Tony Fadell barely needs an introduction: known as the “Father of the iPod”, Fadell built on his experience developing hardware at General Magic, Philips, and his own startup to lead hardware engineering for every single iPod and the first three generations of the iPhone. He then co-founded Nest, which he sold to Google in 2014. Today Fadell is the principal at Future Shape, where he invests and advises startups, with a focus on deep tech.
I have had the chance to get to know Fadell over the last few years, and have had several conversations about processors in particular; we were planning on this interview for several months, and realized it would be best to wait until this week when Fadell’s new book Build: An Unorthodox Guide to Making Things Worth Making was released. To that end, we not only cover the book, but also the iPod, iPhone, Apple’s history with Samsung, Nest, the future of ARM, and more.
On to the interview:
An Interview with “Father of the iPod” Tony Fadell
This interview, which was conducted in early April, has been lightly edited for clarity.
Tony Fadell, it’s good to talk to you again. You have a new book coming out soon that you describe as an advice encyclopedia, and I can definitely relate to it, given that I’ve had the pleasure of getting your advice/feedback for several years now, including a couple calls. So it’s nice to actually talk to you on the record about your career and chips and a whole bunch of stuff.
Tony Fadell: Ben, it’s so great to be here. I’ve been reading your daily blog, I guess you could say, email, and I love it because you cover so many great topics and I don’t know how you do it. You must have a team of ten or twenty people to help you put together all of that really insightful content each day. So thanks for having me on and I’m looking forward to the conversation today.
Yeah. Well, there are ten or twenty people running around in my head, which is probably good, because I’m stuck in quarantine right now, so they can all have a conversation together. But we’re both getting over COVID, so we have that in common. So it’s all good. One of the most interesting things about your career is the way in which it’s defined by speed. You ran a startup while a student, then you worked at General Magic. Then you became CTO of Philips Mobile Computing Group when you were 25 or 26, you made Windows CE devices. You joined Apple as a contractor, and suddenly you’re in charge of the iPod, which was created in a crazy amount of time, a matter of months.
The reason I mention this is I think this is somehow related to the fact I could send an article out and have a correction from you within five minutes. But I’m curious, is that just right place, right time? Is that something about your personality? How is it that your career has been defined by just this super aggressiveness and pushing forward?
TF: That’s a great question, I’ve never been asked that. I’m always trying to feed my brain, just like we need to breathe every day and eat, I need to feed my brain with information and so I’m always reading. You hear about those jokes about people having too many tabs open. My family makes fun of me all the time, I have too many tabs open, too many windows open. My desk is totally littered and messy, I think in a smart way, they don’t think so.
I can relate to that, I can promise you that.
TF: (laughing) I think it’s about getting a lot of information quickly and always trying to stay on top of the latest and greatest in learning. Not just having news, but then diving deep to get to first principles and a lot of technology, because I guess it’s just that speed has multiplied itself. So I would do something at a fast speed when I was younger, when there was no Internet. And then as the Internet came, and international email happened, these different things happened, I got to feed this beast of my brain that needed more and more information, and so I was just running at the speed of how fast I could get new ideas, new things into my brain to make sense of it all.
Just to touch on that — I love that analogy, I’ll go back to it in a little bit — but the story of the iPod is so crazy. You weren’t even hired until April, yet you shipped in October. How was Apple able to move so quickly? Is there any company that could do that today? I doubt that even Apple could do that today with all their resources. How did that happen where you shipped this completely iconic product that didn’t even exist in the imagination of anyone, I guess in your imagination to an extent, but walk me through that process and how was that even possible?
TF: I think it was a coming together of a lot of things. The first one was experience. I and the people around me had experience for ten years. I pulled in a lot of people from either or General Magic or Philips or other people I just knew that I’d met around Silicon Valley over time. So one was having that network of being able to pull people in who knew what they were doing on this product, that was one thing.
Second thing was having a lot of failure before building these things, and they didn’t really necessarily become commercial successes, they might have been critical successes. So you had enough time doing this stuff. You’re like, “Okay, I’ve done this. I know to make boards. I know how to get software packages together, put all these things to happen.” So again, that was doing something totally new from a product perspective, but the process wasn’t necessarily new.
I think the other one was we had incredible leadership in Steve Jobs. He decreed from the minute after we gave the presentation to him in March of 2001, it was “Go!”. I had already been running it for a year before that doing MP3 players in my startup. So it was like, “Okay”, take all the latest knowledge I had gained during the contracting period, and ran with that.
And then the other one was we just cordoned off and it was, “Make it happen”. I saw so many projects that died at Philips because they didn’t happen fast enough, politics set in. So it was like, “Okay, we have to build this. We have to build it quickly. The holiday season’s coming around. This might be our one and only chance, because who knows when Sony’s going to come in and steal everything” because they were the number one in all audio categories. Every audio category Sony was number one in. So it was like, “Well they’re going to come for this”. So speed was everything.
