Tony Fadell: How to build real taste (and why AI makes it matter more)

[00:00] You still need humans to lose. 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, Herman Hauser, that asked him how he decides what is worth building.

I always start from pain. Are there new technologies to solve that pain? [00:30] Bring innovation in, revolution in, and redefine the space. What's the threshold? What's the sign of, okay, this isn't big enough? Oh, the iPod wasn't big enough. It took three generations of the iPod before it became successful. You gotta 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 gonna jam the technology down the customer's throat.

A customer only sees what they see through the lens of marketing. [01:00] 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 because he had done it a hundred thousand times. [01:19] Today my guest is Tony Fadell. Tony doesn't know this. [01:23] But ever since I started this podcast, he's been near the top of my wishlist of people that I've dreamed to have on this podcast.

[01:29] 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. [01:47] He's co-authored over 300 patents. He also wrote one of the most important and valuable and inspiring books for builders called Build. [01:55] 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 Morning Academy of 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 Product Pass 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. [02:22] With that, I bring you Tony Fidel. [02:24] 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 feel [02:36] four hours of conversation of all the things that I want to get out of your head. [02:40] I want to start with a BlackBerry. [02:43] 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, [02:53] "No, this is dumb. It's like no keyboard.

It's 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, [03:02] How much did you guys actually doubt that, okay, maybe they have something, maybe we need to add a keyboard. [03:08] It was the most heated, [03:10] conversation and it dragged out the longest [03:13] There was one way of looking at the BlackBerry, which was [03:17] That is the market we want to go after and we want to win. [03:21] And then there's the other [03:23] side, the flip side of that argument, which is, [03:27] Only 1% or 2% of mobile phone users at the time had a BlackBerry, knew what a BlackBerry was.

[03:33] So what about the other 98% of the people? What would they do? [03:37] What? [03:38] What would they need? Why are we going to go after winning this very loyal and [03:45] incredibly passionate user base and try to pull them away from something. And so there was this, [03:53] basically head to head [03:55] competition between a display keyboard or virtual keyboard and a physical keyboard. [04:01] I had been doing virtual keyboards for a while since General Magic in the 90s, and I knew what [04:08] handwriting was and and keyboards were like on these touchscreens.

[04:12] But I was only doing it on a – I was writing software and calibrating them, trying to make them work with a single touch. [04:21] display [04:23] resistive or what have you. And so I knew what the limitations were of those kinds of things. So I was like, this is really going to be difficult. And we hadn't, you know, multi-touch was just, you know, was on a big ping pong table. It like it hadn't been scaled down. So it wasn't like something in a [04:41] consumptive form where you could really do user tests with it.

And so, [04:45] we set out a set of tests. [04:47] 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 a... [05:10] over a set of months.

[05:13] would, okay, the hardware keyword's here, and it depends on how much you've been using it, but there's this margin there, and we could really understand it. This, over time, was started way down here, and it started to get it, and it 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, [05:35] I was able to convince myself it wasn't going to be a hardware issue.

[05:39] And I was convinced at some point that we were good enough. [05:44] Were we as good as a hardware keeper? No. But were we good enough? Yes. And then other people came to that conclusion. [05:50] But at the same time, there were other people who were adamant that the hardware keyboard has to be there. And they were unrelenting. [05:57] So, this was a classic like I say in Bill, the data versus opinion based decision. [06:06] And if you think about it, you had data that said there was pros and cons on both sides.

[06:12] And [06:14] What happened was the data was not clear that we should choose one over the other. [06:20] 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? [06:32] Steve Jobs opinion. And he was like, if you're not going to get on board, get out of this room.

[06:38] And you can go work on another project, but you're not going to work on this. [07:08] Drop-in APIs with a modern developer platform built specifically for B2B SaaS. Literally every startup that I'm an investor in that starts to expand upmarket ends up working with WorkOS. And that's because they are the best. Whether you are a seed stage startup trying to land your first enterprise customer or a unicorn expanding globally, WorkOS is the fastest path to becoming enterprise ready and unblocking growth. It's essentially Stripe for enterprise features. Visit com to get started or just hit up their Slack where they have access to the market.

