Episode 210: Tony Fadell, Future Shape
Today's guest is Tony Fadell, Principal at Future Shape.
Tony is an active investor and entrepreneur with a 30+ year history of founding companies and designing products that profoundly improve people’s lives. As the Principal at Future Shape, a global investment and advisory firm coaching engineers and scientists working on foundational deep technology, he is continuing to help bring technology out of the lab and into our lives. Currently, Future Shape is coaching 200+ startups innovating game-changing technologies.
Tony began his career in Silicon Valley at General Magic, the most influential startup nobody has ever heard of. He is the founder and former CEO of Nest, the company that pioneered the “Internet of Things” and created the Nest Learning Thermostat. Tony was the SVP of Apple’s iPod Division and led the team that created the first 18 generations of the iPod and the first three generations of the iPhone. Throughout his career, Tony has authored more than 300 patents. In May 2016, TIME named the Nest Learning Thermostat, the iPod, and the iPhone as three of the “50 Most Influential Gadgets of All Time.”
His new book is Build: An Unorthodox Guide to Making Things Worth Making.
Enjoy the show!
You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast), or @mcjcollective (company) and via email at info@mcjcollective.com, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded April 13, 2022.
In Today's episode, we cover:
How and when Tony began thinking about climate change
Future Shape and his investment thesis
Nest and its impact
His book Build: An Unorthodox Guide to Making Things Worth Making
His theory of change
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Jason Jacobs: Hey, everyone. Jason here. I am the My Climate Journey Show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey or MCJ, as we call it, Membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education, but they were longing for a peer group as well. So we set up a slack community for those people that's now mushroomed into more than 1300 members.
There is an application to become a member. It's not an exclusive thing. There's four criteria we screen for; determination to tackle a problem of climate change, ambition to work on the most impactful solution areas, optimism that we can make a dent and we're not wasting our time for trying, and a collaborative spirit. Beyond that, the more diversity, the better.
There's a bunch of great things that have come out of that community; a number of founding teams that have met in there, a number of non-profits that have been established, a bunch of hiring that's been done, a bunch of companies that have raised capital in there, a bunch of funds that have gotten limited partners or investors for their funds in there, as well as a bunch of events and programming by members and for members, and some open source projects that are getting actively worked on that hatched in there as well.
At any rate, if you wanna learn more, you can go to climatotherapeutics, the website, and click to become a member tab at the top. Enjoy the show.
Hello, everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help.
Today's guest is Tony Fadell. Tony is principal at Future Shape, an investment and advisory firm coaching in deep-tech startups. Prior to that, which is probably where you know him from, Tony was founder and CEO of Nest, the company that pioneered the internet of things and was acquired by Google for more than three billion dollars. Tony was also the senior vice president of Apple's iPod division, where he led the team that created the first 18 generations of the iPod and the first three generations of the iPhone.
Tony also has a book coming out called Build: An Unorthodox Guide to Making Things Worth Making. Now I was excited for this one because I've been increasingly seeing Tony getting more active in talking about climate change, in talking about not only what a pressing problem is, but how it's like the net Industrial Revolution in terms of what it will take to address it.
And we also talk about the investing he's been doing, 'cause he's been getting pretty active in climate tech investing. And I wanted to know what was going on in his head, where did this come from? How long has it been brewing? And what's he been up to? Now, we cover all of that and more. We talk about Nest, whether with the benefit of hindsight, he considers it a climate company. We talk about when he first became concerned about the planet and about climate change, how that first manifested into action, some of the twists and turns as that action evolved, up to current of what he's doing today and what he plans to do going forwards.
We talk about, talk about his book and where that fits into the equation. We also talk about his criteria for investments, what types of risks he's comfortable with and not comfortable with, the balance between deploying capital and learning and how he marries or ba- or balances the two in a theory of change in general and what addressing this problem will take as it relates to capitalism, what it will take as it relates to innovation, as it relates to government, as it relates to geopolitical relations, and what the biggest levers are for change.
At any rate, super discussion, could have gone for several hours longer, but I'm just glad we got to have it. Tony, welcome to the show.
Tony Fadell: Hey, Jason. It's great to be here. My friends all said I needed to come on. And so they have encouraged me, and I'm so glad that they did.
Jason Jacobs: Well, I told them not to tell you, but I might have, you know, slipped them a, a $20 bill to the table to get them to do that. [laughs] In all seriousness, huge honor to have you on the show. I, I never would've imagined when I was starting out this little podcast that we'd have people of your caliber agreeing to come on. And also you've got a super interesting story. I've listened to some of the other stuff you've done with Harry Stabbings and at the SOSE climate summit and, and others.
And I think the fact that you both built a company that's kind of a sneaky climate company, but then have gone on to get a lot more into the thorny stuff. I mean, that's not too dissimilar to my path or to the path that a lot of our listeners are on in some forum as well. So the fact you're willing to come on and share your learnings is, is just gonna be a gold mine. So thank you.
Tony Fadell: Thanks. [laughs] Okay. Let's see what happens. Let's dive in. Where do we start?
Jason Jacobs: Yeah. Now that we've hyped it up enough, right? We better deliver. But for starters, I mean, I'll do an intro in the front that talks about your background and bio and stuff like that, but maybe just introduce yourself however you like to be introduced in terms of what you're up to today and maybe a bit on how you got here.
Tony Fadell: Okay. Very quickly. I have been building things for years. I've been building things since I was a kid. And so my journey started, you know, at, you know, when I was three or four years old with my grandfather building and fixing things and, and gardening, and tending to nature actually, and trimming trees and learning all about that stuff when I was very young.
And so it just continued on and then the computer showed up, the personal computer showed up when I was around nine or 10. And then I embraced that and continued building but in a, first, in a software way, then la- la- later, uh, a hardware and a software way. Just continued that journey all the way through college till I went to Silicon Valley in the nineties, '91 to be exact.
