00:00there's a lot of people like us who are
00:02tech fans out there and who remember
00:05being Apple Fanboys and fangirls and now
00:08just feeling like the magic is lost and
00:12just wanting to recreate the magic
00:16building on hard mode
00:20majoring a global pandemic
00:24and markets that's harder than hard
00:26and trying to penetrate the phone market
00:28in particular where there's only a few
00:31players who own almost all the market
00:32share that's really freaking hard
00:35I mean just take a look at your phone if
00:38you're living in the US there's an 85
00:40chance that your phone is from Apple or
00:42Samsung well in today's episode we
00:46he's the founder of nothing
00:48company of course I'm not the first
00:49person to make that joke but he's done
00:51so much more than nothing
00:53he previously co-founded OnePlus and
00:56between nothing and OnePlus Carl has
00:59twice managed to do what so many others
01:02enter one of the most demanding markets
01:05in just over two years nothing has sold
01:08over 1 million units and built a team of
01:10over 400 and in today's episode Carl
01:13chats with us about why he's at it again
01:15what it takes to successfully build
01:17hardware and how he thinks about making
01:19technology fun again
01:21and by the way if you hear us talk about
01:24the glyph interface throughout this
01:25conversation a defining feature of the
01:27nothing phone this is what I'm talking
01:30you can see in addition to the
01:32transparent back there are these LED
01:34lights on the back of the phone which
01:36are used to notify you of different
01:37things but also I think are becoming
01:39increasingly programmable so very cool
01:43to see also very different to what we've
01:45seen on other phones
01:47so the question becomes do you think
01:49what nothing is created here is enough
01:53I'd love to hear your thoughts in the
02:00as a reminder the content here is for
02:02informational purposes only should not
02:04be taken as legal business tax or
02:06investment advice or be used to evaluate
02:08any investment or security and is not
02:10directed at any investors or potential
02:12investors in any accz fund for more
02:15details please see a16z.com disclosures
02:29all right Carl welcome to the show
02:33thanks for having me all right so I like
02:36to start out with Statistics I feel like
02:37this really sets the tone for where
02:39we're at in the hardware market and So
02:41within the phone market specifically it
02:44sounds like there's two companies really
02:46with 50 of market share and in the US
02:48it's 85 what is going on there
02:52well it's a very difficult industry to
02:54break into for a startup company so the
02:57big companies just keep accumulating
02:58market share so that that's what's going
03:00on in the last 10 years there's been a
03:02couple of teams who tried to break into
03:04our space well funded and less
03:07well-funded and everybody's failed so
03:09it's not a route that a lot of
03:10entrepreneurs are taking these days
03:12anymore it's definitely not I mean
03:14people say Hardware is hard mode and to
03:16your point it's not just these new
03:18startups it's large incumbents too I
03:20mean if you look at the companies who do
03:23have strong market share in the phone
03:25market you've got Apple Samsung Motorola
03:27Google those were founded in 1976 1938
03:321928 and 1998. you also worked at
03:35OnePlus before this so that's one
03:37company that's entered the market in the
03:39last decade and now you're working on
03:42why are you doing this why are you the
03:45founder who is stepping up and saying
03:47you know what actually there's a lot of
03:48these incumbents but I think I've got
03:50what it takes to reshape this Market
03:53um I think it might sound a little bit
03:54pretentious but I think if I don't do
03:57this and if we don't do this then nobody
03:59will and by this I mean try and take on
04:03the incumbents in our industry
04:05so I know it's going to be hard and
04:09I know there's a chance we're not going
04:10to be successful but looking around at
04:13all the teams in the world if we don't
04:15attempt this then I don't think
04:17anybody else will and we brought
04:20together a lot of people from the
04:22industry with a lot of experience and
04:24all we all feel a little bit guilty that
04:27we contributed to creating such a boring
04:29state of things and we just want to do
04:32something about it it'll be really
04:33stressful and really hard so if
04:36everything is hard why not just do
04:37something big or attempt something big
04:39it's true why not make your mark but I
04:42mean a lot of these companies like even
04:45meta Snapchat they have so much money
04:48and they've struggled with hardware and
04:49then we've also talked about some of the
04:51smaller companies trying to disrupt what
04:53are these companies not seeing like what
04:55is causing them all to fail
04:58if you're a company who's already making
05:00a lot of money on non-hardware stuff
05:03then Hardware kind of becomes like a
05:06side hustle for you and you might not be
05:09that rigorous in how you run it for us
05:11if we're not successful on our products
05:13if every single product does not become
05:17then we're not going to be around
05:19anymore but for some larger companies
05:21you know they can spend years