[07:38] actual engineers waiting to answer your questions. WorkOS allows you to build faster with delightful APIs, comprehensive docs, and a smooth developer experience. Go to com to make your app enterprise-ready today. [07:51] 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. [08:11] and there's this chart that goes up to more functional [08:14] That is basically Unkind Truth. [08:16] and then another unkind truth, another unkind truth, [08:19] creates more functional systems. [08:21] Kind lie followed by kind lie followed by kind lie leads to dysfunctional systems. [08:27] something Steve Jobs is very famous for. In your book, you talk about mission-driven assholes. You want a mission-driven asshole. There are certain types of assholes that are great. Talk about just the importance of somebody being very direct and

[08:40] in what it takes to build great products. When you're doing a 1.0 of anything, [08:44] when you're doing 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 [08:52] you have very few analogs that you can use to make data-driven decisions. [08:58] And so if most of your decisions are going to be opinion based decisions for a 1.0, [09:03] You have to have one or two or a very, very small set of people who are charged with making the opinion based decisions and can actually get you from point eight from a white paper or a white blank sheet of white paper or whiteboard to an actual one point O spec.

[09:22] 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 bullshit 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. [09:52] it and it's to me 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 the you know the the users now it's very different when you do this in a in a b2b context versus a b2c context [10:09] So, the hardest environment to work with it when you have these opinion-based decisions is in a B2C context because you have to see.

[10:18] these decisions in the full light and you don't, consumer does. They have to see it from the marketing, from how they discover it in the marketing, the key feature sets. [10:29] the ability to use the product, all of these different things for them to actually come up with an opinion. [10:38] 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 it, 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, [10:55] then you're getting real feedback.

[10:57] When it comes to consumer, 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 – [11:10] 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. [11:21] And there's only so many ways you can do it because the rest of the team doesn't see this either. [11:26] And so you have to be very articulate about how [11:29] what that opinion based decision is made for, why, how it might affect 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. [11:47] And you can articulate that. You can get everybody moving in the same direction, even if it is. And it's going to be risky. [11:53] You're right. You got to know that you got to take risk because most people in those other [11:57] functions, they don't want to take any risks. [12:00] And so there's someone who's got to be the target.

Right. And today, you know, in many contexts, [12:06] people going hire consultants. [12:08] right they go and hire okay we're going to do a user study we're going to do all this and they don't have the user studies and have the full context like i was just describing they don't go buy the product and they don't what have you and then they get data and that's because the leader or whoever's in there a 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 [12:38] 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.

[12:46] And we'll take the heat for that. [12:48] So that's the, you know, 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. [12:56] 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 is basically relies on their instinct and their taste and their experience. And a lot of but, 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, this is, you know, now it's we're going this direction. [13:26] lot of work to get [13:28] I want to come back to the idea of micromanaging, which a lot of people, like to a lot of people, that word is bad. Don't be a micromanager. You advocate for creating great products. You need to actually be really micromanaging. Can you speak to that? What do you think miss about the importance and power of micromanaging as a leader? [13:46] You know, we've heard the term sweat the details.

[13:50] It's micromanagement of certain details. [13:53] 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 on my career, I thought everything mattered. And I drove everybody nuts, drove myself nuts. The people hated like, you know, and it became my, it became like, everybody's got to do it the way I would do it. It's like, no, no, [14:16] 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, [14:28] You really need to, and when I mean micromanage, it means micromanage the decision, not necessarily the operations of doing it, making sure you're getting the data. [14:38] like we did with the keyboard on the iPhone, to make sure we're getting the right data to help us [14:43] get the informed gut to make that opinion based decision. [14:46] And so. [14:48] 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.

[14:59] 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 it's like, okay, guys, we're going to... [15:11] fix all of those things at once and you have to micromanage because everybody wants to find the excuses why they can't do that or they can't do that so you have to ask why a lot so it just and but it's all in service of some [15:23] really key detail that needs to get delivered or some innovation that needs to be delivered.