And then ended up building lots of different products. A lot of them failures, some of them successes. And, and today I'm, uh, uh, and my, uh, team and I at Future Shape are helping to build companies with entrepreneurs that have a real mission behind them. And many of them, a lot of them, are climate related. Or the technologies that would go into climate-related businesses.
So we try to take all of those experiences of building since, you know, my experiences of building since the seventies and now apply 'em to help other entrepreneurs and mentor them. And when they're doing very difficult things, having someone there that can help them through, that's not a board member, that's not an investor that doesn't have LPs, is worrying all about the, you know, the return on investment, uh, numbers, but really just there as a sounding board, and, and, like I said, a mentor to be able to help them build that mission out and realize that goal.
And we only, today, invest in things that will help the planet, help society or help health, personal health. So those are the things that we're really focused on. And we're in over 200 companies around the world. And it's been quite a journey and it's been a lot of fun. And we're making investments every week.
Jason Jacobs: And while I do intend... I, I feel like I'm gonna steal a line from Harry Stevens here, but you know, this discussion would be mostly forward-looking, but I do have a couple of questions about Nest. And one question is, was Nest the climate company? And the second question related to that is, how much of that factor in, if at all, in the founding story with the benefit of hindsight? And be honest.
Tony Fadell: Absolutely. No, I'm being absolutely honest. [laughs] There is the climate angle of Nest. Really where it's started was comfort and money. So this was in 2000. Before my wife and I had kids, we would be going up to Tahoe, Lake Tahoe, and we would wanna be warm. And all we had was radiant heating. And we had to choose between either leaving the heat on all the time and wasting money, wasting energy, obviously, or being frozen for 24 hours before everything got warm in the house.
And so that's really where it started. But I have always been a person who has been thinking about the climate since I was a young kid. I did a science fair project in seventh grade, or was it eighth grade? Which was on the feasibility of solar in metropolitan Detroit. In I think 1981 or some '82, something like that. And literally wrote a program on my Apple II to help with doing energy calculations and just telling people and learning about solar when it was three or 4% efficient.
So climate has always been, and energy, and, and nature have always been a part of me, like I said, since being in the garden with my grandfather. It's always just been a part of me. And luckily, when Nest came, there was the green tech revolution back in, you know, 2006 '7, what have you. And then the, the big fallout that. But with Nest, I had to, you know, push down the climate piece of the puzzle and really show, here's a great device. A thermostat can help you save energy and look beautiful and all those other stuff. Oh. And by the way, it'll help the planet. Because, you know, no investors, nobody wanted to hear about green tech because it had been such a disaster back in those days.
Jason Jacobs: And I heard you talk also on Harry Show about how this is like another whole Industrial Revolution and how maybe there'll be charlatan and things like that, but a bunch of really important things will come out of it. And so I would imagine then that, like me, when you get asked about, you know, like, what's your favorite of technology that you're looking at back or things like that, it's like, well, I can't really pick one because it's, it's such a systems problem and because everything needs to transform.
So, and I heard you say it about the whole looking within yourself about what you're good at, what you're well equipped to do and figure out how to point that at climate. I identify really well with that, but it does lead me to a question, which is, before we get into what you look for and investing in things like that, what's your theory of change in terms of how we do go about essentially rewiring our global economy to the extent that you've thought much about it from that big macro picture?
Tony Fadell: You know, motivation is everything, getting people a, and having the will to make change. And I think I've learned over the years, over the decades now, through a few world-changing programs I've been involved with, is that you really have to make it emotional and you have to make it rational at the same time. And it has to really solve pain. Okay.
We have not experienced a pain of climate. Like in 2006, '7, '8, the climate reality didn't really hit home. Now it's hitting home with whether it's wildfires in California, too much rain, not enough rain, hail damage that's up 40 times. 40 times more hail is falling now on the, on the planet than it did just 15 years ago. So when we look at all of these climate events...
And we have geo of political issues, especially with Ukraine, a horrible, horrible war in Ukraine that shouldn't be there, but it is now forcing Europe and many, many countries. So now all of a sudden go, wait a second. We need our energy independence. And where are we gonna go? So when you look at this, you need to have real pain, but you need to have a solution that's both emotional and rational. It can't just be all rational. It's not fun for anyone. But if it's all fun and there's no rational piece of how we're saving things, that's not good either.
So we need the pain and, uh, a solution that's rational and emotional to get people to go. And then great communications around it, all of us talking about it. But, you know, that's the thing, you know? W-when you look at something like el- electric vehicles, there was a lot of naysayers back in the beginning. I was always an early proponent. And then they would go like, oh, I got my Tesla. Can you imagine how much better this pro- this product is, you know, as an EV? And it was so emotional that you're like, oh, and I don't have to go to the gas station anymore. And now it really is affecting your decision making because of the fuel prices being so high and will continue to be that high.
So it's just really interesting that when you get the right product, you know, Nest that was a highly emotional and rational product, right? It was all Nest thermostat. It was all about saving energy and saving money and making it look cool and something great in your house that you were ignoring before.
You have to have that right combination to really make change and have, not just one person buy it, but then to have everyone else be informed by the one person who buy it because that person is such an advocate, they go and tell all their friends and so on and so forth. And that's when it's really cool. And that's what happened with the iPod. That's what happened with the iPhone. It's what happened with even a thermostat. And so if we can do that, you just have to get the right equation solved.
Jason Jacobs: And back to what we were talking about before about how you need to look within yourself and pick a lane that resonates with you, you know, I asked you about the assistance problem of climate change and you jumped to consumer purchasing. Is that because you think it has an out-sized impact on the problem or is it because you think that's where you're best equipped to tackle or, or some of both?
And, and also just to clarify, when you're talking about this winning hearts and minds, and you didn't use those words, you talked about emotional and rational, are you talking about consumers or does that same thing apply as it relates to elections and policy and advocacy and activism and everything?
