tv Bloombergs Studio 1.0 Bloomberg April 17, 2016 10:00am-10:31am EDT
♪ emily: he worked alongside steve jobs to revolutionize the way we listen to music, and became known as the godfather of the ipod. he spent nearly a decade at apple, then hatched a company of his own. in 2010, he cofounded nest labs, where he promised to re-invent every unloved product in the home. a promise so thrilling, google, soon to become alphabet, snapped up nest and its star ceo for $3.2 billion. joining me today on "studio 1.0," nest ceo and cofounder, tony fadell. tony, so great to have you here. tony: it's so great to be here. i love it. emily: you were born in
michigan, but you moved around a lot. 12 schools in 15 years? you tony: yeah. well, going to so many different and cities, there is a lot of positive impact, right? i was able to learn about various different types of people. being in new york, and then being in texas, being in the midwest, they are very -- human nature is the same, but the way they display it might be different. emily: how do you think that affects your work and how you lead? you tony: i think a lot of times -- by always being the new kid, you are always distanced from what is going on around you. so, you're always analyzing. you're evaluating. you're seeing what people are doing and not doing, because you are not in it. you are more of an observer. that helps, because it allows me to step back and analyze the in a -- analyze the situation, not just inside the company from a human perspective, but also from a product perspective. what are people using? how are they using them out in the real world? emily: your grandfather had a big influence on you. he was a carpenter, right? tony: yes, he was. he was an educator. emily: you guys used to build
stuff together. tony: absolutely. he would hold classes like woodshop and metal shop. when he retired, he still did that with us, my brother and i. building soapbox derby racers and fixing lawnmowers and bikes together. we learned from a very young age, like 3- and 4-years-old, how things work, how to use tools. i did not know what a computer was until i saw my first one in 1979 or so. emily: you want to the university of michigan, you studied computer engineering. then in 1991, you moved to silicon valley. tony: yes, i worked with another guy to build a startup in high school. emily: oh, really? tony: we were doing mail order for apple ii. we were designing software and writing it for apple ii. ultimately, i was so frustrated, because we did not have the internet then, right? i thought i had to get to
silicon valley as fast as possible. i would read "macweek" magazine religiously every week on the back. what are the rumors, what's going on? emily: so even back then, you were obsessed with apple? tony: i absolutely was obsessed with all things computing in the 1980's. it first started with apple ii. emily: you worked on the earliest mobile devices, like the precursors to this. at phillips, you started your own company, fuse. by the end of the decade, you probably knew more about mobile devices than literally anybody on the planet. tony: i just kept doing the thing i really love to do. emily: tell me about the first time you met steve jobs. tony: andy herzfeld, who was one of the founders of general magic, he had a birthday party. steve happened to be there and we talked for a few minutes. that was the first time i ever met him. but then the next time i met him was to give the pitch for the ipod. what would become the ipod. emily: you gave the pitch for the original ipod? tony: there was a whole team of us, but i was leading the charge in talking about what it was. it was literally a layout of what digital music could be, what the challenges were. there were three different concepts. and the one we always saved for the end was the one we thought was the best. it was the most expensive, the riskiest one, and steve was very engaged and very much driving.
we had a presentation, you, a -- you know, a deck. but he flips through the deck, and he just jumps around. there was no linear format. you just braced yourself for impact. he would throw questions out, throw out conjectures, and you just sat there and rolled with it. rolled with the tide. emily: where did it end? tony: it ended at literally -- we are going to do this, and tony, we want you to lead it. i had been in other executive presentations, where it was like, oh, it will take four months to decide, or whatever, -- it was, no. from the beginning of the meeting, he was fully engaged, to the end of it, ok, commit and we are going to do it. emily: we are going to take on sony? tony: i said we have to deal with sony. he's like, we're going to get sony. i'm like, but sony is number one in every audio category, in the world for personal audio. how are we going to beat it? he is like, no, we're going to do it. emily: you have become known as the godfather of the ipod. which, in a way, makes you the father of the entire product line.
