Nest CEO Tony Fadell on the iPod, iPhone, and the importance of shipping products

Tony Fadell has had a storied career in Silicon Valley. He grew up in Michigan and took to building things early, thanks to a grandfather who gave him lots of tasks — like changing electrical sockets at the age of four. He became tech savvy, moved to Silicon Valley, and got a job at General Magic, a 1990s company that was trying to beat Microsoft in operating systems and portable hardware. It failed miserably, but Fadell took his ideas for portable hardware first to Philips Electronic and then Apple.

At Apple, Steve Jobs eventually supported Fadell’s attempt to create a music device, and, later, a PC-compatible music device. And so the iPod was born. Fadell’s team created 18 versions of the iPod and helped cement Apple’s turnaround. Then he went on to lead the team that created the first three versions of the iPhone.

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In 2010, he and Matt Rogers cofounded Nest Labs, which made the Nest smart thermostat. In 2014, Google acquired Nest for $3.2 billion, and since early 2015, he has been leading Google’s efforts in smart glasses. Fadell now has more than 300 patents, and he wakes up early every day to exercise before heading into a day full of meetings. Las week, we attended the SV Forum Visionary Salon Dinner honoring Fadell for his many accomplishments. He was interviewed on stage by Kevin Surace, CEO of Appvance and chairman of the nonprofit SV Forum.

Here’s an edited transcript of their conversation.

VentureBeat: People attain a certain number of patents, a certain amount of notoriety, and they lose that humility, lose touch with their friends and their community and their office. Tony has never been that way. Tony is the most humble gentleman in technology I’ve ever met. Anyone who knew Tony 10 years ago, 20 years ago, 30 years ago, they’ll tell you, call him and he’ll get back to you. He will help you. He’s there. Very few people will do that. So thank you for being who you are and that side of you.

Tony Fadell: Thank you for saying that, and thank you all for coming out. One of the big reasons I do that is because I believe if I don’t help other people, I’ll miss out. When I started, the lowest guy on the totem pole at General Magic in 1991, I was 22 and just came out here. Everyone around me helped me to get to where I am. It’s all about giving back and helping others. That’s where the greatest value is. It’s not just about building a great company.

When you read that list of accomplishments, the first day was complete and utter failure. It was a ton of work. But what comes around goes around. If you help others, they’re going to help you. That’s why I love the Silicon Valley community. We can build so many successes and do it together.

VB: You were in electronics and computers early on. What drove you to technology as a kid?

Fadell: I didn’t start with electronics, per se. It started with my grandfather. My brother and I, at the ages of three and four, he started us painting walls and pounding nails and building things. Even changing electrical sockets, at four years old. My mom would say, “What are you doing?” The ability to use your mind and your hands and create stuff, that was given to me by him.

That led me to be curious about all kinds of different things around me. And then the Apple II came out. You saw it all around. It was Time Magazine’s person of the year. I’m really dating myself. But that got me saying, “Here’s another thing to be curious about.”

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I took a summer school class in third grade. It was bubble cards and a paper printout. Not even a monitor. That’s what got me hooked. That’s where it first started. Then after that, the Apple II and a Tandy. I worked to earn the money to get that first computer. But that’s where it all started. First learning from my grandfather about how to use my hands and then leveraging that to build stuff on computers.

VB: What was it like growing up in Michigan?

Fadell: The thing is, I went to 12 schools in 15 years. I was all around the U.S. In certain times I’d be in Michigan, but other times I was in Texas, New York, all these other places. That was the other thing about technology. I couldn’t play sports, because there’s no way to get on a team when you’re only in the city for a year or two. I kept moving, and so what I brought with me was my Apple II. Then I started communicating with my friends in the cities I left on BBSes with a 300 baud modem. That’s what I had. That became my lifestyle.

All I’d do in my life was those kinds of things. I knew I had to come out here as soon as I got out of college.

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VB: People get up every day and say, “Oh, God, another day.” And then the other half go, “Yeah, it’s another day!” When you get up, how do you look at the day? What drives you throughout the day?

Fadell: My day really starts, first and foremost, with some sort of workout. Something around five in the morning, I have to work out for about an hour. Whether it’s yoga or running or lifting. Start there, take the kids to school, and then go right into the first meeting of the day. Sometimes I can’t wait to have that meeting. Other days, “Oh, we’ve got to talk.” But that’s how you start the day. Try to process what you’re going to do.