Tony Fadell: Everyone in government, everyone in industry and companies, voters, they're all humans, they're all human nature. And there has to be a blend of rational and emotional. If a candidate's fully emotional, well, we saw that happen, what can happen there. But you have to have a blend. And people in government, people in the industry, when they're selecting things, whether they're the CTO or the chief purchasing office or whatever, if it doesn't hit home for them, and if there's something that doesn't go, whoa, this is really cool, it's gonna be lower on priority staff.
So you just have to remember that we're just dealing with people, right? We created this. We created this plant, not the planet, but we created everything on the planet in terms of anything made of atoms that's not natural, organic, but we created these problems. We just need to solve them again. You know, we have to press the reset button on almost everything on the planet that we have today.
It's definitely difficult, but it's an incredible set of opportunities to reinvent and look at Industrial Revolution 2.0 or 4.0. And the whole planet has to change it once. It's not just one city, you know, back in the 1850, 1880s, kind of thing like that. A couple of cities were doing that. We're talking about every city on the planet. And there's many more cities now than there were in 18- 1850, 1880, 1900s.
So this is a tremendous opportunity for people around the world to solve their local problems. Yes, there are some 'em systemic big issues like how do we do fertilizer better? And how do we do X, Y, Z better? There are gonna be that, but there are individual things that people, personally as well as professionally in their locale can go off and figure, you know, find the problems and go solve them with their, with their best talents in mind. And like you said, consumer for me or general purchasing power, that's really important to me. Because consumers can make huge change. We saw that in the EV market. We saw that with the thermostat market. We see it all the time.
We need a combination of not just consumers, but it has to be government. It has to be industry. And now we have that set of constituencies all lined up where we didn't have that back in 2006, '7, '8.
Jason Jacobs: And I get that, you know, if we're buying gas-powered cars and we need to switch to EVs, and EVs are cleaner, and things like that, or we're buying and shipping from far away so we could buy local or, and smaller footprint to get the food and things like that. But rebuilding at that level, I get, but what about the actual system of rebuilding?
And what I mean by that is, I mean, when you say we need to reinvent everything, what does that mean as it relates to capitalism? What does that mean as it relates to democracy? Should we work within the system we've got, because we don't have time and because, you know, that's where critical mass is, or?
Tony Fadell: We don't have time. We're lucky if we're gonna change the industrial systems we need to get changed. To try to change government, God knows what's going on in D.C. and, and other places, right? It's just... We're gonna have to do this ourselves as much as we possibly can. And hopefully government will put in, in certain instances, the right policies like a carbon economy and those things.
Living here, 'cause I live in Paris now, and I li- and I've been here now for almost seven years, to see how the climate policies are so different and how much will there is to make the changes. And even more so now with the war going on. To actually move forward, I feel like I'm not a fish outta water. You're like, oh, what is an America doing in Paris and working on climate?
It's actually better here, in some ways, in a lot of ways. Because the governments are listening. They're really trying to do things. They're, they are shifting. Whereas, you know, there's only pockets in the U.S. And, you know, it's growing. It's definitely feels much different here than it does over in, in the states, over on, on the states.
Jason Jacobs: And putting aside your own interest in skillset. Do you have any waiting when you think about things like investing, versus philanthropy, versus government and policy as it relates to change-making or are they all equal and you should just pick a spot.
Tony Fadell: You know, at the end of the day, push my experience aside, consumers make the biggest change on the planet. They will be the ones to make the biggest change. If you bring them a better solution, they will make change happen much more quickly than any government can, than even any corporation can, unless they are corporations run by a real founder-led or in the book that, you know, in my book Build, that I talk about, I say, you know, parent CEOs, not babysitter CEOs.
And so the more we have parents running whatever size corporation, parent CEOs, and the individual consumers, those are the ones that are gonna drive the change just like we saw with EVs. We're seeing the same thing going on with energy storage in the home. We're seeing the same thing going on with battery manufacturing. There are people leaning in, and founders, entrepreneurs. And you're now seeing finally seeing venture capital leaning in again. Because the businesses are screaming for solutions now.
It's no longer, well, that was nice. Oh, it would be nice if we could. Now they're screaming for solutions. And so, to me, it's the companies led by the right individuals and the consumers who are gonna make the biggest change because then the rest of the system will change because they're changing.
Jason Jacobs: So when, when you first started piecing together that it's like, okay, you have this kind of f- family office slash platform, Future Shape that you'll use to try to make an impact on these world-changing problems, and it's, it's an industrial revolution that affects every sector and geography, et cetera, how did you go about thinking about domains and focus and, and what was the balance of thinking versus action and deploying capital as you were getting up to speed?
And I ask that specifically because there's a ton of people who are maybe in your shoes, pre-Future Shape who, or, or who hope to be someday that are trying to figure out what to do with their own capital and time to have the biggest impact on the problem. So it'd be great to understand how you went about it and what, and what you've learned so far.
Tony Fadell: Just like you have My Climate Journey, I've had a journey as well. I continue to be on that journey. And I just keep pulling threads. Frankly, it Nest game because I had a personal need. The thermostat was a problem for me. So I was looking and I started learning more about it. And, and then saying, oh, wait a second. This is really screwed up. And no one's fixing it. Who's gonna fix it? Who knows, you know, network-connected products and, you know, and mobile apps and those things?
So it was like, okay, I'll go do that. Then after that, I was like, okay, well, what else can we do for energy? And that's where we were doing things like demand response pricing at Nest. And we were learning more about that. And, and doing bundles with electric service providers. Then I learned about, you know, the difference between, you know, monopolistic and a free market for energy and what that meant.
And then I kept digging. And then, you know, and then I started learning about plastics. And I learned about all the problems with plastics. And I learned about fertilizers. And I learn about hydrogen. And I learn about ammonia and, and methanol. And you just sit here and... For me, I just read a lot and I just keep pulling at threads. And I start looking going, oh, that looks interesting, that looks interesting.
