Author
Tony Fadell
Year
2022
Review
Tony Fadell (the author) played a big part in building the iPhone, iPod and the Nest Thermostat - some of the most iconic products of all time. Build is both an autobiography and a playbook - for how to build great products.
The inside story on Google’s acquisition of Nest was particularly interesting to me - Tony’s observations align with my personal experience as a Googler. The chapter on Assholes was refreshing, you need to know how to deal with these people! I also found myself agreeing with Tony’s product messaging framework.
This is an important read for anyone interested in building great products.
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Key Takeaways
The 20% that gave me 80% of the value.
- There are too many mediocre companies and products out there. Strive for excellence - push those around you to do the same.
- Dedicate yourself to a problem you’re passionate about. Find your community. If nobody is working on it - you maybe too early.
- There are two types of decisions:
- Data-Driven: Acquire, study, and debate facts and numbers that will allow you to be fairly confident in your choice. Easy to make, easy to defend and easy to get agreement.
- Opinion-driven: Following your gut and your vision - without the benefit of sufficient data to guide you or back you up. Hard to make and always questioned.
- You can’t turn an opinion-driven decision into a data-driven one
- Know the different types of assholes (political, controlling, aggressive, passive-aggressive, mission-driven). Pushing for greatness, challenging assumptions and not tolerating mediocrity doesn’t automatically make you an asshole.
- Quit if you’re no longer passionate about the mission, or you’ve tried everything and spoken to everyone and it’s still not working.
- Design and prototype the entire user journey. Don’t just make a thing - make a better user journey. Every customer touchpoint is an expression of your brand and product.
- Test prototypes with real customers as soon as possible.
- If hardware doesn’t absolutely need to exist to enable the overall experience, then it should not exist.
- Product story telling is really important - for both the customers and your team. Once you understand why your product is needed - you can focus on how it works
- Version 1 of your product should be disruptive. Opinion driven vision > Customer Insights > Data. Aiming for product-market fit, not profitability.
- Version 2 is typically an evolution. Decisions can be baes on data and customer insights once you are evolving your product - look for opportunities to disrupt yourself which aiming for profitability
- The disruption tradeoff: Not so disruptive that you won’t be able to execute - Not so easy to execute that nobody will care.
- Handcuff yourself and your team to a deadline - constraints make you more creative. Then codify your delivery process into a heartbeat - that sets the pace for product development.
- Good ideas solve for a customer need, that’s important and frequent. Good ideas will follow you around - they persist in your mind.
- On Org Design: Break your org into product specific groups so each product gets the attention it deserves. New products need new teams, otherwise they’ll never get made. Decisions speed up and everyone has a shared goal rather than conflicting priorities.
- Design thinking means thinking through a problem and finding an elegant solution. Don’t outsource a problem unless you’ve tried to solve it yourself. Try to notice things, and avoid habituation, getting used to the inconveniences
- Product messaging is key. What you should say? - Where you say it? You can’t say everything everywhere, so you need to get it right.
- Understand your customers pains → map them to a pain-killer in your product
- Test the messaging to check it resonates
- Map your customer touch-points - and work out where each piece of messaging is displayed.
- The product managers responsibility is to build the right products for the right customers
- The things a CEO pays attention to become the priorities for the company.
- Do something meaningful - make something worth making
You make the product. You fix the product. You build the business. Every product. Every company. Every time. Tony Fadell
Deep Summary
Longer form notes, typically condensed, reworded and de-duplicated.
Fully expanded this summary is 9600 words. Condensing 360 pages to about 20.
There are too many mediocre companies and products out there. Strive for excellence - push those around you to do the same.
Building Yourself
- As a kid you make just 25% of your decisions. Largely you mimic your parents. In adulthood you have choice. This is your time - take risks.
- Life is unstructured, no curriculum tests or grades. You’ll need to learn from failure, so change your relationship with it.
- Follow your curiosity to find a job you love. What do you want to learn about? Surrounded yourself with people who you can learn from. Learn through productive struggle.
- Start at the bottom, work hard, prove yourself and move up. Get in early, stay late. It’s your education.
- Prioritise ‘Mission, People and Opportunity’ over ‘Money, Status and Title’
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- Creating a wholly new product or service - or combines existing tech in a novel way
- The product or service solves a real problem
- The novel technology can deliver on the company vision
- Leadership not dogmatic about what the solution looks like. They know customer needs.
- Think about a customer need in a new way, it makes perfect sense when you first hear it
- Companies should start with a customer problem - not a technology
- ‘Google Glass’ was a technology looking for a problem
- Uber was a customer problem → solved by a new combination of existing technologies
- You can dedicate decades to a problem you’re passionate about. Find your community.
- If nobody is working on it - you might be too early or going in the wrong direction.
- If you find a small community keep going, get in early, build relationships and find mentors.
- Put in the work to learn your field - aim to become the most knowledgable. Leverage your knowledge to meet leaders - that will create opportunity.
- Make a connection at your target company. Keep sharing interesting stuff and they’ll notice you. Be persistence and helpful. Offer something don’t ask for something.
- Get into a small company, building something meaningful, with some rockstars on the team. Help the rockstars, earn trust, win respect and nurture the relationships.
- Don’t just to do you job (looking down). Spend 20%:
- Looking up, to the mission and milestones ahead. Make sure you’re staying true to the mission and you’re on a path that makes sense.
- Looking around: beyond your team, meet other functions, understand their needs, perspectives, and concerns. You’ll be able to judge the health of the company better this way.
- For best results always engage other disciplines early; don’t wait until you’ve built something
Building Your Career
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- You can be successful as an individual contributor - consider if management is right for you
- Once you become a manager, you stop doing what made you successful. Your job changes...
- Becoming a manager is a discipline - a learned skill, not a talent. You need to learn and educate yourself and seek help from mentors and other experienced managers.
- Being exacting and expecting great work is not micromanagement. Your job is to make sure the team produces high-quality work
- You can be successful with any management style - but you must be honest. Never shy away from respectfully telling the uncomfortable truth.
- Don’t worry that your team will outshine you. In fact, it’s your goal.