Just like I said, the keyboard, we had to do the hardware, we had to do the software, we had to do the filtering, 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. [15:53] 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. What versus what the bird? Well, there were many other products. Right. Yeah. Yeah. Uh, [16:09] man the uh smoke alarm is that discontinued by the way the smoke alarm yeah i just oh you just what do you why you want to stab me in the heart like this two years ago that was one of the toughest products i and our team and 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 that's there's so many constraints like that's an ultimate constraint kind of product to actually innovate in so yes it unfortunately is discontinued

[16:39] product in the space for a decade and no one changed it no one invested in it it is so crazy it's it like pains me and it pains everyone people 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 [16:57] It's mind boggling that [17:00] the number one product with revenue and everything you're just gonna 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 no no yeah it was yeah it was a stepchild they you really had to pour a lot of love a lot of a lot of attention a lot of love to make something that was that crystalline and and it had to be well formed and nobody really wanted to put in the efforts they probably like who want to do this who's excited by it [17:26] Nobody was probably excited and they just said, "Okay, we'll just...

[17:30] It's not that big a deal in the end of the day where – [17:33] 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. On the smoke alarm point, my favorite feature, I was at an Airbnb once and it just started. Instead of just like straight to beeping, it was just like, [17:52] I'm about to make a loud noise. [17:55] Just warning you that it's going to get... Heads up. We call it heads up.

[17:58] I love that feature so much. It's like, it's about to get very loud. Thank you for telling me. So good. You know, so you don't get PTSD every time. Because you know when a smoke alarm will, you're like, okay, everyone calm. We're going to do this now. Especially when we're doing tests and stuff. We're like, you know, when we're, because people are supposed to test or are supposed to test itself. Like, you know, like everyone stay calm. It's going to be good, children. It's just, we've got to do this one thing.

You know, get through it. Don't worry. That's so good. [18:28] I was like, thank you so much for telling me. There was a lot of love and care important that thing. So I was going to ask specifically about the Nest. Like the Nest thermostat is still the best thermostat out there. I use it everywhere I go. It's just the best. [18:39] The app hasn't evolved. Nothing's changed for a long time. Is it the same reason you just described as just not a priority? Stabbing the heart. [18:45] Yeah, you know, the whole organization was a stepchild.

[18:51] for whatever reason, you know, there was cultural mismatch. There was, you know, probably a business mismatch. I think, [18:59] If Nest was around and alive today like it was, it would have a whole different thing when Google and Gemini and Google O. was yesterday or the day before. [19:11] It would have been one of, I think, some of the centerpieces of what you could do because AI needs context. [19:17] AI needs a lot of context. And in a home, you want to make everything very seamless. [19:22] And the way you get best context is by having sensors [19:26] 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 a anywhere assistant that really knows what's going on. [19:48] Is there space for someone to launch the new Nest, do you think? Oh, for sure. [19:52] For sure. People keep asking me, wait, we can get it. It's like, no, absolutely. It's now is the I now is the time. If it isn't already happening, I'm actually getting business plans of people who are like, hey, you know, is this interesting? Do you want to invest in it?

You want to come and help us, you know, build it? This is like Nest 2.0. So, you know, they're trying to do stuff like that at ring. I don't think very, you know, it's not very privacy focused, but that's what they're trying to do. [20:22] because we remember we 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 um and so we knew what ai was right so since 2010 that was one of the predic one of the foundation piece 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 [20:52] okay we can see this world growing and this ai system and then voice citizens came and 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 [21:04] We could see this...

[21:06] kind of blossoming. Unfortunately, in the fullness of time, it takes 15 years more from the time Nest launched for that vision to come to fruition, but it is there now. If Nest was [21:20] If not, 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 I emailed a bunch of people that know you, asked them what to ask you. One of your colleagues, Herman Hauser. Oh, Herman Hauser, yeah. Herman Hauser.

[21:38] So his question he wanted me to ask, he said, ask him how he decides what is worth building. [21:42] Okay. Well, Herman's great. I've known Herman since 1987, probably before most of your listeners were even born. But Herman, just for context, Herman was the creator of a core computer, which was the Apple II of the UK back in the 70s. And then he created with his team the ARM processor. [22:03] so acorn risk so arm means acorn risk machine from acorn computer and so he was the founder of one of the founders of arm and so i was talking about process anyway so that's so how do so so herman and i go way way back so the the thing is how do you solve your figure out what is worthy to be built and what's not so um [22:27] The first thing is I start from pain.

