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Tony Fadell: The Game Has Changed! You Don’t Need Silicon Valley | E47 · In Search Of Excellence

• 0:00
  Randall Kaplan: You're listening to part two of my amazing conversation with the incredible Tony Fidel, the inventor of both the iPhone and Nest thermostat.
• 0:05
  Randall Kaplan: If you haven't yet listened to part one of my incredible conversation with Tony, please be sure to check that one out first. Without further ado, here's part two of my incredible conversation with Tony.
• 0:23
  Randall Kaplan: So you leave apple in 2008. And then you took a year and a half trip around the world with your wife, who also worked at Apple and you went with your two young sons, you're building a home in Lake Tahoe moved to Paris and came up with an idea that would once again change the way that more than a billion people lived. Nest thermostat, which you described as a world's first learning thermostat, a thermostat for the iPhone generation. The move to Paris confused a lot of people France had 35 hour work weeks and complicated labor laws, which seemed like the worst place on the planet to start a company.
• 0:55
  Randall Kaplan: But you said that nest would have never happened if you didn't get out of what you call the echo chamber of Silicon Valley. Can you tell us how you stumbled on the idea where the idea came from? What the pain point was that you're solving for? And why it wouldn't have happened if you stayed in Silicon Valley? And what's your advice to the millions of aspiring entrepreneurs who want to start a tech company and think that Silicon Valley is the best place to do it?
• 1:17
  Tony Fadell: Okay, lots there.
• 1:17
  Tony Fadell: Let's see, well, first, with nest that was born out of the idea that thermostat specifically was born out of a problem I had when I had a place in Lake Tahoe. And so when I was going up to Lake Tahoe, I had to had to suffer cold nights.
• 1:35
  Tony Fadell: Because if I if I it could be warm if I went up there, but I'd leave the heat on all week or for a couple of weeks to keep the place warm, or I'd have to wait 24 hours to turn on the heat once I got there and needed to you know, let the place warm up. But I got to save energy at the same time. So I was like, This is crazy. We live you know, I tried to make a hack things together for about 10 years. And I kept running into the same problem, the same problems, same problem. And so while I was on my trip around the world that you mentioned, I was also designing the new home in Lake Tahoe. And during that time, I was looking for the latest and greatest of all of these different appliances and controls for the home. Already had the iPhone. And I was in I was in I always knew that it was not good the last five years before that, because I couldn't find anything but I was like iPhones out there's got to be better products. And there's got to be better thermostats. And frankly, there were still no better thermostats that I could remotely control. So it's like what's going on here. So while in Paris. And while on that trip, I started discovering, because I went to different places besides Paris to live in those homes. And so all of the same thermostats were bad and the smoke detectors are bad, nothing was different anywhere around the world. Everyone at all of these homes had the same problems. It's like ding, ding, ding, ding, ding, okay, well, everybody around the world has these problems. It's not just me in the US. And it's not just about remotely controlling your thermostat, but all kinds of other home energy thing related things, security, safety, those kinds of things. And that's when I started writing the business plan for what would end the designing what would become first the Nest Learning staff thermostat, and then the nest, the company, right, and the vision for the company. So those things were going on. And the reason why you happened in Paris was just, I got out of the echo chamber of Silicon Valley, everyone was saying, you know, you should be doing social mobile, you should be doing these other things where, you know, you hear about what's the latest and greatest and everyone's working on. But it wasn't until I got away from that echo chamber, saw things with my experience, saw problems around the world in a new light.
• 4:03
  Tony Fadell: And I was like, Oh, I could solve this. I was like, okay, then I was inspired. And I was also a way from the noise of Silicon Valley. So I could I had focused time to go and work on these problems. And so the thing is, you know, you don't need Silicon Valley anymore. You know, that what was so important about Silicon Valley when I got there 30 years ago, or so or more, was that, you know, all the talent was there. All the technology was there, the knowledge, the experience, and the capital was there. If you look at it now, with open source technology and the internet, you can get technology just about anywhere. There are smart people everywhere in the world. And now because of the mobile, social mobile and the smartphone revolution, you know, we have access everyone has access to a computer in their hand, and they can and the fun nerves are the investors have now blossomed all around the world. It's not just in Silicon Valley. So if you have a great idea, you should be solving for problems that you have in your area, because most likely, they could be problems that the world needs to be solved. But you also don't need to go to Silicon Valley to get get all those pieces of the puzzle like you used to do 20 years or even just 10 years ago, it's the game has changed, you should go off and build what you want to build. And you can usually find the problems and find the money in the teams somewhere near where you're at already. And you don't have to go to Silicon Valley.