At night, I go to bed and I’m exhausted, and I just fall asleep. But in the morning, I wake up and I think of all the things that are going to happen today…Whether it’s running or yoga, it’s like moving meditation. I let the thoughts just wash over my brain and think about how to react to the day and come up with some ideas and problem-solve. After that, I’m in meetings with people all day long, just brainstorming, problem-solving, new designs, five days a week.

At night and on the weekends, I can’t stop. My wife says I’m diseased. I can’t stop thinking about fixing problems.

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VB: You graduated and came out here to General Magic, at the time. It was one of the first concept IPOs. General Magic went public in 1995 with a billion-dollar valuation. Crazy numbers. They had every partner in Japan, every partner in the U.S. It was an amazing company with an amazing 400 or 500 people. In the end, it didn’t succeed. Could you tell us a bit about those early days, when you were learning about how to bring products to the market, learning how to design computing and handheld products?

Fadell: First I had to get to General Magic. I started a company in high school and college. I always had this yearning, where I felt like the biggest fish in the very smallest pond. I was always trying to learn more, and even at the University of Michigan, I couldn’t get that practical experience of creating companies and knowing who to call if you had an issue. You were all alone. I knew I had to go and work with people who had that experience. I wasn’t getting it at school.

Today, you go to school and you can learn a bit about startups and stuff like that. Back in the day, there was nothing. I wanted to go to a company where I could learn a lot. Where are my heroes? My heroes were at General Magic, because they had the team that created the Macintosh. I wanted to go work with them — Bill Atkinson, Andy Hertzfeld. And so to get in the door at General Magic, it’s like my eyes were wide open.

You knew what kind of software it was, but you didn’t know how to build software, how to test software, how to design software. You didn’t have any of those concepts in college. Every day I was learning. I was working 18- to 20-hour days, because I had to learn and do at the same time. Just trying to keep up. But I had my heroes next to me, and I was trying to impress them. I’d begged for a job, and they gave me a job at $28,000 a year. I was like, “All right! I’m in California!”

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I was just scraping by. But to be around those people every day and learning from them about so many aspects of startups. What about the market? The thing you learn very quickly is that you can build anything, given enough time and money. But can you actually sell it? There are some hard lessons we learned at General Magic and beyond about — can you actually sell it? Because it was a disaster, I learned how hard …

VB: What did you learn? What would be two or three takeaways from that project?

Fadell: The first thing was, stick to your milestones, and do not have a project that takes more than a year to a year and a half. You cannot keep the team together longer than that. I look at these civic works projects, like building bridges and stuff, and it takes 10 or 15 years. The team turns over three or four times! But in these kinds of designs, if you go more than a year and a half, it’s taking too long, especially in the Internet age.

It’s hard for me to even convince people to spend a year doing something. A four or five-year project to build a new operating system? Nope. Nowadays it’s hard to plan more than three months out without dedicating to shipping something. But if you want to do something great, that takes more than three months. So make sure you have a really good time schedule and you stick to it and you ship. You need to know what your milestones are, and the team needs to know what your milestones are.

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When I joined, the line was, “We’re gonna ship in one year!” And then it was another year and then another. It was a five-year project and it just kept getting bigger and bigger. We kept saying, “We forgot this! We gotta add that!” No, we have to ship. Great artists ship. Even if they’re not perfect, you gotta ship. That’s one of the biggest learnings. We might not have failed if we hadn’t taken so long.

That was one big thing. The other one is, really understand what you’re trying to develop and how you’re going to market. Do that before or while you’re designing. When you’re designing that feature, what’s the tagline? You should have a list of features, but when you communicate with consumers or business owners, you can only tell them about three or four things. You better understand what those things are. That’s all you need to focus on. All the other stuff, no one’s ever going to get around to selling it.

General Magic’s device had everything in it. It had mobile email. It had downloadable games and shopping and all kinds of different stuff. This was in 1994. We all understand what that is now, but then? It took four hours to explain to people! “That looks really cool. I don’t know if I need it.” And because it was 1994, there was one major thing that was missing, too, which was coming in 1995. We call it the Internet. Instead we had the whole proprietary network with AT&T.

So when they finally launched the product, Netscape went public around the same time, and they didn’t talk to each other. We were the biggest concept IPO to date, and then the very next concept IPO after that? Netscape. Netscape took off and we just got buried.