05:24um burning cash on their Hardware
05:25initiatives and they can afford to do so
05:28so maybe that's that's the reason maybe
05:30we just cannot afford to fail
05:33I mean you've seen tons of startups
05:34succeed for that very reason
05:36so I guess if you're
05:38this and you're the one to do this it's
05:41worth doing how do you even start to
05:43approach that problem like how do you
05:45decide what products to build first how
05:48to approach the problem how you're going
05:50to differentiate I know there's a lot
05:51baked into that but like once you have
05:53that seed you wake up one day and you're
05:55saying I want to tackle this what are
05:58yeah I think a mental model that I use
06:00is like um Iceberg model I think we're
06:04always misunderstood and that's fine
06:06because we're only showing kind of a
06:08little tip of the iceberg to the market
06:10and to external stakeholders
06:12so in the very beginning we know we got
06:14to prove ourselves right because if you
06:16look at the smartphone industry all the
06:18startups to try to make smartphones have
06:20failed and as a result they lost the
06:22factories the odms a lot of money and
06:26so now the odms are like Hey we're not
06:28going to do this anymore we worked with
06:30XYZ they all had great vision they all
06:33had great investors they all
06:35cause us to lose money so why why should
06:38we support you it's the same thing all
06:40over again so I think the bar was a lot
06:43so we had to pick a easier product to
06:46start out with and that's why we picked
06:48the audio product the earbuds it was
06:50still a fast growing category it was a
06:53mass category and we felt we could
06:55differentiate there so using the the
06:58earbuds that we released in 2021 we kind
07:01proved ourselves proved our team
07:03abilities in terms of Designing
07:06something iconic looking manufacturing
07:08that at scale and also selling it at
07:10scale and then to take those credentials
07:13to then convince the next set of
07:15stakeholders be it supply chain or
07:17investors to support us on a smartphone
07:20so in a way the iceberg revealed a
07:23little bit more of itself so if you're
07:24watching us in 2021 okay this is like a
07:27cool kind of hip Audio company
07:30and then last year oh they also made a
07:32smartphone it's like a smartphone
07:33company because smartphone companies
07:34also make earphones make sense but I
07:37think over time we will reveal more and
07:39more as our team gets stronger as our
07:42capabilities get stronger
07:43I think ultimately we cannot be a
07:45smartphone company and we cannot be an
07:47audio company we need to push into the
07:50future oh well I want to hear more about
07:52that future but I like that you
07:54mentioned that you started with the
07:55nothing ear but even that industry is
07:58pretty big there's a lot of competitors
08:00in it and I think people are always
08:02shocked to hear just how big the airpod
08:04industry is or how big of a company that
08:07would be if they were on their own I
08:08think it'd be a top 100 company which is
08:10crazy when you really think about that
08:12and so when you ventured into this how
08:15did you think about differentiating
08:16amongst the already existent products
08:20like you mentioned that you wanted to
08:22create something cool what does that
08:24mean like what is the calculus in
08:26actually producing something that people
08:31I think as a startup company you
08:34you have no resources anywhere your
08:37capabilities are weak everywhere so you
08:39just gotta pick the lowest hanging fruit
08:42or the easiest thing that might give you
08:44an opportunity to break through
08:46so we started off with differentiating
08:48our products in terms of Hardware design
08:50and the way we approached it was
08:54first we looked at the entire industry
08:56and we we saw that there were very few
08:58brands that tried to build a family of
08:59devices that had a coherent design
09:02language I think Apple today is one of
09:04those companies that still do it if you
09:06look at the Apple product design they've
09:09started introducing a much sharper edges
09:11on their products so the iPhone is much
09:13boxier than before but it also Cascades
09:17into their other products that iMac the
09:19iPad Etc so you can see that there's one
09:21coherent design Vision being brought to
09:23life and even if you don't see the Apple
09:25logo you know it's a Apple product it's
09:28very hard to find a second company like
09:29that today but some of these the most
09:32respected tech companies of the past
09:34stay true to this so the Sony of the
09:38past or the bang Olufsen of the past
09:40they all had very distinct design
09:42languages so that's like one of the
09:43first principles we decided that we had
09:45to pursue like when we have more
09:47products on the market in different
09:49categories even when the consumer don't
09:51see our logo they should still know it's
09:53a product made by nothing
09:55and then we started just taking
09:59uh different creative fields from
10:02architecture design to Fashion Design to
10:04movies to to electronics Etc and then we
10:08kind of landed on this concept of having
10:10all our products be transparent in some
10:13way strategically I think these big
10:15Brands they're not going to create a