[22:30] I, you know, some people start from other directions. I always start from pain. That's what I learned is what are people's pain right now, or you can see it on the horizon. They're going to have pain and not too far away. But how do you solve for that pain? And typically, [22:48] those pains were because when those products were created, either it was unintentional consequence or it was a limitation of the technology. [22:57] 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 [23:08] a painkiller for the other problem. [23:10] that having this new pain was worth it. [23:13] And so I always kind of start with, okay, where's our current pain and are there new technologies to solve that pain? [23:21] In the thermostat case, Nest, was we could use AI to learn. It can learn when you're there, when you're away, what temperatures are you like so you don't have to program it so you can save energy.

The big pain was being either comfortable or saving money because 50% of your energy bill was in this heating and cooling unit. You hated the interface. You didn't know what it was. You just paid the bill. It started from that pain and said, [23:48] Okay, well, programmable thermostats, [23:51] weren't innovative, but they weren't used. Like everyone, a lot of them had it. [23:56] because the energy company would give you rebates for it, but no one knew how to use it because it was arcane. It was 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 $10. [24:14] Five to six times more than the things that you're buying today. But that was the crazy opinion-based decision was, okay, yes, it's going to cost $249, but it's going to save you – [24:26] $800 to $1,200 a year. [24:28] 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.

[24:38] and hopefully solve it in a new way. So it starts with the pain, [24:42] Longtime pain, maybe habituated away pain that you have to discover and new technology bonded with that to then – [24:49] to then bring innovation in, revolution in. [24:52] And then redefine the space in a way, which is what we did, which is not with just the product, but how you installed it. You know, it was always installed by third party installers as opposed to yourself, how you bought it, which was you bought it through the installer.

You didn't buy it in Best Buy or. [25:11] somewhere else. So it was, we had to reinvent many different [25:14] 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 the iPod or the iPhone wasn't the iPhone. It was [25:27] It was the iPhone plus the App Store, iTunes plus... [25:31] iTunes, iPod plus iTunes, and then the iTunes Music Store. So you have to think about the full – [25:38] the full thing you're trying to build, not just the one piece, even though that's what you might remember.

[25:43] You have to remember it's a system that you're going to innovate with. So these two-part kind of formula you shared here, the pain and new technologies. The second part is really interesting. Essentially, it's like, what's the why now? [25:55] What's like the new tech that has emerged that now allows us to solve this pain? [25:59] It feels like that's a core part of it. Okay. It's because it's interesting because when you talked about the iPhone keyboard, [26:05] It was a similar story of like, okay, we can actually sort of do this virtual keyboard for the first time in history.

[26:09] Right, exactly. It could be because of multi-touch. [26:12] That's really what it was. And then we were just on the verge of having fast enough processors. Right. And we were just on the verge. So it wasn't you know, if you look at the iPhone or you nest iPhone or iPod, you can see where all these technologies were just coming to light. So 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.

[26:35] right? Those were kind of the end. We also had [26:38] Um, [26:39] high density we were the first products to have lithium ion or lithium prismatic polymer cells so it was new battery technology new new mass storage portable mass storage and this new uh generation of uh digital music and we had arm processors right and so and really really low power so all of those things had to come together to do that um and then on the iphone it was the [27:09] Now we have Wi-Fi everywhere. [27:11] And we knew that 3G was coming.

[27:14] Because it was only 2.5 G when that was. And that was very slow. But we had Wi-Fi. So it was. And we had cameras. Right? Digital cameras. We had the digital camera. We had digital cameras. [27:24] video which was we had YouTube at the time so it was all of those things just on the verge [27:30] to say this is what's going to be very different than what just came before it, like a Blackberry, which was really just a texting machine and nothing else. [27:38] I'm going to close the loop on your advice on finding a great idea.

