PDF Summary:Build, by Tony Fadell

What are the secrets to being successful in your career? How do you build a world-changing product-based business? Entrepreneur Tony Fadell answers these questions and more in Build. The book is part career encyclopedia and part memoir, detailing Fadell’s extraordinary journey inventing the iPhone, and then starting Nest (a smart home device company) and selling it to Google for billions of dollars.

In this guide, we’ll first describe Fadell’s career trajectory—including how he failed to build a smartphone several times before finally hitting it big with the iPhone. Then, we’ll share Fadell’s advice for succeeding in every stage of your career, whether you’re just starting out or a CEO. We’ll also share his tips for creating a successful product-based business and building a great team. Along the way, we'll discuss how Fadell’s advice compares with other experts’ tips on building successful products, businesses, and teams.

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(Shortform note: Fadell’s advice applies if you plan on growing your company from a startup into a large organization and thus need the experience to handle both. But if you started what The $100 Startup’s Guillebeau calls a microbusiness—a business that typically only involves one person—you wouldn’t need this experience, and you’d only ever need to hire others much later in the process if you wanted to expand a successful business. That said, experts suggest that you might still want a mentor, who can help you navigate unexpected challenges as you start your business.)

Discover Your Story

Once you have a good idea for a product, the experience to start a company, and the right people with which to build them, how do you start building the product? The most crucial step, Fadell argues, is to discover your story. In other words, you must figure out who wants your product and why, design every conceivable aspect of your product around that story, and test to ensure that story works.

(Shortform note: The Lean Startup author Eric Ries agrees that it’s crucial to keep your customers’ desires in mind when creating your product. However, he recommends that you figure out those desires as quickly as possible in order to maximize profitability. To do so, first figure out what you think your customers want, then create a minimum viable product (MVP) to test whether they actually want it. This MVP may involve no hardware at all; you could simply build a landing page that describes your product’s features and see how much traffic you attract.)

Fadell explains that thinking through the whole story with your team (especially marketing) is essential because it drives both what you build and how you sell it—to investors and later to consumers. Many companies focus too much on the product itself, because that’s what they think they’re selling; but in reality, a company sells an experience with a product—from how the customer installs it to the customer service they encounter if they run into trouble. Thinking through every aspect of that story will help you build and provide the best possible experience.

(Shortform note: When thinking through your product story, keep your ego in check. Otherwise, you risk making some ill-advised choices—as the executives at Ford did when creating the Ford Edsel, a car that’s considered one of the biggest product launch failures of all time. In Business Adventures, John Brooks argues that this happened because the egos of Ford’s executives, designers, and marketers led them to build a product based on what they thought consumers wanted rather than one that met the market’s actual demands. Moreover, Ford built up marketing hype but failed to deliver on any of it; early Edsel buyers complained about subpar quality and reliability, and Ford stopped manufacturing the car just two years after its release.)

To tell an effective story, include three elements. First, remind people of the annoyance you’re solving so that they can get excited for the solution. Second, provide both logical and emotional reasons that your solution is the best possible choice. Third, simplify technical concepts so that your customers can easily grasp them and relate them to others. If you struggle to determine your story, try writing a press release to clarify what you want your product to do and why it matters.

A Different Kind of Product Story

Building a Storybrand author Donald Miller also recommends writing down a good, multi-part story when building your product. But rather than a press release, he asserts that you should create a “storyline”: a document telling the story of how your brand helps customers achieve their goals.

Miller recommends that you include seven elements in this storyline. First, understand 1) what the customer wants and 2) the problem that prevents them from achieving those desires. Then, get the customer to trust you by 3) demonstrating that you understand their needs and 4) showing competence in dealing with this problem. Finally, 5) tell the customer to buy your product, 6) warn them of the consequences of not doing so, and 7) demonstrate the happy ending of buying your product.

Miller’s system doesn’t include information about explaining technical concepts with analogies, presumably because his text isn’t directed primarily towards technical companies. However, he does suggest another way to encourage word-of-mouth marketing: Implement a referral system that enables happy customers to recommend your product to others and rewards them for it.

Release and Evolve the Product

The next step is to release the product. Fadell asserts that what you focus on in each release will depend on which product generation you’re working on.