And just learning and then deploying capital along the way as I meet with people who have the same kinds of ways of building businesses the way that I think about building businesses, but there might be in a totally different domain, but we can bring so much expertise to help them, whether that's the operations of the business, maybe not technology, per se, 'cause these people will forget more than I'll ever know about the individual technology of electrolysis of hydrogen or something like that.
But at the same time, we can bring things like communications. And how do you communicate these incredible technologies, these brilliant people are making? How do they communicate them? Because typically, when you look at scientists, when you look at engineers, researchers, they're really great in the technology, and they can see the vision of where this could go and how it could change the planet, but they might not be really good and experienced communicators in terms of the marketing angle. And so we try to bring that to them.
At Future Shape, it's a of ending thread that we just keep pulling. And it just goes based on where we see real pain, where we have interest, and where we can add value. That's really what it is at the end of the day. And the climate just becomes more, ha- has become m-m-much more a central focus. It has been for the last, you know, kind of seven, eight years really, but it's been really, I guess, a lot of energy poured in by myself and the team over the last five years because it was all just starting to kind of gel and there was more entrepreneurs and we had kind of crossed out of that old green tech 1.0 mindset. And so people were now diving in. And now we're like, okay, let's go and really, uh, spend a lot of time on climate related startups.
Jason Jacobs: Do you tend to learn first and deploy capital later? Or is deploying capital part of your learning process? Especially, I heard you say that you, in a prior discussion, that you can deploy little checks or very large checks. So how do you think the balance between the two and do you, and do you tend to lead with one versus another?
Tony Fadell: Well, if it's a whole new space, we'll probably start with small checks to learn. But to me, this is like, you know, the, those shadow stock markets, you know, like, oh, okay, all of us, we're gonna go and do a virtual, we'll buy a thousand shares of this or a thousand shares of that, or, and we're gonna track it on paper, you know, and then we'll see who wins at the end, but there's no real money involved? You gotta have skin in the game.
So even if it's a small check or a very large check, you gotta have the skin in the game to really learn. Okay. Because then you're gonna, you're gonna have something on the line that... And, and it doesn't mean that it needs to get returned, but to me, it's like I'm paying tuition. I think about a lot of times is I pay... I tell the entrepreneurs who invest and I go, I'm paying you to keep me off the street so I don't stay retired. So, and I'm paying you to give me an education. And maybe you'll get one back too.
So that's the way I think about it. It's really that exchange of value. And I wanna put our money where our mouths are. Uh, too many times, there's all these advisors and things. And they're like, oh, give me stock and go, give me, ge- pay me. And I'm like, oh, that, you know, that's, self serving. What we're trying to say is we're gonna give you our money. We're gonna pay you to put us on your team. And we're gonna, hopefully, we help. And we'll learn because we'll be so aligned in the outcome. That's how we think about it.
And we start with checks as small as 250,000. And we go all the way up to 25 million now, and everything in between. It's just wonderful to see all of these different businesses that are being created. And then like you were saying, weaving them together, 'cause there's so much overlap, a lot of them have. That's where the magic really comes in, when we can see different models from Aquatech technology and aquaculture for growing, you know, shellfish or, or seafood better.
And then we can take that same idea and then we can worry about produce and how to do leafy greens and produce better. Or we could do something better for climate insurance for agriculture. So these are the kind of things that just, again, it's just pulling this thread and learning along the way, 'cause we're all learning, 'cause we're all doing stuff. All these 200 plus companies that we're in, that everybody's learning. And lots of them are failing and learning again the next day. And, and so are we. And to not have money in the game, that doesn't make sense to me. Uh, I want people to trust us and trust our advice.
Jason Jacobs: Well, selfishly, uh, I have a question. I'm dying here, the answer on it, especially given where you're coming from, building Nest. Just how important is the opinion of experts in domains that you don't have direct experience in? And, and what is the role of, of expertise, given that on the one hand experts are way closer to it than you are, but is that a, is that a blessing or a curse? And how do you know the difference?
Tony Fadell: You need to surround yourself with people who are respectful of your mission, who believe in the mission. You know, when, when I did Nest and with Matt Rogers, when we co-founded that together, and I went and pitched one VC firm or a couple VC firms, they're like, great, I'm gonna invest in you, Tony. But I don't know about this thermostat idea. I'm sure you'll come up with a better idea along the way. So I'm gonna inve- I'm gonna invest in that. And I'm like, no, that's not how this is gonna work. I believe in this. And, and if you don't believe in it, I'm not taking your money. And it was great money. Trust me. It was great money that I was not about to take it. And that's how we see it as well, is that we want people around us who, who are experts at what they do, but also believe in what we do.
Jason Jacobs: But how do you get conviction with the checks that, that you're writing if you're investing in a domain where you don't have direct experience? And what role do you rely on experts for in assessing is it all people or is it technology? And if it's technology, you know, like long duration storage or something, do you feel equipped to assess that on your own? And if not, do you care what experts think? And do you need to consult with them before we getting comfortable?
Tony Fadell: There's experts around the company, and then there's third parties, and then there's the experts, [laughs] right. Then there's the experts who have, have their opinions and they put 'em out, wear 'em on their sleeve and they're out there wr- writing or having podcasts or whatever. I don't trust them as much 'cause they usually have an agenda. I care about somebody who's out the company who really understands it, who really is trying to help them to see the path forward.
And so, no, we'll write checks when we wanna get in because this feels right. Feels right. Like, it's like everyone was building battery companies. Then I was like, who's building the battery recycling companies? I wanna go there. I wanna go learn all about battery recycling. And I wanna go learn about e-waste extraction and, and taking and recycling those kinds of things. Okay. Because, you know, if we're looking at a circular economy, [laughs] you gotta think about all these things being built. Well, how's it gonna go back around?
