Hosain Rahman is the CEO and Founder of Jawbone. Jessica Livingston is a cofounder of YC.

Jessica interviewed Hosain during our 2014 Startup School and this is the recording of their conversation. If you’d like to check out our 2016 Startup School videos they’re in a playlist here.

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Transcript

Craig Cannon [00:00] – Hey this is Craig Cannon and you’re listening to Y Combinator’s podcast. Today’s episode is with Hosain Rahman and Jessica Livingston. Housain is the CEO and founder of Jawbone and Jessica is a co-founder of YC. This conversation was recorded at our 2014 Startup School and if you want to watch the video or read the transcript, it’s at blog.ycombinator.com. Alright, here we go.

Jessica Livingston [00:22] – Thank you for coming.

Hosain Rahman [00:23] – Thank you.

Jessica Livingston [00:24] – I hope to do not much talking at all. and I’m going to just ask you, ’cause it’s sort of a strange thing, I want you to just go through chronology of the early days and talk about, you really did have a lot of close calls and I’d love for you to talk about them and how you got through them and sort of…

Hosain Rahman [00:42] – What did we call them the other day? Sort of the, not near-death experiences, but defibrillator…

Jessica Livingston [00:47] – Defibrillator experiences.

Hosain Rahman [00:48] – Yeah, we actually had to sort of resuscitate it.

Jessica Livingston [00:50] – Yeah, and I’ve literally never heard of so many, so I’d love you to give us a little story. ‘Cause it was back in 1999, I mean that was a long time ago.

Hosain Rahman [00:58] – Yeah, when we started the company it was 1999. I mean lot of people don’t know this, but when we started we sorted started working on the ideas in sort of ’97, ’98 and for lack of a better way to describe it we were trying to build Siri, for mobile devices. We’d been inspired by Palm and Nokia and all these folks that were sort of at the front of this mobile device revolution. We thought, wow, wouldn’t it be great if you could talk to your phone. And that would sort of transform the user-interface experience and all of that. We started with this kind of customer problem and that’s always when we’ve been good and when we stray away from trying to solve that customer problem we sort of fall down. There’s been a few of those along the way. But you know and so very early on we were trying, we said okay, voice would a great way to interact with this. How do we make, basically Siri, this voice interaction layer on top of the operating system and we set out to do that and we realized everything we wanted to do with speech recognition wasn’t going to work. At the same time we’d sort of started to try to go raise money for this idea of a new way to interact with your device. And you know I say now, it was harder for us to raise our first half-a-million dollars than it was for us to raise our first 200 million dollars. And it’s because in those days, people weren’t, in the Valley, they weren’t so focused on mobile, they certainly weren’t thinking about mobile voice and we really needed to prove that we had, everyone thought yes, there absolutely has to be a better way to interact with the device, but what’s your hook, what’s your advantage, what’s that kind of breakthrough? And what we ended up doing is inventing this noise-cancellation technology that turned out to be the biggest breakthrough in mobile audio in 30 years. And it was a sort of serendipitous… Thing that we stumbled upon mostly because we were trying to solve this problem. And then when we did that we said, wait, this is bigger than making speech recognition work against the core of 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. And so then we thought, okay great, everyone’s going to want this, every one that ever heard the demo where we do these A/B tests with weed whackers and blenders and all this stuff and we’d sort of take out all the noise and everyone’s like, wow, I want to have that on my device. We set on this journey, we started to all the heads of manufacturers that were big at the time, sort of Nokia and Motorola and the Korean guys, Sony Ericsson, or Ericsson actually and it was a real wake-up call, no one actually wanted this technology. They thought yeah, it’s a neat demo, we think it’s cool…

Jessica Livingston [03:34] – They loved the demo, but…

Hosain Rahman [03:35] – They loved the demo but they didn’t want to integrate the technology, it was too expensive to add additional microphones. I was with somebody from Apple the other day who was telling me 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. I was just like wow, I couldn’t imagine what we would have been able to do in terms of audio quality with that. But you know again, we were struggling to get our technology into that form factor and hence so many manufacturers were just sort of concerned about pennies so they didn’t want to integrate what we had. So that’s when we were struggling with, you know how do we fund this, how do we take it to the next level? We knew we had something pretty breakthrough and what do we do? And so along came DARPA, and that was a great thing for us, the Defense Department, basically.

Jessica Livingston [04:27] – Like a government agency funded you?

Hosain Rahman [04:28] – Government agency, we never thought we would do sort of work for the military industrial complex.

Jessica Livingston [04:33] – What’d they want you to do?