the ipod, the iphone, the ipad, maybe the watch. [laughter] but really, the ipod itself had such a dramatic impact on everything that apple has done since. tony: it was a big turning point, going from computers to consumer electronics, for the company. emily: what was your relationship with the steve -- with steve like? tony: it was very professional. there were times it was friendly. i would not say we were friends, per se, in terms of hanging out. it was friendly, but it was tough at times. it was a great mentor kind of relationship at times. and there were other times when he will call me on my crap or i called him on the crap -- he didn't like that. whether we were fighting or being friendly, it was all about the best thing for the customer and the experience, which is what i loved. i would never trade that for anything. emily: i read it was kind of like father and son. is that fair? tony: there were love-hate moments. there were times when we were like ok, we are going to take on the world. there are other times there it was like "i'm going to strangle you." if there is tension, there is --
if there is no tension, there is no creation. you really need creative tension. emily: you quit a couple times. he fired you a couple times. you made up. tony: it was a dramatic relationship. [laughter] emily: there is this modern mythology of johnny ives as the apple design guy. i wonder how do you remember it? was it more of a team effort than sometimes this mythology would lead people to believe? tony: when it comes to design, there is no right or wrong. there is opinion. different people had different opinions and led the charge for certain decisions. so, there was a team effort between, you know, myself, johnny, the marketing team, steve. and we would talk about the features, feature sets, what it could look like. grappling with those things. and there were certain decisions i can make myself about how we were going to implement it. but there were certain things about what it might look like, and johnny had a big opinion on that. but steve, regardless of whether it was me, or johnny, or mark, steve always rendered the final opinion on almost anything that
involved the customer. so, it was very much a team oriented thing. emily: is this, sort of, mythology that pits you and johnny against each other, is there any truth to that? tony: like i said, creative tension is what makes things better. we had a lot of -- we had times we saw eye to eye, and there were times that we didn't. put that is what makes a better -- but that is what makes a better product. was there tension? sure, there was tension at times. was it personal? no. it was all about the business and the product, and i think that is what made the magic happen. emily: how did your relationship with steve compare to relationship today with larry -- your relationship today with larry page? tony: i would say that they are two very, very talented people, very, very smart people. they come from two very different backgrounds. larry is very smart in technologies, he loves technology, he loves to see beyond the horizon. and he is an aficionado of product and how it can turn into product. steve is a marketing person who
had a love of product. he would always look at it through that eye. i'm in the middle. i'm a product guy. emily: there was a "fortune" headline that read is tony fadell the next steve jobs or the next larry page? tony: i am just tony fadell. [laughter] it is that simple. emily: what is similar and different between how you run nest and how steve jobs ran apple? tony: similar is accountability. really understanding, trying to understand your customers as best as possible. difference is, i think it is giving a lot more credit to the team and really trying to be more inclusive with getting ideas from people and trying to mold those things in. and listening to them and not trying to get involved in every little detail. ♪ emily: you also ended up poaching quite a few apple employees. tony: i did get a call from steve about that. ♪
in 2010, nest was born. tell me how the plan for nest was hatched. [laughter] tony: because of my time with my grandfather, i learned a lot about houses. i was always fixing them, even before nest. when it came to designing a home for a family, i did not just let an architect run with it. i wanted to get into every detail. that is when i found all of the problems in the home, specifically heating and cooling. even when i told my wife, like, wanto make a thermostat." she looked at me like, "you're nuts." i said, "no, let me tell you." when you explain the situation, that this is not just a thermostat -- their eyes perk up, and they go, "i think you should do it." emily: you reinvented the thermostat, the smoke detector. you gave cameras -- home security cameras, a complete makeover. before you even got to the
cameras, less than five years passed, and google snaps you up. you sell to google for $3.2 billion. tony: i think the first decision was, should we allow google to invest in the company? that was 2.5 years earlier than the actual acquisition. through building a relationship and getting to know larry and sergey and various people inside the team, we got more and more comfortable with the executives, and a lot of the people we were working through that -- the investment process, as well as the preceding two and a half years. so, we have been dating for a while, in a way. we were dating before we got married for two and a half years, so we really got to know each other. the final part was the last three months. it was really this -- maybe we should get engaged discussion. should we get engaged? do you want to have kids? where do you want to live? what would we call the kids and what would our last names be? it was all of those little details before we said we were going to get married.
