Lessons from the Rise and Fall of "General Magic"​

Photo by Josh Carter (source: http://joshcarter.com/images/magic_cap/PIC1000.jpg) - licensed under the Creative Commons (CC BY-SA 3.0)

What is "General Magic"?

If you are interested in technology, innovation, and the history of Silicon Valley, and you haven't watched the 2018 documentary "General Magic" yet, you really should. It's available to stream on several platforms (see the official General Magic Movie web site). The movie retells the story of the rise and fall of the company "General Magic" in the early 1990's, with footage and interviews with the key people of the company at the time.

Now, it's OK if you haven't even heard of General Magic before. No need to feel awkward. I hadn't heard of it either until I actually watched the movie. Of course, I was a child at the time, but the technology and dreams that were born at General Magic in Silicon Valley in the early 1990's have had a great impact on many of the impressive technology success stories and trends since then including social media, e-commerce, and mobile computing. Also, some of the key employees of General Magic went on to make major contributions in technology at large companies such as Apple and Google, as well as create great new technology companies such as Android and NEST.

But the reason you may not have heard of General Magic is because the company failed. Although it was greatly hyped at the time, and caught the attention of the media, investors, and major companies such as Sony, AT&T, and Motorola, General Magic failed to capture significant market share for its Magic Cap operating system and the smart devices built around it. In fact, after reaching valuations in the hundreds of millions after its 1995 IPO, the company was practically dead within a few years due to disappointing revenues.

"Failure is not the end, it's the beginning". 

- Tony Fadell

You can research all the fascinating details online, or better yet, watch the movie. The story has a lot of intricacies, and getting to know some of the key employees such as Andy Rubin (Android), Pierre Omidyar (e-Bay), and Tony Fadell (Apple, NEST) is very interesting.

But in this write-up, I wanted to share some of the key insights and lessons I learned from the rise and fall of General Magic.

1) Importance of Project Management

One of the key ideas that jumped out at me while watching the movie was the importance of project management. General Magic had an indisputably strong team of very smart, talented creatives who were building great technology. But what they lacked was the discipline to deliver within deadlines and within available resources. Having worked as a program manager at Google, some of what I saw happening at General Magic was not new to me. I had seen this happen before, and this has always made me appreciate the importance of project management of technology development.

Talented and creative engineers can go down rabbit holes and spend incredible amounts of time solving technical challenges and making amazing new technology happen. But in the real world, the engineering effort must be bound by the limits of available resources and time. There must be a link between the business goals of the company and the engineering team. The business goals focus on delivering a competitive product, capturing market share, and generating profits, and the engineers focus on solving technical challenges to make the product happen. The project manager provides a critical link of keeping the engineering work within the business constraints, and communicating engineering constraints back to the business.

2) Importance of Product Management

The General Magic team was too focused on technology. They fell in love with the idea of creating compact, connected mobile computing devices with easy user interfaces. They spend inordinate amounts of time making this technology happen. And they largely succeeded from a technology perspective.

However, they were missing a greater vision of a realistic product with a good market fit. A realistic product that real consumers would want, could afford, and would use regularly. And this is where strong product management comes in. To translate market requirements and needs into a practical vision and product road map, within the constraints of time and money.

The product has to be delivered within a certain time frame to be relevant in the market, and to ensure that the business does not run out of money before launch. The costs of development must also be constrained within available budgets, which may require sacrificing cool features. Similarly, the final product has to be affordable to the target customer, which dictates what features are possible to deliver within the product. The project manager, as explained in the previous point, helps to keep the engineers on track to meet all of these requirements.

Without a clear product vision, it is no wonder that the General Magic team didn't reach their final destination. They didn't have one in the first place.

3) Importance of being a "Lean Startup"

The General Magic story also highlights the importance of using a lean startup methodology of delivering a minimum viable product (MVP), and testing it with consumers early. Early customer feedback provides invaluable feedback on what you are building, and gives you the opportunity to pivot in new directions if needed.

The General Magic team focused on perfecting the technology. This single minded determination to make the technology work was truly admirable. But by waiting so long to perfect the product without testing it in the market, the team had no idea if they were building the right product. They had no idea whether the product they were building would be something that consumers would want, and if they would be willing to pay for.

This is the concept of "failing early". It is better to discover that you are not on the right early so you can react. You can adjust the technology, re-think the product, or design for a different price point. You should view failure as a learning opportunity. If you test the product early and get negative feedback ... well congratulations, you have learned what won't work! Now go back to the drawing board and find out what will. It is in this context that we can understand Tony Fadell's quote: "Failure is not the end, it's the beginning."

4) Importance of Focus

One final lesson that came to my mind as I watched the General Magic movie is around the importance of focus. General Magic's product was built to do a lot of different things and to be used for many different purposes. It is admirable that they tried to build a revolutionary product that would replace so many of the manual office and communication tasks of the time. However, by casting such a wide net, they ensured that the product could not do any single function particularly well. There was not a single "killer" feature that was super easy to user, super reliable, and could cover all aspects of a specific task.

Although it may be counter-intuitive, this makes it harder to sell the product. If you tell a consumer that this device can solve all of your problems for a specific task, such as managing meetings, to-do lists, or tracking projects, it is a much easier sell than something that requires an overhaul of how they do everything all at once.

This is particularly true for B2C products aimed at consumers who want simple solutions with little or no learning curve to make their lives easy. More sophisticated business customers in B2B segments would behave differently, as they may spend months evaluating a major new product prior to purchasing it.

A great example of focus is the iPod. When Apple built the iPod, they built a super convenient and easy to use music player that decimated the competition. All it did was music, but it did it so well that the product was an instant success. Once they had "solved" the music market, they were able to build on this success, until they launched the iPhone.

