'Arrived' Music Visual

This transcript is annotated! Click on the highlights to read what others are saying. If you'd like to add your own insights, comments, or questions to a specific line, highlight the relevant text and click on the button that pops up.Jessica Livingston: Thank you for coming. Hosain Rahman: Thanks. Jessica Livingston: I’m planning on doing not much talking at all. And I'm just going to ask you, because it's a strange thing, I want you to sort of go through this chronologically of the early days. And talk about, you really have had a lot of close calls. I would love to have you talk about them and how you got through them -- Hosain Rahman: What did we call them the other day? Not near death experiences but defibrillator-- Jessica Livingston: Defibrillator experiences; that's great... Hosain Rahman: Resonate it, you know. Jessica Livingston: Yeah. I definitely have not heard of so many so I would love to hear a little story. Because it was back in 1999. That was a long time ago. Hosain Rahman: Yeah, it was 1999. A lot of people don't know this but we started working on the ideas, 1997-1998. For a lack of better way to say it, we tried to build Siri for mobile devices. We were inspired by Palm, Nokia, and others in front of this mobile device revolution. And we thought, "wow wouldn't it be great if you could talk to your phone?" And that would sort of transform and interface that. So we started with this sort of customer problem, and thats where we have done good. When we stray away from that customer problems is where we fold out, and there has been a very of those along the way. So early on we decided that voice would be the way to interact with this, so how do we make Siri? This voice interaction layer on top of the operating system. And we set out to do that, we realized everything we wanted to do was feature recognition, wasn't going to work. And at the same time we were already started to raise money for the idea, a new way to interact with your device. I say now, it was harder for us to make our first half a million dollars then it was for us to raise our first two hundred million. And it was because in those days, people back in the valley weren't thinking about mobile or mobile voice. Everyone thought yes, there has to be a better way to communicate with their device. But what's your hook? What's your advantage? What we ended up doing was creating this noise cancellation technology. It turned out to be the biggest breakthrough in audio technology in years. Its this sort of serendipitous thing we stumbled upon. Mostly because we were trying to solve this problem. Then when we did that, we realized this is bigger than making speech recognition, or what people do on their phones which is talk at the time. Now we do lots of other things on our phones but in those days it was a lot about talking, mostly about talking. Then we thought, great everyone is going to want this. Everyone who heard the demo, where we did these A B tests with weed whackers and blenders and all these, everyone was like, "Wow, we want that in our device." And so we set on this journey, we start talking to all the Hansen manufacturers that were big at the time. Nokia, Motorola, the Korean guys, Sony Erickson--Erickson actually, and it was a real wake up call. No one actually wanted to take this demo. Thought, "Yeah it's a neat demo, we think it's cool"-- Jessica Livingston: So they love the demo but--- Hosain Rahman: Yeah they loved the demo, they didn't want to integrate the technology; it was too expensive to add additional microphones. I was with someone from Apple the other day who was telling me that they now have six microphones, I think, in an iPhone and at the time we were just trying to convince people to put an extra one in to support our technology. And it's just like, "Wow, I wonder what we would have been able to do in terms of quality with that." Then again, we were struggling to get our technology into that. The Hansons were just concerned about the pennies so they didn't want to integrate what we had. So at that time we were struggling with, how do we fund this? How do we take it to the next level? We knew we had a breakthrough and what did we do? So along came DARPA, that was a great thing for us, the Defense Department. Jessica Livingston: A government agency funded you? Hosain Rahman: We never thought we would work for the industrial military complex. Jessica Livingston: What did they want you to do? Hosain Rahman: They wanted us to make our noise cancel out rhythms in the foundation of their battlefield technology. And we thought. Great. We have this raw science, how do we take that and productize it? Use these government grants to work through all the issues, and take that science into a form that can be delivered into a product? And it was great. Kept the lights on; we were aid engineers. I think we were one of the earliest technology companies in San Francisco. We moved up to San Francisco in 1999 and then there weren't a lot of startups in the city. And I love it now because you walk around, we are in the same block of Zinga, Pinterest, we used to share an office with Air BnB. Its so fun that there's this vibrant community there now, before it wasn't like that. Jessica Livingston: We need to remind people, we are talking fifteen years ago. It's like the stone ages. Before iPhones, so I want everyone to go back in their mind-- Hosain Rahman: Half these people were probably in grade school. Jessica Livingston: Totally, let's hope they were all born. So then what happened? You get this