10:16transparent product anymore Apple used
10:18to a lot of the Apple iMacs of the past
10:22right uh some of the Nintendo Game boys
10:28when you're a niche player you can be
10:31more differentiated in your Hardware
10:32design yeah but when you're a mess you
10:34got to sell to everybody from the
10:37youngest person to the oldest person all
10:39types of different professions so you
10:40cannot take a lot of risk with your
10:41design anymore if you take too much risk
10:43that's going to reduce your market share
10:45but for us as a small company that's
10:48exactly what we need to do so
10:50Apple used to have this positioning on
10:53the design side that they abandoned
10:55because they they grew out of it yeah I
10:57mean every startup has to find their
10:59wedge and to your point Apple itself the
11:01iPhone used to be a more Niche phone
11:03catering to a more Niche audience and
11:05now they have to cater to literally
11:07everyone and so there are many ways that
11:10a company let alone a hardware company
11:13can differentiate but what you've it at
11:16least sounds like chosen to
11:17differentiate with is design yeah I
11:19think in this stage of the company's
11:20development we can only differentiate on
11:23design and the Insight that we drew upon
11:26is very simply that all product
11:28categories start off functional
11:31like even imagine when clothing was just
11:34invented as a concept we just needed to
11:37keep ourselves warm and shelter
11:39ourselves from the the weather
11:40conditions but now we want to express
11:43ourselves our our personality our
11:45individuality through the types of
11:47clothes that we were we knew there were
11:48people out there who just didn't want to
11:50have the same white wireless earbuds as
11:52everybody else and we thought there
11:54would be a market for that but having
11:57said that it's it's a it's not a very
12:00design differentiation so as the company
12:04grows and we start generating more and
12:08that needs to be reinvested into
12:10technology technology is the only real
12:12mode for a tech company
12:15it's true today it's this really
12:17beautiful really cool looking
12:18transparent phone with your glyph
12:20interface if people aren't familiar it's
12:22got all these lights on the back it
12:24looks cool I can see why people would be
12:25like I want to walk around with this
12:27phone your Twitter even says like let's
12:29make Tech fun again I I get this but as
12:32you're talking about the next phase what
12:35do you mean by evolving that technology
12:37like what do you see as the future of
12:40the phone or maybe what you're alluding
12:42to is another device altogether so if we
12:44started off with Hardware design
12:45differentiation I think this year we can
12:48take the leap into software design
12:51when we ask our users why like what's
12:53the number one reason you buy our
12:54products design is number one
12:56so how can we strengthen that design
12:58proposition even further by introducing
13:00it on the other side of the phone on the
13:02screen the software I think that's
13:05um It's A Little Bit Stronger of a mode
13:07but not super strong
13:09I think the step after that is to work
13:11on the user experience
13:12because the mobile user experience has
13:14not really changed for the last I don't
13:16know how many years 20 years even even
13:18with Symbian right even with pre-symbian
13:21devices there were icons for apps and
13:25when you when you click through the
13:26icons you got like a full screen app and
13:28then you went back to your home screen
13:29that existed in the Nokia Navigator of
13:32the 1990s and now like 30 years later
13:34we're still on that same UI ux it's just
13:37everything is smoother prettier faster
13:40there's more apps available but
13:42fundamentally the human
13:45uh and mobile device interaction hasn't
13:47changed so I think after design is ux
13:50how can we make that interaction simpler
13:53how can you accomplish more faster I
13:56think that Innovation is going to be the
13:57next step and then as we said in the
13:59beginning we want to build an ecosystem
14:01of devices that talk to each other and
14:02that work well with each other so how do
14:05we build that interdevice connectivity
14:07like when you're in the Apple ecosystem
14:08all the Apple products work really well
14:11or somewhat well with each other and
14:13then as we scale I think the the
14:15opportunities to invest in deeper and
14:16deeper modes will will emerge we're
14:19looking a lot at AI happening right now
14:21but we're in no rush because I think
14:24people are still trying to find the
14:25product Market fit and I think us having
14:28a hardware component to what we do puts
14:31us in a really good spot because we have
14:32the users we have the distribution and
14:34we can create more meaningful
14:35interactions if we own both the hardware
14:37and the software for how humans interact
14:40with AI in the future so I think we're
14:42not in a rush we're in a lot stronger
14:44position then a lot of startups that are
14:46pure software in this space but we
14:50should just need to be patient and find
14:51the right product Market fit before we
14:53go all in yeah I love that you mentioned
14:55this symbiotic relationship between