emily: was there any part of you that said, "god, i don't know, this is my baby," maybe it could be bigger. -- this is my baby. maybe it could be bigger?" randy komisar, kleiner perkins, thought you could be far bigger than even $3.2 billion. tony: it was never about money. it was about building the right thing. this wasn't about money. the number was nice. don't get me wrong. but this was a 10, 15 year vision. i knew we were going to need big arms to help us get there. i remember how long it took to go from ipod to iphone, and those things. and you need a lot of resources to do it. just to be standalone? people would say you need to go public, you need to raise more money. i did not want to go public. when you saw that number, when you had the gut the feeling, you -- the gut feeling, you just had to go with it. it is like when you get married. you never know what it's going to be like on the other side. you trust your gut. you have done all the analysis. at the end of the day, it is all about emotional decision. it's not a rational one.
emily: it is funny because people still wonder why didn't you sell to apple. you worked at apple, it feels like apple, was that ever really an option? tony: we considered all the possible acquisition targets. through that, they were obviously on the list. but at the end of the day, been there, done that. google has massive compute power in the cloud and all kinds of algorithms and research around where we are headed. it is a huge part of server technology and software that we would need to be able to pull it off. emily: you continue to run nest as a semi-independent company. how has your role changed? how have the goals of nest changed since this transition? tony: more, faster. that is it. we laid out a roadmap, a two to three-year roadmap. we saw eye-to-eye on all of this stuff. larry just said go implement it as fast as you possibly can. it is like no, i'm not going to go changing it. we believe in this, go. emily: how do you think about the next new product. how do you decide what the next new product will ultimately be? tony: sure. i think that, first, we each, every day, run into frustrations. things around the home, why is it that way? the next thing, piece is, hey, why don't you guys make your roadmap and i will make my roadmap, so we have, like, five or 10 different groups making
roadmaps of what they would think it would be the next two years and then we compare notes. emily: would you say you're working on 10 different ideas at any given time? tony: there are new products, new services, new marketing things. if you ask do i have 10 to 20, i probably have 50 to 70 things always in some state of gestation. emily: how much do you see nest as a consumer technology company versus an enterprise solution? do you see consumers purchasing devices directly, or do you see potentially infrastructure as a better way to get into homes? tony: so, this is something i really learned from steve jobs. you cannot be a b-to-c company and a b-to-b company at the same time. a b-to-c company, you have to have gut, you have to know what -- you have to believe what the customers want to buy. on a b-to-b marketplace, you just sit there and you ask your customers. your top five customers. what do you want?
and you just build what they want, and then you sell it. we are a b-to-c company, and we will remain a b-to-c company. emily: you did end up poaching a few apple employees. tony: i did get a call from steve about that. he called me and said "what is all this, you're recruiting from my talent" -- i said, steve, i'm not recruiting anyone, they are coming to us. maybe you have to make sure you retain your employees better. [laughter] and that was it. and then we have the niceties on -- had niceties on the phone. there were times, like i said, the love-hate relationship. emily: what would steve say about apple if he was here today? tony: i think he would be incredibly pleased. he said, the iphone would be the legacy product that would live beyond him. right? and the iphone is that. right? that legacy product is going to take apple for at least another decade or two decades, right? emily: you are not wearing your apple watch, but what do you think so far? tony: i think they did a brilliant job with the hardware. in terms of the changeable bands. i ran out and bought all sorts of bands. from a software persepective, i
think it's early days. great products become great after iteration. it's just getting started. emily: is it something you could see yourself wearing everyday? tony: i can wear something like that everyday, i just won't charge it every day. emily: so they need to work on battery life? tony: i think everybody needs to work on battery life. emily: so you volunteered to take on fixing google glass. tony: yes, i did. ♪
emily: so, you volunteered to take on fixing this -- google glass. tony: yes, i did. emily: why? tony: why not? no, seriously. look at things we wear on our heads today. we were glasses, you wear earrings, other people wear earrings. we put on headphones. to think that, all of a sudden that, nothing on our heads is somehow imbued with connectivity is shortsighted. we're seeing it on wrists, feet, just -- chests, and everything
else. to neglect the head does not make sense. to say we are done and toss it away -- we can't toss it away. let's take what we learned from it. they said, you would do that? i said, yeah. it was not like i, all of a sudden, threw myself on the fire and said, "i would do this regardless." no, it was a slow dating process before getting married again. emily: dating again. there are some reports out there -- [laughter] tony: more rumors. emily: more foldable, water resistant, more rugged design, any truth to that? tony: all i can say is, don't believe everything you read. emily: are you working on an enterprise version, a consumer version? tony: they are not just going to be for corporations or industries or medicals, it will also be for consumers. emily: and it will be elegant, so i will not feel at all odd wearing this?