Your job will now be communication, communication, communication, recruiting, hiring and firing, setting budgets, reviews, one-on-one meetings (1:1s), meetings with your team and other teams and leadership, representing your team in those meetings, setting goals and keeping people on track, conflict resolution, helping to find creative solutions to intractable problems, blocking and tackling political BS, mentoring your team, and asking “how can I help you?” all the time.
- Learn to let go. Get over the fear that the product will suffer. Trust your team - give them room and opportunity. Don’t overdo it - make sure you still know what’s going on. Examining the product in great detail and caring deeply about quality is not micromanagement. That’s exactly what you should be doing.
- Steve Jobs used jeweller’s loupe to check individual pixels were properly drawn. He inspected every piece of hardware, every word on the packaging - he showed the level of detail expected at Apple
- Agree how to work up front. Your product development, design, marketing and sales process. Set a schedule, define how you’ll work together. Get everyone to sign off on it, then let go and let the team work.
- Track progress with regular team meetings. Goal is to give everyone clarity. Keep a list of your priorities, questions and risks for each project and person. When the list gets too long you need to either dive deeper or back off
- Know your management style. Find out what connects with your team, find out how to share your passion and motivate them. Tell them why you’re passionate? How this small detail relates to the mission.
- Help people succeed and become the best version of themselves. It’s your responsibility to help them work through failure and find success. Celebrate when they do.
On Decision Making
- There are two types of decisions:
- Data-Driven: Acquire, study, and debate facts and numbers that will allow you to be fairly confident in your choice. Easy to make, easy to defend and easy to get agreement.
- Opinion-driven: Following your gut and your vision - without the benefit of sufficient data to guide you or back you up. Hard to make and always questioned.
- You can’t turn an opinion-driven decision into a data-driven one. Data can’t solve an opinion-based problem. No matter how much data you get, it will always be inconclusive. This leads to analysis paralysis—death by overthinking.
- If you don’t have access to data - use insights and consult...
- Insights are key learnings about your customer, market or product space. They can provide something substantial that gives you an intuitive feeling for what you should do.
- Consult experts and confer with your team. You won’t reach consensus, but hopefully you’ll be able to form a gut instinct.
- Customer panels aren’t helpful. People can’t articulate what they want clearly. They’re adverse to new stuff.
- You can’t A/B test your way to achieving your mission. Experimentation is not a replacement for a product vision. Think through what you test. Testing is a tool that’s best used on the smaller stuff (e.g where to put the buy button) - not ‘the core’ of your proposition.
- This is not a democracy:
- Sometimes you’ll need to make the in/out decision. Not everyone will agree with you.
- Explain if it’s an opinion-driven decision → you’re not going to reach the right choice by consensus. Tell the team your thought process. Walk through all the data you looked at, all the insights you gathered, and why you ultimately made this choice. Take people’s input. Listen, don’t react. Listen for feedback that could lead to a better plan. Then give the speech:
- ‘I understand your position. Here are the points that make sense for our customers, here are the ones that don’t. We have to keep moving and, in this instance, I have to follow my gut. Let’s go.’
- Why did your boss call in consultants?? — Are you causing delay? Do they fear for their job? Do they know what they want - but don’t want to hurt anyone’s feelings?
On Assholes
- Political Assholes: Masters of corporate politics. Do-nothing-take-credit types. They are risk averse - focused only on survival and pushing others down so they can reach the top. They don’t build. They hide from tough decisions but are quick to say ‘I told you so’. They may try to swoop in and save the day like superman.
- Controlling Assholes: Micromanagers that strangle creativity and suck joy out of work. Can’t be reasoned with - all good ideas have to be theirs. They are threatened by talent and never give credit. They dominate big meetings - get defensive and angry if their ideas are questioned.
- Asshole Assholes: They suck at work and everything else. They are mean, jealous and insecure. Can’t deliver - they aren’t productive - they try to deflect attention away from themselves. They will lie, gossip and manipulate others to get people off their scent. At least they don’t last long. They can be either...
- Aggressive: They freak out. They yell. They accuse you of all kinds of nonsense. They sneer at you in a meeting and demean you in front of your manager. These assholes are easy to spot.
- Passive-aggressive: They smile. They nod. They agree with you, act friendly. Then they go behind your back, spread vicious gossip, and try to screw you at every step.
- Mission-driven Assholes: Sometimes a little crazy - always crazy passionate. They have no filter - and often don’t care “how things are done around here.” They are neither easygoing nor easy to work with BUT unlike true assholes, they care. They listen. They work incredibly hard and push their team to be better. They are unrelenting when right, but open to changing their minds. They praise genuinely great work. Typically stories follow them around (crazy things they’ve done) but everyone agree’s they’re not that bad, really. The team ultimately trusts them, respects what they do, and looks back fondly on times they were pushed to do the best work of their lives. A mission-driven “asshole” might tear apart your work, but they won’t attack you personally.
- Pushing for greatness, challenging assumptions and not tolerating mediocrity doesn’t automatically make you an asshole.
- Before deciding if somebody is an asshole - understand their motivation. There’s a big difference between being ‘emphatic and passionate to benefit the customer’ and ‘bullying someone to appease your own ego.’
- If you’re the passionate type - describe your position so people see what you see. Be open to questions.
- If you’re facing a passionate type - stand up for what you believe in, they’ll respect that. Mission-driven “assholes” want to be better and achieve that mission. If it’s in the best interest of the customer, they’ll hear you and change their mind. Eventually.
- How to deal with a controlling asshole → Kill them with kindness. Ignore them. Try to get around them. Quit. In that order.
On Quitting
- If you’re no longer passionate about the mission. You’re staying for the paycheck or status. Time is goes slowly at your desk. QUIT.
- If you’ve tried everything. You’re passionate about the mission, but the company is letting you down. You’ve spoken to everyone - understood the roadblocks - pitched the solutions. You’re project is going nowhere - the company is falling apart. QUIT and find another way to work on the mission.
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- Start talking to everyone if the mission fades. Suggest fixes. Speak to leadership. Let them know the issues. If you’re quitting, you have nothing to lose.