So I had just been tempered all the time. One is technology changes, the market changes so quickly, you need to have the right experience and process, and we put it all together. Obviously, it was wonderful to have Apple in terms of the customer service angle, parts of the operations angle, but we had to do a lot of new stuff that Apple had never done before, and obviously the marketing, product marketing, pulling all that stuff together. So we got to pick the best bits of Apple and have them focused on us because of the leadership. Then we were able to build very quickly the new bits, throw them together, and just run like hell because at the end of the day, Apple isn’t the Apple you know it today. Twenty-one years ago, Apple was suffering. It had around barely 1% market share in the computer business, in just the US, that’s not worldwide, Apple wasn’t anywhere worldwide. It was only worth $4 or $5 billion, I think. maybe even $3 billion in total. Now it’s worth almost $3 trillion or $2 trillion, whatever it is this week.
So when you have leadership, when you have a competitor or at least you felt there was going to be a competitor coming very quickly, when the technology was there, right place, right time, and we had the right experience, and the company was at its wits end, because it had tried everything it could do to try to get the Mac to get back into the forefront of consumers’ minds with the iMac, whatever, and that wasn’t really going well. This was, “You’ve got to make it happen”, burn the boats, do whatever it takes to see this first product out there and even then it was a marginal success. It was a critical success. Everyone was like, “Wow!” but a lot of people were like, “I can’t buy it. It doesn’t work with my PC.” It didn’t work with Windows. We had to work really hard to make it a success.
It’s interesting that you list all those factors because in your book, when you talk about your experience at Nest, which I think the acquisition from Google maybe was a little more fraught and dramatic than you might have wished it could have been. But you had this contrast, you talk about Google antibodies resisting you and you said, “Oh, we had Apple antibodies resisting us, as well.” But the difference was Jobs protecting you and you also had this cultural bit where Apple needed a hit. To that end, I’m curious, are we reaching a point, a decade past his death, where Steve Jobs’ management abilities are actually becoming underrated? There are the scare stories that are still around. We all know he was this innovator in design, but just from being a manager and getting stuff out the door?
TF: Well, there’s one which is getting stuff out the door, and that’s a process and having good process. There’s another one, which is getting very innovative things out the door, things that are going against the grain of the internal business itself. The iPod was totally different than the computers at the time, “What? Apple’s making what? Stick to computers, Apple.” that’s what we heard from some people. So there’s leadership when you’re maintaining or when you’re operating something that’s already standing and working. And there’s another type of leadership when you’re trying to do something inside an organization that may be successful, may be not successful, but doing something very against the grain and seeing it through and saying, “We’re going to burn the boats. And this is the way it’s going to be.” That takes a different type of leadership and it takes what I always call is air cover. If we didn’t get what we needed, because we were on such a tight schedule, I could only call in the airstrike so often, but, “Steve. Need help.” and from above he would fly in and go, “Okay, what do I need to do?”
We do that a lot today with the businesses we work with, and we have to be the air cover for that and the investments we make and what have you. We fly in and go, “Okay, can we help you in some way? Where can we go to third parties or other ones to help you get what you need to start up this startup?” Leadership is really the key difference in all of this and understanding the difference between data-driven and opinion-based decisions. Steve was really great at understanding what were opinion-based decisions, and it was his opinion at the end of the day that was going to rule, and he was going to make sure everyone understood that “We’re going to do this. And yes, we don’t know if it’s going to be a success, but this is what I want done. Get it done, please.”
You talked about this in your book, actually, the opinion-driven versus data-driven decision making, and how to build the iPod in the first place was an opinion-driven decision, but to bring the iPod to Windows ended up being a data-driven decision. And in the case of an opinion, well it was Steve’s opinion that counted, but because it was a data decision, that’s how you were able to actually change Steve’s mind about going to Windows. Did I summarize that point properly?
TF: Yeah. It’s really correct. Look, Steve’s opinion specifically was at the beginning of the iPod project was, “We are going to make this amazing thing called the iPod” — we didn’t know it was called the iPod at that time — but “We’re going to make this thing, and this is going to drive Mac sales”. So to use the iPod, you’re going to have to buy a Mac, and that was his opinion.
Two years in, the numbers were okay for the Mac fanboys who had Macs, but no one else was interested in switching to a Mac just for an iPod. So we had that data and it showed very clearly that that original opinion or that hypothesis was that more people would buy Macs because the iPod was available was not right. We had a few people, but it was not this huge mass of people switching from Windows to the Mac because the iPod existed and you had to have one. So over time, and this is the third generation, we had to have the Windows connectivity, the Windows functionality, compatibility, to make sure it worked.
And then all of a sudden people were like, “Oh, this iPod thing is really cool. I’m using it on my Windows device, on my Windows laptop, or what have you. But I wonder what the full Apple experience would be?” And then people started buying Macs after they got a taste of the Apple experience with the iPod on their Windows based computer.
One of the areas that we’ve talked about via email mostly is processors. I’m curious your perspective on how they’ve evolved over your entire career. The Sony Magic Link had a 16 MHz Motorola Dragon, the Philips Velo had a 32-bit Philips 37 MHz processor. The iPod actually had have two ARM CPUs running at 90 MHz, I believe? Then the iPhone had a 32-bit ARM CPU that interestingly enough was actually under-clocked to 412 MHz. You fast forward to the Nest, which wasn’t that much later, and I think your first ARM processors were running at 1 gigahertz. It’s weird because it almost feels like the earlier progression was slower than you might expect, and then it started to ramp up. But I’m just curious, as you step back and think about what you’ve worked with over the years, what stands out about that evolution?