14:57hardware and software if you think about
14:59you know using the iPhone as an example
15:01like when the iPhone 4 came out and had
15:03an HD camera that empowered this wave of
15:07photo sharing apps like Instagram and
15:08then once GPS was integrated you see all
15:10these maps apps and so yes the hardware
15:12is not disjointed from the software it
15:15actually empowers what can come with
15:17software and you mentioned AI but I'm
15:19just curious about you know you're
15:21talking about this like future user
15:22experience it's so true Apple if you
15:24think about like the iPhone that I own
15:26today has pretty much the same interface
15:30as the iPod Touch I had when I was like
15:3210. that's crazy right maybe some people
15:36could argue that's like just the best
15:37user interface but like what are you
15:39thinking there is it do do we see a
15:41fundamental shift because now we have
15:42better voice technology you mentioned AI
15:45like what might that look like with the
15:48introduction of the technologies that
15:49have risen in the last you know like
15:52I think the first question to ask is
15:54like in in all of Humanity's future
15:57history is this the final state of human
16:00computer interaction and if no then I
16:04mean surely there's a better way and
16:07and then we just got to keep exploring
16:09what that better way is but
16:11fundamentally I think we we want our
16:13devices to deliver intent like let's say
16:16uh we want to go for a dinner
16:20but yep actually organizing dinner is
16:22quite quite a burdensome thing on a
16:24mobile device there's so many steps to
16:26go through there's some kind of
16:28messaging app we have to use to message
16:31some yelp-like app to find the
16:33restaurant gotta book the restaurant got
16:36to put something in people's calendars
16:38on the day we have to get an Uber or or
16:41what not to to to get there there's so
16:44many different apps like why is it so
16:46complicated and shouldn't there be an
16:48easier way well let's take a step back
16:51so you started building the nothing ear
16:54you've also launched the nothing phone
16:56um and you do seem to have this large
16:58community of people who are listening
17:00who are like what are you building next
17:02and who are buying your products but
17:04taking a step back from even those
17:06individuals how did you get people
17:07interested in the first place first of
17:09all I don't want people watching this or
17:12listening to to this to think that
17:14there's a hack I don't think there's a
17:15real hack it's it's based on a track
17:18record and because of what I did before
17:20I think some people were excited about
17:21uh what we're going to do in the future
17:24and then I think the second step is to
17:27have a really Clear Vision of what
17:30you're going to do and bring people
17:31along the story and I think a lot about
17:35Tesla right Tesla they always com
17:38especially in their early days they
17:41Beyond just the next product cycle they
17:43communicate you know how the world will
17:45be different if Tesla is successful
17:48and I think people consumers these days
17:50they buy into these causes or these
17:52missions versus the individual products
17:55I remember a couple of years ago Tesla
17:58opened up the the patents to some other
18:03rationale that if more people use this
18:07and leverages this to create electric
18:10then we can make our vision happen
18:12faster it doesn't have to be us so I
18:14think that that made a lot of sense to
18:16me so we've always been trying to tell
18:19the problems we see in the world in the
18:22industry and how we could potentially
18:23make things better with our involvement
18:25I think that played a big role but
18:27obviously launching products the
18:29consumers are satisfied with it's kind
18:32of like tables uh steaks table Stakes
18:34yeah yeah if we don't do that then
18:36people are not going to believe in us
18:37for the future totally I mean like you
18:39said it's table Stakes to create a great
18:41product but you've also had
18:44I think a track record of being a good
18:47marketer like you've built up a huge
18:49YouTube channel with nothing but also
18:50you've you've launched things on stockx
18:52you've done things with OnePlus that you
18:54know drummed up a lot of interest as
18:56well like smashing your phone in order
18:58to to get a new phone so like what what
19:00goes into those and also is there any
19:02marketing as you said there's no hacks
19:05but marketing techniques or things that
19:07you've done that you see some sort of
19:09through line with so in terms of
19:11marketing I'm not a pro and we're
19:14currently recruiting for a VP marketing
19:16so but personally I think marketing is
19:20Arbitrage so one example to make it
19:24clear is like when Facebook just
19:25launched their ads product
19:27the first couple of individuals or first
19:29couple of companies who learned how to
19:31really leverage the ads product they
19:33made a lot of money because there were
19:35not not a lot of people who bought the
19:36ad product so the price was low but over
19:39time as ad agencies started learning and
19:41as big companies started deploying their
19:43budgets on digital and on Facebook then
19:45the price got really high so now the ROI
19:48on doing doing TV advertising and doing
