♪ emily: he worked alongside steve jobs to revolutionize the way we listen to music and became known as the godfather of the ipod. he spent nearly a decade at apple, then hatched a company of his own. in 2010, he cofounded nest labs, where he's promised to reinvent every unloved product in the home. a promise so thrilling, google, soon to become alphabet, snapped up nest and its star ceo for $3.2 billion. joining me today on "studio 1.0," nest ceo and cofounder tony fadell. tony, so great to have you here. tony: it's great to be here. emily: thank you so much for coming. tony: i love it.

emily: you were born in michigan, but you moved around a lot. 12 schools in 15 years? tony: yeah. well, you know, going to so many different cities, there is a lot of positive impact, right? i was able to learn about various different types of people. being in new york, and then being in texas, being in the midwest, they are very -- human nature is the same, but the way they display it might be different. emily: how do you think that affects your work and how you lead? tony: i think a lot of times that by always being the new kid, you are always distanced from what is going on around you. so, you're always analyzing, you're evaluating, you're seeing what people are doing, what they are not, because you are not in it. you are more an observer. that helps because it allows me to step back and analyze the situation, not just in the company, from a human perspective, but also from a product perspective. what are people using, how are they using them out in the real world and looking at those details. emily: so your grandfather had a big influence on you. he was a carpenter, right? tony: yes, he was. he was an educator. emily: you guys used to build stuff together.

tony: absolutely. he would hold classes like woodshop and metal shop. when he retired, he still did that with us, my brother and i. building soapbox derby racers and fixing lawnmowers and bikes together. so we learned from a very young age, like 3-years-old and 4-years-old, how things work, how to use tools. i did not even know what a computer was, right, until i saw my first one in about 1979 or so. emily: you went on to the university of michigan, you studied computer engineering. then in 1991, you moved to silicon valley. tony: yes, i worked with another guy to build a startup in high school. emily: oh, really? tony: we were doing mail order for apple ii. we were designing software and writing it for apple ii. ultimately, i was so frustrated, because we did not have the internet then, right? i thought i need to get to silicon valley as fast as possible. i would read "macweek" magazine religiously every week on the back. what are the rumors, what's going on? emily: so even back then, you were obsessed with apple? tony: i absolutely was obsessed with all things computing in the

1980's. it first started with apple ii. emily: you worked on the earliest mobile devices, like the precursors to this. at general magic. at phillips, you started your own company, fuse. by the end of the decade, you probably knew more about mobile devices than literally anybody on the planet. tony: i just kept doing the thing that i really love to do. emily: tell me about the first time you met steve jobs. tony: andy herzfeld, who was one of the founders of general magic, he had a birthday party. steve happened to be there and we talked for maybe a couple of minutes. that was the first time i ever met him. but then the next time i met him was literally to give the pitch for the ipod. what would become the ipod. emily: you gave the pitch for the original ipod? tony: there was a whole team of us, but i was leading the charge in talking about what it was. it was literally a layout of what digital music could be, what the challenges were. there were three different concepts. and the one that we always saved for the end was the one we thought was the best. it was the most expensive, it was the riskiest one, and steve

was very engaged and very much driving. we had a presentation, you know, a deck. but he flips through the deck, and then he just jumps around. there was no linear format. you just kind of braced yourself for impact. and he would throw questions out, throw out conjectures, and you just sat there and rolled with the tide. emily: where did it end? tony: it ended at literally -- we are going to do this, and tony, we want you to lead it. i had been in other executive presentations, where it was like, oh, it will take four months to decide, or whatever, -- it was, no. from the beginning of the meeting, he was fully engaged, to the end of it, ok, commit and we are going to do it. emily: we are going to take on sony. tony: i said we have to deal with sony. he's like, we're going to get sony. i'm like, but sony is number one in every audio category in the world for personal audio. how are we going to beat it? and he is like, no, we're going to do it. emily: you have become known as the godfather of the ipod. which, in a way, makes you the father of the entire product line. the ipod, the iphone, the ipad, maybe the watch.