TF: What’s amazing to me, because I started with 8-bit 6502s, and then also did my own 32-bit and 16-bit 6502, the 65816, and then created one myself with a partner at the time, two of us made it and fabricated that beast. So I’ve been around the hardware or the CPU game a long time, and I think what we really see, and it happened with memory, as well, not just CPUs, but memory, there was a minimum set of memory you could buy.
I first started with 4k or 16k chips, or what have you. But at some point, especially when you’re making the smaller devices, you couldn’t get smaller memories, you had to get what was being used in laptops at the time, and then possibly, maybe even cell phones. But really, your memory was constrained by what was going on in the computing world. Your processing became the same thing. What is the highest volume processor that you can get for the cheapest amount of money? And it usually was over-spec’d for what you needed, the memory, more memory than you needed for these embedded projects. That was just because you’re drafting behind the other high volume uses for these products and so you catch as catch can, because that’s where the best price is, the best volume was. So maybe you had too many gates and you had too much memory, but that’s what it took to get the product out there.
I hate waste, growing up in 4k and 16k spaces and stuff like that, I hated when people were wasting it. I felt like every bit was precious and every cycle was precious. And then when you get to this day and age, when people are making no code and layers and layers and layers and memory, virtual memory systems that are huge and data that’s unlimited, you go back and go, “Why? We’re doing this much work for this much compute and memory.” It’s like, are you kidding me? So it’s kind of like a double edged sword. So I don’t like the waste, but at the same time, sometimes when you have waste in terms of these extra bits, you can create other products you couldn’t have been doing before because it’s now at a new price point and so you just use what’s available to you. There’s waste in different dimensions and there’s, I guess you say, valuable innovations in different dimensions and you have to weigh them off. But it’s fun to see that you have this much processing in a thermostat.
(laughing) Yeah, it is pretty striking. But it’s interesting, you mentioned this bit about you were focused on every last gate, every last cycle, and one of the things that we’ve definitely talked about in one of the largest corrections I ever had to run on Stratechery, involved the question of Intel and Xscale and the iPhone.
The late Paul Otellini has always insisted that Intel turned Apple down because of price, but I know you strongly disagree with that characterization, and it feels like it comes from the story you just told. Intel was in the, “Just give people more processing than they know what to do with, and they will definitely fill it up”, whereas you are coming at it — it was striking to me to go back and look at this, the first iPhone you actually under-clocked the chip because, it wasn’t power constrained from a processing perspective, I imagine it was a battery life consideration and that was just such a completely different way to look at the world.
TF: Absolutely, you’re exactly right. The new dimension that always came in with embedded computing was always the power element, because on battery-operated devices, you have to rethink how you do your interrupt structures, how you do your networking, how you do your memory. You have to think about so many other parameters when you think about power and doing enough processing effectively, while having long battery life. So everything for me was about long, long battery life and why do we do what we do? David Tupman was on the team, the iPod team with me, he would always say every nanocoulomb was sacred, and we would go after that and say, “Okay, where’s that next coulomb? Where are we going to go after it?” And so when you take that microscopic view of what you’re building, you look at the world very differently.
For me, when it came to Intel at the time, back in the mid-2000s, they were always about, “Well, we’ll just repackage what we have on the desktop for the laptop and then we’ll repackage that again for embedding.” It reminded me of Windows saying, “I’m going to do Windows and then I’m going to do Windows Mobile and I’m going to do Windows embedded.” It was using those same cores and kernels and trying to slim them down.
I was always going, “Look, do you see how the iPhone was created? It started with the guts of the iPod, and we grew up from very little computing, and very little space, and we grew into an iPhone, and added more layers to it.” But we weren’t taking something big and shrinking it down. We were starting from the bottom up and yeah, we were taking Mac OS and shrinking it down, but we were significantly shrinking it down. Most people don’t want to take those real hard cuts to everything because they’re too worried about compatibility. Whereas if you’re just taking pieces and not worrying about compatibility, it’s a very different way of thinking about how building and designing products happens.
So actually, that leads to a couple of questions. So number one, this point you made how you grew up from the iPod, and people think about the iPhone and, “Oh, it’s the core base of it comes from OS X.” But it sounds like particularly when you think about it from a power perspective and just making it work, leaving aside the fact that the iPod obviously put Apple back on the map and provided the user base and all the obvious benefits that the iPod provided, but from a sheer engineering perspective, it sounds like what you’re saying is without having to have figured out the iPod, you wouldn’t even had the right perspective and point of view to have come up with the iPhone.
TF: Absolutely. That is a great way of phrasing it. Correct. You have to have that point of view of that every nanocoulomb is sacred and compatibility doesn’t matter, we’re going to use the best bits, but we’re not going to make sure it has to be the same look and feel. It doesn’t have to have the same principles that is designed for a laptop or a standalone desktop computer, and then bring those down to something that’s smaller form factor, and works within a certain envelope. You have to rethink all the principles. You might use the bits around, and put them together in different ways and use them differently. That’s okay. But your top concept has to be very, very different about what you’re building, why you’re building it, what you’re solving, and the needs of that new environment, which is mobile, and mobile at least for a day or longer for that battery life.