The First Generation

Fadell asserts that your first-generation product must be “disruptive”—it must represent some sort of fundamental shift in how people normally do things. You may need to disrupt multiple elements of the customer experience; Nest disrupted both the thermostat (by making it smart) and how it was sold (by selling it directly to consumers). But don’t disrupt so many elements that your product isn't immediately understandable. For example, the Segway, which was meant to disrupt transportation, failed in part because people didn't understand how to use it.

(Shortform note: Fadell’s definition of disruptive product aligns with that of Crossing the Chasm author Geoffrey Moore, who contends that such a product requires the customer to change how she uses a product in order to adopt it. In contrast, The Innovator’s Dilemma author Christensen suggests that a disruptive product disrupts the market; it initially appeals only to a certain niche but gains mainstream appeal as it evolves and grows more refined. However, Christensen does agree with Fadell that disruptive products like Nest often require retooling of other processes (like sales channels), which is why established companies often ignore them: Retooling their operations is too expensive.)

To create a disruptive product, Fadell recommends that you work within clear limitations. Keep your team and budget small; the larger these become, the more likely you’ll waste time and money building unnecessary features. Additionally, set a clear timeline: It should take between nine and 18 months to ship your first product. To stick to that, create several internal deadlines. Each team should have recurring deadlines to ensure that they’re producing what they need to; there should also be regular project updates to ensure that everyone is on the same page. Finally, set a deadline for completing the product. If, when you reach that point, your product does almost everything you wrote in your press release, it’s ready to launch.

(Shortform note: It will likely take much longer than you expect to ship your first product, as humans are subject to the planning fallacy: We consistently overestimate how long it will take us to finish a project despite having clear evidence to the contrary. Creating several internal deadlines can help mitigate this fallacy, as we tend to be better at estimating how long it will take to finish short-term projects than long-term projects. Alternatively, set your deadline later than you think you need; Eat That Frog! author Brian Tracy recommends pushing it back by 20%. Setting a realistic deadline may help you combat the perfectionism that prevents you from releasing a product that’s mostly ready, agrees Big Magic author Elizabeth Gilbert.)

If your launch fails, figure out why. Examine the data to determine whether your intuition was flawed or if something external harmed your launch. Once you know why it failed, apply these lessons to your next launch—whether it’s a new version of this product or a new project entirely.

(Shortform note: Keeping your team and budget small may also make potential failures easier to tolerate. In Creativity, Inc., Ed Catmull suggests that failure is often hard to accept because we don’t want all the resources we put into the project to go to waste; innovating in low-stakes environments that use fewer resources can circumvent this issue.)

The Second Generation

When creating your second-generation product, don’t focus on disruption. Instead, improve upon the first generation without drastically changing the features that your customers have grown accustomed to. Now that you have real data from actual customers, making these improvements will rely more on this data than your opinion.

(Shortform note: Other experts add something else you shouldn’t change when updating your first-generation product: the name. Research suggests that if you change the name, your customers will expect drastically different features and may be turned off from using the product. To find out what you should change, pay attention to any patterns you see in the data; understanding these patterns will help you make more informed decisions.)

Additionally, consider the timing. Fadell recommends that you release updates to your products on a predictable schedule; that way, your customers will know when to expect new products, and your team will have clear deadlines to work toward. He recommends releasing one to three smaller updates and one large launch each year.

(Shortform note: Some experts suggest that you should change how often you release product updates depending on what stage your company is in. If your company is still growing, release product updates as soon as they’re ready to help build excitement. If your company is more established, create a release schedule, which allows developers to prioritize the most important fixes and builds customer anticipation ahead of the expected release dates. But be careful if you want to do more than three smaller updates and a large launch each year; if you update your product too often, your customers will start to ignore the news.)

The Third Generation

By the third-generation product launch, focus on making money. Fadell states that your first-generation product likely won’t make you money, as most customers are generally wary of new technology. Your second-generation product should allow you to recoup your investments; by this point, you should have fixed the issues in the first generation and made a better product that works well for your customers. The third-generation product is when you focus on profitability so that you can keep the business going.

(Shortform note: While Fadell suggests that you can wait until the third generation to grow profitable, in Crossing the Chasm (which Fadell cites in his discussion of product generations), Moore warns that if your company runs on venture capital (and not its own profits), you risk developing a “welfare state mentality” and losing your sense of focus and urgency. Instead, Moore advises that you become self-sustaining on profits as soon as possible.)