You know, and that's the... Like in Europe now, it's, it's mandated that if you put up a battery company, battery manufacturing company, you gotta put up a battery recycling factory, too, you know, battery recycling center. You can't do one without the other. Those are the kind of things that we look to. And we might not have a lot of knowledge, but we'll put a small check in so we can learn deeply.
And then a lot of times, you know, those companies, those early companies will fail 'cause, remember, this game, 80% of it's gonna fail. So if you're thinking every single one, you know, you've gotta go in with conviction that every single one's gonna be 10 to 20X kind of a investment. And then you learn through, oh, that assumption was wrong, that assumption was wrong. But to think that you're gonna know because some expert tells you, no, sorry, that's not it.
I want to team of people around where we're all discussing it and trying to find solutions of the problem as opposed to just saying no. All the time we give advice, we don't think that's gonna work. Let me give you the reasons why. Here's a different path to make you successful. A lot of experts I see is like, oh, hydrogen, never gonna work. Come on. Really? Hydrogen's gonna work for certain small niches mate. Oh, hydrogen, you know, it's climate warming. It's, you know, if it leaks to the environment, it's at 11 times worse than CO2. Yes, but if we treat it properly and, you know, CO2 can also be if treated properly, turned into something good, we just decided to admit it.
So when I read all these experts, I have to give it all with a grain of salt because I had times in my past where I've had experts. Let me give you an example. So [laughs] in the middle of the iPod generation 1.0, about three months in, something like that, I said, oh, I wanna get the hard drive expert from Apple who's on the computer side. And I want them to come over and, and I wanna just discuss the architecture we're building and see if they have any ideas.
So about a week later, the person comes over and they, and I go, I exp- get on the whiteboard and I explain 'em, we're gonna do this, this, this, this, this. And they go, that'll never work. I'm like, really? Here's a board over here and it's working and it's a prototype in my pod. It's working just fine. [laughs] But we, uh, we want to see if you could find any problems, you know, that would be second order or third or fourth order problems. And they, they just got really mad, and they ran out, and they never talked to us again. And we shipped, obviously we shipped a product, it was successful.
So I've enough of those expert experiences to go, they gotta come with the right mindset. Without the right mindset and the ability to find the solution, I kind of listen, and then I discount.
Jason Jacobs: Do you care about returns?
Tony Fadell: Yes, of course I care about re- of course care about returns. But I don't have LPs. I have a family. And the family's the LPs in a way. But we also make sure that our money are in buckets. [laughs] And there's buckets, very big buckets that can play with this stuff that really matters and that we can lose 80% of the companies could fail or whatever, but the other ones are gonna be incredibly transformative and they'll pay off the losses.
So I've always learned to not focus on the numbers. Focus on the mission, focus on the solution, focus on the pain, focus on the customer. If you do all of those things right, the money will come. Execute, obviously, execute properly and all that stuff. The money will come if you're doing all the other things right. So stop focusing on the money, stop focusing on the numbers and start looking at what you're, the pain you're trying to solve and how you're solving it. And that's usually where the success comes from
Jason Jacobs: As you assess risk in an investment, I mean, it sounds like obviously people is super important to you. What about in terms of whether it's science risk or engineering risk or capital intensity and follow-on capital and, you know, first of a kind, and value of death and... Like, there's, there's all these different kind of buzzwords of risks that get thrown around. Are there any that you actively avoid either as a guideline or as a rule?
Tony Fadell: Pure research. There's a lot of times you meet a l- a lot of entrepreneurs, I'm gonna put that in quotes, who are truly just researchers or scientists who just wanna get out of whatever setting they're in and they think they have the idea, but it's really still pure research or it's really still science and they're still working on. I call 'em, this is still a science project.
And so as far as science projects go, sure. We don't fund science projects. We might donate something else, or stay close to science projects, but we don't go and invest in those, because we can't add any value. If they're just in the lab, just working on the science, it's not the right stage yet. So we are like, oh great, when you have more of an idea of the science and you have something that's ready to be productized, then let's talk. Until that point, let's stay in contact, but that not for us right now. Okay?
If it's too-late stage where it's all just public private financing and growth funds and all that stuff, that's not where it is. We like the roller coaster. We like the roller coaster where it's like, oh, well, now it's time to productize. Oh, is it product market fit? Oh, what are the issues? Oh shit. Now we gotta go and re- you know, change everything if we didn't go- if we didn't get something right or we didn't assess something right. That rollercoaster, just like the, the entrepreneurs on, that's where we like to be, but we don't wanna be stuck in the lab. We wanna be out in the world really, you know, testing these kinds of things. That's one thing.
And so that's the technology side, the, the, and the maturity of the technology. But when it comes to the business, especially with climate solutions now, I have learned that the companies that we really like to see are the ones that have the technology, not what's 90%, 95% there, but what they've also done is they've also solved the problem for scale. So in other words, they know ex- not exactly, but they know pretty damn well, and can explain it, how they're gonna scale this up from, you know, one prototype, you know, facility into hundreds of them. Right? And how do you go about that?
So the technology of one facility is one thing. The technology to create hundreds of facilities in a short amount of time, that's another technology. We wanna make sure they have both of those things. And then we can worry about all the capital issues around those. But you gotta have a solution for one thing, but you also have to have a solution to scale it. Because all these climate things, if you don't know how you're gonna scale 'em, you're gonna be stuck in a, in a valley of death. Because both, physically and metaphorically, because of the fact that we need these solutions now.
So I always say, okay, your technology's there, but show me how we're gonna get this to market in a, in a broader scale. Go out way and think about it. That doesn't mean it's a series B or series C kind of company that's fully matured. That's not what we're talking about here. But we have to peer inside the entrepreneur's brain to understand how we're gonna make this go big quickly. And typically, that's technology in support of the technology.
Jason Jacobs: And I heard you say in the past that you don't lead investments, how important is who the lead is? And how much does that factor into your decision on whether to make an investment?