Hosain Rahman [04:34] – They wanted us to make our noise-cancellation algorithms, the foundation of their battlefield technology. We thought well great, we have this kind of raw science, how do we take that and productize it and use these governments grants to really sort of work through all the issues and take that science into a form that could be delivered in a product and that was great. You know it sort of kept the lights on, we were eight engineers, I think we were after Dolby and Macromedia, one of the earliest technology companies, real technology companies in San Francisco. We moved up to San Francisco, 1999 and in those days there just weren’t a lot of startups in the city. And it’s funny now ’cause I love it, you know we’re on the same block as Zynga and Airbnb and Pinterest, and we used to share an office with Airbnb and it’s just so fun that there’s this vibrant community there now. San Francisco wasn’t like that.

Jessica Livingston [05:26] – I think I need to remind people, we’re talking 15 years ago, it’s like the stone ages, almost. You know, but before iPhones, so I want everyone to go back in their mind and…

Hosain Rahman [05:38] – Well half these people were probably in grade-school.

Jessica Livingston [05:41] – Totally, let’s hope they were all born. Then what happened, you get this money…

Hosain Rahman [05:48] – We get this DARPA grant and the other thing that was really tough is it’s so, again, also fascinating because so many of the ideas that were being kicked around in 1999, I remember Larry and Sergey were like our TAs in computer science and Marissa was my, you know lived in the same freshman dorm and she’s now on the Jawbone board, so it was this crazy time at Stanford and Silicon Valley and a lot these interesting ideas and people, but you had this huge run-up, all the infrastructure being laid out for the internet as it stands today. And all these ideas, like there was a lot of delivery services, like Instacart, right?

Jessica Livingston [06:24] – Yeah.

Hosain Rahman [06:25] – But none of them survived. And there were online specific e-commerce things for niches, none of these things survived. And they were just sort of too early, there needed to be a lot, either better internet connectivity, more distribution of it, whatever it was, it was just too early and so the ideas weren’t bad, they were just sort of ahead of their time. And I think that’s another important lesson that we learned is that you got to stay your course through that. We thought mobile was going to be a big thing. We thought that palm devices would converge with smartphones. They ended up doing it, sort of 10 years after they thought they would, but they ended up doing that. And so the sort of early lesson we learned is if you believe in what you think is right and what you think is going to happen to customer experiences and to the way people are going to interact with technology then stay that course and put yourself in a position to do that and that was the sort of first thing with DARPA. We went to a really unconventional source of capital, right?

Jessica Livingston [07:23] – Right.

Hosain Rahman [07:24] – Who had DARPA funding at that time? Very, very, very few people, I just found out recently that Inktomi did too, But you know it’s not something, who remembers Inktomi? No one. They powered a lot of the infrastructure.

Jessica Livingston [07:36] – I remember.

Hosain Rahman [07:36] – The internet, the Yahoo plot right. So anyways, what happened after the DARPA funding is again, the whole technology industry had sort of cratered. And it was impossible to raise money and I remember we used to go up and down Sand Hill Road looking for money and people would say to us, what’s wrong with everyone who went to Stanford, from 1993 to 2000? You guys have lost us billions of dollars, go get jobs, we don’t want to see you here. I mean…

Jessica Livingston [08:02] – Wow.

Hosain Rahman [08:03] – It’s funny because I still run into some of these people.

Jessica Livingston [08:05] – I bet they like you now.

Hosain Rahman [08:06] – It’s different, they don’t tell me to go get a job. In the same way that they used to, but you know and so again, it’s interesting how the sort of tide had changed and it was not a happy, fun place full of new ideas and that vibrancy 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 hey, mobile’s 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, right. And so….

Jessica Livingston [08:35] – How did you get through it though?

Hosain Rahman [08:37] – We had the DARPA funding.

Jessica Livingston [08:39] – But that couldn’t have lasted forever.

Hosain Rahman [08:40] – It didn’t last that long, it didn’t really allow us to scale…

Jessica Livingston [08:43] – Yeah.

Hosain Rahman [08:44] – in a huge way, but it did allow us to kind of productize, productize and prove out what we had done. The next thing we did is we said okay, how do we get this into a form or product that’s going to go reach lots of people? And we’d been in sort of licensing discussions because we wanted to be like Dolby you know, anyone that has an audio problem, we can be in the front-end, it’ll be kind of like Intel Inside, Dolby et cetera. And because of various economic constraints for these guys and host of other problems no one wanted to pay us much to license our technology. At the time we’d been talking to the big headset manufacturers, Plantronics and Jabra and we thought wow, the technology we have in this space is really disruptive, there hasn’t been sort of a computing proposition there and we can really transform what’s possible there. And so we’d been offered some deals from those guys and we backed out and said, you know what, we’re going to go the course ourselves. And we’re going to go make our own hardware device, right.