You have to remember, we would look for every nanocoulomb to make the iPod last for a week. We always wanted to make sure that under most circumstances, for different users, whether they would go to the gym or their commute, or what have you, we always had one week of battery life in the tank for these different types of users. So you were always thinking about throwing away software, changing the hardware-software split so that we could get to better and better uses of energy. We were obsessed with those kinds of details to bring that battery life to reality.
Something that I take away from this, though, is to question could Intel have really done any different? Everyone criticizes them for missing mobile, but number one, if you’re starting with the idea that you’re just starting with a completely different paradigm, and number two, a point you made is that you’re throwing away all the software. At the end of the day, Intel’s real moat was software. And you had all this, especially on the low level, all this stuff built on x86, and I talked to Pat Gelsinger a few weeks ago, and this idea that Intel internally wanted to go to RISC and Gelsinger led the pro-CISC side with being like, “Hey, we have a software advantage and Moore’s Law will catch us up.” and that was the right approach for them.
But given that, if the right way to do mobile was to throw away all software compatibility and to start with pure efficiency, I just don’t see any realm where, even you put Andy Grove himself back in charge, Intel was ever going to be competitive there.
TF: Well, the mindset at Intel was never about — when they went through that CISC-RISC duality of “Which one are we going to be?”, and they chose CISC, which was the right thing at the time, if you fast forward, they also made that decision, they threw away architectural and they went to more manufacturing. That was the time when they said “We don’t have to worry about all these different product lines to meet all these architectural needs.”
TF: “We’re just going to have Moore’s Law take over” and so in a way that locks you into a path and that’s why Intel, not under the Pat days but previous to the Pat days, was all driven by manufacturing capability and legal. It wasn’t driven by architectural decisions, it was like, “Here’s what we got and we’re going to spread it around and we’re going to keep reusing it”. That was a great strategy for a while. But they had the StrongARM, they bought DEC. I was working at Philips and I was making a new Windows CE laptop based on the StrongARM, and Intel bought DEC and then I was like, “What am I building”? Our product at Philips never saw the light of day because the StrongARM was inside and Intel killed it, but Intel had it. The first architectural licensee of ARM was inside of Intel, back in, I think it was 1998 when that deal was done, they had it all and they threw away StrongARM. And ultimately you see where the market went ten years later, which was ARM, ARM, ARM.
And this is where you needed the CEO to stop the antibodies, or did they buy it to kill it?
TF: No, no, no, no. They bought it for DEC, for all kinds of other reasons, and StrongARM just was this thing on the side. It was like, “Ah, what do we do with that?” You know what I mean? I think they licensed it off to Marvell or something.
Is this StrongARM, was this XScale?
TF: This was pre-XScale. Yeah.
Pre-Xscale. Got it. Okay, yeah, because then they sold it to Marvell. Yeah, I think that’s right.
TF: Right. So they had a program, they got rid of it, then they started a new program. So depending on the management, start, restart, that’s the another big thing in big companies is depending on who the leadership is, and it turns over every four years, it’s almost like a presidency, which way does the wind blow, and you get rid of projects based on that stuff. Saw it all the time at Philips.
All three iPhones that you worked on had CPUs built by Samsung, correct?
And they made all of the iPhone chips until the A8, in the iPhone 6 in 2014?
You were gone by then, I think you worked on the first three iPhones, but I’m curious if you have any insight into whether that Apple-Samsung relationship could have sustained over the long run. Did Apple go to TSMC because it was better, or because they were mad at Samsung? Because I think what’s really under-appreciated about TSMC is that TSMC’s leap to leadership is completely intertwined with their partnership with Apple. You needed both — could you imagine a world where Apple stays with Samsung? I’m curious, you’re laughing. Why are you laughing?
TF: I’m laughing because there’s a lot of stuff that happened behind all those relationships. Truth be told, the iPod and wouldn’t have been as successful as it was if it weren’t for Samsung. The iPhone wouldn’t have been as successful as it was in the first generations if it weren’t for Samsung. A lot of people remember the hundreds of millions of dollars Apple used up to sue Samsung for patent infringement on the iPhone UI and stuff like that. But you have to look at Samsung providing displays, batteries, CPUs and custom parts, flash memory, DRAM. The number of strategic components in the iPod, and then in the iPhone, that were necessary from Samsung, was an incredible set.
I had a partner in Oh-Hyun Kwon, he was the head of all Samsung semiconductors, he started as a guy just doing custom processors inside of Samsung based on their embedded stuff, and that’s where he and I both met. And we worked really hard on putting together that whole set of Samsung processors for custom processors that we designed with them, and we spec’d what we wanted exactly and went through it all. But then they muscled it through and built those processors for the entire line, from Shuffle all the way up to the Classic, they made all those processors. They were also incredibly strategic, when we were consuming 40 to 60% of the world’s Flash supply.
You did that famous deal where you locked it all up.