Handling Problems

No matter how well your launches go, you’ll likely face problems in your business. Fadell recommends strategies for three common ones: a lack of funds, a lack of work/life balance, and catastrophes.

Lack of Funds

If you lack funds for your business, you’ll need to find investors. To do so, Fadell first recommends that you have a clear plan regarding how much money you desire and what specifically you’ll use it for. However, you should have enough money to last for a few months since that’s how long finding the right investors will take. Second, Fadell suggests that you vet your investors carefully since you can’t fire an investor even if they’re bad. Pay attention to how well they treat you when you’re pitching them. If they’re disrespectful, want too much (more than 22%), or have a poor reputation among other startups, look for someone else.

(Shortform note: The authors of Blitzscaling recommend looking for more money than you think you need and acting as if you have half of the funding you have access to, as you’re likely to assume a best-case scenario when raising money and underestimate the number of difficulties you’ll face. Additionally, keep in mind that no matter how well you vet a venture capitalist, how well they treat you when you’re pitching them, and how good their reputation is, their goal is not the same as yours. VCs need outsized returns on a few companies to make up most of the returns of their entire portfolio—so they don’t necessarily care if you fail, as long as one of their companies is a blockbuster.)

Lack of Work/Life Balance

Another problem you may face when building a startup is a lack of work/life balance. Fadell asserts that if you’re starting a business, you’ll likely spend most of your time at work; however, it’s essential that you carve out some time for yourself so that you’re able to lead effectively. Get adequate sleep, nutrition, and exercise. Devote a few weekly blocks in your schedule for reflection so that you can give your brain an occasional break from work. If you’re overwhelmed with administrative tasks, hire an assistant so that you can focus on leading your team effectively. Finally, once the business is up and running, take vacations—and train yourself to let other people on your team handle the business.

(Shortform note: In Clockwork, Mike Michalowicz warns against Fadell’s approach, arguing that entrepreneurs who involve themselves in their company’s daily operations are prone to burnout. This isn’t because they’re neglecting their health and rest or are overwhelmed by administrative tasks. Rather, they don’t have time to improve the company framework (like its daily operations), so small issues grow into crises, and the entrepreneurs burn out while trying to manage these crises. Michalowicz advocates developing a hands-off approach to your business that allows you to focus on more visionary work—and then taking a four-week vacation to force your employees to learn how to operate without you.)

Catastrophes

Another problem you may face when building a startup is some form of “crisis” or catastrophe. When you encounter a catastrophe, your first priority is to fix the problem. As a leader, you should dive into the everyday work your team does so that you can figure out with them how to fix it. You must also communicate effectively with your customers, apologizing if necessary. Only once you fix the problem should you examine why it happened and adjust your processes to ensure that something similar doesn’t occur again.

(Shortform note: Other experts support Fadell’s recommendations for dealing with a crisis. In Good to Great, Jim Collins argues that subpar leaders try to shift the blame or hide bad news when something goes wrong; in contrast, the most effective executives focus on figuring out and fixing the problem so that the same mistake doesn’t happen twice. And the authors of Rework agree with Fadell that you should communicate your mistakes to your customers immediately to avoid unwanted media attention. If an apology is necessary, say “I’m sorry,” which sounds sincere, instead of “I apologize,” which sounds distant and standoffish.)

Then, Fadell recommends that you memorialize what happened. The narrative of how you successfully faced and fought through a catastrophe is important to your company; in the future, it will remind your employees that you can fight through another catastrophe because you’ve done it before. (Shortform note: In The Hard Thing About Hard Things, Horowitz writes that you should talk about problems openly not because it motivates future employees, but because doing so sends the message that it’s OK to talk about problems—if an employee sees a problem, they’ll feel they can communicate it without fear of repercussion.)

How to Create the Right Team

In this section, we’ll first discuss how to hire people effectively. Then, we’ll share how to keep those people engaged at the company. Finally, we’ll discuss the four types of people you need on your team.