VB: Turns out the Internet was a pretty good bet. So you got some learning out of General Magic, and then you went on to Philips. Tell us about what you did there and what you learned from a big company.

Fadell: Just back then, it was 375,000 people at Philips. So how did this all happen? Philips was actually a licensee of the General Magic technology. I had been working with those teams to help build chips and possibly devices and all these other things with Philips.

General Magic was an utter failure. I saw it happen. We shipped the device and no one cared. We thought, “Oh my God, we have to design some other device.” So I started designing a device I thought was the right thing. I showed it to Andy and Milton and Anna, and they said, “That’s really nice, but that’s not what we’re going to do right now. We have to do this other thing right now.” I thought, “Why? This is the thing!”

I knew in my heart that we were going to fail here. So I went to go build a device, a General Magic-based device, and do it in the right way and convince General Magic that they had to support it. I went to the CEO of Philips and pitched him this idea. 25 years old. I had never done anything like this before. I was just an individual contributor, an engineer. I pitched him this thing and he said, “This is great! Now we’re going to hire you and I want you to build it.”

So be careful what you wish for. The next 48 hours of my life, I was crumpled up in a corner thinking, “What did I just do?” But we came out with a critically successful device. It wasn’t a market success, not a business success, but the critics all loved it. It was a pocket computer with a keyboard and mobile email. It used Windows CE back in the day, because General Magic had failed by then, and it turned out pretty well for Philips. But again, you can build anything. Can you sell it?

The sales teams, the marketing teams at Philips, we didn’t own those teams. They just wanted to sell TVs. It was nothing like a startup. But now where’s Philips today? It’s less than 40,000 people now. They’ve sold off everything. It’s a fraction of a company, and now they’re actually going to get rid of lighting, the whole reason for them being. They’ll be a 20,000-person company. Huge change.

VB: Let’s move on to Apple. What took you from Philips to Apple?

Fadell: I went to go and work for RealNetworks for six weeks. Then I said, “I hate this. I’m gonna start my own company.” It was the very beginning of digital imaging. This was in 1998. I was a DJ at the time. I hated carrying around all my CDs. I wanted to carry around one box with me that had all of my music on it. We were creating, at this startup company called Fuse, a CD ripper. You’d put a CD in it and then it would put it on a big hard drive. It looked like a stereo. We were building that. That was the initial thing. I wanted to build this cool music jukebox.

Then the Internet crunch happened. The bottom fell out of everything. A hardware startup doing digital music? “I want software only! I don’t want hardware! Hardware’s over!” I went to 80 VCs, did 80 pitches, and got turned down 80 times. You have no idea how hard it was. Nobody was opening their wallets. They didn’t want anything to do with what we had.

Ironically, when we couldn’t get any more money, I got a phone call from Apple saying, “Hey, come on in. We want to talk to you.” It turned out to be, we have iTunes, we’re making mix CDs, and these MP3 players out there are really bad. We think there’s a way to make an Apple version. Come on as a consultant for eight weeks, see what you can design, and we’ll see what we like. That was it.

VB: Eight weeks turned into …

Fadell: Eight weeks turned into 10 years and 18 generations of iPods and three generations of iPhone. Apple was crazy.

VB: When you go to launch the iPod, this was a moment in time when Apple was not quite failing, but a challenged company.

Fadell: The company had $500 million in debt, $250 million in the bank, and less than one percent U.S. market share. There was nothing left to sell.

VB: You’re there, Steve’s back, and Steve supported this. He had this idea to support a music player. At some level, any rational board would say, “Your company is about to die. You have tons of debt. You have no market share. And you’re going to come up with the 50th MP3 player in the world?” Any rational board would fire the CEO. It was a very unique time when a CEO could get away with doing absolutely ludicrous things by most standards.

Fadell: It was crazy. I’d go around to other people in the company because I needed their help. Jack Williams, the COO, he was in one of the very first meetings I was in. I didn’t know who he was. I turned to him and said, “I need you to do this.” He said, “What is this?” “I’m making this music player!” No one believed it. People did not believe it. We’re fighting for our lives here. What are we doing with this little toy? That’s what it looked like.

VB: No one else had had huge success.