- Finish what you started (as much as possible). Leave at the next natural breakpoint.
- Create a credible and factual story. The rationale for why you left - and why you want to join the next gig. They should be different narratives.
Build Your Product
Design and Prototype the Entire User Journey
- Whether atoms or electrons — the product is just a small part of a customer journey, that starts long before your product, and ends long after. The customer doesn’t differentiate between advertising, app or support — it’s all your company/brand. Don’t just make a thing - make a better user journey.
- You should map, visualise and prototype the whole experience - the entire customer journey. How a customer discovers, considers, installs, uses, fixes, and even returns your product. It all matters.
Draw pictures. Make models. Pin mood boards. Sketch out the bones of the process in rough wireframes. Write imaginary press releases. Create detailed mock-ups that show how a customer would travel from an ad to the website to the app and what information they would see at each touchpoint. Write up the reactions you’d want to get from early adopters, the headlines you’d want to see from reviewers, the feelings you want to evoke in everyone. Make it visible. Physical. Get it out of your head and onto something you can touch. Don’t wait until your product is done - map out the whole journey as you map out what your product will do.
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Tony was frustrated by the Nest teams lack of focus on the mobile app. They were spending too much time on the hardware - despite the app being a bigger part of the user experience. So he made clear the importance of each touchpoint
Nest Customer Journey Touchpoints
Touching and looking at the thermostat | 10% |
Pre-sales website | 10% |
Installation | 10% |
App + energy saved emails | 70% |
Customer Journey & Touchpoints
Awareness | PR, search, social media, paid ads |
Education | Website, email, blog, trial, demo |
Acquisition | Partners, payment model, up-sell, cross-sell, delivery |
Product | Design, UX, performance |
Onboarding | Quick guide, account creation, how-to videos, tips |
Usage | Reliability, usability, updates, lifespan |
Support | Troubleshooting, knowledge base, call centre, community |
Loyalty | New products, newsletter, promotions, ratings/reviews |
- Designing for the limitations of a product box created clarity. The team had to decide on a name; tagline; features; branding and value proposition. It became a microcosm of all marketing - and the work could be reused elsewhere.
- View everything through the lens of your potential customers. Will your prototypes resonate with your customer? You can’t just call them a ‘customer. You have to know them.
- Who are they? Why would they buy? What would they need to know? What was most important to them?
- Create personas → use them.
- Test prototypes with real customers as soon as possible. Nest team tested home installation instructions. Dig into the reports and work out what you can do better.
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- It took nest customers longer than expected to install the thermometers. Research showed they’d spend a bunch of time searching for tools. So Nest decided started to include a beautiful set of screwdrivers - everything you needed to get the job done. They lived in peoples kitchen draws for years to come - and became touchpoint and marketing tool in their own right
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- When handed prototype hardware he would ask... “How can you solve your problem without this?”
- It’s exciting to make something with atoms —they dig into the design, interface, colours, materials, textures—and instantly become blind to simpler, easier solutions.
- Only build hardware if it’s critically necessary and transformative - otherwise it’s not worth the headache of manufacturing and packaging and shipping.
- Unless hardware is absolutely necessary to solving the customer problem - it should not exist.
Storytelling is super important
- The story of your product, company and vision should drive everything that you do.
- Every product should have a story — a narrative that explains why it needs to exist and how it will solve your customer’s problems. Good product stories have three elements:
- they appeal to people’s rational and emotional sides
- they make a complicated concept simple
- they focus on the why → reminding people of the problem they solve
- Start with the why. Once you understand why your product is needed you can focus on how it works. Just don’t forget that anyone encountering your product for the first time won’t have the context you have. The story is an important communication tool for customers, team members, potential hires, investors, marketing etc...
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This was Steve Jobs at his best. He was so good at the presentations because he spent weeks and weeks refining and iterating the pitch with people and on his own. The narrative is also developed alongside the product
- He references the Mac in 1984, the iPod in 2001
- He then said they’re introducing 3 devices today:
- A breakthrough internet communicaitons device
- A widescreen iPod with touch controls
- A revolutionary mobile phone.
- Then he revealed they were the same product
- He showed a 2x2 - Easy to use → Hard to use; Smart → Not so smart. iPhone was going to be the first that was both easy to use and the smartest
- He then explained the importance of ditching the keyboard
People who are really serious about software should make their own hardware Alan Kay - Quoted by Jobs at the end of the presentation
- A good story is an act of empathy. It recognises the needs of its audience. Blending facts and feelings.
- Base your story on customer insights and concrete information. Just enough to convince people that you’re anchored in real facts. Connecting to peoples emotions creates a reason to take action:
- Show them a compelling future - hope
- Connect to their worries and fears -
- Analogies give customers superpowers - they can grasp a difficult feature and explain it to others.
Evolution · Disruption · Execution
- Some definitions to start:
- Evolution: A small, incremental step to make something better.
- Disruption: A fork on the evolutionary tree—something fundamentally new that changes the status quo, usually by taking a novel or revolutionary approach to an old problem.
- Execution: Actually doing what you’ve promised to do and doing it well
- Version 1 of your product should be disruptive, not evolutionary.Disruption doesn’t guarantee success — you can’t ignore the fundamentals of execution. Even if you execute well - it may not be enough. You may also need to disrupt marketing, channel, manufacturing, logistics, the business model or something else to surpass an incumbent in their industry.
- Version 2 is typically an evolution. Refine version 1 using actual customer insights. Double down on your disruption. You now you have fit you should be able to move quickly. If you truly were disruptive, your competition probably won’t be able to replicate it quickly. Keep the thing that makes your product unique whilst you evolve (click-wheel iPod)
- Whilst evolving your product, look for opportunities to disrupt yourself.
- Celebrate when the incumbent sues you. Typically the incumbent will ignore you and laugh at you in the beginning. Once they start to sue you - it means that you’re a credible threat. Celebrate that moment.