How to Hire the Right People

The first key to building an amazing team, Fadell explains, is to hire the right people. This should be your company’s biggest priority in the growth stage, as the people will make or break your company. To do it well, Fadell recommends that you develop a hiring structure that helps you decide whether the candidate will work well in the company by letting the candidate’s internal customers (ICs) make hiring decisions. As discussed earlier, everybody in a company has ICs—the people with whom they share deliverables. For example, a writer’s IC is their editor, as that’s to whom they submit their manuscript. ICs should vet candidates so that they can ensure they’ll work well together.

(Shortform note: In The Four Obsessions of an Extraordinary Executive, Patrick Lencioni agrees that hiring effectively is essential to building your company, but this is because hiring the right people ensures that everybody in the company abides by its core values. Therefore, Lencioni recommends assessing potential candidates based on both their resumes and how well they align with your company’s core values—the latter of which will better indicate the candidate’s potential. Lencioni also recommends that candidates be interviewed by potential team members, but he argues that they should be interviewed by as many of them as possible—both to assess the candidates’ values and to determine how well they gel with the team.)

How to Keep People Engaged

Fadell suggests two strategies for keeping the candidates you hire engaged throughout their time with your company: Handle transitions well, and prioritize benefits over perks.

Fadell argues that handling transitions well is essential to maintaining your company culture—the intangible elements that your employees value—and thus keeping your employees happy. As your business grows, you’ll face “breakpoints”—transitions in sizes that will require you to change how your company functions. As your company adds more employees, you’ll need to refine job descriptions, hierarchical structures, and communication processes to ensure that everyone stays in the loop and your company runs smoothly.

(Shortform note: The authors of Managing Transitions suggest an alternate framework for viewing the evolution of your company. Changes are the external events that happen to your company; transitions are the psychological processes by which your employees deal with change. Like Fadell, the authors agree that it’s essential to help employees manage these transitions psychologically by supporting the people impacted—not because you’ll lose the culture if you don’t but because the change you’re trying to implement will fail.)

Fadell explains that you must prep for these transitions, which inevitably cause big changes in employees’ roles and the company. Otherwise, you risk losing the culture that ties employees to your company—and thus the employees themselves. To do that, ensure that the culture that grew organically in the early stages of your company remains even as you grow larger. Prior to each transition, ask everybody to write down what they love about the company and exactly how they do things. Then, create systems to keep those things: Teach new employees what matters and how to follow old processes. As long as they’re written down, your company can maintain its culture—even as people leave.

Other Perspectives on Scaling Your Company

In The Hard Thing About Hard Things, Horowitz agrees that you need to scale processes as your company grows. However, he suggests that you do so not when you hit a specific number but when adding a new employee feels harder than adding more work to your existing employees, and this feeling is preventing you from growing the team quickly enough to reach company goals. Moreover, he doesn’t advocate asking employees to define the processes they like so that you can keep them; rather, he recommends defining your ultimate goal, figuring out what steps you need to reach it, measuring the success of each step, and holding someone accountable for that success.

That said, Andrew Grove, who wrote High Output Management and whose ideas Horowitz supports, does emphasize the importance of culture; he argues that management must develop and establish culture by both explaining and demonstrating how to do things. But this is not to keep your employees happy; rather, it’s a way to get your employees to behave in the way you want them to, as people’s behavior is controlled by culture.

Additionally, Fadell urges you to prioritize benefits over perks. Benefits are non-wage compensation, such as medical insurance; perks are fun bonuses, such as massages. Fadell warns that giving employees perks is dangerous: When people constantly get gifts, they don’t value the gift as much—but they still get upset if someone takes that gift away. So save your limited funds for benefits, which people value more.

(Shortform note: Other experts agree with Fadell’s definitions of benefits and perks, but they name a third type of reward that companies give: performance-based rewards-,The%20Difference%20Between%20Benefits%20and%20Perks,work%20on%20a%20particular%20project.), which are perks that employees receive only if they meet a certain standard. No matter the type, perks may be more important than Fadell realizes: They can help you attract and retain top talent—especially if you provide the most coveted types, like flexible schedules and extra training.)

Who You Need on Your Team

Fadell explains that you’ll need four types of people on your team: great product managers, the right salespeople, a good lawyer, and an amazing board.