TF: Yeah! I had to go all the way to the board and I had to be the one to sign in front of the board, because one else is going to do it, and we had only made maybe 200 iPods at the end of the day and this new flash memory was in it and they were going to make $4 billion worth of it, and I had to sign my life away for memory. So getting back to the point, though, Samsung was an incredible partner. Even though they got sued, they were an incredible partner, they had to exist for the iPod to be as successful and for the iPhone to even exist. That happened. During that time, obviously Samsung was rising up in terms of its smartphones and Android and all that stuff, and that’s where things fell apart.
At the same time, there was the strategic thing going on with Intel versus ARM in the iPad, and then ultimately iPhone where there’s that fractious showdown that I had with various people at Apple, including Steve, which was Steve wanted to go Intel for the iPad and ultimately the iPhone because that’s the way we went with the Mac and that was successful. And I was saying, “No, no, no, no! Absolutely not!” And I was screaming about it and that’s when Steve was, well after Intel lost the challenge, that’s when Steve was like, “Well, we’re going to go do our own ARM.” And that’s where we bought P.A. Semi.
So there was the Samsung thing happening, the Intel thing happening, and then it’s like we need to be the master of our own destiny. We can’t just have Samsung supplying our processors because they’re going to end up in their products. Intel can’t deliver low power embedded the way we would need it and have the culture of quick turns, they were much more standard product and non custom products and then we also have this, “We got to have our own strategy to best everyone”. So all of those things came together to make what happened happen to then ultimately say we need somebody like TSMC to build more and more of our chips. I just want to say, never any of these things are independently decisions, they were all these things tied together for that to pop out of the oven, so to speak.
You actually mentioned before that you were doing a fair bit of design or giving your specifications to Samsung for custom chips. The official first chip that Apple did was A4, which is I think was a relatively bog-standard ARM design, but is it fair to say that actually this customization then was actually started much earlier than any of us appreciated, even back in the iPod days?
TF: Oh yeah. We were customizing all the way to the very first, I think it was the fourth generation, third or fourth generation, I can’t remember, iPod, which had the first initial Samsung ones. So what happened with Samsung was I think it was called the Blue line, I think it was Blue was the line of processors that they had. And it was these small embedded processors at ARM 32-bit. They were run-of-the-mill processors like anyone else had for ARM. You take the ARM package and you make your processor and what have you, there were not a lot of custom modules and stuff.
And that’s when we started going, “Oh, well you have this.” and they’re like, “Well, we have our fab capability. We have these design teams sitting around, we have this ARM set.” “Oh, thanks. But this is not good at all. These processors aren’t good. They don’t have this, this, this, and this and this.” And so, O.H. took it upon himself, and he went back to Korea and four weeks later comes back to Cupertino who goes, “How about this part?” I’m like, “It’s better, but I don’t know if you can really make it.” And then I said, “But you need to change these things.” And Tupman was going, “We need to change these things.” Four weeks later, again, they come back. “How about this?” I’m like, “Oh my God, that’s what we want!” And I’m like, “Could they really pull it off?” I’m like, “Nah, I don’t know”. So we said, and this was against PortalPlayer at the time, who was the only chip supplier for the iPod, the main CPU supplier at the time and Tupman and I looked at each other, we’re like, “Yeah, it’s close. And you’re there, go fab it and let us know.” So they literally went out and they started fabbing it and saying, “We’re going to have parts in ten weeks or twelve weeks. Do you want to try it?” And we’re like, “Well, we need all this software. We need these base level modules, whatever.” And they’re like, “Okay, well go do that.” And we’re like, “What?” And literally through this testing process, Oh-Hyun Kwon, and that team muscled it together.
To me, they were as great as any Silicon team that I saw in Silicon Valley. Maybe not the most innovative, but the hardest working and they made it happen. And I was like, “We got to give these guys a shot”. So these guys are just, they’re like us, and we were bonded together at the hip and we were like, “Let’s do this, let’s do this, let’s do this. And then let’s do this one part.” Then we’re like, “Well, why don’t you do the Shuffle part? And so, “Okay, you’ll do the iPod Shuffle part.” And then we were like, “Shit, they pulled off the shuffle part. Okay. Now you’re going to do the Classic part.” So it was this testing, testing, testing to see if they did it, and they stepped up each time and we were amazed and that’s where they really, they earned the partnership. They truly earned a partnership with us, and that’s why we were successful, because when we said we wanted to change display standards, so the inner phase, the internal interface between the CPU and the chip, which was the display drivers, which was at the time, people were talking about MIPI. MIPI was this new serial interface, high speed serial interface for LCDs.
And the world was all navel gazing, going, “Yeah, MIPI sounds great, but who’s going to jump in? And Oh-Hyun Kwon and I just looked at each other over dinner and we said, “We’re going to do MIPI. Okay. We’re MIPI.” And we changed the whole industry to MIPI overnight because we said, “We’re going to do it.” iPod was the number one product, Samsung had displays. They had all the display drivers, so they made all the MIPI drivers, we made the iPods and the processors to be made with it and then all of a sudden MIPI rolled throughout the entire LCD value chain, which was amazing. That’s the stuff we got to do together. Same thing with Flash. “We’re going to consume 40, 60% of your Flash.” Okay. “Let’s go build not just one, two more plants, and we’ll put the money in with you to build those plants.” So these are those kind of events that have to happen to make these kinds of successes go on behind the scenes.
