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Chapter 1: What was the vision behind General Magic's smartphone in the 90s?
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This is Planet Money from NPR. Okay, how many times have you sat and thought about how much more you could accomplish if you had more? More time, more money, more resources. Like how good your project could be if you had just one more day. Or a bigger budget or more help. Well, this is the story of a company that did have all of that. And they were making something amazing.
Something most of us touch every day. A smartphone. But, and this is the part that is bonkers, this was happening nearly two decades before the iPhone came out. Before the internet, before Wi-Fi, before mobile data, before cell phones even. Tony Fadell was employee number 29 at that company. Before even email really existed for people, before...
Anything like Amazon or e-tailing existed before downloadable games or downloadable music existed. All of that stuff. We were creating all the technology that would later become what the iPhone was. Nowadays, Tony is a businessman. He's always been a computer geek.
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Chapter 2: How did General Magic's resources contribute to its downfall?
His words, not ours. I was making fake IDs on a Mac in high school because you had a laser printer and a laser printer was like, oh my God, I could replicate things in the world. So I was making fake IDs on laser printers. You must have been very popular. Oh, yeah, yeah. I made a lot of money, too. Tony was brought up in the 70s and 80s to build things. I was fixing things.
I was changing electrical sockets. You're describing yourself as kind of being like a shop class kind of kid. Yeah. My grandfather taught shop class. Oh, seriously? A shop class kid. OK. He always had the mantra, if a human made it, a human can fix it and build other things, too. Tony's favorite thing to tinker with was computers. It was your own world. You could make anything you wanted.
And around the time Tony was in high school, mid-80s, computer geeks actually started to become cool. In Rolling Stone, there was a huge article by Stephen Levy about the original Mac team. And I was like, oh my God, there's computer geeks? Guys like me, guys and gals like me, building this thing that I love, the Macintosh, and they're in a rock and roll magazine. I'm like, superstars.
He's 15 and he became obsessed with these computer engineers.
Chapter 3: What challenges did General Magic face in product development?
Oh, I could be like that. So they were my heroes. And so I would just track them obsessively. Yes, stalking, you could say. Tony went to college, launched a few startups, and he kept reading tech magazines. And then one day he saw something buried in the gossipy type pages in the back of one of those magazines. Tony learned his heroes were working on this top secret project.
It was at a brand new company called General Magic. And I was like, General Magic? What? What is this? And he didn't care how, he just wanted in. I had no idea what they were doing, but whatever it is, I needed to get involved. He found a number, started calling sometimes 10, 15 times a day. This is your favorite band. You're like, I want to get on the road with the band.
Yeah, I'll be a roadie, whatever it takes. I just want to be with this band. So after, you know, a six to seven month knocking on the door, getting rejected and pestering the hell out of everyone there, they gave me a job and I went crazy. Tony moved to Silicon Valley to work with his heroes. He was 21. His dream had come true.
He was hired as a software engineer in the hardware team at General Magic to make the first smartphone, this thing that was going to change the world in 1991. Hello and welcome to Planet Money. I'm Erika Barris. And I'm Emma Peasley. General Magic had everything. The vision, the talent, the money. But having everything might have been its undoing.
Today on the show, what the push to create the first smartphone can teach us about how genius ideas come to life or don't.
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General Magic was creating basically an iPhone, but in the early 90s. At that time, I was carrying quarters around to use payphones. Computers were in like 15% of American homes. And yet, here was General Magic creating this ultimate portable interconnectivity device where from your palm, you'd call people, send them faxes.
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Chapter 4: Why was the Sony Magic Link considered a failure?
We were creating the devices. We were creating all the network servers and network server software. All the user interface. All the applications. We were creating... That is a lot. We were creating the touchscreen. We were creating everything in this little company. All of it at this company. Research, development, and engineering were all happening at once, and they had the talent to do it.
General Magic was started by those rock stars, and they handpicked other budding rock stars to work there too. It was so exciting, General Magic even hired an in-house film crew. That ended up making a documentary about the company. So we've seen footage of younger, long-haired Tony hunched over a small screen with a bunch of wires connected to a keyboard.
I'm hooking up a demo so that we can see keyboards working with the device.
He's building an early version of the USB.
Is it important? If you want to hook up disk drives and things of that nature, yeah. It's really important.
Another employee, Megan Smith, was working on a touchscreen.
You can figure out where you are, whether you're touching tea or whether you're touching a capsular. How small will it finally be, do you think?
Someday, Dick Tracy Richwatch. And the money was there to fuel all these experiments. The company's investors included all these telecom and electronics giants like Apple and AT&T and Motorola and Sony and Panasonic, to name a few. They literally threw many, many millions of dollars at this Silicon Valley startup because they all wanted a piece of what could potentially be the next big thing.
People from those companies would sometimes come visit. They were just like mesmerized, like, what is this you're building? They had no reference point because it was so different than anything they had seen. So they're like, whoever these people are, they're really geniuses. It's really cool.
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Chapter 5: How did constraints impact creativity at General Magic?
I don't understand it, but we'll just keep them going because it's clear they think they know what they're doing. The employees called themselves magicians, and there was even a bunny in the office. An actual bunny named Bowser, because, of course, magicians need a rabbit. And the magicians worked endlessly.
Just people programming whatever at all times of the day and night, doing things and saying, come over here and check this out. People would be sleeping there overnight. We were there so often the place smelled terrible.
You know, people would hang up their dirty clothes on the cubicle walls.
Oh, gosh.
It was like a huge dorm room.
Smelled like one.