money? Hosain Rahman: Get this start up grant. And the other thing that was really tough was, so again-- it's so fascinating. All the ideas that were kicked around in 1999. I remember Larry and Sergey were RTA’s in computer science and Marisa lived in the same freshman dorm room and now she is on the Job board. So it was this crazy time in Stanford, Silicon Valley, and all these interesting people. But you had this huge run up, this infrastructure being laid out for the internet as it stands today. And all these ideas, these delivery services like InstaCart. But none of them survived. There were online, specific, ecommerce things. For niches, none of these things survived. It was sort of too early. There needed to be a better internet activity, distribution of it, whatever it was, it was just too early for it. The ideas weren't bad, they were just sort of ahead of their time. And I think thats another important lesson that we learned is that you got to stay your course through that. We thought mobile was going to a big thing. we thought that Palm devices would converge with smart devices. They ended up doing it, ten years after we thought they would do it. But they ended up doing that. So the early lesson we learned, is if you believe in what you think is right, you think is going to happen in customer experience, the way people are going to interact with technology, then stay that course. Put yourself in a position to do it. That was sort of the first thing with DARPA. We went to a really unconventional source of capital. Right, who had DARPA funding at that time? Very, very, very few people. I just found out recently that Incandme did too. But who remembers Incandme? No one does. They parted a lot of the infrastructure that Yahoo built. So anyways, what happened after the DARPA funding is, the whole technology system kind of cratered. It was impossible to raise money. I remember we used to go up and down Sand Hill Road looking for money. And I remember people asking us, "What's wrong with everyone who went to Stanford from 1993-2000? You guys have lost us billions of dollars. Go get jobs, we don't want to see you here." Its funny because I still run into some of these people. Jessica Livingston: I bet they like you know. Hosain Rahman: Its different now, they don't tell me to go get a job in the same way they use to. Again, it's sort of interesting how the tide has changed. It was not a happy, fun place full of ideas. That vibrance wasn't there, there was a really bad feeling around. We had to figure out a way to keep going through that, to believe that mobile is going to be a big thing. And at the time, the valley wasn't the center of the mobile universe. It is now, for sure. And so- Jessica Livingston: How did you get through it though-- Hosain Rahman: So we had the DARPA funding. Jessica Livingston: But that couldn't have lasted forever. Hosain Rahman: It didn't last that long, and it didn't allow us to scale in a huge way. But it did help us to productize and help out what we have done. The next thing we did. Was we thought, okay how do we get this into a form of a product that is going to reach lots of people? And we have been in sort of licensing discussions because we wanted wanted to be like Dolby. Keep the front end and have intel inside or dolby, etc. Because of various economic constraints, for these guys and focusing on profits, they didn't want to pay us much to license our technology. And at the time, we had been talking to the big headset manufacturers Punchricks and Jabra. And we thought, "Wow the technology we have in this space is really distributive. There hasn't been a computing proposition there, and we can really transform what is possible there." So we were offered some deals from those guys and backed out. Said, you know what. We are going to go on the course ourselves. and go make our own hardware device. This is in late '02, and we thought we could do this better. Jessica Livingston: Do you have hardware backgrounds at all? Hosain Rahman: I studied mechanical engineering at Stanford, and that was before there was a D school. And so we knew a little bit about how to make things. But certainly not-- Jessica Livingston: To be dangerous. Hosain Rahman: Enough that we could do it. But knowing what I know now, it's totally insane that we did it. And I can't believe that-- anyways. I can't believe people actually thought that we might be able to do it. So again, long story short, we put together some parts in order to raise Capital to get build a hardware device. In those days, building consumer hardware as a start up was totally insane. I think we did a study at the time, the only other sort of venture funded consumer hardware--well theres two-- had been Apple in the late 70’s and then Palm. And Palm didn't really start out really long before becoming US Robotics before they launched the company. So there were no examples for people to look at and say, okay this is the cycle, build the products, scale it, build distribution, got it out, and there was an exit. So there was no pattern for people to look at. There was big failures like, Go and Bill Campbells go with that. And just convincing people that we knew what it was going to take to do that was really, really hard. I know when we raised venture capital in 2003, it was the only deals that firm had done. And it was insane to go build this stuff. And then we set about going to build our first consumer headset. Its when we really started thinking about design. Before that, in the valley, design was a sort of thing that once you