but really, i mean, the ipod itself had such a dramatic impact on everything that apple has done since. tony: it was a big turning point, going from computers to consumer electronics, for the company. emily: what was your relationship with steve like? tony: well, it was very professional. you know, there were times when it was friendly. i would not say we were friends, per se, in terms of, like, hanging out. but it was friendly, but it was tough at times. it was a great mentor kind of relationship at times. and there were other times when he called me on my crap or i called him on the crap -- he didn't like that. whether we were fighting or being friendly, it was all about the best thing for the customer and the experience, which is what i loved. i would never trade that for anything. emily: i read it was kind of like father and son. is that fair? tony: there were love-hate moments. there were times when we were like ok, we are going to take on the world. and then there were other times, like, "i'm going to strangle you." if there is tension, there is not creation.

you really need creative tension to change things. emily: you quit a couple times. he fired you a couple times. you made up. tony: it was a dramatic relationship. [laughter] emily: there is this modern mythology of johnny ives as the apple design guy. i wonder how do you remember it? was it more of a team effort than sometimes this mythology would lead people to believe? tony: well, look -- you know, when it comes to design, there is no right or wrong. there is opinion. and different people had different opinions and led the charge for certain decisions. and so there was a team effort between, you know, myself, johnny, the marketing team, steve. and we would talk about the features, future sets, what it looks like, grappling with those things. and there were certain decisions i can make myself about how we were going to implement it. but there were certain things of what it might look like, and johnny had a big opinion on that. but steve, regardless of whether it was me, or johnny, or mark, steve always rendered the final opinion, right, on almost

anything that involved the customer. so, it was very much a team-oriented thing. emily: is this, sort of, mythology that pits you and johnny against each other, is there any truth to that? tony: like i said, creative tension is what makes things better. so, we had a lot of -- we had times when we saw eye-to-eye, and there were times that we didn't. that is what makes a better product. was there tension? sure, there was tension at times. was it personal? no. it was all about the business and the product, and i think that is what made the magic happen. emily: how did your relationship with steve compare to your relationship today with larry page? tony: i would say that they are two very, very talented people, very, very smart people. they come from two very different backgrounds. larry is very smart in technologies, he loves technology, he loves to see beyond the horizon. and he is an aficionado of product and how it can turn into product. steve was very much a marketing person who had a love of product. so he would always look at it through that eye. i'm in the middle. i'm a product guy. emily: there was a "fortune"

headline that read "is tony fadell the next steve jobs or the next larry page?" [laughter] tony: i am tony fadell. it is that simple. i am just tony fadell. emily: so, what is similar and different between how you run nest and how steve jobs ran apple? tony: similar is accountability. really understanding, trying to understand your customers as best as possible. the difference is, i think it is giving a lot more credit to the team and really trying to be more inclusive with getting ideas from people and trying to mold those things in. and listening to them and not trying to get involved in every little detail. emily: you also ended up poaching quite a few apple employees. tony: i did get a call from steve about that. ♪

emily: 2008, you left apple. in 2010, nest was born.

tell me how the plan for nest was hatched. [laughter] tony: because of my time with my grandfather, i learned a lot about houses. i was always fixing them, even before nest. when it came to designing a home for a family, i did not just let an architect run with it, i wanted to get into every detail. that is when i found all of the problems in the home, specifically heating and cooling. even when i told my wife, like, "i want to make a thermostat," she looked at me like "you're nuts." and i was like, "no, let me tell you." when you explain the situation, that this is not just a thermostat. their eyes perk up and they go, i think you should do it. emily: you reinvented the thermostat, the smoke detector. you gave cameras, home security cameras, a complete makeover. you know, before you even got to the cameras, though, less than five years passed, and google snaps you up. you sell to google for $3.2 billion. tony: i think the first decision was should we allow google to invest in the company?

and that was 2 1/2 years earlier than the actual acquisition. through building a relationship and really getting to know larry and sergey and various people inside the team, we got more and more comfortable with the executives and a lot of the people we were working through that, the investment process, as well as the preceding 2 1/2 years. so we had been dating for a while, in a way. right? so, we were dating before we got married for about 2 1/2 years, so we really got to know each other. the final part was the last three months, was really this -- "maybe we should get engaged" discussion. should we get engaged? do you want to have kids? you know, where do you want to live? and what would we call the kids, and what would our last names be? so, it was all of those little details before we said we were going to get married. emily: was there any part of you that said, "god, i don't know, this is my baby. maybe we could be bigger." randy komisar, kleiner perkins, thought you could be far bigger