[27:41] I'm curious about kind of the flip side of when it's still, when it's not good enough. So there's like so many gadgets out there that are solving some pain level. Maybe there's a new technology that they integrated, but they're still like, it's not a big business. It's not a real company. [27:55] What's the threshold? What's like a sign of K? This isn't big enough. Well, you know, the iPod wasn't big enough. [28:02] It took three generations of the iPod before it became successful. Everyone, you know, well, anyone who knows, you know, if they remember iPod before iPhone, because iPhone swallowed everything.

It's like the black hole of everything. But, you know, iPod, the first generation, [28:17] was only successful with the Mac geeks and the Mac geeks were less than 1% of the market. [28:24] and then the second generation was also that way so when we we get we we'd sell everything we'd sell [28:31] could for the most part [28:34] in the first quarter and then it would die. [28:36] Because it was just the Mac aficionados, the loyalists, who'd come and buy everything. [28:41] And it wasn't until the third generation where we made it work on Windows – [28:46] Did it actually – and we had the iTunes Music Store.

[28:49] Did it actually start to take off? [28:50] 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. [28:59] to, you know, we, the team at 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 shift. And Steve said over my dead body, no way. This is going to help us sell more Macs.

[29:15] So, and then, you know, we're like, okay, we're making the second one. Oh, we're going to keep it with Mac only. We just got to fix a few of these things. And then all of a sudden it'll take off. And it was like. [29:25] It didn't take off. So then it was. [29:27] There's a long story about how we finally got Windows connectivity, but there was always this Skunk Works thing project behind the scenes doing that. I did the same thing with Stylus. [29:38] Steve never wanted a stylus on the iPhone or the iPad.

He never wanted. [29:43] he never wanted it he's like the finger is good enough when we can't do it with the finger it's like [29:47] And I'm like, we're going to have the B2B context and we're going to have forms 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, which was you had to use the pen for everything as opposed to using your finger. So it was like I want it instead of pen dominant.

I want a finger dominant. But that's what he was saying. But then when we added the stylus, which was another Skunk Works project, all of a sudden it came out. I was like, well, we had to have stylus. Right. And now it's a big feature of the product. [30:17] it but it is a big feature for certain professionals who really want that in artists and hobbyists and stuff and so sometimes you have to have those skunk works things that even if the opinion-based uh 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 [30:39] So but we had to like I said, the the iPhone wasn't a hit right away.

It was kind of like, oh, yeah, I worked on AT&T and it was two and a half G and it was this man. And, you know, it did it only worked in the US. So we had to get multiple versions till we got out. And that's in my book. [30:55] I have the, and it's called... [30:59] I think it's three generations. [31:02] Everything needs three generations. Yes, Bill, there it is. Three generations. I've learned [31:07] You make the product, you fix the product, [31:10] then you [31:11] Fix the business. [31:13] So you have there's no I've never seen anyone get it all right the first time.

[31:17] Like you want to, you would like to, but you get close, but [31:21] 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 [31:30] First iPhones, we weren't making any money. [31:32] The second iPhone and second iPod, okay, we started getting a little bit better numbers [31:38] but we got more or less the features sort of dialed. Third one was like, okay, Windows, [31:43] We got the margins. We're getting up the volume.

We got all the right. And like, go. [31:48] reliability, whatever else it had to be. [31:51] So you need to stick with your idea, even if it's not necessarily going the first time, unless there's something really severely dangerous. [31:59] your 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. [32:14] not just make the product work.

[32:16] There's so many directions I can go here. One that's interesting is how often Steve Jobs is actually wrong. Oh, yeah. You have to do like takes a year still. Okay. Finally. We all were wrong at certain times. But you know, it's when you hit those you when you hit it big, when you get the right ones, they over they 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 get to.

[32:42] 'til you find your way. [32:44] And and but you only fail if you stop. [32:49] If you keep iterating and keep going, [32:51] Well, then that's not failure. That's called learning. [32:54] The other interesting part of the story you just shared here, which is one of my favorite stories in your book, actually, [32:59] The fact that [32:59] You kind of implied this, but basically the first iPod was, you had to have a Mac to use it. [33:04] and ideas, 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 [33:12] saving apple eventually not selling macs but people buying ipods [33:15] And that was like 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 three hundred forty nine dollars. [33:25] 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... [33:33] 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, oh, that's pretty interesting. Maybe I should try other products from this company and give, you know, give them a shot. [33:52] because that was just such a sublime experience. [33:55] And that's how it all changed and that's how iPhone was able to be created because without the iPod, [34:01] But there I'm pretty sure there would have been no iPhone. There would have probably been no Apple.