got momentum you might put a cool case on something, different color. If you wanted to appeal to women, you put it in pink. And this is what others thought about design. The only other company that said there was this intersection between design was Apple in 2001-02. Really with the iPod in mass scale. We were fortunate to have such a great tip of the arrow from Apple, going and cutting down the path in front of us. So again, long story short, we put these elements together. We realized how hard it was to take these complex algorithms and to figure out all of the little details that you needed to think about in order to make this product great. Sometimes I sit up and wonder, we make lots of products now, and have been fortunate to ship tens of hundreds of things. But I look at Tusla that makes cars. And I think about all the details we have to think about to get it right and I can't imagine how Elon processes all of that all the time. There are a million things that can go wrong that you have to think about to build a car. And it's not as similar when you have to build these complex products where you have software interfacing with hardware, and now the cloud. And how these things work, there are very little patience people have when things are not working. Kind of fast forward, we kept launching our first product, which was a headset. And there was kind of a precursor where I knew we might be going wrong on this first product. The first time I was, fortunate enough, to meet Steve Jobs Mid 2004 right before Walter Karsa D Conference. We were going on stage to debut our products and Ive been set up to meet him, he is kind of the God of electronics. I went to see him and it was forty-five minutes of absolute, I don't know how to describe it, killed on. He absolutely killed on every single decision, every single edge, every single technology decision. The crazy part is everything he hit on was right and we knew that deep in our hearts. And we didn't -- because we were trying to meet a time table and because we were trying to not run out of money and ship the thing on time, we sort of made all these trade offs and compromised a lot of things that in our hearts we knew better than. And for me it was a real galvanizing moment, we knew that hey this guy, thats really good at this is telling me that that was wrong. We shouldn't have compromised on what we knew was true. It was the first one, I was, shit should have gone with our gut. Jessica Livingston: So it was harsh but valuable feedback? Hosain Rahman: Totally. Jessica Livingston: Okay. Hosain Rahman: It was unemotional but brutal. Just really, really, really brutal. Just cutting, the only place--I remember talking, this thing was crazy. I don't know if anyone in the audience remembers it. It was a big headset, it connected to a clip on your belt, and it plugged into your phone. And we were arguing about the clip and the product guy at the time that we hired was like, oh no, people will clip this to their belt. And Steve was, the only place anyone would clip that is in your mind. Get it out of your mind, you know. And he was right, we probably sold more of those units sitting here then of that first unit. Because it shipped, it got all this great buzz, we were product of the year in Time magazine. And we sold five of them. Because it had all these problems. we knew there was this really cool technology and that was on the intersection of wait, we didn't stay true to the customer experience and solve the problem we were trying to solve for the user. We compromised all these things to meet schedule criteria, and their real constraints, right? Jessica Livingston: Didn't follow your instinct? Hosain Rahman: Did not follow that gut instinct and we knew better. That was probably the hardest thing during my conversation with Steve. And I did send an email to him saying, You were right on everything. I appreciate you taking the time to be honest with me as some people are. Jessica Livingston: Did he respond? Hosain Rahman: Yeah, And he was always like that with us. And we launched several other products with Apple, like Jambox and all those things. We had a great relationship with that company and continue to. And we learned a bit more about that experience, So going a bit further on that. We continued to launch this thing that ended up being stillborn. We didn't sell any, ran out of money, and now was like, Oh my God what do we do? And again making a long story short, our investors at the time sort of lost faith and shut the company down. Jawbone was shut down, they laid all the employees off. They literally chained the doors-- Jessica Livingston: They chained the doors to the office? Hosain Rahman: The chained, locked, I have a letter somewhere saying we terminated all the employees its gone. In those days, too, entrepreneurs and founders, its a lot more friendly now than it use to be from investors. You actually get to control your company. Actually we were kicked off the board. Jessica Livingston: You were kicked off the board? Hosain Rahman: We were kicked off the board, we didn't have a say in these corporate decisions. Thank you for your ideas, we will take it from here. And that happened a lot. Jessica Livingston: So what did you do? You show up and there are chains on the doors? Hosain Rahman: The thing that I had, and my co-founder had, was we still believed that we found something special. We still believed in the mission. We still believed that we could better people's lives and communicate better. And that we could sort of push this forward. So what i