than even $3.2 billion. tony: it was never about money. it was about building the right thing. and so, this wasn't about money. yeah, the number was nice. don't get me wrong. but this was about a 10, 15 year vision. and i knew that we were going to need big arms around us to help us get there. and i remember how long it took to go from ipod to iphone, and those things. and you need a lot of resources to do it. just to be standalone? people would go, oh, you need to go public, you need to raise more money. i did not want to go public. so, when you saw that number, when you had the gut feeling, you just had to go with it. it is like when you get married. you never know what it's going to be like on the other side. you trust your gut. you have done all the analysis. but at the end of the day, it is all about emotional decision. it's not a rational one. emily: it is funny, because people still wonder why didn't you sell to apple. you worked at apple, it feels like apple. was that ever really an option? tony: we considered all the possible acquisition targets. and, and, and through that, you know -- they were obviously on the list. but at the end of the day, you know, been there, done that.

google has massive compute power in the cloud and all kinds of algorithms and research around where we are headed. and there was a huge part of server technology and software that we would need to be able to pull it off. emily: you continue to run nest as a semi-independent company. how has your role changed? how have the goals of nest changed since this transition? tony: more and faster, right? that's it. we laid out a roadmap, a two to three-year roadmap. we saw eye-to-eye on all of this stuff. larry was like just go implement it as fast as you possibly can. right? so, it is like no, i'm not going to go changing it. we believe in this, go. emily: how do you think about the next new product? how do you decide what the next new product is ultimately going to be? tony: sure. well, i think that, first, we each, every day, run into frustrations. things around the home, why is it that way? the next thing, piece of it, is, hey, why don't you guys make your roadmap and i will make my

roadmap, so we have, like, five or 10 different groups making roadmaps of what they would think it should look like over the next two years and then we compare notes. emily: would you say you're working on 10 different ideas at any given time? tony: you know, there are new products, new services, new marketing things. if you ask do i have 10 to 20, i probably have 50 to 70 things always in some state of gestation. emily: how much do you see nest as a consumer technology company versus an enterprise solution? do you see consumers purchasing devices directly or do you see potentially infrastructure as a better way to get into homes? tony: so, you know, this is something i really learned from steve jobs. you cannot be a b-to-c company and a b-to-b company at the same time. a b-to-c company, you have to have gut, you have to know what -- you have to believe what the customers want to buy. in a b-to-b marketplace, you just sit there and you ask your customers. your top 5 customers. what do you want? and you just build what they want, and then you sell it.

we are a b-to-c company, and we will remain a b-to-c company. emily: you also ended up poaching quite a few apple employees. tony: i did get a call from steve about that. he called me and said "what is all this? you're recruiting from my talent." i said, "steve, i'm not recruiting anyone, they are coming to us. and maybe you have to make sure you retain your employees better." [laughter] tony: and that was it. and then we have the niceties on the phone. there were times, like i said, the love-hate relationship. emily: what would steve say about apple if he was here today? tony: i think he would be incredibly pleased. you know, he said the iphone would be his legacy product that would live beyond him. right? and the iphone is that. right? that legacy product is going to take apple for at least another decade or two decades, right? emily: you are not wearing your apple watch, but what do you think so far? tony: i think they did a brilliant job with the hardware. in terms of, like, the changeable bands. i ran out and bought all sorts of bands. from a software persepective, i

think it's early days. great products become great after iteration. it's just getting started. emily: is it something you could see yourself wearing everyday? tony: i could wear something like that everyday, i just won't charge it every day. emily: ok, so they need to work on battery life? tony: i think everybody needs to work on battery life. emily: you volunteered to take on fixing the google glass. tony: yes, i did. ♪

emily: so, you volunteered to take on fixing this, google glass. tony: yes, i did. emily: why? tony: why not? no, seriously. look at things we wear on our heads today. we wear glasses, you wear earrings, other people wear earrings. we put on headphones. to think that all of a sudden that nothing on our heads is all of a sudden becomes inbued with conductivity and computing, i think that is shortsighted. we're seeing it on wrists now, feet, head, chest. to neglect the head does not