You see a lot of it with Tesla today. First they were doing charging networks. Now they’re doing batteries and battery materials and they’re moving the whole industry to a new direction, because they are the leaders and thinking about the entire ecosystem around it, not just the point thing that they’re doing, just cars, they’re thinking about the greater thing. That’s what we thought about in terms of the iPod and the early days, the iPhone, and Apple’s gone even further than that, since.
It goes back to the point you made before about because everything was built for computers, you couldn’t find stuff that was small enough, it was all overspec’d for embedded applications. I think you mentioned that you actually had the idea of making a thermostat for a decade before you built Nest, but none of the parts existed and then suddenly you looked up after a decade at Apple and you’ve helped build the iPod or the iPhone. And suddenly the parts are everywhere —
TF: And they’re cheap! “Oh my God. Now I can make this thing!” Before you had to make custom little one-off everything, displays, operating systems, everything. And then you go fast forward ten years later, you have all these parts littered, parts and parts and parts of all kinds of things from the Android, the iPhone ecosystem. Then you got all this software, too. Then you have the app economy and you can make a simple app that goes — it all came together. That was just the difference between General Magic, which was roll everything on your own, didn’t even have an Internet. We didn’t even talk about General Magic, so it’s all that stuff at General Magic, and then doing it well too early, and then more or less, a lot of the bits were there, and a lot of the ways of thinking, and society was there to accept something that would be the iPhone.
Is it an axiom, that if you’re inventing too many pieces, then you’re probably going to fail, because that’s a signal you’re too early?
TF: Well, one is that you’re too early, and two is, or you’re just too ambitious and you’re not getting to market fast enough to really see what the customer needs and wants. Not just flirting with all kinds of things and engineering that’s fun to do.” Yeah, of course we should build our own this” and a lot of times that’s ego driven, “We should build this”. It’s like, “No, today there’s lots of things you can reuse out there. Go reuse those.” The number of times you’re building new code from scratch these days? Wow. It’s very hard to see. Now it’s like no code everything. Going and actually making new novel code? That’s rare, rare stuff.
Yeah. That’s interesting. Tell me, what should ARM do? What about ARM? I mean ARM, obviously, Nvidia acquired them, that was not approved. I think you approved of it not being approved.
TF: (laughing) I approved that!
But now they’re going to try to IPO. It’s very hard to see them getting a price even comparable to what Nvidia was going to pay, particularly as Nvidia’s stock has appreciated. What role does ARM play today, particularly as more and more companies are building their own chips? Walk us through why do companies need ARM, and what is next for the company?
TF: Well, technology companies, they need to build on different parts. They need to build on other-
Right, to your point —
TF: Nobody can build everything.
TF: In these days, people need to use these general blocks all over the place to build what they do. Whenever I say, “If you’re building things that don’t differentiate you, you’re doing all this extra work that doesn’t differentiate your product. Why are you doing it? Only add the value where you can truly add the value”, and where these other things is, go use other people’s technology to create that stuff so you can stand on their shoulders and get what you need done faster. ARM is all about that, ARM is a set of processors, sub components, subprocessors, IO modules, analog, graphics, all kinds of different things for compute to make chips easier. So they have a whole catalog of all kinds of different parts, different software representations of hardware, that you can then go and put on your chips to make chips much more quickly and use all their expertise. Once again, LEGO blocks, click them together and then you can make a chip. It’s not that easy, but it’s a lot easier than it was twenty years ago or fifteen years ago, even. That’s awesome that they have that.
Now, everyone could go make chips and now ultimately, architectural licensees can go make and custom design their own architectural licensees for the instruction set, can now go make their own processors with their own needs in mind, whether that’s AI workloads or data server workloads, or embedded workloads. Whatever it might be, in combination.
Is ARM getting paid enough by them?
TF: Well, that’s the thing. I think architectural licensees have had an amazing licensing experience from ARM. They’re getting all of this intellectual property for very little money and they don’t have any skin in the game when it comes to keeping Arm independent.
TF: ARM needs to stay independent because it has been the Switzerland of all this technology. It reminds me of the IBM consortium around chips, if you think about IBM and all those years of building next generation libraries, cell libraries for making chips, all the design rules, the design kits that TSMC enjoyed, IBM, GloFlo, all these guys did. It was a consortium around putting together these packages so that everyone could make chips with this technology, the very latest technology. ARM is very similar to that, but it does not get anywhere near the same type of funding, you could say, like the IBM stuff did in the day. So you need to literally figure out a way that all these architectural licensees and other licensees who benefit so much from the ARM ecosystem invest back in it.
Can ARM fix that, just charge more? Or is there something fundamental to the structure of the ecosystem that is a problem there?