Tony Fadell: It's second priority, to tell you the truth. We don't lead because we don't have LPs, one. Two, we get much better information and we get much better access to the company when we're not on the board, 'cause when you're on the board or, or when you're leading, that means you're typically on the board, it's, it's a much different relationship. [laughs] Right? It's much more formal. We like the informal. We'll go talk to the team. "Oh, board, member's coming today." That all of a sudden changes the way people interact with you. And when they're at the company, not just the entrepreneur, but, uh, people around the company. I'd much rather go in and our team goes in and we go at every level in the company, we t- we talk to all kinds of different people and we usually get information much earlier than the board does. [laughs]
Jason Jacobs: Maybe just a chance to, to give a pitch to any founders out there on various stages of the journey. Are there particular sectors you're excited about or particular areas that you wish someone was solving? Or just, I guess a more general question, who do you wanna hear from?
Tony Fadell: [laughs] Well, I think I just articulated it a little bit, which was, you gotta have proven science and prototype productization to a certain extent. But then you also have to have the idea for how you're gonna scale and have a, a pretty good understanding ending for that. Not from a capital perspective, but from the technology of it.
What I have been surprised by, and I continued every day, is how many different things need to be fixed to solve for climate crisis. Some are big, some are not as big, but they're still big in the relative scheme of things. And they're usually different depending on which continent you're on. So I do not have any kind of hard and fast rules around this stuff when it comes to climate.
You know, well, I can tell you what I don't like, I can't tell you what I do like. I don't like anything where the government is not 100% aligned with the permitting process for getting whatever it is you're trying to build. Right? There's one which is regulates that, regulations that promote and help advance. But when you're gonna go into 10-year kind of permitting cycles, when you could build the thing in nine months, it's like, forget it. You know, that's not gonna work.
I've seen a lot of stuff on the, you know, seashores, you know, like, okay, let's fix things on seashores, oceans, ocean shores and stuff like that. And the number of environmental groups that have to get involved to help there, And each one's a little local government, you're like, oh my God, my brain's gonna explode. There's no way to scale this. That's why I talk about scale. Great technology, but we don't have the will to scale it because of the governments and all these groups involved.
So I try to go where there's a li- little less friction when it comes to that. So when there's high friction, I won't look at it because there's enough other things to work on that have lower friction, that I'm gonna go deploy capital and, and time for those things because those can help too. So, again, you know, path of least resistance, I would say, and how fast can we get going?
Again, it's not about money. It's about leaving this planet in a better place for my kids and my grandkids. That's what it's really about. And if we can't scale those things fast, then I'm wasting my time. Just like, you know, you chose, okay and I chose, it's like, we could be doing something different, but we chose the climate because it's so important. So now I'm gonna choose the things in the climate that have the least amount of friction possible.
Again, it's gotta... More or less, it's gotta be... You know, there's some bits-only companies out there, but most of the things in climate are bits plus atoms. And atoms take time. And atoms have to be done right. And there's a lot of people involved, a lot of money involved when it comes to that.
Jason Jacobs: Do you ever get the itch to get back on the horse as an entrepreneur? and whether you do or you don't, if you were to, and you were gonna build a company in climate, do you know what that would be?
Tony Fadell: Well, I'm not gonna get back on the horse. I found that I'm able to have a lot of impact with all the entrepreneurs around me and to go back into that operating role. I would not have the breadth of knowledge that I do today if I was back into one specific role. I can learn a lot from each of those en- entrepreneurs and then see beyond where they're at to where the next phase is, and the next phase is.
So that's really wonderful way of being able to give back and give back on mass to many, many different entrepreneurs all trying stuff. Okay? That's the first thing. So, no, I'm not looking to give back into things from that point interview. Well, I'm working. Talk to my family, talk to my friends. They're like, you're always working. Yeah. I'm always working. That's not gonna change. But it, just the way I work is very different now than it was, you know, six, seven years ago.
Things that excite me? There's so many things. That's what's so exciting, is that there are so many things. And the heavens are opening up for solutions, entrepreneurs, startups in every kind of way. It's crazy to me. And it's not just CO2. That's the thing. We gotta look at methane, uh, releases and what do we do about methane. We gotta look at plastic. We gotta look at organic waste. I know that's CO2 in a way or methane, but what, what are we doing with all the trash we're creating and how are we gonna turn that into treasure? How do we make it circular?
So for me, it's not an issue of picking one thing. It's about limiting and constraining myself and our team so that we lo- you know, cause we can only do so much. So at some point it just becomes, it comes down to how much time do we have and how much capital can we deploy? Because, like I said, we're in over 200 companies and we're a team of, you know, eight, nine people, depending on how you count. It's a lot of work. Very rewarding work, very, very rewarding work.
Jason Jacobs: I definitely feel that I... I think one thing that strikes me is that, I mean, you come from being a long-time executive at a company that prides itself on extreme focus and how less is more. And it's not about every bell and whistle, but it's really only about the absolute necessities and nothing more. When it comes to tackling climate, I've heard, I mean, people like [inaudible 00:41:12] who have said, you know, gimme 14 great entrepreneurs and I'll solve climate change.
Or there's a lot of people in the climate movement that feel like most of the "solutions" are noise and it's really only like two or three things that need to happen. And they, and they might have different two or three things on their list, but, but they really focus in on key outside levers. It, it doesn't sound like that's your view. And I'm curious how you contrast that to your roots in Cupertino.
Tony Fadell: I think that each in- individual, each entrepreneur is, how can I say this? They are trying to create the Cupertino version of what their mission is on. Okay? So I get to go and work with 200 different companies, all tr trying to build a Cupertino mission and realize it. So it's not that, maybe I might not be as focused, but I'm focused on a few key things. Like what don't we do? We don't do sales tech. We don't do ad tech. We don't do gaming. We don't do media. We don't do marketing technology. We don't do gaming. We... You know, I could go through a list of everything we don't do. But the spaces we did choose to go into are very vast and very wide. And actually very synergistic in many ways.