Fadell: The market was littered with junk. I almost didn’t take the job. We had the General Magic tale. We had the Philips tale. I turned to Steve and said, “We can build anything. Give it enough time and money. But how can you guarantee to me that you can sell and market it? Look at Sony. They own every audio category. How do we go up against that?” He said to me, “Look. You make it, and I guarantee I’ll use every marketing dollar I’ve got. I’ll starve the Mac to do it.” I said, “Okay, you do what you want.” He was really passionate about it.

He was crazy. It wasn’t just me. I had to hire a team. I had to convince them to come to this dying company that might get shut down at any time. Most of the other people in the company didn’t believe in it. It was quite extraordinary.

VB: How did you feel the week of launch?

Fadell: It was interesting. I’ve been on the stand, because the lawsuits, the trials over the iPod, the infringement… You know you have a success because everyone sues you. That’s what always happens. I’m on the stand and this attorney comes up and says, “You knew this was going to be a success! You absolutely knew this was going to be successful!” I’m like, “No, I did not.” Look, dude, after a decade of failures, I was hoping it was successful, but I was tempered. I understood. I’d seen so much failure. I had no idea.

At General Magic, we all inhaled our own exhaust. All the press were saying we were going to take down Microsoft.

VB: Well, General Magic had a bit of the Google play. You had the great operating system and a great hardware design and you could license it to the entire world. How would you not be successful? Turns out to be the wrong place at the wrong time. Hardware wasn’t fast enough. No Internet. Everything.

Fadell: Being a kid, being in my 20s, I believed all that. I knew it was going to be successful! Everyone said it was going to be successful! Then, with the iPod, I’m not breathing anything. I’m not listening to anything. I hope I’ll do a good job, but that’s it.

VB: When did you finally wake up and realize it was a success?

Fadell: It took two and a half years. Really. The first one was awesome. Every Mac owner bought it. But there weren’t many Mac owners! Then, flatline. This is where the arm-wrestling happened with Steve. I had a team making it compatible with the PC and Steve’s like, “OVER MY DEAD BODY! Never! We need to sell Macs! This is going to be why people buy Macs!” I said, “Steve, the iPod is $399. But really it’s not. Because you have to buy a Mac!” We had to give people a taste.

We had this knock down, drag out battle. We’re all sitting around and saying, “Look, Steve, we need to get this on the PC. That’s where the biggest set of people are.” And even Bill Gates goes, “Why did you decide to put it on the PC?”

VB: Who said it first? Because I have to imagine, if you say that when Steve’s in the room, a frying pan comes flying at you.

Fadell: The way this normally works is, you have a little pre-meeting before the meeting with Steve. I’m gonna say this, then you say this, then you say that. Sometimes it works. That time, though, everyone got scared. We showed up and I’m like, “Who’s gonna take the first step?” Everyone’s shutting up.

This time, though, I think it was Bill Schiller who said, “We gotta get this thing on the PC!” And I’m like, “Yeah, I’ll get the team working on it!” We let it sink in. This was like the fourth time it had come up, and he hadn’t wanted to hear it. But enough quarters had passed with nothing really happening. Like I say, it was a critical success, but not a business success.

He finally said, “Okay. But under one condition. We’re going to build these and run it by Mossberg. And if Mossberg says it’s good enough to ship, then we’ll ship it.” He wanted to divorce himself from having to make the decision. But Walt said, “Not bad. I’d ship it.” That’s how we actually shipped on the PC.

VB: What happened to sales after the PC? Straight up.

Fadell: Straight up. And then what happened was Mac sales started taking off. People got a taste of Apple. It was good on a PC, but it was great on a Mac, so let’s go get a Mac. That was the drug, like people talk about the gaming drug.

VB: I remember iTunes entering, because it was controversial for a computer company to do all these deals with the music labels. Then we had other crazy thing, because music was free at that point. You’d get it from Napster or whatever, steal it. This idea of charging 99 cents a song …

Fadell: It was the convenience. People would pay for that.

VB: So where did iTunes enter into this, both on Mac and PC, so that it all worked?

Fadell: At the beginning, the reason why the iPod was needed — revisionist history, you know, everyone goes back and thinks there was a grand master plan at Apple. There was no master plan. We were living day to day. We started with iTunes, so you can rip CDs and make mix CDs. Then people want something more than a CD, something convenient to put their music on. Then they’re ripping CDs to get their music, so there has to be a better way. That was when digital downloads and then iTunes Music Store happened.

It was this continuum of hit a wall, fix it, hit a wall, fix it. That’s how it all came together.