19:50Facebook advertising there's no real
19:52difference for me it's always about
19:55uh what's the next Arbitrage opportunity
19:57so that we can have an unfair Advantage
20:00compared to the the bigger companies
20:02because if we don't then as a startup
20:04like what's our reason of being like how
20:07if our marketing cannot be higher Roi
20:09than the big companies we're not going
20:11to be able to compete so on the topic of
20:15um that's just something we've been
20:16experimenting with for the last three
20:19I think now we have four videos uh over
20:22a million views yeah that's huge yeah
20:24maybe this is the new way of Arbitrage
20:28like we can pull aside the curtains and
20:31show people how it is to build a company
20:33like this so one of the videos that we
20:35made is um phone reviews right there's
20:38already people making phone reviews on
20:39YouTube but there's no phone maker
20:42making phone reviews on YouTube so
20:44there's a lot more insight behind the
20:46curtain stuff that we can share that
20:48might be really interesting to to the
20:50viewers yeah you talked about behind the
20:52curtain what do you think given your
20:54experience at both nothing and OnePlus
20:56what do you think people misunderstand
20:58about Hardware like if a new founder is
21:00like you know what I agree Carl Hardware
21:03is not innovating the way it used to be
21:05I want to be part of this change what do
21:08you think they might not know
21:10I think it's very easy to make mistakes
21:13that are very very costly when you're
21:15making Hardware because I've seen it
21:18many times people with the software
21:19background making Hardware they might
21:21underestimate the the length of the
21:24value chain like 10 different teams from
21:26supply chain to manufacturing to
21:29Industrial design to Hardware
21:30engineering to software engineering to
21:32sales to marketing to after sales
21:34everything kind of has to work for the
21:35project to work if if one chain breaks
21:38then the entire thing breaks and on top
21:40of that cash flow is really really
21:42difficult to manage it's very very
21:44difficult to manage especially as a
21:46young company actually that's that's one
21:48of the big learnings for us because at
21:50OnePlus we actually had a big company
21:52so we could leverage their supply chain
21:54we could leverage their working capital
21:56but starting from scratch supply chain
21:59and working capital have been our
22:00biggest headaches because
22:02without a track record going to the
22:04suppliers they're not going to give you
22:06the best payment in terms like if you're
22:08a big company you can pay
22:10let's say uh two months after getting
22:13you can pay the factory but you get paid
22:15within one month so you still have 30
22:17days of kind of buffer time so you don't
22:21use your own working capital to grow
22:23your top line but for a small company
22:26because the suppliers they're not they
22:28don't know if you're going to be around
22:29so you need to prove you want their
22:31money now yeah or even in advance like
22:34sometimes months in advance so if you're
22:38planning to scale something and you have
22:39to pay them the money many months in
22:42advance I think that's like a really
22:44hard thing to manage that's on the
22:46production side and then if your sales
22:47don't come fast enough
22:49your cash flow might break might not
22:51have cash you might need to find other
22:53ways of making payroll and the second
22:55one is supply chain like the supply
22:57chain doesn't make a lot of money either
22:58they're usually squeezed by the brands
23:00to make the minimum amount of money so
23:03if your project is not successful
23:04they're also going to lose money so
23:06convincing them to work with you is
23:08almost like pitching investors like they
23:10need to believe that this is going to
23:12work and they're going to make their
23:14yeah didn't you work with a factory that
23:17ended up shutting down yeah it was the
23:19only Factory that wanted to work with us
23:20it wasn't the best run factory but you
23:23know you got to fight with army you have
23:25so we we work with them launched our
23:28first product very quickly after
23:30we began manufacturing with them we saw
23:32that there were there were big
23:34management issues on their production
23:36line so then we deployed our own
23:38Engineers onto the line so every station
23:42supervised by our people kind of
23:44micromanage them so they couldn't make
23:46mistakes and what kind of mistakes are
23:48you talking about there like a broken
23:51first we start off with industrial
23:52design how the product looks right and
23:54then yeah we'll do the mechanical design
23:56how the parts all fit into the product
23:58and then we would kind of design for
24:00manufacturing so we would design the
24:02production line for each person in each
24:04stage of the process has to do in order
24:07to go from components to finished good
24:12and then we give that scheme to the
24:15factory and they just have to replicate
24:18so for instance if we Define that there
24:21needs to be a certain strength between
24:23the Pogo pin so the metallic connector
24:26and the on the case and the part on the
24:29earbud so that yeah the earbuds can get
24:31the charge we design it with a certain
