap this is Art this isn't just you know it's love. Generations and because it's so magical it's absolutely want the freshness of Youth and you want the experience of age to come together what you don't want is a recklessness of Youth and the rigidity and open to learning from each other and from the industry and their competitors and always challenging each other most constructive way possible I remember when you left Apple you didn't have a plan with me
00:21:33did you get from Apple to Nest the plan when leaving Apple was very very specific and spend time with the children very very specific get a we had lots of different projects going on outside of apple one of them was to build a house in Lake Tahoe for a family and I'm basically the same problems whether with security or it was safety or it was Comfort or energy consumption all of them have these ugly products no one cared about you know commoditized since the 70s
00:22:13I'm looking at our house until we're trying to build and I can't find the world has these problems the world has these problems we were just at the point where the cell phone or smartphone was taking off dramatically reducing the cost of components for all of these things for being connected the software all these things I was like wait a second I see it, you're going to be able to put Communications processing incredible user interfaces on devices that you can control from anywhere because now we have it we have the remote control in your hand because the smartphones going to do it
00:22:59to all that stuff with swirling I'm seeing the problems everywhere I'm trying to design out the problems in the house in Lake Tahoe and I was like about you know getting that funnel to trying to prioritize and figure out what's the best markets to enter you know who are the competitors it was a space I didn't know anything about what we did with the technology that would be instilled inside of it and even new technologies like machine learning machine learning and AI when no one even knew what it was today we're talking about assistance in chatbots and all the stuff we were doing that
00:23:45what was great that all that stuff came together at that time and we lucked out because I r t i don't even hate the termite man that everybody else follows you say that was never part of your vision or solving problem with a great design really Marvel people who can do really pretty design you did something that I really I really a tribute to Steve Jobs a lot which was never shipped product before the technology was ripe it was very very hard to learn and it's 25 years ago General magic we made the iPhone affects only other with the technology available at the time just 15 years too soon
00:24:45and so I really learned that timing is everything everything you have to be able to know when all of these things come together and you don't want to do it too late it's okay to be a little bit too early just not a way too early right we know remember tablets at the same time we all of those things I was there was a part of it never gets virtual reality I was going to those conferences in 89 you like crazy up there the markets can happen but you have to also understand where the social component where people are thinking about and can assimilate or understand the new tech
00:25:45Knology how would would apply to their life right we did so many things right at you know magic the timing was wrong because people didn't know what online messaging was there was almost very few people didn't email nobody understood what downloadable games work and shopping from a device right and Wireless Communications are those things we were making something that yes a few people in Silicon Valley would be enamored by with the general public had no idea now if we shipped to the iPod or the iPhone what's look at the iPhone the iPhone happened not because it was the iPhone it was because it was the you know that Society was always tense of ties to the internet it was already sensitize to mobile communication it was already sensitize to email right
00:26:41they didn't know what apps work on iPhone didn't really ship with any music right now music for things with a brilliant interface was what made that happen but it was the right thing at the right time with the right ticket she had to look at Palm and handspring they had the rudiments of a lot of the iPhone but the fact that you had an iPod all this is simply adding functionality to their iPod not selling my new device was critical exactly but nobody was just simply electronic Rolodex
00:27:41text that you could get from your desktop out so you can have it in the world that's all they wanted and then after that so we started with just music then we added podcast then we added pictures photos video and then we had a downloadable all of these kinds of things were one step at a time to get people to the right place with and they could look at General magic device and I want that you can take 4 hours to try to self stay what you're saying sounds so simple but to really understand what is the essence of the product of people need today what kind of what kind of Technology delivered today can I sell today to make sure I'm in business tomorrow to deliver and really at the end of the day the consumer not just an everyday person or it's a business
00:28:41three things they only want to hear how about three things that can have the time to learn about three things and that's what will convert them into a sale and you have to be prudent and you can't just a man at a fourth fifth sixth because they're not going to eat there going to be there going to be called I like what does it do for me focus on 3 made you get a chance for a Ford Focus on three. To start Nest you brought with you I kind of apple people who show you what you really want to improve upon or make your own at Nest Great question well first of all I wasn't just Apple we had General magician lots of very very people and today is all kinds from Microsoft and Google it everywhere so it at mast today but I think the big thing that we
00:29:41learned from our time at Apple was
00:29:45secrecy and confidentiality inside of a team not letting other people know what they're working on is really really detrimental it's always why did they get to know when why don't why don't why don't you trust me it's a lack of trust to share that information
00:30:02so that was one thing we wanted to make sure that people had which was making sure they felt like a 100% team members anyone else okay and there's nothing wrong with security confidentiality I think it's incredibly important but I think going down to sub component level that is that's much too much do that but typically you don't do that buy outright telling people they can't know it's by its by making it not as easily accessible right but still make sure that everyone knows are valid that's one thing I think the other thing is you know and mess is not a wrong thing but Apple grew up in the world of non connected computers