VB: In the midst of that, somewhere along the line, you decided to take this concept, build more of an OS, add communication, and you have a phone.

Fadell: It wasn’t that easy.

VB: At that point a computer company building a phone was unheard of. Phones were from Nokia and Ericsson and other people. How did you get from a music player to a phone?

Fadell: We had the music player doing video and audio and photo. We had iTunes. Then futurephones came out. They started playing MP3. This is a holy shit moment. Phones could steal everything we were doing. What could we do to counter this?

The first idea was to do a deal with Motorola called the ROKR E1 and put music on a phone and see if we could get iTunes there. We tried to hold those guys at bay. It was a complete disaster. We knew we’d have to build our own phone.

Everybody in the futurephone world was trying to crank out as many phones as they could every year. Samsung had a different model of phone every day. Each carrier had its own set of rules. It wasn’t about the consumer. It was about what you could sell to the carriers. The Motorola ROKR E1 was poorly designed. There was no way we could work with another company and get the right experience.

We started out by making an iPod phone. It was an iPod with a phone module inside it. It looked like an iPod, but it had a phone, and you would select numbers through the same interface and so on. But if you wanted to dial a number it was like using a rotary dial. It sucked. We knew three months in that it wasn’t going to work. Steve said, “Keep trying!” We tried everything. We tried for seven or eight months to get that thing to work. Couldn’t do it. We added more buttons and it just became this gangly thing.

That was the iPod phone. At the same time, we were trying to build a touchscreen Mac. We were also trying to do better video on an iPod. We had a real screen, but people didn’t like to watch videos on their iPod. So how can we get a really big screen, but not have the click wheel involved? Instantly, we knew we needed a virtual interface on top of a phone. We wanted to make this touch Mac, and we knew the iPod phone wouldn’t work, but we knew we needed to make a phone.

Steve’s like, “Come over here!” I didn’t know about this at the time, but he showed me a ping-pong table that was the first multi-touch screen. It was a ping-pong-sized table. It had a projector of a Mac on top of it, and you could interact with it. He said, “We’re going to put that in an iPod!” “Steve, it’s the size of a ping-pong table!”

In the end it was clear that we needed to build a phone, and we needed to build a touch screen company on top of it. That’s exactly what we did. We created a touch screen company to build the multi-touch display. Then we needed a better operating system, so we brought a bunch of pieces of the Mac, a bunch of pieces of the iPod, and bolted them together. That was the first version. Then we threw that away and made the second version of the iPhone. That was the one that shipped. It took two and a half to three years, depending on how you count it up, from the time we said we needed to do a phone to the time we actually shipped.

I told you that three months is what people want. Good luck trying two and a half or three years and keeping people together at such intensity. People asked me why we didn’t just buy a cell phone company and use them to help build the phone. But we weren’t making a cell phone with a little bit of music technology. We were building a computer with a little bit of cell phone in it. We had to start with a handheld computer team and add a little bit of the cellular thinking. Not the other way around, which was the way all the cell phone companies were trying to do it.

VB: The iPhone launches. I’m sure you were wondering if anyone would buy a phone from Apple. It was a very big secret until it launched. When did you finally realize that was a success, a change-the-world success?

Fadell: The second generation. The first one was a lot of learning. We had the wrong business model with carriers. We didn’t have apps yet. It was our first learning device. The second one was where it took off, because the carriers could subsidize it. We had the right carriers. We had apps. It was so powerful.

The thing is, a lot of times … back in 2005, 2006, 2007, Blackberries were everywhere. At Apple, we didn’t use Blackberries. We didn’t have any mobile stuff. But as soon as we had the iPhone, you could see the entire company transform. Overnight. Everyone was using them. That was very different. They couldn’t put them down. That told us to invest more, invest more, do whatever it takes.

VB: You saw that once you saw it among yourselves.

Fadell: Oh yeah, we all saw it.

VB: You waited a little bit and you started Nest. Tell us about that.

Fadell: My wife and I, we had two young kids, and we took a year off and traveled around the world with them. We just wanted to spend time with them. We lived in these houses for two months or three months around the world, and we were building a house in Tahoe at the same time. I was encountering certain problems around building this green, connected house.