ended up doing was sort of wrestle it back from those investors. After we took it back we had sixteen grand in the bank, six grand in debt, and a DARPA contract. We focused in on that and said, what are all those mistakes that we made? That we knew better on? And other fuaire is the best teacher you can have, right? Because you learn so much more. You think about every aspect that went wrong, five hundred and eight degrees again, and again, and again. You ask what went wrong and why did it happen? Jessica Livingston: Were you independent at this point or are your investors still involved at this point? Hosain Rahman: They said just go take it. They were already off board. Jessica Livingston: They lost hope? Hosain Rahman: Whatever, it was just wasn't even a considered decision-- Jessica Livingston: But it was a blank slate. Hosain Rahman: We had all this cool technology and had all this promise and people resinated with it. It had to get in the right package, the right form. The right way people could access it, interact with it. We failed on what i feel like design was all about. The attention to the right details, resolving the right details. To make the best type of possible solution for the customer. And we missed that. We missed it in a big way, and it sort of put us out. Again, we focused for the next two years, work for no salaries. DARPA’s kind of kept the lights on, as did our friends and families. Then we started thinking about a wearable headset and that is when we thought about programmable computing. And its funny because everyone now talks about wearables, every day. Probably about every hour its mentioned. That is when we thought about all these things on your body and how its wearable and all that type of services. Anyways, thought that it was probably another two days of crazy stories. Jessica Livingston: Can you talk at all about the shipping story? Hosain Rahman: Oh you love this story. We went two days with no salaries. We had Vnode and David Whitten at Coastal Adventures help with AT&T to launch our Next Generation bluetooth headset. Everything is lined up, we still can't raise enough Capital to get it off the ground. It was tough but Venod and David saw some problems and were advising us to see what would happen. We were trying to launch, we had product in a dock in New York and the manufacture wouldn't release it to us. We had no money in the bank. we literally had twenty-seven hundred dollars in the bank. And we had to figure out how to get those products released from customers to be delivered to AT&T, who was singular at the time, to get into stores. Jessica Livingston: In time for Christmas or something? Hosain Rahman: Christmas! For anyone launching product, December 21st is not a good time to launch product for Christmas. Its kind of too late. And so that was a whole nother story. So we still convinced AT&T to take it in and one of our Angels, Chris Birch and Austin Herst, gave us a line of credit to unlock it. I had to go to JFK to find the customers people to give them what the harmonized code was to unlock this type of product, and get them to release this stuff to get it to stores. And Mowkes wrote about it in their journal and it sold out in a couple hours. I think we went from zero to seventy million in revenue in our first year. So thats the thing that I learned that I hope they focus on. When you go focus on profusely what those things are that you are trying to solve and those problems, you can transform your business like that. The other stuff, you got to figure out. Its not easy. But thats the core thing. And if you dont do it, everything goes really bad. And if you do, you can build from there just transfer over night like that. Jessica Livingston: Literally it was like this, over night. Hosain Rahman: Overnight. Jessica Livingston: Then what happened? Hosain Rahman: Then we had to go build a business. we had to scale, build a team. We were fortunate in that as we built out a foundation and built a team. Make the product, it was a success, then we had to scale from there. No infrastructure. We went from zero to seventy million with a consumer hardware product. In that moment in the beginning of January, we had six people. So we scaled that, with revenue it grew to twenty two. Thats when Node and MarketBend, Ben Greson, Sequoia all came in. We started to build the company. Then we had this screaming 2008. Business was growing, growing, growing then suddenly you had the big meltdown of 2008. When Lemon Brother exploded and we found ourselves with millions of products on back order. And all of a sudden those orders got canceled. We found ourselves with fifty to seventeen million in China. We had to learn and work that down. We spent a lot of time working that down to zero, we did a big deal with Costco to try and move it. So we had all these bumps and bruises and again we experienced in again in 2011. I had announced this new up-product on stage. All these 4A and sensors headsets, then translating it to health. It was this massive, literally debut this thing on stage with Ted. We had a billion of media presses around around it. It was--I still think it was the fastest selling third party product with Apple that fall. They went out there were issues about them breaking at scale. We couldn't even get units back to figure out what was wrong fast enough. And here is this incredibly high product, we were thinking about levitating in that product even before we had learned to crawl or walk. And this all type, you don't even know what to do for the consumer- we were