Valley of Genius

by Adam Fisher

  Michael Stern: But Tony just keeps pestering people until they hire him.

  Tony Fadell: I was humbled in the first ten minutes of being there, I was like, Oh my God, this is not like Michigan, these are the smartest people ever, I have got to be working here. Whereas Apple was still making computers, these people were making the next form of a Mac! It was the iPhone, fourteen years too soon. It had a touch screen, it had an LCD, it was not pocketable but it was portable—the size of a book. It had e-mail. It had downloadable apps. It had shopping. It had animations and graphics and games. It had telecommunications—a phone, a built-in modem. I was like, I want to go with them, where they are making this stuff from scratch. I can be part of it.

  Marc Porat: He just walked in the door and impressed Bill and Andy and got his first gig to do stuff. General Magic was Broadway, and Andy and Bill gave this kid from the Midwest somewhere a break.

  Tony Fadell: Ultimately, they gave me the job, and I was the lowest guy on the totem pole. I came in and I was working with my heroes.

  Michael Stern: We had a building right on the Mountain View–Palo Alto border. That building had been empty for ten years, and it had a pack of feral dogs living in the basement. So we were the first tenant. We had the top floor. It was a jungle. I mean they had built like a model railroad that ran up the top of the building.

  Tony Fadell: That was not a train set, that was a remote-controlled car track, but I had a Lego train set in my cube and put that up, and a bunch of other toys in my cube.

  Michael Stern: We had Bowser, the pet rabbit which lived there and would shit everywhere.

  Steve Perlman: Bowser was never trained to use kitty litter, so he would leave little gifts around the office. I typically walk around barefooted, and I would collect these little gifts between my toes. But Bowser was so cute and adorable—we all loved him.

  Michael Stern: People brought their dogs and the parrot flew around and the trains rattled around and everybody lived there kind of 24/7.

  John Giannandrea: Zarko Draganic famously slept under his desk for months at a time. Zarko shared a cube with Andy Rubin.

  Megan Smith: You’d say “Hey Zarko, let’s meet at three o’clock.” And then he would say, “A.M. or P.M.?”

  Michael Stern: The kids, they just worked nonstop. They’d work in bouts.

  Megan Smith: That’s what the kids in Silicon Valley do in their twenties. We work like crazy and have an amazing time. Maybe some other folks are busy partying or doing whatever they’re doing, but the Silicon Valley kids are inventing together and that’s the community.

  John Giannandrea: It was fun times. The place was kind of crazy, too.

  Marc Porat: The culture and the environment was Apple done even more fun. We had meals, we had spontaneous music things going on. We had Bowser running around. We had gunfights—Tony was the chief antagonist or protagonist with water weapons. He would start battles with water guns and pistols, and it was really fun.

  Steve Perlman: So much fun! But too much fun.

  Tony Fadell: Remember Gak, or Slime, the green slime? We would leave it on stuff, and we had all kinds of practical jokes on each other.

  Amy Lindburg: I hid a hot dog in Tony’s computer, and he retaliated by putting a pickle inside my computer and it shorted out a whole bunch of stuff. There was just always some little joke going on. It was just, we spent all of our time there. Every night was late night.

  Tony Fadell: We were known to work really late. Eleven or twelve, even four in the morning. It just depended. So this was about ten or eleven o’clock at night, and we were all getting punchy. We were like, “Let’s get out the Gak and the slingshot!”

  Steve Jarrett: Somebody, late one night, had built a funnelator. It’s like a slingshot, it was surgical tubing that could shoot anything. And so, Tony and a bunch of other guys decided that they would put a bunch of this gel inside of the funnelator…

  Steve Perlman: People were having a meeting in an upper-story conference room and we thought it would be really funny if we went and shot Gak so it splattered on the outside window. We’d watch it drool down.

  Tony Fadell: So who was it? I think Perlman and Andy were holding it on either end, and because earlier in the day we had lined it up, I was like, I am really going to pull this thing back.

  Steve Jarrett: Tony’s really strong.