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- You focus on one amazing thing - but forget the user journey
- You can’t crack the technology to unlock your vision
- You change too many things too fast - people can’t keep up
The Key Tradeoff | |
Not so disruptive that you won’t be able to execute | Not so easy to execute that nobody will care. |
- You can only push people so far from their mental model (overturn window of change).
- First time around you and your team will have to make many opinion-driven decisions. To do that you’ll need some tools (order of importance).
- Vision: What you want to make, why you’re making it, who it’s for, and why people will buy it. Leadership is needed to ensure the vision is delivered intact.
- Customer insights: Customer and market research: what they like, what they dislike, what problems they experience on a regular basis, and what solutions they’ll respond to.
- Data: You won’t have reliable data. BUT gather information - scope of opportunity, the way people use current solutions.
- Second time around, the order of importance changes
- Data: Track usage - test new versions. Hunches can be confirmed or disproved. You can fix the stuff you got wrong when following your gut to fix the stuff you screwed up when you were just following your gut.
- Customer insights: Now people are paying - they’re more reliable for insights. They can tell you what’s broken and what they want to see next.
- Vision: Assuming you got v1 right. The vision is now less important. Keep in mind your longer-term goals and mission so that your product purpose isn’t lost.
Heartbeats for Handcuffs
- Constraints help you make decisions. Time is the most powerful constraint. Commit to an external deadline like Christmas or a conference. Handcuffing yourself to a deadline mean you have to get creative to finish on time. If working on a version 1, its hard to know when to ship unless you set a deadline.
- Constraint → Creativity → Fuels innovation.
- Create heartbeats (strong internal deadlines) to keep everyone moving forwards. Team heartbeats and (cross-team) project heartbeats.
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- Keep teams small for as long as possible
- Brand new products should never take longer than 18 months to ship. {AC: for software I use 6 months}
- As teams grow - you need to change all the meetings (all-hands project milestones etc)
- A steady heartbeat helps teams know what is expected of them
- Don’t estimate long projects at a daily granularity - aim for macro milestones instead
- You’ll spend too long talking and scheduling
- You’ll miss things anyway
- People aren’t good at estimating their time or breaking down work
- Predictability of a heartbeat allows you to codify a product development process. Ultimately the predictability is how you make your deadline.
Three Generations
- Typically you need 3 generations of any new disruptive product to turn a profit. Three stages of profitability line up with the crossing the Chasm scale.
Book recommendation: Crossing the Chasm by Geoffrey Moore.
Version 1 | Version 2 | Version 3 | |
£ | Product Market Fit
Not remotely profitable | Profitable Product
Positive unit economics | Profitable business
Covering all expenses |
Who | Innovators and early adopters | Early Majority | Late Majority |
What | Shipping a prototype | Fixing V1 | Refining an already great product |
How | Figuring things out and outsourcing | Bringing things in-house | Selectively outsource smaller projects |
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- Hardware companies focus on COGS—cost of goods sold. Their main costs after labour relate to making the product. They must lower cost to reach profitability
- Software companies focus on CAC — customer acquisition costs. Their main costs after labour relate to selling.
- Your product has to learn to crawl, and walk, before it runs. It takes time to evolve and change, to react to customer feedback and make every point on the customer journey strong.
You make the product. You fix the product. You build the business. Every product. Every company. Every time.
Build your Business
Great Ideas
- Good ideas have 3 key aspects to them:
- It solves for ‘why. You need to understand why customers need it before anything else.
- It solves a problem that a lot of people have in their daily lives
- It follows you around - you can’t stop thinking about it even after you’ve learnt enough to realise how hard it would be to solve.
- How has nobody thought of this? This is such a great idea!
- Your research shows others have tried and failed. Or an impossible obstacle is the reason nobody has tired it. You put the idea to the side.
- The idea returns. You do further research; you prototype a bit, you’re full of ideas. You generate a bunch of ideas, you realise the people before had the wrong approach. Maybe the timing looks right, technology might be able to solve the impossible obstacle.
- You commit to more research - you need to make a decision
- You plot a way past the first big obstacle, and maybe the second too. You get advice from others.
- People start asking you about your project. When are you starting? Can I join? Each new problem pushes you to find new solutions.
- Even though there’s uncertainty, you understand the space, you can see the product and the business, you commit.
- The best ideas are painkillers not vitamins. They solve for a customer problem that constantly bothers you.
- Identify your biggest risks and challenges. You need an answer for the biggest ones; everything else can be solved later. Include the challenges in pitch decks; use them to rally your team.
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The plan wasn’t to start a company after Apple. The thermostat problem followed Tony around. he formed an idea for a product and a company. I like the way the vision for the product - creates a jumping off point for the connected home company
Your thermostat should learn the temperatures you like and when you like them. It should connect to your smartphone so you can control it from anywhere. It should turn itself down when you’re not home to save energy. And of course it should be beautiful something you’d be proud to put on your wall. But we knew the company we were really building—it wasn’t going to stop at thermostats. We would create a slew of products, reinventing unloved but important objects everyone needed at home. And, most importantly, we were going to create a platform. We were going to build the connected home We wanted to take a different approach. Instead of trying to cram a fully formed platform with every possible gadget into someone’s house, we were going to start with just one really good product—a beautiful thermostat that would live on people’s walls for a decade or more. Once people fell in love with our thermostat, they’d buy more products that worked with it.
Getting Ready to Work on Your Idea
Work at a startup | Get a working knowledge of each discipline. Enough to hire and enough to know when you’ll need to them. |
Work at a big company | To understand big company problems. Process, governance and politics. |
Get a mentor | More important than a cofounder or a team. You have to trust in them, they have to believe in you. Your mentor should be smart, and have done it before. |
Find a cofounder | To share the load and provide balance. |
Convince others to join | Don’t start unless you don’t know who your first 5 employees are. They should be great at what they do (Individual contributors) |
Marrying for Money
- Think of a VC partnership as a marriage: a long term commitment between two individuals based on trust, mutual respect, and shared goals. Take time to find somebody you’re comfortable with. A good relationship with your partner is key - they’ll be able to help you and hook you up to their network. Once you take money the balance of power shifts, the VC can fire the founder.
