General Magic | Customers, Etc.
Reflections on Silicon Valley’s greatest failure.
The 2018 documentary General Magic tells the story of Silicon Valley’s most famous failure. Founded as a secret project within Apple in 1989, the founding team would imagine the future of mobile computing long before its time, suffer a catastrophic business failure, and ultimately disband. But the story doesn’t stop there. The engineers of General Magic would ultimately go on to spearhead some of the greatest technological advancements at the world’s most valuable companies.
One of the founders, Marc Porat, wrote a note to Apple CEO John Sculley in 1990 about the type of device they were wanting to create:
"A tiny computer, a phone, a very personal object . . . It must be beautiful. It must offer the kind of personal satisfaction that a fine piece of jewelry brings. It will have a perceived value even when it's not being used... Once you use it you won't be able to live without it." via Wikipedia
Sound familiar? While the team at General Magic had a grand vision, the business ultimately failed and they weren’t able to deliver on what they could imagine. What follows is a series of reflections on what we can learn from the story of General Magic.
The team, the team, the team
One of the first things that stands out when watching the documentary is the strength of the team that formed at General Magic. Marc Porat was joined by legendary engineers Andy Hertzfeld and Bill Atkinson, who had both been on the original Macintosh team at Apple. The team would expand to attract seasoned veterans from Apple and other companies in Silicon Valley.
The documentary contains considerable “home video” style footage from the early days of General Magic. You get to see the team working together in their offices and can feel the excitement in those early meetings. Their office furnishings were minimal, but the culture of the team would be familiar to any engineer at an early stage company that’s confident they’re about to change the world. They cared less about the trimmings and more about what they were going to achieve as a team.
At General Magic’s first launch event, I thought it was notable that during Andy Hertzfeld’s talk, he placed more emphasis on the team than on the device itself. Mind you, this was for a launch that was ultimately considered a commercial failure. It was very clear that the team was the most important part of the experience, even more than what they had built.
I can understand why team is so important. When I joined Fog Creek Software as a support engineer in 2011, I did so because I knew Fog Creek was a great place for developers to work:
Joel Spolsky founded Fog Creek Software with his friend Michael Pryor in 2000. They didn't have a specific product in mind, but were motivated to start the kind of software company where they would want to work—one where programmers were the stars.
FullStory, where I worked from 2016 until earlier this year, has a similar origin story. From CEO Scott Voigt:
To take a half a step back, in 2005, I was working at a three-man company with the most brilliant guys you could imagine, Bruce and Joel, who are my partners today. But we were part of a little three-man company that got acquired by Google and became the foundation for the Google engineering office in Atlanta. I loved working with Bruce and Joel – it was super fun – they’re great guys.
Years down the road they were still at Google and I had gone on to do some other stuff, and we really just wanted to get the band back together. They quit their jobs at Google – I quit where I was. We didn’t quit because of a product we wanted to go build – it was more that we just wanted to start our own company together.
Why is team so important? At some point you realize that if you’re going to be spending eight (or more) hours per day working, you want it to be with great people who are passionate about what they want to achieve. You want everyone to be excellent at their craft, constantly raising the bar for what the team can achieve and avoiding getting bogged down in bureaucratic and political distractions.
Into the light
One of the amazing things about working on a great team is just how much focus a group of people can produce to achieve what wasn’t previously thought possible. The General Magic team was inventing connected mobile computing and were having fun doing it. They added productivity features to their device as well as delighters such as animated expressions (an early form of emoji). Because the team was very talented, they were able to make iterations to their design almost overnight.
Their first real challenge came when Apple launched the Newton, unbeknownst to the General Magic team. The team wondered aloud if Apple was trying to kill General Magic. Although it would go on to be a commercial failure, the Newton signaled Apple’s entry into mobile computing, putting pressure on General Magic to exit stealth mode and bring a product to market.
When General Magic held a press event, it was so successful that the attendees—all members of the press—went from needing to write about the event to actually wanting the device General Magic was pitching. The hype validated the team’s excitement, but also put pressure on the team to deliver. Their IPO shortly thereafter had the same effect, confirming consumer excitement while spurring the team on to bring a product to market.