  Tony Fadell: Everyone is cheering me on: “Go, go, Tony!” So I am pulling it back and pulling it back, and they are like, “Go!” and I am like laying down on this thing, and the thing goes “whoosh” and then “pop!”

  John Giannandrea: The green slime went straight at the window and then the window just shattered—fell out of the building. And we were like, “Ooops.”

  Tony Fadell: I just looked, and my whole life flashed before my eyes. I am like, Oh fuck, I am going to get fired, what am I going to do!? And we have an all-hands meeting the next morning. So I go, and I sneak in the back just as it was starting, and then of course everyone knows what I did, all of a sudden everyone is just like, “There’s Tony!” and they just start clapping, and they are laughing and cheering, and I am like, I broke a six-thousand-dollar window, and everyone is laughing and cheering?

  Marc Porat: I said all was forgiven. Do not even worry about it. There were no rules about having fun.

  There were other sorts of breakthroughs, as well—technological ones.

  Steve Jarrett: So Tony and I were two of the youngest employees and visibly so. At the time, we were probably—I don’t know, I think we were maybe twenty-three and twenty-four. We have a trip to Japan which, because I’m the Japanese business development guy, I helped organize. We go to see all our partners there and we’re going to describe the design of the new hardware—the new chips and the entire layout of the next generation of the hardware that we’re creating.

  Tony Fadell: Japan was it for electronics in the early nineties. Even Apple could not make small stuff back then. And Mitsubishi Electric was a partner of General Magic’s. Our job was to work with them on building new chips for our devices. So we presented the architecture for the next-generation General Magic device—showing it off.

  Steve Jarrett: We go into this meeting and Tony gets up and on the overhead projector, puts down a slide, and he starts to walk through the diagram.

  Tony Fadell: I am going through the block diagram, explaining it, and they were all, “Oh, yes, that is great, wonderful.”

  Steve Jarrett: And so, Tony gets to the part where he’s describing the modem. He says, “Well, then here’s where you can connect the telephone cable.”

  Tony Fadell: And they go, “But Tony-san, where is the modem?”

  Michael Stern: In the block diagram there was no modem chip.

  Tony Fadell: I said, “In software.”

  Steve Jarrett: They all look at each other and one of them says, “Honto desu ka?” which is “Can it be true?” The other guy just kind of shrugs his shoulders. Then they immediately just start yelling at each other in Japanese. One of them jumps up and grabs the telephone that’s in the room and yells down the phone. They ask us to stop and wait.

  Tony Fadell: Just then the boss, Nagasawa-san, comes into the room and sees this activity. And as this happens, the loudspeaker goes, “Beep beep beep,” and we are like, “What is that?” And somebody says, “Oh, there is a typhoon warning. We all need to leave before noon, because we need to get home because the typhoon is coming.” I go, “Really?” and they go, “Yeah, but we are going to keep working.”

  Steve Jarrett: Five minutes later, guys in all these multicolor factory jumpsuits show up and fill the room. And then they say, “Tony, again, please. Please describe your architecture.” So Tony gets to the part and he says, “Well, this is where there’s no modem because we’ve done it entirely in software.” The one guy grabs his head in his hand and just hits his head on the table. I said, “Is everything okay?” The guy who organized the meeting says, “You have just obsoleted Kato-san’s division.”


  Tony Fadell: So while the whole of Mitsubishi Electric is being evacuated, the CEO and that team and us stay there the whole afternoon and we sat in this room, and I think even at some point the power went out and we just kept talking. How do you do this modem in software? How do you do this device? They were blown away by the system-on-a-chip low-voltage all-in-one design and the software modem. The CEO had never seen anything like it.

  Michael Stern: They were selling hundreds of millions of dollars in modem chips. And we made it so you don’t need a chip anymore. So that was the kind of stuff that Magic accomplished. Again, Magic’s DNA was Apple. We were Apple all the way. I mean here is a little start-up with limited working capital, and we are designing our own chips instead of going and buying them? Absolutely insane.

  Amy Lindburg: The OS, the hardware, the soft-modem: All those achievements were amazing at the time. It was like the Apollo Project.

  Steve Jarrett: The user interface was really visionary, too. It was groundbreaking. It was based on the real world.

