Build: An Unorthodox Guide to Making Things Worth Making

by Tony Fadell

Companies think they can control the worst of it—that a little bad behavior is just the cost of a high-powered sales team. What’s the problem if everyone’s hitting their sales targets?

Or you might find out that those great numbers they’ve been putting up aren’t so great after all. Maybe they’ve been telling little white lies about your team’s capacity or your product’s ability to meet customers’ needs. Maybe all those customers flowing into your business have been sold something you can’t actually give them. And now they’re pissed.

The old commission model is an anachronism. It’s outdated and rewards all the worst behavior. But it is useful for one thing: weeding out the assholes.

Most lawyers excel at two things: saying “no” (or “maybe”) and billing you. That’s not necessarily because they’re bad lawyers; it’s just how the system is set up.

You will never get a pure, unadulterated “yes, go ahead—there’s no danger ahead” because there’s no ironclad way to prevent a lawsuit.

That doesn’t mean you shouldn’t follow legal advice—it just means that legal shouldn’t be your only consideration.

Their job is to tell you the law and explain the risks. Your job is to make the decision.

When considering your first legal hire, you may be tempted to hire a generalist—someone who can do a bit of everything. People think that will cut down on their need to hire outside specialists. But it’s the opposite.

David Letterman and Kanye West wrote to us asking for our product when we were sold out.

I had seen too many successful products and platforms from little startups die when bigger players moved in and sucked up all the oxygen in the room.

We had plenty of concerns about a culture clash, but the Google team reassured us that Nest’s mission-driven culture would set a new standard and help drive a cultural evolution at Google. They told us we’d get a huge boost in sales and that we’d be able to bring our platform to life years faster than we could as an independent company. They told us this was going to be a beautiful marriage.

Everything was more expensive. In 2014, just before the Google acquisition, Nest spent around $250,000 per employee per year. That included decent office space, good health insurance, the occasional free lunch, and fun perks from time to time.

After we were acquired, that number shot up to $475,000 per person. Some of the increase was due to corporate red tape and increased salaries and benefits, but a lot of it was the added perks of free buses, free breakfast, lunch and dinner, tons of junk food, gleaming conference rooms with full A/V setups, and new office buildings. Even

little over a year after the acquisition closed—Google cofounder Larry Page called me into his office. He said, “We’ve got an exciting new corporate strategy for the company. It’s called Alphabet. And we want Nest to be the model for how to do it right.”

For sixteen months we’d been focused on trying to integrate with Google, to become one with the mothership and get all the goodness we needed to accelerate our vision. That integration and technology access was the main reason we agreed to be acquired in the first place. But Larry told me that was over. New direction. New strategy.

There was no plan in place. None. I’m all for “Do. Learn. Fail,” but you can’t turn an entire company upside down without at least a semblance of a strategy.

I pointed out that Berkshire Hathaway buys companies that are ten, fifteen, fifty years old. They’re fully formed, have plenty of revenue. They’re grown, healthy adults. Alphabet’s other bets were infants, toddlers, adolescents trying to find themselves.

To add insult to injury, our cost per employee more than doubled—a 2.5x increase. And nothing was different—everyone at Nest was doing the same job in the same place. Now we just had to pay for it ourselves, including an Alphabet corporate tax for any service that Google supplied. So the basics we relied on—IT, legal, finance, HR—got instantly more expensive.

I started getting allergic to the word “thoughtful.” Every time Google senior management wanted us to swallow some new strategy, they’d tell us it was, despite appearances, extremely thoughtful.

When it was clear I wasn’t going to budge, Larry told me that we had to reach profitability. “I need you to get bold and creative and figure out how to cut everything by fifty percent.” And he literally meant everything: head count, expenses, and our road map.

Larry told me not to worry about firing everyone. He said there were plenty of open jobs at Google that they could easily move into. And I thought, Has this guy ever had to personally lay off people in his life? You can’t just play with people’s lives like that.

People have this vision of what it’s like to be an executive or CEO or leader of a huge business unit. They assume everyone at that level has enough experience and savvy to at least appear to know what they’re doing.

But some days, it’s high school. Some days, it’s kindergarten.