[34:04] because it was close to bankruptcy. [34:06] Wow. [34:07] That's crazy how close it was to that if some of these decisions went the wrong way. [34:11] 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. [34:21] So many stories, but I want to come back to the customer journey. [34:26] 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. [34:36] of the entire customer journey. [34:38] And the kind of your 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. [34:45] And you have this [34:46] Very important advice. 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,

[34:58] We have a good sense of the context when we are defining those things. We are – [35:05] We're living in that world. [35:07] Okay? [35:09] 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, you know, 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. [35:34] But you have to also remember that these people don't live in those that they live in the context, but they're not aware of your product in their context. [35:43] 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 whatever, your earned, owned and earned and owned media that you do. [36:01] you really need to [36:03] put that your product in their context and make the visuals and make the words and everything sing to them.

[36:10] And if not, they're not going to get it. [36:13] right and so too many times we just say oh if we just make the perfect product no you have to put all for a consumer thing specifically and it's it's also really good for a b2b product as well is make sure you understand your customer and they go [36:26] And when you say the right word, they go, oh, they get me. [36:29] 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're [36:37] 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 is it and you're [36:47] You're weaving this [36:49] 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, [36:59] is my is word of mouth right by other early adopters but you got to do the same thing for the early you know i mean not the earliest early adopters but the early adopters [37:09] who other people trust to talk to.

Because a lot of other people who are late adopters, they know, oh, that's that. That's wacky George. He tries everything and then like, no, no, no. But if so and so has tried it, [37:23] Oh, I should take notice of that. [37:25] Right? And so what you want to do is make sure you understand the gestation of your customer and where they are and where they are in the thing and who you're trying to… [37:34] 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.

[37:55] and how you're going to get those higher and higher volumes. And it really means about 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. [38:07] But then the second version of the product, you're getting these later adopters and you've got to speak in their language. [38:13] And the third set of adopters who are really laggards, you've got to really speak to them and go through that. And it could be totally different.

And so this was a very interesting... [38:24] story that it was so [38:28] emblazoned in my mind [38:32] Back in 2001, two, three. [38:35] Still, when Apple had no presence outside of the US, Apple was really it was selling in the US, some Canada and some in Japan. But that was it. And that was the max. [38:44] So we were selling iPods into those areas. [38:49] And so we had kind of the early adopter and then we had some other language and then by the third, fourth version of iPod, we had some really refined language for those kind of late adopters.

[39:01] So then we said, we're going to go back and get a push into Europe. [39:07] We're going to get we're going to get because the iPod hadn't taken off in Europe. So we're going to push you. We're going to push iPod into Europe. [39:14] And so we're on, I think, the fourth generation or something like that. [39:17] And so what did we do in Europe? We ran the same marketing [39:23] as we were doing in the US in China. [39:25] Europe. [39:26] And the thing is, [39:28] 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. [39:36] And we're like, ding, ding, ding, ding, ding. Sales aren't working. We got to change the marketing. We got to meet those Europeans where they're at because they're slower to adopt technology versus it starts with the coast and goes inward in the US, right? And so we're like, oh, we got to change things up. [39:53] And so, you know, sometimes it's 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 where the, if it doesn't have an installed base for word of mouth, [40:06] you're going to have to get that word of mouth started to work with those people to get that going.

Now, it's different with all software products and all these things and many, many, um, [40:16] Many products can go global right away, but marketing [40:21] You still got to tell a story and you got to, you know, so it's it just reminds me that even though we've maybe compressed the time for some pieces of the. [40:30] adoption puzzle you know because we can distribute faster doesn't mean we can [40:35] The... [40:38] The... [40:40] awareness [40:41] can get accelerated and that we can get people to intelligently understand with this product faster if we just say, [40:49] the words of somebody who might have known about the product for three years.

