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.