• 5:35
  Randall Kaplan: Let's talk about money for a moment. For years after starting to ask when you're 44 years old, you sold the company to Google for $3.2 billion before nests, you had made a decent sum of money but there's a term I've heard over the years is called fuck you money. And when you sold Nast, this was clearly fuck you money.
• 5:52
  Randall Kaplan: When people hear about a massive sale like that and read about the billion dollar headlines they think to themselves, wow, that's a shit ton of money. And I want to do something like that, where I make a shit ton of money. I've been there I've read the headlines when I left a high paying job, that prestigious job is sun America, part of my motivation was the opportunity to make a lot of money. Have you ever been motivated by money when you started something? And where should the goal of making money rank and our motivation to start a company or work for a company?
• 6:22
  Tony Fadell: Hmm? Well, for me, it was never about making money.
• 6:29
  Tony Fadell: It was about solving a problem.
• 6:29
  Tony Fadell: All the things in my career was about things that I was curious about. And then over time, I was doing things that I was curious about in solving those problems.
• 6:38
  Tony Fadell: And then I learned that oh, by the way, it needs to be a big market. Because if you don't have a big market, then you know, you're you're not spending, you're not utilizing your time wisely. So yes, you do have to kind of know about money. And you have to focus on that at some point when you're looking at building a business.
• 6:55
  Tony Fadell: But it all started with a curiosity of what could be, you know, what could be created, if you looked at actually the market of thermostats and the world before nest, it was maybe six 500 $600 million market, and that was worldwide, because thermostats for only $19 or $29, or something like that they were junk. But when you when I started looking at what it could be, and what the products and how much the products could save money, right? That was the big thing about that it could save you money in your house, you're spending 1000 or $1,500 a year, maybe even more than that on your energy, maybe you could save 200 $300, you'd spend more money on a product that can do that for you. Right? So so the market actually grew much, much bigger, because of the innovations and the curiosity that I and the team had in fixing the problems inside of that market. So we were focused on solving a real problem and bringing efficiency where and the market grew from that we weren't focused on the money.
• 8:00
  Tony Fadell: And then over time, you know, the company was worth what the company was worth. And we were going after that. But again, when even when we sold it, I told the told the entire team.
• 8:10
  Tony Fadell: Yes, you might think that $3.2 billion is what the company is being bought for. But what I said is, Google is investing$3.2 million in $3.2 billion in our vision. And they're investing in that in us to see our vision through to the end.
• 8:29
  Tony Fadell: So don't think of this as a cash out. Think of this as an investment in enabling the mission and the vision that we have, and where we're gonna go with that, with that kind of investment.
• 8:39
  Randall Kaplan: How could it feel when you have employees like that you have a huge sale, and you're making a lot of people very rich, you have programmers who are making 150 $200,000 a year, they're one of your first 10 first 15 people, as a founder of a company, do you say to yourself, This is amazing, and I heard what you said about the vision, but economically, you're changing their lives for ever?
• 9:04
  Randall Kaplan: How good does that feel as a founder and a leader of a team?
• 9:09
  Tony Fadell: Well, you know, there's, I we can talk about the scale of money, but when I think about it, when I truly think about it, I think about their families, their kids, and what they can enable for the for them. So for me, for these people to be able to do something more for their family, or their extended family. That's what I see. It's not about them being able to drive another car, or you know, or get a boat or another house or whatever. It's about what they can do for their family and invest in their family. And so what I told the team when we got there, do not go changing, don't change. The reason why we got here is because of the hard work and the way we worked and how we got it and the scrappiness where, just because you may have more money doesn't mean you should change your values or the way you look at life. You guys I hear for a reason. Stay within sight of that, that knowing who you are, don't let your feet get off the ground. And let's stay focused on our mission and vision. And yes, you have these more the resources to help you and your family. But don't go crazy with it.
• 10:14
  Randall Kaplan: Let's go back and talk about Steve Jobs for a minute and also talk about a chapter of your awesome book bill. Steve will forever be known as one of the greatest entrepreneurs and minds in history who changed the lives of billions of people forever, for the better. But there's a downside to Steve just as there are too many successful people.
• 10:31
  Randall Kaplan: Some have also changed the world forever. Elon Musk is a great example of that today. Right as we speak, Steve was known to be brash, rude and extremely difficult to work with. He was known to have temper tantrums, and it's been widely reported that he was hated by a large amount of people at Apple. You met Steve for the first time when you were 22 years old at a birthday party for a guy named Andy Hertzfeld in Palo Alto. He ended up working for Steve for nine years and reported directly to him. You said that working for Steve was one of the most important relationships of your life. In your book, you also talk about quitting when people have no passion. You've tried everything else that works young employees today, I've seen our job hoppers, they find a job across the street that pays in$10,000. More they think the grass is greener on the other side. When is the right time to quit your job and doesn't work in tough conditions help make you a better employee and leader. And isn't work work?
