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

Episode Date: February 7, 2023

Tony Fadell is an amazing and successful engineer, entrepreneur, and investor. He is the father of the iPod, co-creator of the iPhone, founder and former CEO of Nest Thermostat, and the founder of Future Shape, a global investment and advisory company.In 2014, Tony Fadell was one of the Time Magazine’s 100 most influential people in the world. He is also a NY Times bestselling author with his book Build: An Unorthodox Guide to Making Things Work.It’s a true pleasure to have Tony on our show and hear how he searched and found his excellence!(00:24) Leaving the Silicon valley and inventing Nest ThermostatA trip around the world with his familyDesigning a new home on Lake TahoeRealized there were no good thermostats to remotely controlNest Thermostat was born in ParisThere is no need for Silicon Valley anymore, the game has changed(05:35) Money as a motivation to start a companyIt was never about making money, it was about solving a problemFocus on the inventions that fix real problemsYour success drastically changed the lives of your employees(10:14) Steve Jobs and when is the time to quitBook mention: Tony Fadell, Build: An Unorthodox Guide to Making Things WorkWorking for Steve – one of the most important things in his lifeRumors about Steve Jobs are just rumorsSteve cared about customers and products, he demanded excellence, and he wasn’t going after people for no reasonWhen is the time to quit? (When you don’t grow anymore, when you work for someone you don’t respect, and when you work in a team with serious flaws)If you’re working for an jerk, do you quit?(18:32) The importance of Extreme PreparationWhat is Extreme Preparation for Tony?VC pitch meetingsTED talks(21:10) The importance of mentors in search of excellenceEveryone needs a mentor (even Steve Jobs)The best mentors know human natureCoaches are something different(24:25) Fill in the blank to ExcellenceWhen I started my career I wish I had known – more about understanding the customerThe biggest lesson I learned in my life – when to say no and say it more oftenNo. 1 professional goal – to help people and mentor themThe greatest innovation in the next 50 years – Artificial IntelligenceResources Mentioned:Build: An Unorthodox Guide to Making Things Worth Making, Tony FadellNest ThermostatAppleSponsors:Sandee | Bliss: BeachesWant to Connect? Reach out to us online!Website | Instagram | LinkedIn

You're listening to part two of my amazing conversation with the incredible Tony Fadell, the inventor of both the iPhone and Nest thermostat. 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. 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. 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 were 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? Okay, lots there. Let's see. Well, first, with Nest, that was born out of the idea, the 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 suffer cold nights because 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, hack things together for about 10 years and I kept running into the same problem the same

problem same problem and so while I was on my trip around the world that you mentioned I was also designing a new home in Lake Tahoe and during that time I was looking for the latest and greatest of all of these different appliances and and controls for the home i already had the the iphone um and i was and i was and i always knew that it was not good the last five years before that because i couldn't find anything but i was like iphone's 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 I was 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 were 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 U.S. 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 business plan for what would and the designing what would become first the nest learning thermostat and then the nest uh the company right and the vision for the company so those things were going on um and the reason why it 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 what 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. And I was like, oh, I could solve this. I was like, okay. Then I was inspired. And I was also away from the noise of Silicon Valley. So I had focused time to go and work on these problems. And so the thing is, you don't need Silicon Valley anymore. What was so important about Silicon Valley when I got there 30 years ago or so or more was that 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, we have access, everyone has access to a computer in their hand. And the funders or 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 all those pieces of the puzzle like you used to do 20 years or even just 10 years ago. 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. Let's talk about money for a moment. Four years after starting Nest, when you were 44 years old, you sold the company to Google for $3.2 billion. Before Nest, you had made a decent sum of money, but there's a term I've heard over the years. It's called fuck you money. And when you sold Nest, this was clearly fuck you money. 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, a prestigious job at 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 in our motivation to start a company or work for a company? Well, for me, it was never about making money. It was about solving a problem. 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 and solving those problems. 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'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 some point when you're looking at building a business. But it all started with the curiosity of what could be created. If you actually the um the market of thermostats in the world before nest it was maybe six five hundred six hundred million dollar market and that was worldwide because thermostats were 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 a thousand 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 could do that for you, right? 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. And the market grew from that. We weren't focused on the money. And then over time, you know, the company was worth what the company was worth. And we were going after that. But again, even when we sold it, I told the entire team, 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 billion in our vision. And they're investing in that in us to to to see our vision through to the end so don't think of this as a cash out think of this as an investment in in enabling the mission and the vision that we have and where we're going to go with that with that kind of investment how good did 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 $150,000, $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 forever. How good does that feel as a founder and a leader of a team? Well, you know, 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 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 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 and the scrappiness. Just because you may have more money doesn't mean you should change your values or the way you look at life. You got here for a reason.