tony: i did not say that that is what you will be wearing. i do not know how you feel about wearing it now, but i will not ship anything that i will not wear. emily: ok. now, you are also a car guy. you are one of the first owners of bmw's electric i-8. you also have a tesla. what is missing from the cars you have? tony: i think we will have a joe -- you will see some dramatic changes in how we think about these cars. in terms of the price point. but we are still 7-10 years away from a mass switchover. emily: what can apple do for the car market? tony: if you think about a car, what is a car? a car has batteries, a computer, a motor, and it has mechanical structure. if you look at an iphone, it has all the same things. it even has a motor in it, if you try to say and scale, oh my god, i can make a car with the same components, there is some truth to that. but the hard stuff is really on the connectivity and how cars can be self driving. those kinds of things. really hard and it is all
software and services. i think that when you look at either google's self driving car program or the alleged apple thing, it is all through that lens of software first. emily: did you ever talk to steve about building a car? tony: yes. emily: what you talk about? -- what did you talk about? tony: we had a couple of walks, and this was in 2008, if we were to build a car, what would we build? we were just crazy, looking at what a dashboard would be, what what would this be, what would seats be, how would you fuel it, or power it? at the end, we were so busy and we are so constrained, it would be great to do it, but we can't. emily: so, when steve was alive, was this something that he was like, we are not doing this? we are not doing this right now? tony: there were a lot of things that we said no to. a lot of people said at the end of the day, why didn't the ipod turn into a great video camera? tvs are the other one. at the end of the day, what had the biggest impact on the world was cell phones. we said ok, we will focus all of
our energy on that. forget all this other stuff. those are interesting. we well -- will let other companies do that. let's focus on a really big market that could have incredible impact well beyond steve's reign as ceo. emily: google is taking it on to with self driving cars. tony: they are. it's great! it blows my mind every time i go talk and talk with chris. it feels like i am being driven around by a professional driver. regardless of whether it is a taxi, or uber or anything, i love those services. but most people who drive, do not know how to drive. they just don't. even if they do it every day for a living, they do not know how to drive. they are not professional drivers. emily: how do they make these cars safe and well designed and desirable? tony: to me, self charging cars -- self driving cars have already caught up with consumers. because that is what uber is. it is a self driving car, but there is a person driving it. as far as i'm concerned, they hathis choice.
now, the question is how to make it better and more pleasurable. emily: what is next for you? do you see staying at google? forever? tony: yeah. i got married. i did not get married and say i was going to get divorced and take half the money. no, that is not what i did. very simply, i got married and volunteered, in a way, for google glass. i'm not going anywhere. i love what i do. emily: you said that you regret not being able to tell steve about nest or show steve. tony: yeah. emily: what would you say to steve if he were here today? tony: i would just say thank you. i would say thank you. thank you for putting up with me. i believe he needed me a little bit. and i definitely needed him to help with the mentoring. we needed all the team and all the people who came and joined when it was the real dark days of apple and there was not a lot of money and there was tons of debt and nobody buying our things or our products. when you come through that experience together, regardless of what happened, you have to step back and go, ok. emily: tony fadell, thank you for doing this. tony: thank you. emily: it was great to have you.
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