Great Product Managers

A great product manager understands what the customer wants, communicates those desires to the team building the product, and later translates them into a marketing message to share with potential customers. For example, one female Nest product manager helped the team building a security alarm realize that mothers wanted reassurance when they were home with their kids. In response, the team built in a feature that allowed customers to open doors from inside without triggering the alarm but kept the system active so that it would alert you to intruders. This feature helped Nest tell its female customers why they should buy the product.

Other Characteristics of Good Product Managers

In Inspired, Marty Cagan agrees that a product manager must understand the customer’s desires and help the product-building team build features that meet those desires. However, he argues that the product manager should communicate what the product does to the marketer rather than create the marketing message herself.

Whatever role the product manager fills in your company, pay attention to how well they meet your customer profile. At Nest, a female product manager noticed female customers’ concerns; often, men are unreceptive to women’s concerns because they don’t have personal experience with the issues women face, as Caroline Criado-Perez points out in Invisible Women. This may be an issue with product managers, who are mostly men.

The Right Salespeople

Fadell suggests that you find salespeople willing to work outside of the traditional commission model. If your salespeople’s salaries depend only on whether the customer buys the product, they’re incentivized to sell at all costs. As such, they may treat the customer poorly—perhaps by misleading them about product features. Instead, implement a vested commission strategy. Incentivize the salespeople to treat potential customers well by giving them part of the commission when they sell, and the full commission the longer the customer stays with the company.

(Shortform note: Other experts suggest that salespeople are incentivized to sell at all costs and mislead potential customers about products if they’re operating on an exclusively commission-based model. If you or the salespeople you want to hire are skeptical of a vested commission strategy (perhaps because they’re worried that the customers will leave due to unforeseeable reasons), try offering your salespeople a base salary plus commission: Having that base salary as a cushion will make salespeople less likely to resort to misleading sales tactics, but the commission structure will still encourage them to sell.)

A Good Lawyer

To run any business, you must make legal decisions. At some point, it will be more cost-effective to hire your own lawyers instead of continuously outsourcing legal issues. Fadell recommends hiring a lawyer familiar with your business’s core competencies. A generalist won’t be able to advise you effectively without hiring other specialist lawyers and will also lack the legal expertise to advise those specialists effectively. So you’ll spend more money to get worse advice.

(Shortform note: Another route you can follow when building a legal team is to hire a startup lawyer—someone who's experienced in the legal ins and outs of funding and starting a company. These lawyers can help you find the legal specialists you need; just read your agreement carefully to ensure that the startup lawyer doesn’t make an unreasonable amount of money from doing so.)

Fadell also cautions against blindly following your lawyer’s advice. Success often requires taking risks. A good lawyer will inform you of the potential legal consequences of those risks; a great one will help you find a better workaround to accomplish your goals. But ultimately, only you can decide what’s worth the risk. (Shortform note: Other experts note another sign of a great (and not just good) startup lawyer: They’ll connect you to a wide range of experts—both in and outside the legal fields—who can help your business.)

(Shortform note: It’s not just business success that requires risk-taking. In Who Will Cry When You Die?, Robin Sharma argues that living a full personal life also requires taking risks. But many of us are risk-averse, no matter how well your mentors (or lawyers) advise you. If you want to be less fearful of taking risks, try practicing with low-risk and low-pressure decisions. For instance, take the risk of purchasing a new toothpaste brand. From there, you can slowly build up to taking bigger risks.)

An Amazing Board

Fadell writes that once you’re CEO, you’ll also need to create a good board: These are the people you’ll turn to for advice and the ones who can fire you if you do poorly.

Creating a good board requires that you include four types of people: a master networker who can introduce you to people who can help your business; investors, ideally those who are compassionate about the grind of building a company and not exclusively focused on their potential returns; an operations person—someone who’s built a company before and whose brain you can pick; and finally, a chairperson—someone who facilitates the board meetings, addresses any bad blood between board members, and supports your vision with the board.

(Shortform note: Trillion Dollar Coach provides further advice on creating and managing boards from Bill Campbell, whom Fadell mentions in Build as a long-time mentor. In addition to having the specific expertise Fadell names, every board member should care deeply about the company and always be available and willing to get their hands dirty to help you do your job. If they don’t come prepared to meetings or contribute in any useful way, remember that you have the power to fire them; it’s not just the other way around.)