So, okay, so we have focus, maybe not to that individual company level, but we do have companies. Remember, if 80% are gonna go away, that means we're down to, you know, 40 companies at the end of the day that are gonna be really the ones that we're gonna spend a lot of time with. And so it does narrow down focus. You have to think about a big funnel at the top to then get the other ones coming out the bottom so that you can be focused and write those big checks, like I was saying, to help them to get there.
Jason Jacobs: But it sounds like the Industrial Revolution frame will where every sector and it takes all different kinds of solutions is much more aligned with your view of the world than gimme 14 entrepreneurs and I'll solve climate change.
Tony Fadell: Well, I hope the node's right. From what I can tell and, 'cause I've lived in, in [inaudible 00:43:09], but I've lived in many different places and seen many different things. I've lived in Indonesia. You know, I go around... I live here in Europe. I've been in the U.S. for many years. Right? Everybody has different problems. And this is not just like a, make an iPhone, it goes around the world and it's done. These are atoms-based solutions that have different solutions depending on where you are in the world because they all have different needs and different resources around 'em. And especially when you say we gotta act local.
When you do that, you don't wanna be moving things around and everything. You're gonna have a different solution. Absolutely. So yeah, sure, there might be a small modular nuclear reactor that you might be able to replicate, okay, but you still gotta worry about the fuel sources, and where do those come from, and all the regulations around the fuel sources, and the permitting, and dah, dah, dah.
And so yeah, I think there's technology, but then there's ways of scaling that are very, very, that could go around the plant. Te- Technology might be able to go to the plant, but the ways of scaling might be very locally driven.
Jason Jacobs: Well, I have lots of other questions, but I wanna make sure we have time. You've got a book got. And I, I'd love to hear more about the, the book and what it's all about.
Tony Fadell: [laughs] Yeah. So, besides having a great discussion about climate, like we're having now, is, the discussions I love to have are also about building companies. And so your audience, probably most of them are out building companies. They're building themselves, they're building their teams, building their technology to try and change the world for the better.
So Build, the book is called Build: An Unorthodox Guide to Making Things Worth Making, comes out on May 3rd, you can go in, to tonyfadell.com and you can see all the pre-order links there and learn all about the book. But what Build's really about is an encyclopedia of mentorship. So with these 200 companies, or plus companies that we, we talk to all the time, plus all the other companies we don't invest in, but call to us to look at it, we give them advice. They ask us tons of questions, tots, tons of operational questions.
So what I've tried to do in the book is distill down all of these questions about how to build it to team, how to build yourself, how to, you know, think about your board, how to think about your responsibility as CEO or as a manager or what have you and give tangible stories to help people who are, like your audience, building something that matters.
So 30 years in Silicon Valley, plus before that, all these stories. I, you know, I got to work for a decade with Steve Jobs. I got to work at other major corporations and see how they do it. I got in my own startups. So this is just a book of mentorship. You know, about six, seven months before COVID came down. I was thinking about, wow, I'm so blessed and I, you know, uh, I'm able to, you know, have freedom in the world and we're doing Future Shape and everything. I was like, how did I get here?
And one of the things that was really important were the mentors I had along the way. Those mentors didn't have any financial obligations or any financial, you know, incentives to help. They just helped. And they saw something in me or in the idea or whatever and said, oh, here, how can I help? And I could ask 'em for advice and they'd give me some advice or, or introduce me to someone.
So the only reason why I'm talking to you was because of those interactions that I had to with those people. And obviously having my own, you know, effort to m-m-make the success and the teams are around us putting it all in on the line to make the success happen. But there are a lot of struggles along the way. And those mentors didn't just help me with the success, they also helped me with the, the times that I struggled through failure, what have you.
Most of those people have died. And so I saw that the baton was passed to me. It's now my turn to be a mentor. And so Build is, uh, trying to be a mentor in a box, taking all those lessons learned, I learned from my mentors, as well as the things I've learned and making 'em in a very digestible format. And whether you're building your career, you're building a company, build what have you. It could be building a company inside of a company or a division inside a company or a product inside a company. It's not just for entrepreneurs. It's for all types of people, whether you're in from a, late in high school, or even way, if you're thinking about retirement.
And hopefully, it's giving back and answering a lot of the basic questions that people who are building things can get some advice. And even if it's wrong, at least they get one set of advice that could throw it out. I'm just trying to give back, really is what it's about. We've had incredible reviews from some of the best authors out there. Like Walter Isaacson and Malcolm Gladwell have read it. Oh, we've had 50, 60 people read it. I've, we've gotten just praise back, to tell you the truth. I, maybe everyone just blown smoke, but it's been really reassuring that, you know, these lessons... 'Cause it's all about human nature. It's not about creation of the iPod or iPhone or Nest or whatever. Those are back stories, for sure, but these are all human nature stories and ways of thinking.
So that's what Build's about. One thing I should tell your audience is that Build, all the net proceeds from the book will be matched by me five times, and will be going into a Build Climate Fund. So literally, all the proceeds are gonna go into a fund that my team and I manage. And we're gonna be investing in climate startups. And we're gonna be doing just the same things. So take the profits, 5X it with our monies, put it into a professionally-managed team. And over time we hope to see those things grow, see businesses grow. And then we'll reinvest them in new companies. And then over time we'll also be, be donating any, any profits, any proceeds from those activities to climate-related philanthropies.
Jason Jacobs: So it's for-profit investing, but the pool of capital, if it makes profit, then goes back into doing more for-profit investing, but that all gets funneled back into having more impact over time?
Tony Fadell: Exactly. Yeah.
Jason Jacobs: It's almost like donor advised, but set up as a for-profit vehicle?
Tony Fadell: Yes, exactly. Cause, look, we could write the check and we could give the money to some philanthropic endeavor, but we're really good at building companies. We're really good at finding companies. So let's go invest in those. Make those things that generate their own capital. And then we can take those, those investment dollars and put 'em into other companies. Because if we get there by 2050, let's hope that God we get there and we can limit the, the global warming by 2050.