Stay within side of 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 resources to help you and your family, but don't go crazy with it. Let's go back and talk about Steve Jobs for a minute and also talk about a chapter of your awesome book, Build. Steve will forever be known as one of the greatest entrepreneurs in mindset history who changed the lives of billions of people forever for the better. But there's a downside to Steve, just as there are to many successful people.

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, and you 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 are job hoppers. They find a job across the street that pays them $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 working in tough conditions help make you a better employee and leader and isn't work work 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. Of course, we all have our tendencies that we have, and it happens over time. Over 10 years, I didn't see him 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 the customer. He cared about the products that were being were being made and, and, and who they were made for and wanted to demanded excellence. He did not sit there and, you know, and, 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 or not being transparent about things. So you had to bring your A game every time. Now, that said, 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's not working out, you need to move them aside, but you can't have those kinds of dynamics. Okay. Moving us, 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's 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, 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 gonna, everything's gonna be aligned. You're gonna work with the best person in the best company with the best products and everything that doesn't happen. There's a, you know, there's a, um, a natural curve there that, 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 think are good with your time, that are valuable. That's what's most important. Sometimes the companies 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 it 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 your manager's manager, by HR. You try to make those points known. If no one is moving and changing things or giving you good feedback as to why those things are happening and they're kind of ever present and it's not getting better, well, then that's the case where you quit. You get up and you quit.

But you don't just get up and quit just because something's not right that day. Or you're always searching for another job to do something else that's just going to pay more. That is not the right way to quit. The right way to quit is once you're in a place with a team doing something that you really love, 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 are 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 would before be, I was there 10 months and look at all the things I've done.

I was there 18 months. Look at all the things. It's 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. This episode of In Search of Excellence is brought to you by Sandy.com.

S-A-N-D-E-E.com. We are a Yelp for beaches and have created the world's most comprehensive beach resource by cataloging more than 100 categories of information for every beach in the world. More than 100,000 beaches in 212 countries. Sandy.com provides beach goers around the world with detailed, comprehensive, and easy-to-use information to help them plan their perfect beach getaway at home and abroad, and to make sure you're never disappointed by a beach visit again. Plan the perfect beach trip today by visiting sandy.com.

That's www.sandee.com. The link is in our show notes. Stay sandy, my friends. Are you looking for your next great gift to surprise a friend, colleague, or loved one? Bliss Beaches makes the perfect gift. This best-selling bright and beautiful coffee table book by Randall Kaplan features stunning drone photography from exotic beach locations around the world. It's the perfect housewarming gift, a great addition to any home or office, and a fun and creative alternative to bringing a bottle