[40:53] 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. Yeah. [41:01] Is there a story behind that? [41:03] Back in the day. [41:07] at Apple. And I think it's still that maybe it's changed now, but back in the Steve days, [41:12] There was. [41:14] the different functions of Apple. [41:17] And because they were all lean, because the company was only 4,000, 5,000 people, and it was already doing max and everything, each function was kind of very, very functional.

And so the marketing didn't get... [41:30] into the engineering and the design folks it was like separate like steve was the it was the hub and he was in each of them putting them together like i said the the uh the um [41:42] opinion-based decision maker. And so when we heard the tagline for the first time, [41:50] I was like, [41:51] That's genius. Now, how long that happened? How what was the behind the scenes? We were we were just a tiny team. You know, we're getting this done in 10 months.

So everybody was just running for it. Right. Wars versus iPhone, which was we had discussions of it. Should we call it the iPod phone or should we call it the iPhone? Because Cisco had the iPhone back in the day and there was copyright issues and trademark issues. And so we were into that because it was also a two and a half year development. [42:21] going to cannibalize ipod right so there was a lot more discussions but in those early days of thousand songs though it was [42:27] Everybody run in in literally not it less than it was really.

[42:32] Five to six months, everything got done because we really started it in April and it shipped in end of October. [42:40] So I think one of the core takeaways from what you shared here is, [42:43] even if you may have the perfect product, the marketing may be [42:47] the gap. [42:48] That if something isn't working, it may... [42:51] Absolutely. And the thing is, I think we're starting to see that, the cracks of it. It might be more than cracks now with like OpenAI. [43:00] What is it? [43:03] It's like, oh, it's your answer 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. And if I, but what am I using it for every day? And like, oh, Claude, it does Claude code. And it does, you know, code, you know, and then what happens open is like, oh, we have codecs now. [43:19] 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? [43:27] 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, Netscape Navigator. And then all of a sudden it evaporated. Like, well, what do I use the net for? Like, 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 with product marketing. So, you know, that is... [43:54] To me, that's its marketing. [43:56] But if you start, if you are already thinking about the marketing, [44:00] You're already going to start thinking about the product.

[44:02] And that's the thing is when you're just thinking about the product, you're like, and it was really just a technology demo that went. [44:08] you know, viral and they're like, oh, yeah. And they still keep winning on that. They never put product in. [44:12] Till it was too late. Now, Anthropics where they are and valued more and higher revenue and all the other stuff. So, you know, it just it just. [44:21] Even if it's a software-only product, yes, there's lots of hardware and servers and all that other stuff. [44:26] 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, the messaging, the target markets early on.

You can't leave it till later. [44:41] and then get it. [44:42] and then back calculate it. And that's why I say you should, you know, you should really make the press release before you start [44:50] more or less start the project again. [44:53] Yeah, there's a whole chapter on that. We have the – like Amazon's also very famous for that, this whole book on working backwards that goes really deep on this approach. But the weird thing is it's working backwards. See, the thing saying working backwards – [45:06] 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 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. [45:21] It's just because it's so technology led and technologists, and this is what I thought when I was 20, I was like, yeah, now it sounds backwards. It's actually backwards. [45:30] No, that's actually insane.

It's not working backwards. It's just an insane way of working. [45:36] Like, come on, let's really think through this. It says so much that you as one of the most successful, insightful builders, you know, [45:45] are so into marketing. [45:48] 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, because you're coming from a customer point of view.

[46:00] So you have to see the lens and the customer only sees what they see through the lens of marketing and sales. [46:06] Right? And so you have to be in their shoes and you go, "Okay. [46:09] When I do the press release, I can only have three or four key features. [46:14] After that, [46:15] It becomes gobbledygook. [46:17] 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. [46:26] 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 it's it's a holistic design it's not you know like because we think the technology [46:44] The technology is in service of the customer. [46:47] Not we're going to jam the technology down the customer's throat and they're going to figure out how to use it.