  Tony Fadell: Each thing was a mock-up of the real world, and you would interact with those things like you would interact with the real world.

  Steve Jarrett: You started at a picture of a desk and you could drag things around on the desk and you tap on things to open them.

  Tony Fadell: It was skeuomorphic—like file cabinets to put your things in, a desk to write on…

  Steve Jarrett: And then you could leave the desk and go into the hallway. And in the hallway there’d be doors.

  Michael Stern: You’d click and behind the doors were various rooms—like the game room, the media room, the library. In the library there would be all your books, all of your electronic books. And we’d written some manuals so there would be something to populate the library. And in the game room we had the first networked games. You could play online with opponents. No one had ever done it before! Again, this was something Tony just kind of whipped out in a day.

  Tony Fadell: And you would go out the door and you could go down the street and go to a shop which would be a virtual shop.

  Michael Stern: This is where the third-party developer community was connected. Because remember it was all about being a platform, not a closed system, so that third-party developers could develop applications. Productivity applications, games, you name it: They had them. We actually had wonderful games in the game room.

  Megan Smith: Pierre Omidyar was running all the developer services stuff.

  Steve Jarrett: Pierre was doing really early, really interesting work of thinking up online services that would work on these mobile devices that we were creating. He created a turn-based chess game that was easily the most popular game on our platform.

  Tony Fadell: It was pretty neat, you know?

  Michael Stern: So we were demonstrating all this stuff. Meanwhile Marc is talking up the vision of the global community enabled by anytime-anywhere communications. So by 1992 we had all the ideas and we were trying to build the thing. That was really hard. And we kept slipping. The schedule kept slipping. And the partners kept getting more and more anxious.

  Andy Hertzfeld: At the same time, we found out that our leading benefactor, our father, decided to kill us.

  Marc Porat: I remember a board meeting where we were laying out all the secrets and all the plans. In that meeting John Sculley was taking copious notes, word for word almost, just huge amounts of what was being said, and Andy turned to me and said, “What’s up?”

  Andy Hertzfeld: The Newton project had run aground. It wasn’t going to work and it was going to cost $10,000 instead of $5,000. You couldn’t get the display and it was too complicated and it was failing. And with the Dynabook vision of the Newton failing, he decided that Newton should instead copy Marc’s vision and make something based on Marc’s prototype. It should fit in your pocket at a low price point.

  Marc Porat: That was really a problem. Why did Apple not just put all their weight behind Magic? Why did they have to hedge their bets? Sculley set up the competition for essentially the same IP and the same market space.

  Andy Hertzfeld: The Newton was supposed to cost $5,000. They remade it to cost $500. It was supposed to be the size of a notebook and it became the size of a postcard. Obviously, it was an existential threat.

  Marc Porat: The design center of the Newton was handwriting recognition. Our design center was personal communication. Personally, I thought there should have been enough blue sky between them so they could coexist, but it was widely viewed by both the teams and by outsiders, for example our licensees and the media, that they were set up to compete with each other. That was the perception. And there was some bitterness about that.

  Andy Hertzfeld: Sculley was on our board! It was a real betrayal.

  The Newton debuted in August 1993, and it flopped. The main problem was the handwriting recognition software: It was not very good. But the fact that Garry Trudeau made the Newton into a recurring punch line in his nationally syndicated comic strip, Doonesbury, didn’t help much, either.

  Mike Doonesbury: “I am writing a test sentence.”

  Apple Newton: Siam fighting atomic sentry.

  Mike Doonesbury: “I am writing a test sentence.”

  Apple Newton: Ian is riding a taste sensation.

  Mike Doonesbury: “I am writing a test sentence!!”

  Apple Newton: I am writing a test sentence!

  Mike Doonesbury: “Catching on?”

  Apple Newton: Egg freckles?

  Apple had rushed to market and paid the price. General Magic, meanwhile, wasn’t going to make the same mistake that Sculley did. Instead, they made the opposite mistake. Pursuing perfection, Magic fell several years behind.