But it isn't gonna go away. We're gonna still have to make sure we're doing the right things. This is an existential problem that's gonna go on decade after decade after decade. This is not just a one time, we solve it with 14 entrepreneurs and it's done and we'll never have to think about again. No. We have to change everything including ourselves and the way we think about this, 'cause it's always going to be an issue. Because, basically, we're morbidly obese on the planet right now. [laughs] And we're gonna have to live within our means and live with the planet, not live on the planet like we do today.
Jason Jacobs: And, Tony, we've talked for almost an hour now and, and it's really been focused on things that you're doing and that you're looking to back companies that are, are doing... I'm curious, if you could wave a magic wand and change one thing that is outside of the scope of your control or the companies that you back, for that matter, that would most accelerate our progress on getting the problem under control, what would you change and how would you change it?
Tony Fadell: Okay. I will give you a few things. Number one, all the, what could be stranded oil and gas or fossil fuel-related assets, you know, Shell or Total, or, someone's gonna get rid of 'em, right? Well, they get rid of 'em and they go to the dark web. They go to the dark web of investors who go and then buy those things and then get as much money as they can for the next five, 10 years or whatever is the are goes.
The government has to say, if you created the problem, any government, if you created this problem, you own this asset now, you need to deal with it. You can't just get it off your balance sheet and say it went away. Right now, we're like... It's like kind of like what we do with plastic or whatever. Yeah. I just give it to someone else. I'm sure it'll get recycled. It's total fucking bullshit. Sorry, my French.
Jason Jacobs: No, we check the explicit box just for these reasons. Uh, sometimes swearing is, is the best way to get your point across.
Tony Fadell: But seriously, we can't just let these assets that are prop- you know, properly managed, go to the dark web and then let them go for a free-for-all where they're even less managed because they're not public companies with full transparency. These companies and the governments have to get involved. When any of their CO2 or fossil fuel assets need to be properly regulated so that they're just not sold off to the highest dark web bidder, like your private credit card numbers or whatever, and then they just go do whatever they want, 'cause that's what's going on. So that's one thing we need to do.
The second thing we need to do is we need governments to step up and start understanding, just like they did for COVID response or the Ukraine war, we're at war with ourselves. And we need to sit here and understand it's not a typical permitting process. We under- have to understand that lots of things were gonna fail. Look at how many things failed in the 1910s, '20s, 1900s with all these different technologies. But lots of things were promoted. Even China goes off and does invest in things that might not pan out. They had like 600 different EV companies that China was backing.
We need governments with the will to help get of the red tape, to a certain extent, or at least fast track it. I'm not saying get rid of environmental reviews or whatever, but we have to fast track these things just like we did with COVID or with the war. Or we have to get them to back things. In other words, match funds. So if we go in with 500 million for something, the government will match with 500 million 'cause there's, it's surrounded, right? By of the right people.
We need to raid the labs, get that stuff out of the labs. You know, whether it's Lawrence Livermore or... You know, pick your lab, we gotta go raid the labs 'cause there's people doing amazing stuff in all of these research labs, but nobody does anything with it. They already have all this stuff. I was telling the French government the other day like, we wanna create something like, you know, the department of energy, you and the, the, you know, and, and all these researchers. I say, don't go build another one that's gonna take 15 years. Just go over to the us and just ask them what they're doing. And then just, you know? [laughs] Let's do some more cooperation. We can cooperate on sanctions. We can coopera- Let's cooperate with the national labs getting together and figuring out what's the best of breed.
So I think the biggest thing that needs to change is governments have to get more involved if they're gonna make these changes happen. And I'm seeing it happen here in Europe, but governments have to clear the path. 'cause otherwise, investors are not gonna get involved when they go, oh, you mean you wanna put up a plant, but it's gonna take 10 years for permitting or even eight years for permitting? You can't do that. 'cause no one's gonna get involved that way.
Jason Jacobs: Awesome. And Tony, I know we're almost out of time here. Is there anything I didn't ask that I should have or any parting words for listeners beyond what you just said? Which was great stuff.
Tony Fadell: [laughs] Thanks. Thanks, Jason. Well, I think the biggest thing is, and your listeners already know this, you're either part of the solution or you're par- part of the problem. You cannot be indifferent or apathetic that to the climate crisis. So what are you doing professionally, what are you doing personally to get on the right side of this and find solutions yourself, your family, as well as the businesses that you either work in or that you manage? And make sure you're always on that right side of the climate. And don't just brush it under the rug, you know, and just go, oh yeah, that's for someone else's to suffer.
Whenever I get to- together, and I hope that people who are listeners here will also ask this question, whenever I get together for a dinner or a get together with people, I ask them, what are you doing about climate change, personally and professionally? What are you doing? Tell me about what your stories are? And then people go, oh, I'm not doing anything. I'm like, oh really? You're not doing anything? Let me tell you some of the things, and, and not just, you know, being. how can I say? Uh, judgemental on them, but giving them ideas.
So it's to have a promoted discussion. So I'm sure your audience already does this. I do this everywhere I go. And I always ask them, what are you doing? What are you doing? And the more we can have this conversation and give up ideas and make them part of the solution, that's gonna go a long way. Because a lot of people want to be a part of the solution. But right now they're apathetic or they're indifferent because they feel helpless. And you need to give them a way or give them ideas for ways of how they can get involved.
Jason Jacobs: Amazing. Well, I wish we had several more hours here, but we covered so much ground. Tony, thank you for coming on the show. Thanks for all the work you're doing. And to the audience, Build's comes out on May 3rd. And make sure to check it out. I know I will.
Tony Fadell: Okay. Thanks, Jason. Thanks, everybody.
Jason Jacobs: Hey, everyone. Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note, that is .co not .com. Someday we'll get the .com, but right now, .co. You can also find me on Twitter at jjacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear.
And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers may me say that. Thank you.