And their job was just to come up with ideas and try everything. And their bosses encouraged that. I'm like, hey, I'm thinking about this. Yeah, that's a good idea. Go work on that. I'm like, OK. And then I'd show them. They're like, well, maybe a little bit more of this, maybe more of that. And then go off and do it. And the funders, those giant companies, they also had ideas.
Tony would travel as far as Japan to meet with Mitsubishi or Sony. And those companies wanted the General Magic device to work with their systems. So Tony would come back to the office and they'd all keep tinkering. They had so much cash that in 1994, they traveled around the country by private jet to show off their product. And they got lots of press attention.
Some say it's revolutionary. Others simply say it's magic.
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Chapter 6: What lessons can be learned from General Magic's experience?
It was the biggest sandbox, playing with the smartest, coolest geeks. You see our founders skipping through the hall and singing. So this sounds like ideal. Like this sounds like the dream. And yeah, okay. So you're living the dream. Living the dream. Tony was having the time of his life. But a few years in... He started to think there might be problems, like they had not made anything yet.
Nothing actually existed. And there was no real schedule, no real deadlines. When I joined, they were like, we're going to ship this product in the next year to year and a half. OK. Sounds great to me. Well, 12 months goes by. And I'm like, okay, we're shipping a product. I'm just trusting everyone. Like, I guess this is how you ship a product. I don't know. I'm 22. Yeah.
These guys know they've done it before. So I'm just going to follow the lead. Then 18 months go by and I'm like, Wait a second. We're not even close to shipping anything. And then it was 24 months. And I'm like, what? Then it was, you know, 32 months. 12 months turned into four years, and they still hadn't actually finished the product they had set out to build.
And at that point, there started to be pressure. Sony and Panasonic and Motorola and all those companies were like, hello, where is the product that we invested in? They had to get a product to market. So in fall of 1994, they finally did. And in true tech fashion, the company's leaders, the tech rock stars, held a big splashy show for its debut.
So welcome to the first public demonstration of General Magic's technologies.
I want to talk a little bit about... The device existed. The Sony Magic Link, powered by General Magic. It was like a mini tablet, but chunkier.
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Chapter 7: How did Tony Fadell apply lessons from General Magic to future projects?
You could choose apps from a touchscreen while holding it in your hands and almost fit it in your pocket. General Magic played a promotional video and all.
It's a new way to reach just about anyone, anywhere, anytime. You're only a press of a button away. Sony Magic Link. And what it takes off your desk is only matched by what it takes off your mind.
The future was here. The magicians, they had delivered. You could send a fax, track your checks, read a book, play a game like solitaire. All for the price of $800 in 1990s dollars. And there was just one minor issue. This magic link ended up being the biggest flop ever. In Silicon Valley for a decade or more. Yeah, they ran into a very econ 101 problem.
When customers press and everybody looked at it and they go, what is this? It is not enough to have supply. You gotta have demand. Less than 3,000 magic links were sold, mostly to family and friends of the magicians. And within a few years, this company that was going to change the world became a distant Silicon Valley memory. How did that happen?
How did this visionary idea become a nothing product? Well, that whole story you just heard, that whole story was the reason it became a nothing product. At least that's the theory of one guy who spent years researching what happens when people have too much freedom.
They were a spectacular failure because they had too much. They had too much talent. They had too much time. They had too many resources. They could do anything. And so they did do anything.
David Epstein is a journalist, and he says years later, when he got his hands on the thing General Magic built, this iPhone before the iPhone was actually pretty fun.
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Chapter 8: What does the story of General Magic teach us about innovation?
I mean, I played with a Sony Magic Link, and it's definitely cool, but part of the problem was there was so much that it was incoherent. I mean, it shipped with a 200-page manual. Can you imagine getting a device like that?
A phone book, essentially. We first learned about general magic from a book David wrote called Inside the Box, How Constraints Make Us Better. David studied what made Dr. Seuss and Dr. Martin Luther King Jr. and Isabel Allende and NASA and Pixar successful. And his big theory that cuts across all of them is that to be creative, to be successfully creative, you need limits.
David says what happened at General Magic is a great example of why people need constraints. And you can basically distill his takeaways into three lessons. Number one, they didn't have a clear customer in mind. They didn't have a problem they were fixing or a need they were filling. Basically nothing to guide what they were making.
They did have an imaginary customer in their heads named Joe Sixpack. Basically, a guy lazing on his couch with a beer, watching TV. What they didn't think about was what problem they were solving for him. Like, he didn't need email in his pocket because odds are Joe Sixpack didn't even own a computer.
Is Joe Sixpack going to read a 200-page manual? I mean, I've read a lot of the manual. It's elaborate.
They did test the magic link on a few real people, like Tony's mom. My mom was a user tester. So my mom came to visit me. My mom sat in user testing. She's like, I don't get it. What is this thing for? It didn't work. Was it me? Did I do something wrong? I don't understand why I even need this thing. I was like, wait a second. Moms always know. And I was like, yeah, who is going to purchase this?
What problems are we going to solve for them with this? Why are they going to want to put their money down? Tony and David agree. Sure, the technology may have been ahead of its time. But David says a big part of what tripped them up was not having a clear picture of their customer.
It was a problem because it didn't tell them what to do and, more importantly, what not to do. So if they had a very specific customer in mind and they identified some real customer problems, they would have had priorities.
And the fact that they weren't listening to what customers needed was compounded by who they were listening to. That's the second problem David identified. Too much money. See, General Magic's idea was so revolutionary that it attracted the attention and money of a lot of powerful partners. You know, those companies Tony was flying to visit, like Sony, Mitsubishi, Motorola, Philips, AT&T.
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