[46:52] There's too much noise. You've got to make it frictionless, and you've got to fit it in their world and see from their point of view, go, oh, that's what I need. General magic was the perfect story for that. [47:01] I don't know if your viewers should definitely watch the movie General Magic because 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. [47:14] Yeah, that documentary is incredible. It's like such a, I like the very young version of you.

Yeah, very different. People won't recognize me. Yeah, you have a whole chapter about just like not overworking in your career based on that experience. Which General Magic was for me, yeah. I am so excited to tell you about this season's supporting sponsor, Vanta. Vanta helps over 15,000 companies like Cursor, Ramp, Duolingo, Snowflake, and Atlassian earn and prove trust with their customers. [47:44] Teams are building and shipping products faster than ever thanks to AI. But as a result, the amount of risk being introduced into your product and your business is higher than it's ever been.

Every security leader that I talk to is feeling the increasing weight of protecting their organization, their business, and not to mention their customer data. Because things are moving so fast, they are constantly reacting, having to guess at priorities, and having to make do with outdated solutions. [48:11] Vanta automates compliance and risk management with over 35 security and privacy frameworks, including SOC 2, ISO 27001, and HIPAA. This helps companies get compliant fast and stay compliant. More than ever before, trust has the power to make or break your business. [48:28] Learn more at

com slash Lenny. And as a listener of this podcast, you get $1,000 off Vanta. [48:35] That's com slash Lenny. I want to talk about something else around the evolution of the product management role and builders. What's really interesting, this 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. [48:56] and this is what everyone's starting to call product managers, people on product teams, [49:01] I'm curious just what you're seeing with this kind of converging of [49:05] these roles?

Do you feel like [49:07] everyone just becomes a builder and there's no more designer, engineer, product manager. Do you think they'll continue being these functions with, [49:14] But more merged, I don't know, what are you seeing with the discipline of product management specifically? [49:19] Well, the discipline of product management [49:22] sits between all of these functional roles. [49:26] Okay, whether that's marketing, sales, distribution, sometimes manufacturing depends on what the product is, engineering, obviously. [49:38] And [49:39] 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. [49:52] you know what's going on between all of them and stitch them all together to make this this thing sing and [50:00] What we're saying is, oh, I can just... [50:04] 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 the AI world of what those things are, they are very clear definitions. [50:18] of certain points of view, [50:21] for the customer and you have to consider them.

[50:24] And to say that they're going to get washed away and then AI is going to come up with it. [50:29] It reminds me a lot of how software coding is getting done with... [50:35] Um, [50:36] Like something like Claude today. [50:38] Maybe it was a month ago. [50:41] When the Claude source code leaked? Mm-hmm. [50:45] right cloud so source code late and everybody's like oh my god it leaked [50:50] And then if you and at the time and I'm I don't maybe they changed it. Maybe they didn't. But at the time, Dario was saying, you know, 90 to 100 percent of all our codes written by, you know, our, you know, Claude.

[51:05] And, you know, we just monitor it and watch it. [51:08] And we're like, oh, well, that's really interesting. And then the code leaks. [51:12] Then if you looked at the code, anybody who looked at the code, [51:16] who's a real software architect and engineer, [51:20] Threw up. [51:21] They were like, it made what? [51:26] 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 subfunctions. This is the main loop of Anthropics Claude. The main loop, not just something off in the corner.

This is the main loop. And people are like, how can you do this? This looks brittle. There's like, it's unreadable. And they're like, well, the AI knows it. [51:49] But when you think about it, [51:51] and you have to maintain it. You can have an agent... [51:54] make code for you and it could work and it could test, but is it secure? [52:00] Is it maintainable? [52:03] If there's something going wrong, can you roll things back and understand what's going on? Like there's so many other aspects to writing code and delivering a product thing.

[52:12] that you still need humans in the loop. And so when I think of product design, [52:17] I think of software code with AI. [52:20] And when you look at AI and 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. [52:39] around the code structuring it so that subsequent generations can get better and better and it just kind of [52:46] Devolves.

[52:48] into this mass of things you don't know, you're getting short-term gain for very, very long-term laws. And that's called software debt, technical debt. Everybody hates technical debt. So it 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?