TF: Look at NATO. If you have NATO or something else, an alliance of companies come together or countries come together to support NATO. ARM is like that, you need your architectural licensees and your major customers to come and buy shares in the company and say, “We want this to be a healthy Switzerland for this technology.” It’s important that ARM exists independently. That’s why the Nvidia deal got killed, ultimately. But now that ARM doesn’t have a parental figure or someone to protect it, now those people who have benefited so much, let’s say it’s the Qualcomms, the Apples, the Amazons, Microsoft, even. Samsung, who else is there?
TSMC and Nvidia.
TF: TSMC, Nvidia. Infineon. STMicro. All of these guys need to go and have to be, if you want to be a licensee or an architectural licensee of ARM, you need to own a certain percentage of shares of ARM to be able to gain access to our technology. Now obviously, they’re small guys and they shouldn’t have to do that. But the big guys who want to remain independent, have an independent path, they should do this. We keep hearing about SiFive, we keep hearing about RISC-V. We hear about this whole open source area of chips. I have this banter back and forth with a few friends of mine who are investors and people who don’t really understand the chip business, and they go, “ARM has to die because it’s got onerous licensing agreements.” They think it’s too expensive.
Isn’t that the challenge? ARM’s too expensive for small guys and too cheap for big guys, basically?
TF: Exactly! It’s got to get flipped. And that’s my point about ownership. The guys who make a lot of money, they should be paying a lot of money for this technology, and they should be owning part of the company. The small guys, it’s just like freemium software. If it’s free, and you use it every so often, great, use it, no harm, no foul.
Does ARM just need better leadership?
TF: I think ARM needs a stronger board. I think Arm needs someone who’s not in it for — the owner today is really all about money, not necessarily the love of ARM. This is so important that we have the love of ARM, and that comes from the architectural licensees and they have to show their love. A financially-driven ARM, of course it needs to work within the numbers, and it has to be profitable and it has to do the right thing, but this is something that the community needs to invest in. It needs to show that it’s really appreciated, it’s kind of a stepchild. It’s like, “Oh yeah, we need processors. Great. We got this great deal from ARM,” but what are you doing to really help and promote it longer term?
Now, if we go against the open source alternative, you’re hearing, “Oh, well, we have this open source CPU and this…” Sure you have all these open source things. It still takes toolkits, and it takes software stacks, and it takes integration. It takes teams for backend engineering, it takes packaging. It’s not just putting it on a server and replicating bits and electrons. It’s about replicating atoms and making special things with all kinds of software layers on top of it. To think that people are all of a sudden going to trade out ARM and put in this open source stuff and think it’s just as simple as open source code, they got it wrong. They’re still going to need backend, they’re still going to have masters of choke points.
Yeah. This was the point that Intel understood a long time ago. It’s a chip, but the software is still what matters. That’s still where the moat comes from.
TF: You’re going to still need the software, but you’re still going to need all this other infrastructure to be able to create the chip. To think that in the open source world, you’re going to all of a sudden get rid of all that? No, you’re going to just have different companies supplying it. So all you’re doing is just saying, “I’m just swapping, really, cores.” Is the RISC-V architecture that much better than the ARM? No. It’s like a false choice. “You’re going to go over here, because it’s going to be so much better.” Yeah, maybe there’s more innovation, but there could have been a lot more innovation on the ARM side if the people who are using it and taking advantage of it showed more love to ARM.
Well, if Masayoshi Son calls me up and says, “We need to put a new CEO in charge of ARM to take into market,” I think I know who he should talk to.
TF: (laughs) Oh, that’s too nice. Thanks.
A couple other points. Another interesting episode that we talked about privately was the bake-off at Apple when it came to the iPhone, if it was going to be iPod-based or if it was going to be touchscreen-based. One of the points you made in your book is that the bake-off was very short and it was resource constrained. You needed to make a decision, and then you invested in the right one. And I think this came up in the context of Facebook changing plans on their virtual reality OS. They had the Android one and they had their internal one, and it went on for years. Why do companies fall into this? Is it just that they’re too rich? They have too much money, and so they’re just undisciplined about this?
TF: Absolutely! That’s exactly the right thing, is when there’s too much money, there’s too many people saying that they can do it better, and there’s no time limit or other constraints, money limit, market constraints, what have you, these teams go at it. If you remember, there were two different operating systems going on at the time at Apple, before Steve got back,
That’s right. Yeah.
TF: There were pink and blue and all these things, IBM had it. So there were all these different kinds of in-fighting that happens, and it’s all based on constraints. When there’s a lack of constraints, that’s where all of these things bloom. At Google, when I was there, there were at least four different competing audio projects for audio in the home for playing music. There was four of them! I’m like, four? Why is there four? Everybody had a slightly different take and nobody was willing to go and kill them and prune them and say, “No, this is the right one,” and take all the pieces together, because they were too afraid, for whatever reason, I don’t know. It’s hard enough to have one great product that’s orthogonal to what the company does and saying, “Oh, this is an all new thing,” to have four of them, and say, “We’re going to launch all of them at some point?” That just doesn’t make any sense. Constraints are really key there.
Well, here’s a question, then. You say in your book Build that you don’t regret selling to Google. We’re talking about Nest here. But isn’t that a little bit of a white lie? You look around the connected home and it has barely progressed from when you first started Nest. You talk in the book about being worried about these big ecosystem players from Apple or Amazon or Google coming in and swamping you. But given the fact you were a startup and you have constraints, weren’t you actually better placed? When you look back, if Nest remains independent, is it in a completely different place now than it ended up being?
