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People are bored and they want to see the Nothing team bring some change: Carl Pei

Highlights from a conversation between Cred's Kunal Shah and Nothing founder Carl Pei.

By  Kashmeera SambamurthyAug 31, 2022 10:27 AM
People are bored and they want to see the Nothing team bring some change: Carl Pei
Kunal Shah in conversation with Carl Pei during a Cred Curious session. Pei said, "We believe in functional design where everything needs to have a function. Even if it looks cool, there needs to be a functional element. Some brands can focus on ornaments, but that is not what we do."

Kunal Shah, founder of fintech firm Cred, got into a conversation with Carl Pei, chief executive officer and co-founder of Nothing, a London-based consumer technology company. Pei is also the co-founder of OnePlus.

The conversation hosted by Cred took place during Pei's recent visit to India where he hobnobbed with Bollywood biggies and Bengaluru's startup celebrities.

Pei told Shah during the Cred Curious session, "The team and I were brainstorming many different names. I thought they were all really good. My little sister hated them, and called them out for their cringe factor. At one point, I kept rambling names and she kept saying cringe, cringe, cringe. I am going to call it Nothing. And, she said, 'Do that.'"

Read on.

On setting up a hardware tech company: Is familiarity the comforting point?

It is hard, but it is also easy. Software is easy, but it is also hard. I think the entry barrier for hardware is really huge. Once you enter, and you have a product, getting a user base is relatively easier. When the app store first came out, there was a gold rush where the first apps got immediately distributed. Now making software has been democratised where distribution is really hard.

In the latest WWDC (Worldwide Developers Conference), Apple announced “Buy Now Pay Later.” This was disruptive to a few companies out there. I think, now we know how to distribute the product, and if we reach some level of scale, we have the opportunity to do software services as well.

On brand building and principles surrounding it

One of my co-founders said that, if there is one thing he wishes for the team, it is for everybody to have a sense of hunger.

I started making websites when I was 12. When I was 14, I had one of the biggest websites in the world for illegal game downloads. With that kind of experience I had since I was 12 where I was trying new things, I think I got a sense of familiarity of what the consumers want, and how we attract them.

The way we shouldn’t build a brand is to view a brand just as a story you tack on to your company at the end of the day. Like, “let the product guys do whatever they do”, “let the engineers do their work,” “let the sales and marketing team figure out what the brand is.” That doesn’t really work, I think.

One example we discussed within the team is Nike. Nike sells commodity products, they are worth a lot as a company and consumers love them. A couple of years ago, they had an ad with Colin Kaepernick (American civil rights activist and football quarterback), who is controversial for the audience and the companies in the US. This is because he didn't kneel.

Before you do a match, one needs to kneel in front of the American flag and sing the national anthem. Instead of kneeling with both his legs, he knelt only with one leg, because he felt that black minorities were not being respected in the US. Donald Trump back then was still the president and tweeted about him saying that he was Unamerican, unpatriotic, and Nike made him the main spokesperson in the commercial.

I was like, “Wow! If I am CMO or CEO of Nike, and the marketing team is like, ‘Hey! You want to use this person who is hyper controversial?’” This is to potentially have half of the US hate my brand because I launched this campaign, and because half of the people vote for Donald Trump.

I think for 99.9 percent of the companies, it is, “Hell, no! Don’t do this.” I think what happened at Nike was like, “What is our purpose? We believe everybody is an athlete. By running this ad, will I inspire more people to become an athlete. If yes, let’s run it. If not, let’s not run it.” And I think, when you have your purpose clear, then your decision becomes easy.

I think the best way to build a brand is to unite all teams on a higher level purpose or vision or mission, and make sure every team executes against that. A brand is every single touch point a consumer has with the company. Not just their advertising material but also the product, but also the service, or interacting or bumping into an employee.

Kunal Shah in conversation with Carl Pei

On the importance of a brand: Why is it difficult for people to understand?

In some countries and in some societies, different economies have different life cycles of their growth. They start off in a very utilitarian way - what is the functional benefit? But, as people make more money, and the middle class grows, you want a higher meaning or a higher purpose for the product or the company you associate with. I think that is why, maybe, in some countries, brand building talents exist more in abundance than in others.

On values that build “Nothing”

The strongest competitive advantage over the long run is probably the culture of the company. We have four values that we aligned back then and there is no appetite to make any changes.