I thought the world was going to change when your interface with the world was in your hands all the time. As we went from place to place, and I’m using email and designing this house online and everything else, I’m also seeing the same problems in all these homes. We were in Spain and France and Hawaii and here. All the homes had the same exact problems. They’re not green. The thermostats suck. The smoke detectors suck. Everybody had these problems. I thought they were just U.S. problems, but in fact they were everywhere.

The volume of smartphones was taking off. The prices of components were dropping dramatically. We could start to use these components in all these different devices in the home. What’s the first and best one to do? It’s the thermostat. That’s where it hit me. I had been spending 10 years just trying to control the thermostat in our house in Lake Tahoe. I spent hours and hours cobbling these things together and they never worked. I finally decided to make one for me.

I needed it to be green. It should turn off when you’re not home. It should be able to learn your preferences. That’s what happened. There was a need.

VB: It seemed like an easy thing and it turned out to be a lot harder than you thought.

Fadell: Way harder. Getting it to connect to 50-year-old furnaces … When you’re trying to get the thermostat to talk to all of this old equipment, there are no standards. There’s nothing. It’s ancient. Then to have it talk to the Internet and make it low power so you don’t have to run wires to it … all these are difficult problems. If I’d known then what I knew after it was done, I probably wouldn’t have done it. I said the same thing about smoke detectors. You have no idea how hard those are.

Each time, ignorance is bliss. We didn’t know enough about the markets, but we got in.

VB: What did you take away from the Nest experience so far? You had some great product successes and the company was acquired by Google. What did you learn?

Fadell: That even the most unloved, most ignored, most despised thing in the world, you can reinvent it and make people love it. You can change the way people think about something by putting all your love and passion into it. Not just the product, but the marketing and everything else. This is what I learned from Steve. If you lead it and put your heart and soul into it, and you can sell it because you know every single bit of it, that will resonate with people, because you’re solving problems both for yourself and for a lot of other people who see the same thing.

If you do that, you will be rewarded. You take a risk. You take that unloved thing and reinvent it. People will come, and they’ll follow you. It will build a movement if it’s done right.

VB: Were there other people interested in buying the company at the time?

Fadell: Yeah, there were others interested in buying, but a lot of others just wanted us to keep on going. It was designed that way. I designed it so we were running both tracks. You always want leverage. We wanted to have every option available to us. We wanted to make sure we made the right decision.

VB: I know we can’t talk about specific projects you’re working on right now — one of the biggest things that was shown recently from several companies was VR and AR. The technology is coming along. We’re not as able to talk about content so much. But what is your vision of where that goes?

Fadell: Truth be told, I started working on VR at the University of Michigan. I went to the very first cyber-posium in San Francisco in 1989, before General Magic. I’ve seen the wave of hype around VR twice already in my lifetime. To see it again … We’re just at the cusp now, the early Apple II days, or the early General Magic days for the iPhone —  10 years too soon. It’s going to happen. But there are so many tools, so many technologies, so many things that still need to get built.

I’ve seen compelling use cases for AR and VR in industry, in virtual activities, in medical. I see a lot of it. I see a lot of consumer possibilities. But we’re still in the very early stages. Some people will tell you otherwise, but you see the prices of what’s going on with Oculus today. Everybody thinks that all of a sudden, it’ll take off. When the iPhone came out it was $700. Certain people could use it, but a lot of people couldn’t get access to it. Now, eight years later, everyone can have one.

We’re in those stages with VR and AR today. It’s going to continue. We need to learn so many things. For me to tell you what I think it’s going to look like, I really don’t know. But I do see that there are tangible applications for it. I just don’t think the way we think of it today …There won’t be all these fun-and-games kinds of things. There’s a lot of real work that will accomplished with this – medical, manufacturing, construction. That will be more important than consumer applications, which is different from the way people are thinking about it now.

VB: You worked for many different bosses, including Steve and Larry, two very different people. How would you describe their management styles?

Fadell: Larry’s an incredible scientist and technologist. He respects product and is fascinated by product. Steve is an incredible marketer who loves product and wasn’t necessarily so involved in technology. They come from very different places. Larry has more of a research background — small teams thinking about things but not necessarily all the business concepts. Steve was all the marketing and all business. It’s very different. Not that either one’s bad or good, but they’re very different.

I’m a product guy. I love technology, but I’m not a guy who’s going to sit in a lab and be a scientist. I love marketing, but marketing is not the only thing I do. I leave a lot to marketing experts. I sit in the middle. The style is very different, because one is about how far you can push the technology, thinking about 10 years out. The other is about the two things you really need to do and marketing them exactly right and getting them out the door to do great business. It’s two different ways of thinking and approaching a problem.