As CEO, you spend almost all your time on people problems and communication. You’re trying to navigate a tangled web of professional relationships and intrigues, listen to but also ignore your board, maintain your company culture, buy companies or sell your own, keep people’s respect while continually pushing yourself and the team to build something great

The job is to give a shit. To care. About everything.

When you truly give a shit, you care, you don’t let up until you’re satisfied, you pick things apart until they’re great.

You don’t have to be an expert in everything. You just have to care about it.

They’re hands-on, but to a point. They know when to back off and delegate.

If they screw up, they admit to it and own their mistakes.

They realize that nothing should be theirs, even if the genesis was with them. It all has to be the team’s. The company’s. They know their job is to jubilantly celebrate everyone else’s successes, to make sure they get credit for them, and hold little for themselves.

Sometimes people forget that. They firmly believe that if they didn’t think of it, it’s not worth thinking about.

CEOs get so wrapped up in their own companies that they dismiss the competition. If it wasn’t invented here, it can’t possibly be any good.

It’s poison to think great ideas can only come from you. That you alone can hoard them in one place. And it’s stupid. Wasteful.

Steve took a lot of risks, made bad decisions, launched products that didn’t work—the original Apple III, the Motorola ROKR iTunes phone, the Power Mac G4 Cube, the list goes on. But if you aren’t failing, you aren’t trying hard enough.

CEOs have to make incredibly unpopular decisions—lay people off, kill projects, rearrange teams. Often you’ll have to take decisive action, hurt people to save the company, to cut out a cancer. You can’t skip surgery because you don’t want to upset Team Tumor.

And you can never tell if you’re getting it right. When you’re an independent contributor, you can typically look at something you’ve made that week and be proud of it. When you’re a manager, you can look at the collective achievement of your team and feel a sense of accomplishment and pride. When you’re a CEO, you dream that maybe, ten years down the road, some people will think you did a good job.

That freedom is thrilling and empowering and utterly terrifying. There is nothing scarier than finally getting what you want and having to take responsibility for it, good or bad.

The best CEOs always know the outcome of a board meeting before they walk through the door.

Bill would always say that if there was any potentially surprising or controversial topic, the CEO should go to every board member, one-on-one, to walk them through it before the meeting.

Being able to help the board grasp exactly what’s going on is good for the CEO, too. The better you can explain something, the more you understand it. Teaching is the best test of your own knowledge. If you’re struggling to explain what you’re building and why, if you’re presenting a report without really understanding it,

Typically companies with inexperienced boards are always running out of money. They never meet their quarterly goals and always blame “market problems” rather than the CEO or themselves.

once saw an early-stage startup with a five-person board where the CEO controlled four seats. The CEO simply installed employees and friendly outsiders in all the available spots, and if anyone voted in a way the CEO disliked, they were removed. The one board member who knew better was completely helpless.

When two fully formed companies merge, their cultures need to be compatible. Just like any relationship, everything ultimately comes down to how well people get along, what their goals are, what their priorities are, and what drives them crazy. Fifty to 85 percent of all mergers fail due to cultural mismatches.

But that culture is enabled and driven by the fact that Google’s search and advertising business pretty much prints cash. Even Googlers call it the “Money Tree.”

It was the right thing to do for our customers. It was exactly the wrong thing to do for our relationship with Google.

Back then Apple’s executive antibodies saw us coming to take their time and draw away their resources, so they tried to block our way and ignore our requests.

But Google didn’t have Steve Jobs. It had Larry Page and Sergey Brin—both brilliant and savvy entrepreneurs, but they didn’t have Steve’s fighting spirit, born from multiple near-career-death experiences.

The moment I realized that, I could see how we’d been misaligned from the start. We hadn’t prepared for this. We hadn’t planned for no managerial air cover. We hadn’t planned for organ rejection.

Most acquisitions are driven and overseen by bankers, and bankers only make the real money if the deal goes through, so they’re motivated to move fast and get paid. They don’t care about getting every detail of what happens to employees right. They don’t really care about cultural fit. Not deeply.

Most investment M&A bankers are not your friends. I’ve seen so many small startups, especially in Europe, call in a banker to help them raise money or sell their company. The bankers promise the moon and stars but rarely deliver.