The first one is, ‘Be the change'. This means, take ownership, be proactive. If you see a problem, step in and change it. Nobody is going to be after you, following up all the time.

Second is ‘Pride and product’. People queue up for Apple products because they have a track record of delivering great products. If Apple makes a few generations of poor products, that is not going to happen. We must always remember that product is the key, no matter what.

Third is ‘Thrive on diversity’. Diversity is true meritocracy in removing biases around language, culture and geography. Finding the best people with different functional skill sets helps us build the company, and the brand. How do we really identify the best people in the world at different things and integrate them? That is what I believe is true diversity.

Fourth is ‘Survive’. On one hand, you can have a great dream, and great vision. But, if your company is not around, you cannot try to accomplish that. Sometimes, ‘pride and product’, ‘be the change’ and’ survive’ come to clash. At the end of the day, you have to be around to have another chance or another day to try and change what you want to change.

On vanity v/s utilitarian functionality

We believe in functional design where everything needs to have a function. Even if it looks cool, there needs to be a functional element. Some brands can focus on ornament, but that is not what we do. On being ‘most scared of’

Every product we build has to be a hit. That is how it is in our industry. I think Phone 1 has gotten a tremendous amount of buzz. The real test is the first couple of weeks when you first ship the product and people start receiving it. When you have hundreds of thousands of people using it, if they love the product, they will tell their friends about it, and we are safe.

We are now in this middle period where a lot of people are excited about it, a lot of people have bought it, and a lot of phones are still on the way to the customers. We are collecting a lot of feedback, especially on the software, to improve the chances that, when people in large quantities start activating the product, it will be something they really love.

On the unique traits of Indian consumers v/s consumers outside India

People in India are very tech savvy. They know the details of all the components that go in and how much it should cost. I think they look at the values of the product. I think that is why some of our messaging has worked well here. Many people speak in English here, and there is very little gap between the information in the West and here. A lot of consumers want to be a part of the movement that is global in nature, and not necessarily local in nature.

In some markets like Indonesia, they only look at the price of the product. They don’t really know what is inside, where one can sell a product at a higher margin as long as it is cheap.

On creating the right environment for a premium phone

If you look at the market, there is a lot of competition, theoretically. In practical terms, there is not a lot of competition. Because, apart from Apple, all other brands and their percentages, they don’t really exist in people’s minds. So, I think, there is not a lot of competition.

We raised a lot of money from our community. First time we did, we just announced the name of the company, “Hey, we are going to do it.” Second time, we had a role map of our products with pokemon code names. So, a lot of faith and belief came in again. It really validates that people are bored and they want to see the Nothing team bring some change in the industry.

On the symptoms of mediocre talent

One symptom is not knowing the details. You are responsible for it and you should know every single detail. If you are in a more senior position, you should be able to bring a lot of great people with you. If you can’t, there must be something wrong. The better you are, I think, the better you are able to work with high level talent, and not have conflict.

On product framework and operating principles

Going back to being an insect in the animal kingdom, we first need to recognise that a lot of companies share an ant's state vision that we do, be it complete ecosystem or ambient computing far into the future. There are brands which are 20, 25 and 45 years old out there. So, if you are both late and you are weak, what can you do? For products, we have consciously taken a fast follower strategy. This means we never create a new category, at least not now when we are so weak.

They create the category and we find the loophole or opportunity in that category that other people have created. We vet ourselves with a differentiated approach. That is the framework at the beginning.

The opportunity has to be big. Smartphone market - 1.5 + billion shipments once a year, true wireless headphones - more than 300 million a year. We only touched these categories.

On creating hype

I think it is about expectations and quality. If you are consistently delivering quality, people will have expectations on you to deliver more quality. I think they pay attention and they are looking at what you are going to do. Don’t create hype for the sake of creating a hype. Focus on creating quality products.

On the brand name, 'Nothing' (Pei said that the other names that were considered were Next and Stone.)

The other name was essential, and we really liked it. But, I think Nothing is cool. It is easy to remember, it is very funny. It does have a deeper meaning that if you are able to accomplish the purpose and vision when technology around is so seamless, it fades away, where you don’t have to think about it all the time. So the feeling becomes a feeling like Nothing.

First Published on Aug 31, 2022 10:27 AM