24:34like strength requirement but then the
24:38couldn't Source the right type of spring
24:40I think so the strength was less than
24:41required so there were some earbuds that
24:44came out of the line that couldn't get
24:46charged because of that error in the
24:48production but similar issues all over
24:51the place and so that wasn't working out
24:54for you this Factory shuts down what
24:57other complications have you run into I
24:59mean you also built this during the
25:01pandemic which introduces its own
25:03complications when we
25:06we're gonna develop our first phone the
25:08phone one it was pandemic but because of
25:12the pandemic there was a semiconductor
25:13shortage all over the world yes and when
25:17suppliers cannot even Supply their big
25:19partners that they already have
25:22they're very reluctant to take on a
25:24small company like why would they do
25:26that I already owe these big guys a lot
25:28of components why would I give you
25:30anything yeah and some of these big
25:33companies they had bought supply for the
25:35for these components for some components
25:37for up to six years so they have a
25:39guaranteed supply for six years as a
25:41small company you don't have anything we
25:43really had to swallow our pride in the
25:45beginning and just like with our Tails
25:48between our legs just go and beg just
25:50beg everywhere from the the execution
25:52level to the to the board chairman level
25:55just try and find introductions to map
25:57out the supplier like who makes
25:59decisions how does the decisions get
26:01made within their organizations and try
26:02and just pitch everybody every every
26:05single angle will be big angle I'm just
26:08a kid with a dream angle you know just
26:13I I spoke to most of our competitors
26:15CEOs as well I know that yeah percentage
26:18chance would be quite small that they
26:19would help us because you know we're
26:20competitors but everything that had like
26:23a one percent chance of working we tried
26:25until we finally got all the components
26:27together it caused some delay to our
26:29product development process but
26:32in the end we made it happen you made it
26:35happen would you say there were any
26:36mistakes I mean we've talked about this
26:38already but you brought this level of
26:40experience into this company so you're
26:41starting at a great Foundation but it
26:43still is a new company new products new
26:46challenges like the pandemic that we
26:48just talked about do you think that
26:49you've yeah you've made any mistakes
26:51along the way like anything that would
26:53help other Founders who were thinking of
26:55venturing into this very difficult space
26:57I think another big mistake we made was
27:01not introducing enough flexibility in
27:04our supply chain so I think the best way
27:06of running supply chain is to delay
27:08every decision to the last moment
27:09because then you have time to get more
27:12data to look at the demand and look at
27:14other Market factors I think sometimes
27:16we ordered components in bulk in chunks
27:19instead of the minimum amounts at the
27:22last possible time I'm just curious to
27:25know this as someone who's like a big
27:27remote work Advocate do you think
27:30Hardware can be built remotely you're
27:31talking about these factories I see your
27:33Instagram too you're flying around
27:34you've taken Zoom calls
27:36um in different places around the world
27:38you also are someone who's lived around
27:40the world right so you grew up in Sweden
27:42you're originally from China you now
27:44live in London do you think this stuff
27:45eventually can be done with a remote
27:47team you know I've heard tons of people
27:49say the iPhone could never have been
27:51built without people being in the same
27:53room at the same time what are your
27:55thoughts there's definitely a place for
27:58remote for some companies but probably
27:59not our company because first of all
28:01being a young company a very young team
28:04to build that initial culture and those
28:06initial relationships I think face to
28:09face is much more efficient maybe for
28:12more mature companies with very uh where
28:15people already kind of have established
28:17relationships and mature processes and
28:19how things work there's a place for
28:23I think secondly our industry is one of
28:25the most difficult Industries in the
28:27world we talked about a couple minutes
28:31who tried in the last 10 years to break
28:33in has failed yeah and there's a higher
28:36chance that we'll succeed if we work
28:37together and then third if I think if
28:40you work in a creative field or a
28:42strategic field being remote is also
28:44going to be more challenging if your
28:46work is more kind of just do the same
28:48thing over and over again then it's
28:50easier to be remote and not coordinate
28:52too much with other people but if it's
28:55strategic if it's creative I find it
28:57much easier to work in an office if you
28:59look at our design team they kind of
29:01print things out on a big big wall and
29:03then they just discuss sometimes they
29:05make physical mock-ups and they discuss
29:08the mock-ups it's very hard to
29:10do this in a remote setting what gets
29:13you jazzed like you started this company
29:15you had this Vision like where would you