- Funding is very cyclical. But it’s never easy.
- Getting funding takes longer than you’d expect. 3–5 month process
- Most VCs are risk averse; and want to see you’re on a clear growth trajectory. Don’t get funding too early. If you’re still researching and testing you might not need it yet.
- Questions to ask: Do I need more money? What will I use it for? Whats the minimum I need? How much will you need when your needs change later?
- Promise everything to get you to sign. But they don’t deliver.
- They force timing. A self-destructing term sheet designed to make you panic
- Greedy VCs who’ll only invest if they can get an outsized piece of your company
- Courting of inexperienced startups - with the intention of micromanaging the CEO. Mentorship and advice is OK - orders aren’t
- Get a warm introduction
- Have a compelling story to get attention - Focus on the why; not the technology
- Limit to 15 slides - make it flow - make it compelling emotionally and rationally. Keep it high level - but show you’ve dug into the detail.
- Pitching is hard, you’ll suck at first. Start with a friendly VC to get feedback - not your best shot
- Don’t play games - be honest
- Be clear how much you need - and how you’re going to spend it
- Don’t assume your valuation should increase - especially if you’re not hitting milestones
- Every investment is unique - there’s no valuation yardstick
- Investors will want references - customer feedback etc - make it easy for them
- Show your risks and mitigations
- Get 2 similar VCs - so if one plays games the other can defend you
- You can only serve one customer. Decide who your most important customer is. 2 sided network: you need to focus on one side. Most companies should be B2C or B2B. You need to understand your customer, their demographics and psychographics, their wants and needs and pain-points. All your teams are shaped by that understanding.
- Some exceptions: travel, retailers, financial products. If you cater to both, your marketing has to be B2C. You can’t convince a regular person to use a B2C product.
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Killing yourself for work
- True work-life balance is a mythical state where you have time for everything (work, family, friends, hobbies, exercising, holidays). Personal balance - knowing you’re going to be working or thinking about work most of the time and creating space to give your brain and body a break.
- Design your schedule and your calendar. At the daily, weekly and quarterly scale.
- Create time to reflect - 2-3 times a week.
- Create room for foundational health suff
- Sleep well: Keep it dark and cold. Limit caffeine, sugar and alcohol
- Eat well: Your an athlete, your sport it work. Fuel yourself. Don’t eat too much, or too late. Cut down on refined sugars, smoking, alcohol.
- Exercise 4-6 times a week.
- See family
- Prioritise all the time. Write everything down - have a system for bringing things up with your team.
- On several sheets of paper
- Top milestones by discipline
- Everything needed to hit those milestones
- Top issues
- Top customer issues
- Current roadblocks
- Next major milestones
- Date commitments from the team
- Ideas - log of great ideas (product or org improvements)
- Weekly tasks
- Each Sunday go through all of the notes - reprioritise tasks - delegated, delayed or canceled.
- Keep a focus on the bigger goals and milestones ahead of the team
- Email the management team on Sunday night. Letting them know their accountabilities and the major milestones.
- Have a meeting about it every Monday
- Vacations are an opportunity for a team member to step up and do your role
- Hire an assistant - outsource scheduling and sorting through emails emails. They are your partner, they can unlock time
- If you can’t function today; go home relax. Don’t stay and make bad decisions.
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What to do in a crisis
- Keep focused on how to fix the problem - not who to blame - cancel non-essential stuff
- Get into the weeds. Bring clarity. Remember to step back afterwards
- Get advice from mentors - don’t try to solve problems on your own
- Your job is constant communication - talk and listen
- Accept responsibility for how its affected customers and apologise
- Set expectations and limits to additional working hours (Saturday to 5PM not Sunday)
Part 5: Build Your Team
Hiring
- The best teams are multigenerational - From interns to experienced crew. Put interns on real projects - they’ll tell their friends.
- Hire diversely. Every new perspective, background and experience will improve the business. There’s a battle for talent - you can’t afford to ignore any part of the population.
- Candidates should interview with people they’ll work with (same team and cross-discipline). Everyone on the team should know what you’re looking for.
- Candidates should be mission-driven, good on their feet, passionate about the customer and add to the culture. Have a no assholes policy.
- In an interview:
- Find out who they are, what they’ve done and why they did it. What are you curious about? What do you want to learn? What’s their compelling story? Why they left and want to join.
- Simulate work. Work through a problem with them. What questions do they ask? What approaches do they suggest? Do they ask about the customer? Are they empathetic?
- If you have 50 people who get your culture and 100 that don’t - you’ll lose it. Teach the culture by immersion, give new hires the push they need to start running with the team.
- Fire people that don’t work out. It’s not fun, but it’s brief. It’s better for them and for you. Help them find a new gig. Nobody should be shocked to be fired, start performance management early.
- Make hiring everyone’s priority. Don’t lower the quality bar though.
Breakpoints
- Growth continually breaks your company. Breakpoints typically occur when you need to add new layers of management. Breakpoints lead to communication problems, confusion and slowdowns - if not managed well.
- People can’t manage more than 8-15 people. 7-8 people in larger organisations.
- Create management layers pre-emptively
- Change the communication process.
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Size | Notes |
0 to 15 | Conversation and communication is easy. Everyone can come to every meeting. The org chart is irrelevant. Keep it like this for as long as possible. Decisions are made together. |
15 to 50 | Teams and silos form with the first layer of management. Make sure the managers are ready for the shift. Responsibilities start to narrow. Not everyone can attend every meeting. You have to think about comms now. Formalise your interaction. Send out notes and updates. |
50 to 120 | Managers of managers are introduced. HR is needed. You need processes for promotions, hierarchy levels, benefits, job titles, RACIs or DICEs
Sub-teams and specialisation appears more.
Comms between teams and leadership needs to be formalised. How do you present to the company? Align on vision and set priorities? |
Up to 400 | Multiple projects competing for resources. Leadership more isolated and distant. Meetings are out of control and information flow slows. Restructure meetings and rethink communication style. All hands meetings have to be more rare and more high level → focusing on the vision so they’re relevant for everyone. |
- Pieces of your culture won’t scale. Small companies can buy birthday cakes. At 300 people it becomes too difficult.