• 11:30
  Tony Fadell: Okay, well, first, let's let's back up. So all of those rumors and all of those other things you heard about Steve, those are definitely rumors, I did not see him taking people out. On a regular basis.
• 11:41
  Tony Fadell: Of course, we all have our tendencies that we have. And it happens over time. And over 10 years, I didn't see him, you know, taking people out the way that you described or the way that is typically written in the press. So first of all, we need to put that aside. Steve was mission driven, he cared about what he about the customer, he cared about the products that were were being made, and, and who they were made for and what and demanded excellence. He did not sit there. And you know, and just go after people in in meetings, unless those people weren't doing their jobs, truly weren't doing their jobs, or giving half half baked answers are not being transparent about things. So you had to bring your your A game every time. Now that said, you can't be critic, you know, you can't be criticizing people, you can't be judging people, you need to judge the work criticize the work, not the person. Of course, if the person is not working out, you need to move them aside. But you can't have those kinds of dynamics.
• 12:45
  Tony Fadell: Okay, moving on. Putting that putting that to bed, let's talk about quitting. So when you quit, of course, there are times when you need to quit. And some of it is the company is not working out, or you are not learning anymore. Either you're working for somebody you don't respect any longer. And that's the biggest thing is, you know, if you're working in a company, that's not doing well, okay, fine. But if you're working with somebody who you respect, that's what's most important that I always see is you're working with somebody that you really respect and you're learning from and you're growing with, sometimes the companies aren't doing well, you're not always going to everything's going to be aligned, you're going to work with the best person in the best company with the best products and everything. That doesn't happen. There's this you know, there's a natural curve there, that goes that people go through that sometimes they aren't working with the with the with the best of everything. But if you're working with someone you respect, and you're growing, and they're investing in you, that is the most important and you're doing things that you know you think are good with your time that are valuable. That's what's most important. Sometimes the companies aren't aren't, aren't perfect around them. That's okay. But it's when you're working for someone you don't respect or you're working on a mission, that doesn't make sense to you at all. Because you don't know who the customer is or doesn't apply to you or whatever it is. That's when you start or you're working in a team that has serious flaws. Where you're, you know, it's politics or what have you. That's when you sit there and you try your best to try to make sure your your points are known by your manager by the your managers, manager by HR, you try to make those points known. If no one is finally moving and changing things or giving you good feedback as to why those things are happening and they're kind of ever present is not getting better. Well then that's the case where you quit.
• 14:41
  Tony Fadell: You get up and you quit, but you don't just get up and quit just because something's not right that day. You get out or you're always searching for another job to do something else that just gonna pay more. That is not the right way to quit. The right way to quit is once you're in a place that you A team doing something that you really love will hopefully for a person you respect, then you need to do you need to quit the right way. And that means by communications and all of those things to try to work out the problems. Because otherwise if you're just a Job Hopper, like you mentioned, you're not going to get anywhere in this life because it's going to be seen on your resume. And we see this all the time now, much more so now than we did before because like I was there 10 months and look at all the things I've done. I always there 18 months, look at all the things I just like bullshit, you didn't do all those things, who really did those things, you're just taking credit for what other people did, because there's no way you could have done all of that stuff in that short period of time.
• 15:41
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• 16:40
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• 16:52
  Randall Kaplan: Get your next amazing gift and order a copy of bliss speeches by clicking the link in our show notes. If you're working for an asshole, do you quit?
• 17:05
  Tony Fadell: Question is is what is motivating that person? Are they motivated by their mission and their sense of the customer?
• 17:13
  Tony Fadell: And what needs to be done? Or are they motivated by their ego?
• 17:16
  Tony Fadell: So if they are voted motivated by their ego, absolutely, you should not be working for someone like that. Because they aren't just using you to get themselves ahead and pushing you down. But if they are going for a mission, if they're mission driven, and they're doing something's important, and it's important to you as well, as long as that person is not criticizing, you're criticizing you judging you, but criticizing the work pushing you to be better because they can see it in you. That is not a asshole you should be quitting. That's somebody who's trying, who's investing in you and saying you can be done, you could be doing something better. Okay, that is just a coach. Even though even the biggest best people I've seen on the planet, you know, Steve, had a coach, always sitting there pushing and making sure he was doing the right things. You need a coach as well. And a lot of times hopefully that will also be your your boss who's going to push you into things that are uncomfortable. Your knee jerk reaction is oh, that asshole.