00:30:52babe can I grew up in the world if they started with memos they were typing memos cuz they had to build the machine to actually make communication and overtime so if you look at the first 15 to 20 years of apple and kind of internet connections or internal network connections right it was all the communication style is very different was very much more high arc today the world and so I think we look at how are structure is for people being able to talk to each other inside the company it's very different than others though it has to go on up you know I want to make sure that anyone could come and and approach me in and and talk to me know we had two things called lunch-and-learns which is open door come in bring your lunch in there be 20 or 30 people so any question you want on the table I'll answer it we can all talk about it we can all brainstorm it but it was
00:31:52where to really get to know that
00:31:54you can talk to us we are not in some Ivory Tower we are here to also help you and to Mentor you because we understand we're young team they need to see the inside there's not a We Are Who We Are what the reasons are and we can also fix that off the cuff let's talk about what you want to talk about so that we could as management understand where where where where they're at the employees are coming from and the teammates and they can understand where we're coming from so we have an open dialogue different in today's connected world than the old memo driven hierarchical world and I'm sure but that's like a you know I'm sure a real big part of what we do it at Masten pill terms of building a culture
00:32:52did you find the Apple culture was a powerful engine for what you did it Nest was it was it really important for you to think to have that experience at Apple absolutely you know you know
00:33:08as we talked about earlier you have to be able to understand what it takes to build these kind of price you have to have sensitivities and you and there's only a few companies in the US that still understand stuff right now where you're eating for dinner trying to bring it back from China here now and so yes it's absolutely critical cuz there's only a few people who know and you know there's a reason why a lot of people trying to steal recruit out of apple because they have that sense ability that experience of understanding that now of course that said we didn't have enough sense abilities about in Matteson internet-connected things and servers so we had to go get that from somewhere else because there's great we're not trying to be an apple 2.0 or 2.0 or Microsoft you had to get the right level of DNA mix between each of them to be able to make a hardware software Services business
00:34:08and each of them stand on their own legs and strong not that one was the stronger right all of those companies are coming from their legacy points of view Hardware first stop for second and Google
00:34:26software first and then they learn about Amazon for that matter so all of them are all doing that but they come from different places we try to make sure that we had open conversations what does it seem look like how do we make sure that the hardware software and services are at appear level right what you how would you compare the strengths of Apple to the most powerful companies on the planet woodchuck supposed to strike supposed to companies answer this question many times and I'm going to answer the exact same way you know
00:35:13Apple started from Steve which was he was an incredible Market or he had customer insights he understand what the customer wanted and communicated so was up and drive and everything from the customer point of view and infusing and marketing using it back to where the technology is fun
00:35:34you know Larry Incredibles scientists write incredible you know research for those kind of think he'll start from the lab and then bring it back the other way so we're looking at two very different ways of embracing technology embracing marketing and so neither is right or wrong it's just two different ways of doing any have to do all these comes you have to go back to where they originated right where did they originate science one and marketing goes that way another one before it was a connected world ending out where is a connected world yes so each of those cultures nothing's wrong with either of them it's just different and they have to understand what they are and augment their cultures with other things as they need them for their business what are the great product you see out there right now any field could be Automotive could be anything with the products
00:36:34beautifully designed experience yes yes time and again because it's still resonates which is there's the Nespresso coffee machine that would have some environmental environmental effects cuz of the pot every single thing out there I think I'll fix the retail stores the marketing the touchpoint the quality of the actual capsule the quality of the hard with the the consistency and richness of the product at the end of the day and the and the business model is a very great person but you gotta have a great business behind I'm I'm in awe by that you know they have other competitors for cheaply and everything else and it feels that way you know I think about you know something that I haven't been able to try yet and I'm looking forward to trying it which is the new Tesla Model 3
00:37:30let's compare that with the Chevy bolt right everybody long-range electric only car that's below $30,000 with incentives you know that Stanley car for the Eevee generation
00:37:50so what you stack those two cars side-by-side functionally miles speed these kind of think they all look the same on paper but if you look at them if you actually look at the two products the bolts actually coming out sooner than that but if you look one is emotional it's not just rational irrational feature sets of one's emotional the very thought everything and they said this is the new way to be the other car looks like it's from the parts bin it looks like there's a reason why one has I don't 400,000 500,000 pre-orders and the other one doesn't because it tugs call Challenger brand verses that stuff you can do that with any Brant you don't have to just be the small guy to to go against it it's just about the love the passion what are you trying to accomplish
00:38:50what did a closing advice would you give to an entrepreneur somebody out there trying to figure out what they want to do with their lives and it could be something to maybe somebody gave to you or something that you've devised in the over the course of your career but keep you some advice
00:39:07if you don't have butterflies in your stomach everyday now I'm not talking crazy butterflies but if you don't have that little sense of doubt
00:39:18you're not trying hard enough or you're not paying attention if it feels too easy if the money's coming to easy if the products coming out too easily you're not trying hard enough or you're not paying attention you got to always be right on the edge of going at pushing yourself you got to push yourself thanks so much for coming by thank you Randy this is an awesome day care
00:39:47you can always stay in touch by following us on Twitter at kpcb liking our Kleiner Perkins Facebook page following us on major

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