- Specialisation → The more the organism grows the more differentiated each cell needs to be, the more complicated the system becomes. People sometimes struggle to narrow their focus. It feels like things are being taken away. Focus on the opportunity - Do they want to lead a team? Learn something new? Help them understand what they love - work to retain those things.
- Org Design → People and teams need to diversify
- Single product companies can organise by function (hardware, software).
- As you add products - this structure will slow you down (it will break between 2-5 products)
- Leaders can’t keep up with more than 3-4 projects. Remaining projects get sidelined for later, and later never comes.
- You need to break your org into product specific groups - so each product gets the attention it deserves. New products often need new teams - otherwise they’ll never get made. Each product gets a dedicated engineering team, marketing person, designer and writer. They turn into little startups. Decisions speed up and everyone has a shared goal rather than conflicting priorities.
- Meetings. Be mindful of hours spent in meetings and compiling status reports (both intra-team and inter-team). All-hands meetings must decrease in frequency and scope. They should start to focus on vision. Google had 140k people attend a weekly 120 minute all-hands (madness).
- HR and mentors become more important as you scale - especially as you transition through the breakpoints.
- Culture is hard to pinpoint and preserve. You have to write down what you value, and have a plan for how to preserve them. Codify your values and how you work - get teams to write down how they do things. Keep special events. Weave them into budgets, processes and hiring.
- Plan for breakpoints. Or you’ll get stuck at the same size and stagnate. They don’t just happen to the company - they happen to the CEO and leadership team.
- Create the optimal structure first- then fill it with people. Avoids weird overlaps and titles to make concessions for egos.
Design Thinking
- Everything that needs to be created needs to be designed. Designing means thinking through a problem and finding and elegant solution. Anyone can do it - everyone should.
- Design thinking encourages that you identify your customer, and their pain points, deeply understand the problem you’re trying to solve and systematically uncover ways to solve it.
- Analyse your customers needs
- Explore all possible options - including unexpected ones
- Choose the best option - aesthetically, functionally and at the right price point
- Design isn’t just for designers. Not everyone can be a great designer but everyone can think like one.
- You shouldn’t outsource a problem until you’ve tried to solve it yourself, especially if it’s core to your business.
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- Get out the room
- Break everything down into steps
- Set constraints up front
- Ask why at every step - Why is it like this now? How can it be better?
- Understand and tell the story of the product
- Understand your customers problems, mindset, environment, needs pains, challenges, hopes and desires
- ... and explore all the different ways you can address them
- Look at the problem from all angles - get creative
- Connect with your team and other teams with ideas
- Create prototypes all along the way
Avoid habituation
- We get used to inconveniences - they become reality.
- Think like a designer and view things with a critical eye - how can they be better. You find opportunities to improve experiences that people long ago assumed would always just be terrible.
- To solve a problem - you have to notice it in the first place
- Tony noticed that all his CDs were too heavy - he had to lug them around everywhere
- Steve jobs called this mindset staying a beginner
- Steve wanted iPods to work out of the box - so he changed the supply chain so they arrived charged. Now everyone does it. It’s magic, but the kind anyone can do, you just have to notice the problem
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- Who is your customer and where will they encounter this name?
- What are you trying to get your customer to think or feel about your product?
- What brand attributes or product features are most important to highlight with this name?
- Is this product part of a family of products or is it stand-alone?
- What will the next version be called?
- Should the name be evocative of feeling or idea or a straightforward description?
- Once you come up with a list, begin to use the names in context.
- How does it sound in a sentence?
- How do you use it in print?
- How do you use it graphically?
How to do Marketing
- It needs to be both anchored in human connection and empathy AND rigorous and analytical
- It can’t just be figured out at the end - think about marketing from the very start
- Use it to prototype your product narrative. Make it tangible. Do it in parallel. Product marketing and product development can inform each other
- The product is the brand. Every customer touchpoint is a marketing opportunity. A great end to end experience is great marketing
- Nothing exists in a vacuum. Design the entire process together - all of the customer touch points
- The best market is just telling the truth. The goal of marketing is to find the very best way to tell the true story of your product
The best marketing is just telling the truth. Steve Jobs
Two key frameworks bring structure and understanding to everyone in your team → and help the team understand how important it is.
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- Break down the pain points that your customer is feeling (or has habituated away)
- Each pain is a why - it gives your product a reason to exist.
- The pain-killers are the how - features that will solve the customer’s problem
- ‘Why I want it’ column - explains the emotions that your customers are feeling
- ‘I need it’ column - covers the rational reasons to buy this product
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- Essential for product development → PMs and marketing work on the messing architecture from day one. Each pain has to be understood and answered with a painkiller from the product.
- It’s a living document - understanding evolves - so does the messaging architecture
- Its a shared resource - all customer touch-points should be designed with them in mind
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- You can’t say everything everywhere. So when you decide what to put where, it was crucial to know which parts of the story customers would be exposed to at various points of the journey
- Everything is connected to everything so everything should be connected together.
- Figure out where to put what messaging in the customer journey.
- For every version of the story - write down the most common objections and how we’d overcome them.
- what stats to use, what pages of the website to send people to, what partnerships to mention or testimonials to point to
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- When the creative team wrote “The Nest Learning Thermostat saves energy” the legal team made it “can save.”
- Marketing would change and evolve throughout product development - there was always a ‘why we made it page’ - key marketing deliverables become living documents
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- Especially in the beginning
- This isn’t micro management; its care. Putting energy in to every part of the customer journey
- Everything was presented to him with context (what came before, what came after)
- What story we are telling - to who - where are we in the customer journey
The Point of Product Managers
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- What Product Management isn’t: marketing, project management, press relations, communications, design, product finance, the CEO
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- Figure out what the product should do
- Create the spec: the description of how it will work
- As well as the messaging: the facts you want customers to understand).