VB: The Steve movie created a lot of controversy. Some people say that’s kind of him. Others say it’s not him at all. What are your thoughts?

Fadell: I didn’t see the movie. I didn’t need to. I lived it. Steve was an amazing guy. He was a human. He had amazing talents, and he also had drawbacks. I would never change my working for him or my history at all. I don’t regret it in any way.

What happens is, a lot of the negative stuff that comes across in books and movies and wherever else … What I’ve always found with Steve is that the people who talk negatively about the experience they had with him, it’s because either, one, they couldn’t keep up, or two, they didn’t bring their best to the table and he saw that, or three, they thought he was in the way. They thought they should be Steve, that they had the idea that they deserved more credit for. All the people who complain in the books, it’s usually one of those three reasons.

The ones who saw the benefits of Steve, they’ll say, “He was a balanced person. He wasn’t always perfect. But he was an amazing genius at the same time.” His style was amazing for the right people around him. If you were not the right person, you got [not sure of the punch line here – 57:05]. Which you could have. It’s just sour grapes.

VB: A lot of work is going on in AI and robotics now. A lot of people are afraid of AI and robotics. What are your thoughts?

Fadell: We made robots every day at Nest. Our thermostats were robots. Everybody thinks of a robot as being this humanoid-looking thing like Boston Dynamics, which are fascinating. They’re wonderful. They’re really cool, like science fiction coming alive. But we have robots all around us. We just don’t call them that.

I believe there’s so much we can do with computers as intelligent assistants. Everyone knows AI. Artificial intelligence. Human replacements. But then there’s IA, which is intelligent assistants. Augmenting humans and making us better with computers. I’m much more a believer in IA than AI.

I’m not scared like some fearmongers are. The AI we have is really good at logic, but it’s horrible at emotions. It’s horrible at gut instincts. I have not seen a computer be creative like a human can be creative because it’s not about logic. It’s creativity. If you’ve never read the book by Dave O’Connor, Thinking Fast and Slow, it’ll teach you a lot about what we can and can’t do with AI and how we think every day.

There are two systems in our brains that O’Connor talks about. We only know how to use one of those with a computer. We don’t know how to use the other. We have to use both of them to make the creative leaps that happen in our society. So yes, I think logical AI and IA assistants are going to help us get more in touch with our guts because we’ll be able to run more logical models that help us find the next global maximum instead of getting stuck.

VB: How did you recruit, motivate, and win the respect of people smarter than you? Assuming there are people smarter than you.

Fadell: There are a lot of them! First and foremost, it’s that passion and vision. It’s being able to tap into that and communicate it to people, whether they’re a marketer or a technologist or a customer support person, or whoever they may be. You make sure they understand the mission. You’re going to do something that’s bigger than yourself. You’re going to do it together with these people. Here’s the reason why.

It’s not about the latest game or social network. We’re going to save energy. We’re going to turn things around in the home with these kinds of things. You sell them based on that. Then you ask what they can bring to the table, how they can help. They see in that vision, through that vision, what they can bring to augment it and make it better. The more you communicate that vision, the more ideas you get from other people, and the more they’re going to believe in it. And not just believe in it, but own it.

That’s another big difference between Steve and Larry. For Steve, most of the ideas, whether they were his or not, were his. It worked. But it didn’t always work. We didn’t really feel good sometimes. But the big thing is, when you give someone your mission and they have an idea, call it out. Say, “That’s an amazing idea! That’s awesome! We gotta do that!” The more you make people own that mission – not just assume the mission from someone else, but own the mission – the more you get done.

VB: What’s the greatest lesson you learned from your biggest failure?

Fadell: I mentioned the one from General Magic, which is setting a time limit. People need to see something. That’s one thing. The other big one is making sure that wherever you start, when you get to milestone break, either you ship it, or you learn so much that you know how you’re going to continue to a new direction off that. At Philips, one out of 10 products that was in design made it to market. Imagine what the teams were like. They’re getting assigned to a product, and they know there’s a 90 percent chance that product is going to get killed. No one was passionate.

At Apple, 99 percent of everything that was started would ship. Now, with the iPhone it took two and a half versions to finally ship it, but you knew it was going to ship. That’s a very different thing in your culture. If people know it’s going to ship, they invest in it. If you have a culture where you kill stuff all the time, you won’t get the best out of your people, and the best people are going to walk.