29:17love to be at the species for time what
29:21potential of the hardware that you can
29:22build gets you just like truly excited I
29:25think two things one is community and
29:27two is product Innovation on community I
29:30think the world is a very different
29:32place to when Apple started more than 40
29:36everybody's so connected these days so
29:39in the past you might have had to be in
29:42Silicon Valley to get
29:43all the latest information and become an
29:45expert at something related to
29:48but today because of the internet you
29:50can be anywhere in the world and be an
29:52on on whatever topic you're passionate
29:54about you can be on a remote island if
29:56you want to so there's an explosion of
29:59talent and kind of passion
30:02all over the world I think the exciting
30:04thing for Community is you know how do
30:07we erase the difference between employee
30:10and Community member so that every
30:14stakeholder can contribute to building
30:16the company and its products we allowed
30:18our community to also become
30:20shareholders in our company
30:21and our community has an elected board
30:24Observer on our board to keep us honest
30:27and give us feedback from from the users
30:29so even if we become a big company we
30:32still don't forget what our intentions
30:35are and then we've seen a lot of cool
30:37creation Now from our community
30:39we see a lot of interesting uh ideas for
30:42future product designs made by our
30:44community and some of the renders are
30:45really good so that's really cool we
30:48have a very unique font like it's like a
30:52it didn't support some languages like
30:54Cyrillic or Arabic our users have made
30:57those adaptations themselves and it's
30:58very professionally made and we're
31:00thinking about whether we can integrate
31:02those into our products we have users
31:04who've made PC and Mac versions of the
31:06control app to control our earbuds as
31:09it's it's not made by us so this is just
31:12the beginning but how can we over time
31:17become the collective that builds this
31:19company and builds these awesome
31:20products together and it's a big
31:22contrast if you're a collector versus
31:25the the Behemoth uh Apple which is more
31:29like the eye company it's like command
31:31and control top down every Tower style
31:33iPad iPhone iMac I everything and this
31:37is the collector versus the eye so I
31:39think that's kind of community I would
31:41love to spend more time to figure out
31:42how to make that part happen
31:45and then second on product Innovation
31:48I think Apple they they kind of
31:51stabilize their business using the
31:52personal computer that wasn't their
31:54breakthrough moment I think their
31:55breakthrough moment was with the iPod
31:57that's when they really built a Mass
32:01I think you know we're at the tail end
32:03of the smartphone Innovation curve
32:05um actually the total size of the
32:07smartphone market is actually decreasing
32:09which is okay for us we're very small so
32:12we still have a lot of upside in the
32:14market I think this is the market where
32:15we kind of have the opportunity to build
32:19but it's not our breakthrough category
32:22we need to invent a breakthrough
32:25category over time it doesn't have to be
32:27this year next year with the following a
32:28couple of years but in the next 10 years
32:30we have to create a breakthrough
32:32category and I would love to spend more
32:33time there as well yeah let's return to
32:36community but I have to ask you about
32:37this this breakthrough category category
32:38the phone really has been the hardware
32:40device of the last decade you could say
32:42even longer than that and if you think
32:45about the last few years and I might be
32:47missing certain pieces of Hardware but
32:50like what has what has come to be in
32:52that time period I guess drones have
32:54been something that that have become
32:56popular but that's not as much of a
33:00um although consumers are adopting it
33:01but it's hard for me to think of what
33:04this new hardware device might be I mean
33:06some people might say it might be ar VR
33:09that's been pending for a while I know
33:12the Oculus has sold a record number of
33:14headsets in the last few years but where
33:17do you think this is going there's been
33:18a lot of uh this is the next thing like
33:21drones as you said AR VR
33:26and those Technologies might make I'll
33:30make like really big impact in the
33:34um but I think the the thing that has
33:37the highest potential of changing our
33:40habits because arvr hasn't changed the
33:43way we live our lives but the smartphone
33:45has right correct so I think the next
33:47product that has the opportunity to
33:49change our habits I don't know exactly
33:51what the product is but it I think it's
33:54most likely in the intersection of
33:56Hardware software and AI
33:59um I think just software AI is not
34:02enough it's very it's it's niche if it's
34:05if it's in a browser I think the form
34:07factor has to be related to the utility
34:09yeah I think about the phone like most
34:11people as you said interface with the
34:12screen but there's also so many other
34:14modalities to a phone there's the
34:15ability to connect to Wi-Fi but there's
34:17also sound right like yeah airpods is an