• 18:16
  Tony Fadell: But are they doing it for the right reasons. Now if the person is mission driven, all the other stuff, but they're still criticizing you and saying you're not worthy and that stuff, then there's still an ego driven asshole, even if they're on the right issue on the right mission, and you should leave,
• 18:32
  Randall Kaplan: I want to switch gears and talk about one of my favorite topics, what I call extreme preparation, which is the title of a book I'm writing that I hope will be out later this year. One of the main ingredients that got me to where I am today is I'm always the most prepared person in the room. If someone spends one hour preparing for a meeting, I spent 510, sometimes 40, as I did for when I met Eli Broad, my former boss for the first time. This isn't regular preparation. It's what I call extreme preparation, In Search of Excellence, how important is extreme preparation? And has it been to your career and keep give us two specific examples where you spent 40 or 100 hours preparing for a single meeting.
• 20:06
  Tony Fadell: So, you know, you have your definition of extreme preparation, I think of it as not preparation for a meeting. I think it is understanding the details of everything that you're supposed to be in your purview or what it is your function is. So understanding all those levels of detail is important. A lot of times what I see is managers, especially managers and managers, directors, whatever, they just get a report from whomever it is who's working for them, and then they just parent that report out they don't really understand the details. So to me is understanding the details being in the in the weeds, asking the question, so you really have a great grasp of that. That is not extreme preparation. That means it's going into detail. So when it comes time for the meeting, you can then be able to answer most questions, not all questions, but 90% of all the questions that'll get thrown at you in an intelligent way so that you can not just answer the first question, but the second and third order questions as well. And so that's what I would call being in the details. And then you don't have to worry about extreme preparation, where I see extreme preparation. And this also goes into into details. And where we would do rehearsals and stuff is in VC pitch meetings. So when we go to venture capitalist, and we want to pitch and make sure we have our story, right, it makes sure everybody's aligned on what we're saying, and how we're saying it, and trying to find holes and having in other investors in the meetings to try to help us shoot holes in our story to make sure we're answering it either on the slides or in our, in our in our, in our dialogue, though, that stuff, you know, and I also did extreme preparation for like my TED talk, right, 45 or more, you know, rehearsals. So there is extreme preparation for certain kinds of specific presentations.
• 21:51
  Tony Fadell: But I, but in general, you should be in the details for the day to day, every day, because that's how you do the best job you can into to deliver the results you need to deliver.
• 22:03
  Randall Kaplan: Let's talk about the importance of mentors, which have been hugely influential in your life, as in mine. And I'll talk about future state your investment advisory firm, which has invested over 200 startups around the world and which you describe as mentors with money.
• 22:14
  Randall Kaplan: You've had some amazing mentors in your life, a guy named Phil Goldman, who was the first person in Silicon Valley to take you under his wing, a guy named Phil Campbell, who also mentored Steve Jobs, and Eric Schmidt and Sergey Brin, Bill Campbell, Bill Campbell. And Larry Page. Bill knew nothing about technology, but knew everything about human nature. And then they were your parents, and your grandfather, In Search of Excellence? How important is it to have mentors?
• 22:41
  Randall Kaplan: Do we need to find mentors? Who are real people? Or can you get mentors for reading books like build?
• 22:49
  Tony Fadell: Okay, so, so the first thing is, everyone needs a mentor, look, you have mentors, you might not think it but you have mentors, you know, you can call them your parents, okay, you have mentors growing up. But when you're growing up, you're always looking for maybe it's your big brother, or big sister, or maybe it's your uncle or someone else in your family who you can talk to about things that you wouldn't normally talk to your parents about. And they want to see you do well, and they want to help you. That's a mentor. So all throughout your life, even when you're the youngest you use they're surrounded, or you can find people who want to invest their time in you to be able to help you in some way without any financial reward. Everyone needs a mentor. I've seen the best.
• 23:32
  Tony Fadell: Like I mentioned, Steve Jobs, have a mentor. I've seen many different people, Bill Campbell, who was a mentor of mine was the mentor to Steve Jobs, Larry Page, Sergey Brin, many, many people. So you do need mentors.
• 23:41
  Tony Fadell: They're the ones who don't have to have the, the technical knowledge or the experience that you have in the things that you do, what it really is about human nature. These the best mentors are about human nature and and have experience in your in your general area, in business or whatever to help you. But we're not talking about coaches, life coaches, we're not talking about speaking coaches or management coaches, to meet coaches, that's a different thing that's about a specific point in time in life, that it's about a specific subject.