VB: How are you innovating around security?

Fadell: We’re using all kinds of new hardware techniques, software techniques, all those kinds of things. I’m not saying we have a new technology. It’s just applying it appropriately and making sure we test it, making sure we have the right teams testing those things, and communicating what we do to the consumer so we can earn their trust.

We’re not going to get it right 100 percent of the time. There’s no such thing as perfect. But it’s also knowing that you’re there to fix it immediately if something does happen. There was a big glibc thing that happened last week. We had fixed it. We found it and fixed it four weeks earlier before it hit the rest of the world. When it hit it was already done. It’s having that kind of diligence. That’s what people trust. Yes, there will be problems, but will you catch them and fix them and address them?

We’ve applied all the best technology we can, applied the best processes, but nothing today is secure. Absolutely nothing. I don’t know how we’re going to get past it except for the fact that we have a team, and we fix things when problems arise.

VB: Is it true that when you worked at the Country Club of Detroit, the caddymaster — I don’t know how someone knows this — told you that you couldn’t hit or find a golf ball to save your life and suggested you enter the foreign service?

Fadell: Yeah. This story has to be from Jim over there. We went to the same high school and worked at the same country club. He was a tennis instructor and I was a caddy, much lower on the totem pole. But yes, I couldn’t hit a ball to save my life.

VB: Should tech companies build automobiles?

Fadell: Automobiles … Remember the analogy I just made about cell phones and the iPhone? It’s a computer with a phone in it. Guess what? Cars, especially self-driving cars, are increasingly computers with a bit of a motor to provide the battery. If anyone thinks that tech companies can’t do this, you’re crazy. The auto companies are really worried.

In the ‘40s and ‘50s, that’s how Motorola got started. They were all about putting radios in cars. The car manufacturers wanted nothing to do with electronics. They wanted to outsource it. They just wanted to build carburetors and engines and wheels and brakes and style. The thing is, the technologies that become competitive differentiators aren’t going to have anything to do with sheet metal or drivetrain in the future. It’s all going to be about self-driving and those kinds of things. Tech companies can dramatically change the innovation tool sets that they have today.

They’ve been outsourcing it for years. I don’t know how the auto companies are going to do what they think they’re going to do, because this is a new era of computers with wheels.

VB: The electronic calculator was the end of the mechanical calculator. The mechanical calculator companies had absolutely no ability to compete, not any of the skill set. Do you see this being that kind of disruptive change?

Fadell: Yeah. It’s that big. It’s that disruptive. If you look at the contents of a car, the building materials, the amount of sensors and computing and all those things, it’s going to fully go in that direction where 70 percent of what you build, outside of the batteries, is the computing infrastructure. The Ford board was just asking me the same question. [punch line drowned out by cough – 107:30] You could see the fear in their eyes. Oh boy. But yeah, should tech companies make and sell cars? Yeah, they should. And I’m from Detroit. I hope the car companies win out. Detroit is trying to come back up.

VB: What leadership lessons, bringing people together, leading them to terrific products, would you leave to this audience today?

Fadell: I talked about mission and getting people on the team. But it’s not just keeping people on the team. It’s keeping them engaged and moving ahead all the time. The other one is, I’m from the old school of leadership, which is to lead by doing. Be involved.

A lot of people tend to say, “Let the team figure it out!” I think that even though that seems appealing, most of the younger people who really want to learn, they want to learn. They want to be mentored. You need to be there to mentor them and go through these things. They can’t just be learning by themselves. They need leadership. They need mentoring.

I try to bring a lot of young people onto a team, but also to invest in them. Now, some of them walk out the door because they don’t have a lot of commitment to you. It’s a little different now with the Tinder generation. But there are a lot of people coming from other countries, from other perspectives, they’re just happy to be there. They want to be mentored. They want to learn. Those are the ones that we invest in. We give them a lot of leadership courses. We have them be part of the design phase, part of the design sessions, even though they might be an individual contributor on this part, to make sure they can learn about all these different things and make them multidisciplinary.

If they have a mission and they’re growing themselves and they’re doing something really positive that they can invest in, that’s when the relationship builds with that person. Not just with that company, but the company after that. These people are going to be the next leaders of the Silicon Valley. Hold people to high standards, but invest in them.