TF: Great point. I think the difference, and this was the mindset, whether that was right or wrong, but my mindset was we were building a platform. You go from products to platform, too many times people go, “Oh, look at this great platform. And now you guys can go make products off our platform.” That’s never how it starts. It starts with great products and great products, hopefully they’ll work together.
Yeah, the products give you permission to be a platform.
TF: Yeah, that creates a platform to allow you to do that. And I was looking at we already had two products at Nest at the time, and I was looking at this is going to become a platform. For me, and I was always trying to get at Nest, we were trying to get developers. Developers on our platform, developing apps, developing other hardware products and those kinds of things. I had seen when platform guys have trounced small startups in the past, when they said they just announced something like, “Oh, we’re doing this.” And all of a sudden the developer community runs away. Because it’s from the small startup, they’re like, “Oh, they’re doing it. I’m going to go run over there where there’s more resources where I know it’s going to be a success”, maybe or maybe not. And then what happens that brain drain, that developer drain happens and that platform can’t get started. That’s one thing.
The second thing that happens is when you’re an independent company, and you don’t have any real sources of revenue outside of the things you’re doing, because both of those were new product categories, the thermostat and the smoke detector, CO detector, they were still getting started. We needed to feed this beast with lots of money. There were very few venture capitalists that were, at that time, going to give us money to invest in platform. So if you want to make a platform, you have to go to somewhere where they have lots of money to invest in that platform. It was a $4 billion deal we were doing, was not just buying Nest, they were going to invest $4 billion over a period of time for us to build out the platform. That was the difference, I was always, “How much are they investing in us?” not that we’re being sold.
So, right deal, wrong company?
TF: (laughing) Moving on.
No, I don’t regret it. Look, we don’t regret. I even put in the book, we don’t regret it at all. But of course could have things been done differently? Did I think leadership would’ve worked differently? Yeah. And, my bad. I got that one wrong.
We’ll end on this. The book is called Build: An Unorthodox Guide to Making Things Worth Making. What was the motivation to write a book? Who is the target audience?
TF: Well, the target audience is anyone who’s trying to build their career, maybe build a product, build a team, build a company. So it’s anyone from even late high schoolers, graduates, all the way through if you’re thinking about retiring. So the audience is anyone, it’s not necessarily fanboys, Apple fanboys, it’s not set for engineers only, it’s not set for marketers only. It’s set for a wide swath of people building anything. It’s not just applied to the Silicon Valley mindset, it can be used around the world. So that’s the first thing. So that’s the audience.
But the motivation for Build and for writing it was, pre-pandemic, I woke up one day and I looked around and I said, “I am so lucky. I’m sitting here, how did I get here?” And I’m just cherishing the moment and I remembered all those people who were my mentors along the way, who without financial gain in mind, just helped. Said, “Oh, you should talk to so and so,” and, “Oh, think about this problem this way. Have you thought about this?” And they just were kind people, smart, experienced people who just lent a hand when I was asking a question, I went for advice and they did that. I was thinking about who those people were, and I was like, most of those people had died. My mentors had died and then I was like, “Well, I think they passed the baton to me”. The only reason I’m sitting here is because of those people who helped me, now it’s time for me to help those people sitting in other places who need this kind of knowledge that I learned from the greats, and trying to give back.
So really this is all about giving back and about retelling these stories, but it’s not a biography. It’s not trying to talk about all the successes. It talks mostly about failures and learning and talks about human nature. It’s not a rah-rah book about “Look how great this was”, or “Here’s where I grew up and my childhood”, none of that stuff, none of that stuff’s in the book, don’t want it in the book. But it was really about giving back to help others get to the next stage in whatever they’re trying to do, and maybe see their problems from a different point of view, and maybe some of it will resonate.
Well, I’m not sure I agree that the only reason you’re here is because of your mentors. I think that there are probably some inherent Tony Fadell qualities that had a lot to do with that. But it was great to talk to you and hear more about this and hear some war stories as it were. Super fun for me, you’re one of my best readers, you give great feedback, particularly when I’m wrong, so I appreciate it. It’s great to talk in person.
TF: No, it’s always great to go back and forth and banter and all those things, I love it. Just a little bit more on the book, just so everyone knows. I just wanted everyone to know that all proceeds, all net proceeds from this book, are going to the Build Climate Fund. The Build Climate Fund will take all those proceeds, I’m going to match it five times, and we are going to then invest in climate solution businesses. So I really care about the climate. We want to go after and find innovative startups, and we’re going to just keep that money in building great companies to hopefully help us with our climate crisis and then ultimately, any proceeds from all of those investments and things will go to climate charities. So please go out, hopefully you like Build, and it’ll help you in some way, it truly was a labor of love. So again, thanks Ben for having me on, thanks for the labor of love that you do every day in your posts. I really enjoy them and I know your readers do, and thanks for being you.
Well, I appreciate it. That’s a very kind thing for you to say. I’ll look forward to talking to you again soon.
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