fortunate because we have been through some hard times. So there is a DNA in the corporation that we can take a step back and say lets try to figure out what is happening. First principle is to try and take care of the customer. Make sure users are happy, the first question I ask is, Are we doing any physical harm to people? Is there anything wrong? Is it hurting people? Jessica Livingston: Is it catching fire? Hosain Rahman: Right, is it catching fire. Is it burning peoples' wrists off? We had one of our competitors--not good. So I think you have to go from there and we are fortunate that we have been through hard times. It was never this straight shot of success. And I often tell people, the things you encounter when you are five people, tens of thousand of dollars in the bank. Compared to billions in market value and big channels--they are less exponential or nerve racking to different scales. So if you learn to persevere from those things and you focus on the things that matter, you will power thought those things for the whole journey. And then you forget those lessons of when you were on the ground with your teeth kicked in and the taste of blood in your mouth and how you go through it. And what we did with UP is we found out we had an issue, and I sat down and wrote a letter to people. We made a mistake, we screwed this up. We will give you the money back and you keep the product. We are going to go fix this stuff and we will be back. And when we came back, consumers embraced up and I was surprised with that letter I was getting death threats on Twitter to people saying, wow that is the example of how you treat customers. We weren't trying to think about just what's the right thing to do. Jessica Livingston: I feel like I would tell people to never start a competitor on any of your products. You are the toughest founder who has been through so much. They would never survive. So we have a couple more minutes and I know there is so much I wanted to get through. Hosain Rahman: Hopefully that is good. Jessica Livingston: It was good, we talked about the near death ones that I liked. Can you talk about how hard it is to mix software and hardware data and bring them all together? Hosain Rahman: Its cool because I feel like everything we have done over the past fourteen years has been a preparation for it. I feel like we have been going to school, where we have learned how to build these great, high design products. And e have been fortunate to be recognized for it. One of the things that was exciting from the first launch is we built our own application. And in 2011 we didn't have an application team, we had to build that from scratch. So one of the things our hardware issue was was how crap our app was. It was really bad. All my friends said, why are you building software? I was like, we always have made software just the algorithm and this stuff--It was a really tough learning experience getting people from the application world to work with people in the hardware department instead of working in silos and the some magical point for it to all come together. Because that actually doesn't work. So I used a lot of 2012 to rip it down and say--what we learned in hardware is you have to make stuff that people will pay you more than what it costs to make. Which is a really hard discipline. you end up being focused on, is this good enough that someone would take a dollar out and pay you for it? In app development and lots of web development people don't have that discipline. Everything is free and moves quickly. So people just figure out stuff. But there isn't that discipline of, is it good?Are we solving that problem? Will people pay us for it? So we took that from our hardware team and tried to get our software team to think about their experiences in that aspect to trying to resolve it. Yeah to say we are making judgements on where it is going and how it comes together. And then we had the speed that the software team has to reiterate to the hardware team. Trying to get the best of what these things are. And then I organized it again what the customer problem was. We are solving this customer problem. We are going to use these things as tools. we are going to solve it in the software app, or the hardware, or the cloud data. That was another new thing for us is build a data team. I think we have a world class one, we publish a lot of those results. I measured in world class against Google and those guys because they are trying to take out of our team. Which I think is a sign that you arrived when the big guys try to steal your people. But putting all those elements together and putting them together because they speak different languages is really difficult and I think that is the new tip of the arrow. I think that comes back to that advantage that we have other people and be successful. They are no longer these dumb boxes. There are boxes where the applications experience and software is just as important as what you physically touch. And there is a melding of those lines. And I tell people when we think of design and mobile applications it's something between three dimensions and two dimensions. Its not just a little visual thing. You've got to interact with it and that is not quite three dimensions but something in between. Putting these pieces together. Then again, it's about solving and moving these pieces around to actually solve that. Jessica Livingston: Well sadly, we are over. Thank you and congrats on all your hard earned success. I'm obsessed with my Jambox Mini and thank you for coming out today.