  Marc Porat: AT&T was late; they could not get their network done. Sony was late, they could not get the consumer electronics piece done. We were late, because we were perfectionists. We were late because we pushed ourselves to the limit. We felt a lot of pressure internally because we were late, and we had to synchronize our releases with how ready our partners would be. Everyone was late. Two years late.

  Michael Stern: We missed Christmas of ’94, so we really thought, Okay, next year.

  Amy Lindburg: The first thing that we shipped was the Sony Magic Link.

  Andy Hertzfeld: And as soon as the Magic Link came out I gave one to Steve.

  Marc Porat: Because it was inspired by the same kinds of things that the MacOS was inspired by, it was built by the same people, it was designed by the same graphic artist.

  Michael Stern: And then as soon as we shipped we went on the road show for the public offering.

  Marc Porat: I spent 80 percent of my energy managing the founding partners. We needed to be clear of them, and an IPO would get us enough money where we did not actually have to be so beholden to them. The IPO hinged on getting everything organized, and of course AT&T was the last one in, to deliver what they needed to deliver, and then we were off to the races.

  Steve Jarrett: We’d already sold a significant amount of stock to these large partner companies, and we had a bunch of licensing revenue coming in, so the company looked superstrong on paper. And so when we went public in 1995, it was one of the first internet IPOs in the sense that we had a particular price and then we opened way, way above the S1 price.

  Marc Porat: We were priced at $14, opened at $32, and took in tons of money. So the IPO as an event was very successful. But then the Magic Link sales were not good, and we said to ourselves, “Oh man, this is not going to go well.”

  Andy Hertzfeld: We were hoping to sell a hundred thousand of the first Sony devices, but they only sold like fifteen thousand.

  Steve Jarrett: The hardware was too large. The battery life wasn’t great. They were very expensive. The first Sonys were $1,000. Remember, these weren’t mobile phones. These were devices that, to communicate, you had to plug in a telephone cable.

  Megan Smith: The devices were doing so many new things that nobody knew what we were talking abo
ut. Why would they want something like this?

  Amy Lindburg: We were designing a product for Joe Sixpack—literally they would call the customer Joe Sixpack—and the trouble is that at that time Joe Sixpack didn’t have e-mail! It was too early.

  John Giannandrea: One of the great Silicon Valley failure modes is “right idea—way too early.”

  Amy Lindburg: And then the internet started to emerge.

  Marc Porat: One day, as I recall, someone brought in something called Mosaic, and they said, “This is the future.” I said, “Okay, what is it?” We loaded it up and it crashed immediately. “Well, why is this the future?” “Just watch, just watch.” He put it back up.

  John Giannandrea: We downloaded this thing and people were crowded around the workstation—I think it was a Silicon Graphics Indigo—and we were like, “Look at that!”

  Marc Porat: We were looking at a really early browser, and there was already awareness inside the team that we had to go internet. We knew that release 2.0 would have to be an internet machine. The question was, can we ship the first one and still have enough time, money, energy, and stamina to get to the second one?

  Michael Stern: We have no revenue. Things aren’t working. The partners start bailing. Things are getting pretty ugly.

  Steve Jarrett: We kept taking the first-generation hardware to trade shows and kept getting asked, “Oh, does it have a phone inside of it?” It became really clear that the next product that we should try to build should actually be a cellular phone. And so Andy and the other engineers started to make a smartphone—a handheld cellular phone that was running our software. Again, remember, like this is before digital cellular existed, so SMS didn’t exist and you couldn’t send data over cellular. And so, they built this very early prototype which had wireless web browsing.

  John Giannandrea: So there were two devices. There was the device being built for Sony. And everybody knew that it was a dog. I was working on the second product, which was going to be cheaper, faster, have better battery life…

  Marc Porat: Andy and Bill demoed a Magic machine, which was in a format like an iPhone, and they said, “So this is what we are going to ship next. It is a phone, and you can see all the Magic Link icons on it, and let me show you how it works.” They go through contact the manager, the telephone, sending e-mails… the works. That was iPhone form factor and that was iOS functionality in 1995. We were very excited about it, and they said that this is the next thing that we are going to do. That was for 1997.