34:20example like I can't wait till there's a
34:22better set of applications that actually
34:24integrates with the airpods so maybe
34:26that's also on the roadmap for
34:28um nothing let's quickly return back to
34:31the community because I think that ties
34:32into what you're saying which is you're
34:34doing a lot of this with a with a small
34:36team but you have this community behind
34:38you people who are building apps for
34:40your products and so what do you think's
34:42driving that like what about the nothing
34:44journey is resonating with people
34:47I think just wanting to to make the
34:50industry more fun because
34:53I think there's a lot of people like us
34:55who are tech fans out there and who
34:58remember being Apple Fanboys and
35:01and now just feeling like the magic is
35:05just wanting to recreate the magic
35:07certainly when we talk to investors when
35:09we talk to sales Partners when we talk
35:10to Consumers community members there's a
35:13lot like this message really resonates
35:15it's really what we want to do and I
35:18think when you're doing something as
35:20exciting like the as this then
35:24it's hard to not find people who want to
35:27be a part of the journey
35:29yeah what experiences from your past
35:31remind you of tech being fun like you
35:34mentioned your first interactions with
35:35Apple products but like what else from
35:38your childhood makes you think oh wow
35:41that was like that was fun when I
35:43interacted with that device
35:45so a lot of Apple products a lot of uh
35:48dumb phones of the past as well there
35:51were really active online communities
35:53that were kind of modding the phones
35:54modding the software making themes skins
35:57I used to be a part of those
36:00I think the early consumer internet boom
36:03was also really fun so all of a sudden
36:05there was this concept called Web 2.0
36:07and you can contribute content to the
36:09internet through blogging through
36:11YouTube through Facebook you could poke
36:14people on Facebook you could tag people
36:18um there's so much positivity and
36:24society as a whole just just really
36:27thought that that technology would help
36:29make the future better there was a lot
36:31of optimism around technology back then
36:35the opposite is true like
36:37governments consumers
36:41um they see tech companies as the old
36:43oil companies there's Anti-Trust issues
36:46user privacy issues people don't trust
36:48tech companies anymore and you know I
36:51think that's really sad
36:52I think it's sad too I think um at a16z
36:55we're definitely Tech optimists what do
36:58you see today that makes you still an
36:59optimist about technology given that
37:01we're not in the the era of Facebook
37:03pokes and you know some of the things
37:05from the past Game Boy colors like what
37:07what gets you excited about tech today
37:09I think AI is really exciting
37:12um I I don't have enough time to think
37:13about it yet but I've played around with
37:15it it's really fun the potential of it
37:18and I think what we're doing is really
37:19fun but I think we just got to get
37:21stronger as a company before we can do
37:23all the really fun things we just got to
37:26survival things first yeah I think Ai
37:30and and nothing well Carl this has been
37:32amazing anything else you want to add
37:34for yeah just people who are who are
37:36thinking of Hardware there's extremely
37:38difficult industry to break into
37:41yeah I think it could be really helpful
37:43work at a hardware company if you if you
37:46want to make Hardware to learn all the
37:48ins and outs I also think it's really
37:51when you see somebody out in the wild
37:53wearing your product or using your
37:55product you know that kind of
37:57satisfaction I think is hard to get if
37:59you're just building an app or or
38:00software and especially if they don't
38:03recognize you as the maker that's when
38:05you know you've you started to break
38:06through and reach new consumers is that
38:09what drives you is that
38:10that lights you up when you see
38:14knowing that you produce
38:16things I before this podcast I had a AMA
38:19with our community as well on Discord I
38:21think that's also really exciting to see
38:23that there's so much passion and support
38:28yeah I was actually months ago walking
38:31down the street and I saw a bunch of
38:33Teslas and I had the same thought the
38:35same way that like a music artist when
38:37they're driving a car and they hear
38:38their song on the radio and it's like
38:40it's like for the first time that is so
38:43incredible I was thinking about Elon or
38:45really anyone who's innovated when they
38:47see their product in this case on the
38:49street that must just be like the
38:51absolute coolest thing yeah it's a great
38:55all right well Carl thank you so much
38:57for doing this thank you for what you're
38:58building thank you for taking on a
39:01challenge that many people are a not
39:04willing to take on or B have failed to
39:06take on as you said this is a long road
39:08ahead but thank you for for building
39:10thank you for having me
39:13thanks for listening to the a16z podcast
39:15if you like this episode don't forget to
39:18subscribe here on YouTube to get our
39:19exclusive video content we'll see you
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