make sense. to say we are done and toss it away -- we can't toss it away. let's take what we learned and let's learn from it. i said let me fix it. because i think i understand a little. they said, he would do that? i said, yeah. so it was kind of like -- it was not like i all of a sudden threw myself on the fire and said i would do this regardless. no, it was a slow dating process before getting married again. emily: right, dating again. there are some reports out there -- [laughter] tony: more rumors. emily: more foldable, water resistant, more of a rugged design -- any truth to that? tony: all i can say is don't believe everything you read. emily: are you working on an enterprise version, a consumer version? tony: they are not just going to be for corporations or industries or medical or what have you, it will all be for -- also be for consumers. emily: and it will be more

elegant. so i will not feel odd wearing this? tony: i did not say that that is what you will be wearing. i do not know how you feel about wearing it now, but i -- i am not going to ship anything that i will not wear. emily: ok. now, you are also a car guy. you were one of the first owners of bmw's new electric i-8. i assume you also have a tesla. tony: oh, yeah. emily: what is missing from the cars you have? tony: i think you will see we will have some dramatic changes in how we think about these cars and accessibility in terms of the price points, but we are still 7 to 10 years away from a mass switchover. emily: what can apple do for the car market? tony: if you think about a car, what's a car? a car has batteries, it has a computer, a motor, and it has mechanical structure. if you look at an iphone, it has all the same things. it even has a motor in it, so if you try to say and scale, oh, my god, i can make a car with the same components, there is some truth to that. but the hard stuff is really on

the connectivity and how cars can be self driving. those kinds of things. really hard, and it is all software and services. i think that when you look at either google's self-driving car program or the alleged apple thing, it is all looking at it through that lens of software first. emily: did you ever talk to steve about building a car? tony: yes. emily: what did he say? what did you talk about? tony: we had a couple of walks, and this was in 2008, if we were to build a car, what would we build? we were just crazy, looking at what a dashboard would be, what what would this be, what would seats be, how would you fuel it or power it? but at the end, it was always like we were so busy and we are so constrained, it would be great to do it, but we can't. emily: so when steve was alive, was this something that he was like, we are not doing this? we are not doing this right now? tony: there were a lot of things that we said no to. a lot of people said at the end of the day, why didn't the ipod turn into a really great video camera? tvs were the other one. at the end of the day, what was the biggest one that had the biggest impact on the world was cell phones. we said ok, we will focus all of

our energy on that. forget all this other stuff. those are interesting. let some other company do it. let's focus on a really big market that could have incredible impact well beyond steve's reign as ceo. emily: google is taking it on, too, with self-driving cars. tony: yes, it's great. they blows my mind every time i go over there and talk with chris or sergey. it feels like i am being driven around by a professional driver. regardless of whether it is a taxi or uber or lyft any of those things, you know, i love those services. but most of those people who drive do not know how to drive. they just don't. they are not professional drivers. emily: how do they make these cars safe and well designed and desirable?

tony: to me, self-driving cars have already caught up with consumers. because that is what uber is. it is a self driving car. it just happens to be there is a person driving it. so as far as i'm concerned, they have made this choice. now the question is how to make it even better and a more pleasurable experience. emily: so what is next for you? do you see staying at google? forever? tony: i got married. i did not get married and say i was going to get divorced and take half. no, that's not what i did. very simply, i got married and i volunteered, in a way, for google glass. i'm not going anywhere. i love what i do. emily: you have said that you regret not being able to tell steve about nest or show steve. tony: yeah. emily: what would you say to steve if he were here today? tony: i would just say "thank you." i would say thank you. thank you for putting up with me. i believe he needed me, too, a little bit. and i definitely needed him to help with the mentoring.

we needed all the team and all the people who came and joined when it was the real dark days at apple when there wasn't a lot of money and there was tons of debt and nobody buying our things and products. when you come through that kind of experience together, regardless of what happened, you have to step back and go, ok. emily: tony fadell, thank you so much for doing this. tony: thank you, emily. emily: it was great to have you. tony: it was great. ♪

♪ francine: this was the year that a threat of an economic slowdown in china and a global commodity crunch left markets dazed and confused. in 2015, europe almost broke apart. greece went to the brink of economic oblivion, the ongoing war in ukraine showed further tension. over the next hour, we review that and more as we reflect on the major market moving stories we've covered here on bloomberg television. ♪ >> january 15, 2015. that's the day swiss investors will never forget.