There was a noticeable change in temperament in the film when the business went from R&D mode into “ship at all costs” mode. They were still a team and they appeared to still enjoy working together, but they were clearly in unfamiliar territory as they had to focus on bringing the product to market. Work was nearly constant as team members set up cots to be able to spend the night in the office. Come hell or high water, the team was going to ship.
Oh customer, where art thou?
The team was undoubtedly incredibly focused as they continued their march towards product launch, but there were multiple warning signs along the way that they may have been focused on the wrong thing.
First and foremost, General Magic’s CEO, Marc Porat, had committed the company to a grand vision without knowing clearly if it had the technical resources to deliver on that vision. Hindsight tells us that the technology wasn’t there yet, but it was hard for the team to see it.
Around the same time, the internet was taking off. While General Magic had created partnerships with the world’s leading telecommunication providers, their data network was proprietary. The internet was entirely public and available to anyone. The team at General Magic dismissed the idea of people wanting to sit at their computers and check email with mouse and keyboard, instead envisioning a much more seamless experience where communication happens on the go with a mobile device in hand.
There’s a learning opportunity here. What was valuable to early users of the internet? Even though mobile computing might have been “better”, in a theoretical sense, people were just fine putting up with the pain of using a mouse and keyboard to check email and interact with websites. Compared to what they had had before, which was nothing, this was far superior. Rather than dismissing the perceived inferiority of connecting to the internet via a computer, the team could have asked themselves just how valuable the public internet must have been that people were willing to use whatever technology was available in order to access it.
The team also had trouble understanding how the devices were going to be used by real people. Users would do things on the device they weren’t “supposed” to do, frustrating the engineers who had designed the interface. While the team knew the interface lacked the finish it needed, they didn’t believe they had the time to slow down and make it right. “Ship or die” was the mantra.
The General Magic team got the strongest signal of the product’s failure immediately after launch. After much fanfare, they learned that very few people actually bought the product. Damningly, all of the people who had purchased the product were people the team previously knew. The device was a complete failure.
There’s an anecdote in the story where one of the team members says, “everybody would want one, because we did, and we were wrong.” And separately, “We talked about our user being Joe six pack”, without thinking that Joe six pack probably doesn’t even have email.
Why didn’t the team talk to real potential users of the product or at least have realistic users in mind? It probably wasn’t just one thing. On one hand, their vision was so compelling, they probably thought they had the validation they needed. They had a successful IPO—surely investors willing to put real money behind the business meant that their business model was valid, right? It could have also been due to secrecy, which was their primary marketing strategy, and perhaps a dose of pride.
Seeds of the future
Perhaps the most amazing part of the documentary is that what they wanted to create eventually did get created, just a decade later and not at General Magic.
Tony Fadell was a young engineer when he joined General Magic. He would later go on to lead the team at Apple that created the iPhone. It’s not too far of a stretch to say that the iPhone is the device General Magic was trying to create. The technology just wasn’t ready when they were trying to create it.
Even more interesting is that nobody was predicting a General Magic-like device would have been successful. By early 2017, when the iPhone was announced, smartphones appeared to be pretty well established, with brands like Windows Mobile, Palm, and BlackBerry dominating the market. There wasn’t “room” for any new players. And then Apple launched the iPhone. Let’s revisit Marc Porat’s words from earlier to describe the General Magic device:
A tiny computer, a phone, a very personal object . . . It must be beautiful. It must offer the kind of personal satisfaction that a fine piece of jewelry brings. It will have a perceived value even when it's not being used... Once you use it you won't be able to live without it.
Owning the value proposition
Interestingly, Apple developed the iPhone in secret, just like General Magic. While this could be seen as a failure to “get out of the building”, it’s impossible to argue that they failed to deliver a product that consumers that wanted. The iPhone reinvented the smartphone category.
Apple’s success was that they completely owned the value proposition. Partial ownership of the value proposition would have meant iterating on existing smartphone implementations, taking a product that was mostly familiar (like a phone with a physical keyboard) and slapping an Apple logo on it. It was risky, but ultimately worth it.
What’s the lesson here? If you’re going to introduce a technology that you believe will revolutionize an existing technology, you have to be willing to commit the resources to completely own the value proposition. It’s enough to make a partial commitment. You’re trying to convince consumers to completely abandon what they’re used to and trust you that your way is better. You have to go all the way.