- Work with almost every part of the business to get the product spec’d, build and brought to market
- (engineering, design, customer support, finance, sales, marketing etc)
- Ensure the product stays true to the vision - doesn’t get watered down
- The voice of the customer - keep every team focused on creating happy customers
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- Coordinates tasks, meetings, calendars, and assets to enable individual projects to get done on time.
- Product managers are the voice of the product - project managers are the voice of the project - they alert the product manager to anything that could stall or derail the project and to help find solutions.
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- Supervises groups of project managers, focusing on long-term business objectives as well as short-term deliverables
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- No designers in tech companies
- No school for design - no formal training
- Design was low down in the hierarchy of disciplines
- IDEO, Apple and design-led thinking changed that
- Google is now organising around product managers not engineers - because customer needs a voice on the team
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- Spec what the product should do and the roadmap for where it will go over time
- Determine and maintain the messaging matrix
- Work with engineering to get the product built according to spec
- Work with design to make it intuitive and attractive to the target customer
- Work with marketing to help them understand the technical nuances in order to develop effective creative to communicate the messaging
- Present the product to management and get feedback from the execs
- Work with sales and finance to make sure this product has a market and can eventually make money
- Work with customer support to write necessary instructions, help manage problems, and take in customer requests and complaints
- Work with PR to address the public perceptions, write the mock press release and often act as a spokesperson.
Theres also less well defined stuff:
- Customer pain-points, customer research, moving projects forward, triaging bugs,
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- the story has to be utterly cohesive from the beginning.
- Many companies divide responsibility like so:
- Product Manager - defines the product and gets it built
- Product Marketing - writes the messaging - the facts you want to communicate to customers and gets the product sold
- Your messaging is your product - the story that you tell - shapes the things that you’re making
- Steve Jobs wasn’t interested in increasing battery life until the team showed that a 12 hour battery life meant that you didn’t have to charge your iPod all week (for a bunch of personas).
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- The product spec and messaging flex as new ideas and information emerge
- Product Managers are like band producers. They are the only ones who can see how everything is coming together (other disciplines are instrumnets).
- The job isn’t CEO of the product. Mostly you’re empowering the team. Helping everyone understand the customer needs and work to make the right choices. If the PM is making all of the choices - they aren’t doing it well.
- The product manager has to be a master communicator - they have to influence people without managing them. They have to ask questions, listen, use their super power, empathy for the customer, empathy for the team.
- Men set the alarm when they leave the house. Women liked to put the alarm on when they’re home with children for extra security.
- Considering the second use case requires different features
- Product management are at the centre of any product, they are the thread that ties people, teams and disciplines together.
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Getting Sales Right
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- Your sales culture needs to be driven by relationships not sales. It’s incredibly important at every stage of the companies growth. A customer is not seen as an ATM machine.
- Get the commission structure of the sales team wrong - and you’ll create two cultures.
- The 2 cultures (sales and company) will think differently and care about different things
- Sales are traditionally incentivised to close deals and get paid. The rest of the company think longer term.
- If commission is paid too quickly - you promote short-term thinking (competition, promising)
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- If starting fresh: Everyone gets paid salary, stock and performance bonuses. Sales, customer success, support, marketing, engineering everyone. They don’t have to be paid the same amount - but the model should be the same. No monthly cash commission for sales!
- If transitioning:
- Get other teams to approve deals (customer support etc) - to ensure a longer term success.
- Then change commission. Commission should be vested over a longer time horizon. Build a culture based on relationships not transactions. Pay 10% quickly, 30% after a few months and the rest later. If the client leaves - don’t pay the rest of the commission.
- Every sale should be a team sale - to avoid individualism and competition
- Tony’s dad was a salesman at Levis - taught him the importance of sacrificing a sale to build a personal connection and maintain a strong relationship overtime
Lawyer up
- The more successful and disruptive you are the more you will be targeted.
- Lawyers are setup to bill by the minute... so bring them in house quickly - it’ll be obvious when. Look into fixed price contracts and the legal documents open sourcing movement.
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- They’ll never say yes. They are trained to look for risk in everything. You can’t prevent lawsuits in the US.
- You’ll need to take risks in order to innovate and succeed.
- Never break the law - follow their advice on things like employment law
- For the grey area stuff - that will determine the direction of your company - there’s legal vs illegal and defendable vs un-defendable. Their job is to tell you the law and explain the risk. Your job is to make the decision.
- Once you have an in-house lawyer they’ll negotiate down your legal bills
- Get an IP lawyer if IP is going to be important. Don’t get a generalist as they’ll have to outsource.
- You need a legal leader - who can work alongside execs, engineers and marketers.
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- Steve paid an itunes competitor $100m to settle a case. Tens of millions more than they asked for - he didn’t want to waste time and attention with a court battle.
- Tony dug in against Honeywell - but Google decided to settle on acquisition as Honeywell were a client of there’s
- Tony didn’t want a strangulation warning on the cables - none of his competitors had and nest had a bunch of warnings in app and manuals → the law was clear though → the risks were too high → so legal talked him down.
- They made the label bigger, easier to tear, and closer to the camera. Everyone noticed them, and took them off. Win Win.
Part 6: Be CEO
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- Sold to Google so they could build an IOT platform. Google committed $4bn to building the platform over 5 years.
- Seemed like the perfect fit at the time, both parties had the best of intentions
- The plan was to integrate - but it didn’t work
- Google Store and GCloud migrations would take more than 1 year
- Google had so many perks cost per employee went up from $250k to $475k
- Nest distanced themselves from Google with a press release after customer concerns - that annoyed Googler’s who didn’t want to work with Nest as they weren’t ‘Google’
- Google is somewhat self organising - so you had to convince every team to get something done
- Google then wanted to Alphabetise Nest not integrate it
- Then Google decided to sell Nest - and Tony left (Larry got Bill Campbell to tell Tony)
- Then Google decided to keep Nest and integrate it.
Becoming CEO
- Nothing can prepare you for being CEO. You set the tone for the company - ultimately everyone looks to you. The things you pay attention to and care about become the priorities for the company.
- If you want your company to care about everything - then you need to pay attention to everything. Don’t get lost in spreadsheets, keep your focus on the customer. Everything matters, you can prioritise but get across everything.