of wine to somebody's house for dinner. Bliss Beaches is available for purchase on Amazon, where it has glowing reviews and a five-star rating. Get your next amazing gift and order a copy of Bliss Beaches by clicking the link in our show notes. If you're working for an asshole, do you quit? The question is, what is motivating that person? Are they motivated by their mission and their sense of the customer and what needs to be done? Or are they motivated by their ego? So if they are motivated by their ego, absolutely, you should not be working for someone like that because they are 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 that's important and it's important to you as well, as long as that person is not 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 doing something better. Okay. That is just a coach. Even the biggest, best people I've seen on the planet, you know, Steve had a coach always sitting there pushing him, making sure he was doing the right things. You need a coach as well. And a lot of times, hopefully that'll also be your boss who's going to push you into things that are uncomfortable. Your knee-jerk reaction is, oh, that asshole. But are they doing it for the right reasons? Now, if the person is mission driven and all the other stuff, but they're still criticizing you and saying you're not worthy and that stuff, then they're still an ego-driven asshole, even if they're on the right issue, on the right mission, and you should leave.

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 spend five, 10, 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 can you give us two specific examples where you've spent 40 or 100 hours preparing for a single meeting? So, you know, you have your definition of extreme preparation. I think of it as not preparation for a meeting. I think of 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 of managers, directors, whatever, they just get a report from whomever it is who's working for them and then they just parrot that report out. They don't really understand the details. So to me, it's understanding the details, being in the weeds, asking the questions, 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 will 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 details and where we would do rehearsals and stuff is in vc pitch meetings so when we go to venture capitalism we want to pitch and make sure we have our story right and make sure everybody's aligned on what we're saying and how we're saying it and trying

to find holes and having other investors in the meetings to try to help us shoot holes in our story to to make sure we're answering it either on the slides or 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. 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 to deliver the results you need to deliver. Let's talk about the importance of mentors, which have been hugely influential in your

life, as in mine, and also talk about FutureShape, your investment advisory firm, which has invested in over 200 startups around the world and which you describe as mentors with money. 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 Grin. Bill Campbell. Bill Campbell and Larry Page. Bill knew nothing about technology, but knew everything about human nature. And then there were your parents and your grandfather. In search of excellence, how important is it to have mentors? And do we need to find mentors who are real people? Or can you get mentors from reading books like Build? Okay. So the first thing is everyone needs a mentor. Look, you have mentors. You might not

think it, but you have mentors. You could not think it, but you have mentors. You know, you could 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 usually are 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, 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. They're the ones who don't have to have the technical knowledge or the experience that you have and the things that you do. What it really is about human nature. The best mentors are about human nature and have experience 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 me, coaches, that's a different thing.

That's about a specific point in time in life that's about a specific subject. 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 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 burying yourself with 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 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. Before we finish today, I want to go ahead and ask some more it's a two-way street. It's not just a one-way street. 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 Excellence. Are you ready to play? No, well, let's try. When I started my career, I wish I had known. 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 hard way 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 i'm solving a problem at a at a much wider scope of uh for a wider scope of people um that's a large enough scope as well the biggest lesson i've learned in my life? When to say no and to say no more than yes. My number one professional goal is? Now it's to help enable people doing hard things, to be a mentor, to help people building hard things, 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. My biggest regret in life

is? 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 Nest and he wanted to get together, but I waited a couple weeks too many. The one thing I've dreamed of doing for a long time but haven't done is? I want to go on a safari. The greatest invention of all time is?

Greatest invention of all time is? Greatest invention of all time? I think that's electricity. In the year 2050, we're going to be A, driving across the country through tunnels built by the Boring Company. B, flying to work across town in our own mini helicopters, air taxis. C, 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. Oh, it's D. I don't believe in a lot of things. A, B, or C. I think it's D. The greatest innovation in the next 50 years will be?

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 over for us, but literally helping us grow. If you could go back in time, what's the one piece of advice you would give to your 21-year-old self? Read, build. I wrote the book exactly for me if I was 21 to 22, 23. Will Blake Corum win the Heisman Trophy next year? We can only hope.

We can only hope. Go blue. Go blue. The one question you wish I'd asked you today but didn't is? What does it really take to become who I am? And 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 or 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. 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 and 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.

Randall, thanks so much. I hope you keep finding excellence wherever you go.