• 24:16
  Tony Fadell: Mentors are about this holistic view, who look at who you are, as a person, professionally, personally, as a family person, all of those things, and try to weave those things all together and look at a 360 view. You need to have those to keep your feet on the ground, to be that person, even when you're when you're either down in the dumps or when you're at the height of success, to keep you level on that ground, either grounded with your feet on the ground or above ground to make sure you're not bearing yourself with you know, unnecessary problems, or to actually tell you, hey, maybe it's time to give up maybe this isn't the right thing. It's that person so you don't drive yourself crazy. Always talking to yourself, you can talk to someone else, because that mentor is someone who you can talk to about things you couldn't talk to with your board or your even your co founder or your executive team or other people. It's somebody who you can really rely on and they can also learn from you mentors want to also learn from you. So it's a two way street. It's not just a one way street.
• 25:17
  Randall Kaplan: Before we finish today, I want to go ahead and ask some more open ended questions. I call this part of my podcast fill in the blank to excellent so are you ready to play?
• 25:25
  Tony Fadell: No. Well, let's let's try.
• 25:27
  Randall Kaplan: When I started my career I wish I had known
• 25:31
  Tony Fadell: if I started my career I wish I had known much more about understanding the customer. Understanding the customer needs I always thought I was the customer. And so I spent 10 years learning about who was the customer and learning the Hardway about No, you're building this for someone else, not yourself. So it's really getting that that understanding that, while I'm curious about something, I need to make sure it I'm solving a problem and at a much wider scope of for a wider scope of people. That's a large enough scope as well.
• 26:12
  Randall Kaplan: The biggest lesson I've learned in my life is
• 26:16
  Tony Fadell: when to say no, and to say no more than yes,
• 26:19
  Randall Kaplan: my number one professional goal is
• 26:22
  Tony Fadell: now it's to be to help enable people doing hard things to be a mentor, to help people doing building hard things, to allow them to, you know, to allow them to build those things and help them steer clear. So I'm giving back just like the mentors who gave to me to help me to get to this point.
• 26:42
  Randall Kaplan: My biggest regret in life is
• 26:46
  Tony Fadell: don't have many regrets. I don't actually don't have any regrets. I think the only regret I had was not being able to see Steve Jobs before he died. Because I was so busy with Nast and he wanted to get together but I I waited a couple of weeks too many.
• 27:04
  Randall Kaplan: The one thing I've dreamed of doing for a long time but haven't done is
• 27:09
  Tony Fadell: want to go on a safari.
• 27:12
  Randall Kaplan: The greatest invention of all time is
• 27:17
  Tony Fadell: greatest invention of all time. I think that's the electricity
• 27:22
  Randall Kaplan: of the year 2050 We're going to be a driving across the country through tunnels built by the boring company, be flying to work across town in our own mini helicopters, air taxis, see have chips inserted in our brain to help us be smarter and live longer. D have cured most forms of cancer, or E all of the above.
• 27:46
  Tony Fadell: Oh, it's D, I don't believe in a lot of things. A, B or C. I think it's the
• 27:52
  Randall Kaplan: the greatest innovation of the next 50 years will be
• 27:56
  Tony Fadell: I think we're seeing it right now. I think we're seeing how does artificial intelligence or intelligent assistance really grow the human capacity beyond where we are today. Not taking us taking taking over for us, but literally helping us grow.
• 28:13
  Randall Kaplan: If you could go back in time, what's the one piece of advice you would give to your 21 year old self?
• 28:19
  Tony Fadell: Rebuild? I wrote it wrote the book Exactly. For me if I was 21 to 2223.
• 28:26
  Randall Kaplan: Will Blake quorum win the Heisman Trophy next year?
• 28:33
  Tony Fadell: We can only hope we can only hope go blue
• 28:36
  Randall Kaplan: Go Blue. The one question you wish I'd asked you today but didn't is
• 28:43
  Tony Fadell: what does it really take? To become who I am? And where did you did you need anything special to get to this point. And for me, like I said it was mentors. But really where I started was where a lot of other people started. I won't say that I was, you know, destitute or poor on the streets by any means. But I picked myself up by my bootstraps and made it happen and got through failure. And so failure was the biggest reason why I am where I am and the mentors who helped me through those those times.
• 29:16
  Randall Kaplan: Tony, you've been someone I've admired for a very long time. There aren't many people who can say they've changed the world that had a measurable impact on the lives of billions of people, but you are one of them. I'm very grateful for your time. Thank you very, very much for sharing your story with us.
• 29:33
  Tony Fadell: Randall, thanks so much and I hope he keep finding excellence wherever wherever you go.