What do you think?

If you have watched the General Magic movie, let me know what you thought in the comments below. Any other lessons or ideas you learned that you can share? I would love to hear your thoughts.

The best innovations are the ones you don't know you want!

Innovation or Science Fiction?

The best innovations are the ones you don't know you want! OK ... that's not entirely true. We often imagine amazing technologies and innovations that are often closer to science fiction than real innovations.

But what I mean to say is that the best and most revolutionary innovations are things that consumers don't realize that they want, at least not yet. In today's world, everyone is talking about innovation. It seems that every company out there has innovation as part of its vision. So we are bombarded with new 'innovations' every day. And yet, this stream of innovative products and services is often underwhelming, and often represents incremental improvements over existing products and services. These can be really nice and cool ideas, but they often don't have a huge impact, and consequently they rarely result in large financial returns.

Examples of Revolutionary Innovation

Revolutionary innovations, on the other hand, are often not even on people's radar at the time that they are introduced. Consumers may even dismiss such ideas when they first hear about them, since they can't imagine the scale of the innovation or the impact it will have. However, such revolutionary innovations can quickly grow to capture huge markets, destroying legacy companies in those markets along the way, and make a huge impact on the world.

There are many examples of this. Apple has been a great generator of such products over the years, including the introduction of the first graphical user interface personal computers in the 1980's, the iPod digital music player and iTunes for digital music downloads, the iPhone and iPad. Most people in the 1980's had no idea what they could use a computer for, much less express any demand for a graphical easy-to-use interface for computers. Before the iPod and iTunes, few people imagined that they could download music and store their entire library on a tiny device that they could easily carry in their pocket.

Before the iPhone, few people recognized what they could do with a "smart" phone, beyond making phone calls of course. At the time, leading mobile phone companies such as Blackberry, Nokia, and Motorola dismissed the full touchscreen design of the iPhone as a fad, much to their regret. They likely held customer panels and interviews in making that decision. The consumers they consulted, stuck in the mindset of their time, could not imagine the possibilities of what the iPhone could accomplish.

The same can be said of the iPad, which introduced a powerful computing device in a highly mobile and lightweight form factor. As a completely new market segment, tablet computing did not grow explosively like smartphones, but it still created a new market where Chromebooks and Microsoft Surface devices also compete.

But Apple is not the only example. Before Google was launched, did anyone imagine how revolutionary Google's corporate mission “to organize the world's information and make it universally accessible and useful” would be? Google's search technology went on to completely change the world and how people study, work and play. Who would have imagined that Google could make such an incredible impact on the world while offering access to this technology completely free of charge, and driven by text ads, completely revolutionizing the advertising industry as well.

Other contemporary examples include Amazon, Uber, and Netflix, each with its own unique story of disruptive innovation. But what lesson can we learn from all of these stories? As I alluded to in the title, the moral of the story is that the most revolutionary innovations are those that are unexpected, completely unimaginable to the average person of their time, and for which there may be no demand prior to their release.

Innovation Lessons for Startups and Investors

Many entrepreneurs and startup founders are taught to go out and measure demand for their product, or an MVP version of it, and iterate until they find something that works. This is the basis of the lean startup methodology, summed up in a sentence. It's great advice and a good methodology to follow to ensure your startup is building a product that is relevant, that solves a customer pain point, and that will have a viable market.

However, the most innovative products will be those that define new product categories, new markets, and new business models. Such ideas are likely to be initially rejected, or at least not understood. It takes a visionary and very persistent leader to push such ideas through and make them happen, to deliver them to the world and to sell them to people. The most successful entrepreneurs are those that recognize when such innovative ideas happen, and take risks on them to bring them to life despite initial market skepticism. Not all such seemingly revolutionary ideas will succeed, no doubt. History is littered with products that were once hailed as great innovations, but that never really caught on. Personal Digital Assistants (PDAs), such as those developed by Palm, are one such example. But those that succeed, are destined to change the world.

For investors, a similar lesson can be learned. You can invest in ideas and technologies that are seemingly the great next step for any given market, and you may achieve solid returns doing so. Perhaps a new battery technology that charges faster or holds more energy, or a faster processor to power the next generation of mobile devices, or a great new app that connects a new audience to a service or product they need on demand. However, the greatest returns will be reserved for those investors who have the vision to invest in technologies that lead to brand new markets and business models. Yes, those are highly risky, especially for the first investors to enter these markets. But these are the innovations that can make a real difference in the world, and deliver out-of-this-world investment returns.

Embracing Innovation

One final lesson is for consumers. I have always been an early adopter, not just of new technology, but of new products, services and ideas in general. I love to try new companies, new products, and new business models. And it pays off, not only for me personally as a consumer, but also I find that it keeps me ahead of the curve professionally as well. So my advice to consumers is: don't be afraid to embrace bold new visions.

I'm still surprised by the number of people and entire organizations that have not embraced cloud technology, and continue to lose their data, work and productivity due to their attachment to legacy products. I'm shocked at how often I'm still asked to complete paper forms that get filed in physical filing cabinets, and how people develop elaborate schemes to try to keep track of all that paper and to find the information they need when they need it. And I can't believe how many companies, including supposedly sophisticated technology companies, expect highly talented job applicants to spend hours entering data into a job application system, one field at a time. At the core of each of these issues is often a reluctance by individuals to embrace new ideas quickly and to be flexible to learn new ways of doing things.

So I encourage us all to think big, aim for the stars, and embrace new technology that can make the world a better, safer, and more fun place for everyone.

What do you think?

What's your view on innovation and technology? What defines the best innovations? Do you embrace new technology, or do you feel that we should be skeptical and suspicious? Let me know in the comments section below, I genuinely want to know your thoughts!