- Pick things apart until they’re great. You’ll have to tell teams to do better when they’re at 90% amazing. Keep pushing until further returns become really painful, then pull back a little. Push people and teams to discover how great they can be.
- You are at the top of the pyramid. Your passion and focus will trickle down. Don’t pick your battles - all parts of the company need your attention. Nothing comes off the list.
- Create accountability for results
- Hands on - but know when to delegate
- Long term mindset - but also in the detail
- Remain curious - always learning
- Own mistakes
- Make hard decisions
- They know the difference between a data-driven decision and an opinion one
- They listen - to the team, customers, board
- Don’t worry about being liked - build a thoughtful independent company that could thrive without you. It doesn’t feel good to push people in the moment. Explain it’s about the customers not you. You can’t please everyone -trying can be ruinous. It’s lonely at the top. Stand alone.
- Just because you’re in charge doesn’t mean that you’re in control. Your attention is constantly diverted.
- You can never tell if you’re doing it right in the moment.
- The freedom is thrilling, empowering and terrifying. You can create whatever you want. You can change things. That’s why you start a company - thats why you become a CEO.
It’s not easy. But all that attention, that care, the quest for perfection — they’ll raise the team’s own standards. What they expect of themselves. After a while, they’ll work incredibly hard not just to make you happy, but because they know how much pride they feel when they do world-class work. The entire culture will evolve to expect excellence from each other.
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- Babysitter CEOs - stewards, safety first, predictable, grow existing products, don’t take risks. Leads to stagnation and deterioration. True of most public company CEOs.
- Parent CEOs - push for growth and evolution, take big risks, Innovative founders are always parent CEOs. You can take this mindset if you didn’t start the business yourself(Satya Nadella)
- Incompetent CEOs - inexperienced or founders, ill-suited to lead a company, can’t be either a babysitter or a parent, so the company suffers.
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- Even the best CEO cannot stand alone, untouchable, unchallengeable, accountable to no one.
- The advice of smart, invested, experienced people is valuable
- Even big projects within a company should have a mini-board. Execs who can work to guide a project lead and step in if things go sideways
- A board’s primary responsibility is to hire and fire the CEO. Outside of that; they can give advice and feedback that steers the CEO in the right direction
- CEOs need to prove to the board that they’re doing a good job, or risk being fired. That’s why board meetings are so important.
- Truly understand your subject matter
- Do lots of prep
- Line everyone up in advance. One by one.
- Presentation: Where it is now, where its headed this Q, and in years to come
- There should only be good surprises in a board meeting—We’re ahead of schedule! -
- Everything else should be a known quantity - have 121s in advance
- There isn’t enough time to discuss and resolve difficult issues
- Craft a narrative and tell a story - even when going through the numbers. If you can teach something to the board; you have to have understood it first
- Public boards are different to private ones - so you’ll need a bigger reward to lure in the kinds of board members you’ll need
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Indifferent boards: the members are checked out. They may sit on too many and have a “you win some, you lose some” mentality
Dictatorial boards are the opposite—too invested, too controlling. They hold the reins so tightly that the CEO doesn’t have the freedom to lead independently.
Inexperienced boards they don’t know the business and don’t know what a good board or CEO looks like, and can’t ask hard questions of the CEO - never mind remove them
Buying and Being Bought
- The two companies cultures should be compatible. Figure out if your goals are aligned, if your missions nestle into each other, if your cultures make sense together. The dating phase is crucial - check the sink for dirty dishes.
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- Oh s***! We’d been speaking completely different languages.
- They hadn’t prepared for no managerial air cover - they hadn’t planned for organ rejection.
- Larry was telling the truth. But ‘marshalling’ the troops at Google mean something very different to at Apple.
- At Google it was a skeleton plan and an occasional meeting. No one at Google could dictate to teams they decide how to use their time.
- At Apple Steve Jobs would make things happen and meet weekly or daily to unblock
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- We put out a statement to customers without ever thinking about how it would affect our internal relationships.
- Assumed that Google would take more care and be more invested in making such a big deal work
- Underestimated how powerful the Google culture was and how entrenched it was.
- I didn’t talk to other companies that Google acquired before us
- It’s hard to get good Google employees to transfer. You get the ones that want to try something new - they’ll dilute your culture - and demand more perks and Googleyness
- Apple protects its culture by buying only small companies - their culture is never really diluted
- Great companies are bought not sold
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- Beware of too many perks. Take care of your employees don’t distracting and coddle them. Don’t serve three gourmet meals a day and offer free haircuts to attract employees
- Benefits really matter. Perks should be occasional.
- Surprising and delighting your team is wonderful and often necessary. But when perks are always free, appear constantly, and are treated like benefits, your business will suffer.
- If you gift flowers constantly - they aren’t as special.
- When people pay for something they value it. Subsidise - don’t make it free.
- When something happens only rarely it’s special - so if a perk is only received occasionally, it can be free. Make it clear it’s not a regular thing. Switch up perks so they’re a surprise.
- It’s really hard to reduce perks and cut costs.
- It’s not just the customer that starts to go out of focus. As the number of perks increase, people’s reason for being at their job can begin to blur as well.
Don’t be a CEO barnacle - know when to step down
- People strive to be CEO of a big company. It’s hard for them to let go - their identity is wrapped up in it - it’s terrifying
- When to step down:
- The company or market has changed too much - you can’t manage it anymore. Not everyone is a great fit for every stage of the company.
- You’ve become a babysitter CEO. You are not challenging and growing the company.
- The board is pushing you to be a babysitter CEO
- You have a succession plan and the company’s on an upswing. Try to leave on a positive note and leave the company in good hands.
- You hate it: It doesn’t mean you’ve failed. You learnt something about yourself
- Be smart - see changes coming - make a succession plan
- After you leave - it takes about 18 months before you can start thinking about something new
Beyond Yourself
- It’s special to create something together as a team.
- Products and people are what matter. The products change, the companies change, the relationships don’t.
- The best part about being an exec was the opportunity to help people.
- Do something meaningful - make something worth making