How Nothing Founder Carl Pei Built A Multi-Million Dollar Smartphone Brand In Just 2 Years

Coming Up (0s)

• The video discusses Carl Pei, the founder of Nothing, a smartphone company.
• Nothing was launched two years ago and has achieved $600 million in annualized revenue.
• The video will explore the company's success and other related topics.

Carl's journey into tech (36s)

• The individual was a gadget enthusiast from a young age, owning an iPod and being one of the first in their friend group to own an iPhone.
• They were inspired by early Apple products and were disappointed when their iPod broke shortly after the warranty expired.
• While visiting relatives in China, they purchased an MP3 player from a brand called Mesu, impressed by its quality and design.
• They created a fan community around the brand, which led to them being profiled in the Los Angeles Times and eventually being recruited by the company after university.
• At the time, they were considering applying to Y Combinator but ultimately chose to accept the offer from the Chinese company, citing laziness as a factor in their decision.
• They moved to China in 2011 and stayed for 11 years, learning how to make hardware during that time.

Starting OnePlus (2m47s)

• The speaker was previously working for a company whose founder was struggling to cope with setbacks and was not actively involved in the company. This led the speaker to lose respect for the founder and seek new opportunities.
• The speaker joined Oppo, a company known for its offline distribution channels, but was quickly presented with the opportunity to create a new brand focused on online sales.
• The initial vision for OnePlus was to leverage Oppo's supply chain advantages and low-cost manufacturing to disrupt the online market, initially targeting China.
• The speaker, being a young individual, expressed interest in leading the expansion outside of China, as Oppo lacked a team for international markets.
• At the time, Google services were not available in China, meaning there was no Android build for international markets.
• The speaker recognized the potential of Cogen, a community-driven custom ROM that had gained significant traction and recently transitioned into a company.
• The speaker proposed a collaboration with Cogen to address the lack of an operating system for OnePlus's international markets, leveraging Cogen's expertise in custom ROMs.

How Nothing came to be (5m27s)

• The individual had been working at OnePlus for seven years, working at least six days a week with no real vacations.
• After leaving OnePlus, the individual planned to travel the world for at least six months.
• After ten days of travel, the individual felt a sense of anxiety and a desire to contribute, leading them to return to Stockholm.
• The individual reached out to entrepreneurs in Stockholm for advice on raising money, receiving guidance from a welcoming community.
• The individual received diverse advice from various entrepreneurs, which initially caused confusion due to conflicting perspectives.
• The individual eventually understood the advice and successfully raised seed funding.

Building a new smartphone is hard (7m7s)

• Building a smartphone is a complex process that involves hardware, relationships, and a value chain.
• The speaker initially aimed to improve upon their learnings from OnePlus but the vision evolved over time.
• Securing funding was challenging, as the speaker estimated needing $100 million to create a smartphone, a sum difficult to raise at the seed stage.
• Many factories, including Foxconn, were hesitant to work with startups due to past failures. Foxconn had previously worked with five startups that failed, leading them to prioritize their relationship with Apple and avoid further risk.
• Foxconn's reluctance stemmed from the opportunity cost of working with startups, as they had to invest in engineering and inventory, even taking on inventory risk for startups who failed to meet their sales projections.
• The speaker found it difficult to establish a supply chain due to the reluctance of companies to collaborate and take risks after previous failures.

Why Nothing made earbuds first (10m7s)

• Nothing decided to start with earbuds because they were a smaller, but still complex product, allowing them to gain experience and build relationships with factories.
• Many factories were hesitant to work with Nothing due to their lack of experience and the crowded earbud market.
• The only factory willing to work with Nothing was struggling financially and relied on Nothing's business to survive. This factory was unable to replicate Nothing's manufacturing process, resulting in a significant defect in the first batch of earbuds.
• 90% of the first 5,000 units shipped had a charging issue due to a faulty spring in the charging case.
• Nothing responded by immediately halting production, renting apartments near the factory, and sending engineers to oversee the manufacturing process.
• This intensive effort allowed Nothing to improve quality and eventually sell 600,000 units in the first year.
• The experience forced Nothing to adapt and improve their processes, partnerships, and team, ultimately making them stronger.

Cultivating a cool brand (13m12s)

• The speaker acknowledges that the brand's awareness is still relatively low, despite achieving $600 million in annual revenue.
• The speaker suggests that the brand is developing a "cult following" due to its focus on design and aesthetics.
• The speaker highlights that the current user base is a mix of tech enthusiasts and creatives who appreciate design, fashion, and music, which is a different demographic than the company's previous customer base.
• The speaker attributes the shift in user demographics to the brand's design-centric approach and curated Instagram feed, which resembles a hybrid of a luxury fashion brand and a tech brand.

The right Tim Cook/Jony Ive ratio (14m22s)

• The speaker suggests that hardware startups should prioritize a Tim Cook-like approach, focusing on survival and volume, over a Jony Ive-like approach, focusing on design and differentiation.
• The speaker recommends a 90% Tim Cook to 10% Jony Ive ratio for most hardware startups in the beginning.
• The speaker believes that as a hardware startup gains volume and establishes itself, it can gradually shift towards a more Jony Ive-like approach, increasing its focus on design and differentiation.
• The speaker suggests a maximum of 20% Jony Ive, with 80% Tim Cook, as a safe starting point.
• The speaker believes that the threshold for Jony Ive can be increased over time as the company grows and establishes itself.

Nothing's glyph interface (15m21s)

• The "glyph interface" is a design philosophy that aims to create a product with a defining feature that is easily recognizable and memorable.
• The goal of the glyph interface is to make users more mindful of their smartphone use by providing essential information through lights on the back of the phone, reducing the need to constantly check the screen.
• The glyph interface allows users to see important information, such as who is calling, how far away an Uber is, or how much time is left until their next meeting, without having to unlock their phone.

Carl's favorite designs (17m9s)

• The speaker's favorite sneaker is a classic white Common Projects shoe.
• The speaker's favorite Apple product is the volume knob UI on the first generation iPad. They appreciate the attention to detail in the design, including the brushed metal and the way the light reflection changes with the tilt of the iPad.
• The speaker dislikes flat design and prefers skeuomorphism.
• The speaker's favorite watch is the Royal Oak.
• The speaker is not a fan of smartwatches because they find the constant notifications overwhelming.
• The speaker's favorite sci-fi movie aesthetic is from "2001: A Space Odyssey." They use screenshots from the film on their brand's mood board.
• The speaker also enjoys the aesthetic of "Blade Runner" and "Blade Runner 2049."

Advice for hard tech founders (19m38s)

• Starting a hardware startup is difficult, but it is achievable.
• It is recommended to build credibility before launching a product in a highly competitive category like smartphones.
• There is a great sense of satisfaction in seeing people use a product that you have helped create, especially if they do not recognize you as the maker.