Jessica Livingston [09:39] – Wow.

Hosain Rahman [09:40] – This is in kind of late ’02. And we thought we can do this better.

Jessica Livingston [09:45] – Do you have hardware backgrounds at all?

Hosain Rahman [09:47] – Well, I’d studied mechanical engineering before, this was before there was a D school, so we were kind of in the D schools. We knew a little bit about it and some electrical as well so we knew a little bit about how to make things, but certainly not…

Jessica Livingston [09:57] – Enough to be dangerous.

Hosain Rahman [09:58] – Enough to think that we could do it.

Jessica Livingston [10:01] – Okay.

Hosain Rahman [10:03] – But knowing what I know now, it’s totally insane that we did it, right. And I can’t believe that, anyways that’s… I can’t believe that people thought we might actually be able to do it, right. Long story short, we kind of put together some parts and were able to raise some capital to go build a hardware device. Now again, in those days building consumer hardware as a startup was totally insane. I think you know we did a study at that time, the only other sort of venture funded consumer hardware company, well there’s two. Had been Apple, right whenever that was in the late ’70s and then Palm.

Jessica Livingston [10:47] – Oh my God.

Hosain Rahman [10:48] – And Palm didn’t really stay around very long. It became part of U.S. Robotics, even before they launched the company. And so there had been no examples, for people to look at and say okay, this is something that we took through the cycle, built the product, scaled it, built distribution, got it out and then there was an exit. So there was no sort of pattern that people could point to and so talking to anybody I mean there was big failures like Go and some others, Bill Campbell was involved with that and John Doerr and all these guys. And so just convincing people that we knew what it was going to take to do that was really, really hard. I remember when we raised you know venture capital in 2003, it was like one of the only deals that that firm at the time had done and it was insane to go build this stuff. Then we set about going to build our first kind of consumer headset and that’s when we started really thinking about design. Before that, in the Valley, design was the sort of thing that once you had a little momentum, you might put like a cool case on something or a different color or whatever and if you wanted to appeal to women you made it pink. This was sort of what people thought of design. The only other company that was really sort of saying that there’s this intersection of technology and design was Apple. In sort of ’01 or ’02, really with the iPod, at a mass scale. And so for us we were fortunate to have such a great you know kind of tip of the arrow in Apple sort of going and cutting down the path in front of us. And again, so long story short we put these elements together and we realized how hard it was to take these complex algorithms and to figure out all of the little details that you need to think about in order to make this product great. And you know sometimes I sort of sit up and wonder, we make lots of products and now have been fortunate to ship tens-of-millions of things. But I look at you know Tesla that makes cars and I think about all the details that we have to think about to get it right and I can’t imagine how Elon sort of processes all of that, all the time, from, you know there’s just a million different things that can go wrong that you have to think about when you build a car, right. And it’s not dissimilar when you build these very complex, consumer products where you’ve got software interacting with hardware and now talking to the cloud and how do these things work and there’s very little patience people have for things not working. Anyways, so kind of flash forward, we ended up launching our first consumer product which was a headset, and there was sort of a precursor where I knew that we might be going wrong on this first product and the first time I was fortunate enough to meet Steve Jobs, was in mid 2004, right before Walt (Mossberg) and Kara’s (Swisher) e-Conference ’cause we were going on stage to debut our product and it had been set up to meet him, sort of the God of consumer electronics, right. And I went and saw him and it was 45 minutes of absolute, just, I don’t even know how to describe it, we just got killed. Absolutely killed on every single decision, every single edge, every single technology decision. The crazy part is I knew every thing that he said was right and we had known 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 we compromised a lot of things that we in our hearts knew better on. For me it was this sort of really galvanizing moment because I remember that hey, you know this guy who’s really good at this, is telling me that that was wrong. That we shouldn’t have compromised on what we knew was true, right. And so those were the first moments when I was like, shit we should have gone with our gut.

Jessica Livingston [14:30] – Sort of harsh, but valuable feedback?

Hosain Rahman [14:32] – Totally.

Jessica Livingston [14:32] – Okay.

Hosain Rahman [14:33] – It was unemotional but like brutal, I mean just really, really, really, really brutal. You know just cutting like the only place, I remember we were talking about, like this thing was crazy, I don’t know if anyone’s ever, certainly probably no one in this audience remembers it, but it was a big headset and it connected to a clip on your belt. And then it plugged into your phone and we were arguing about the clip and the product guy at the time that we had hired was like, “Oh no, but people will clip this to their belt.” And Steve was like, “The only place that anyone would ever clip that is in your mind.” Get it out of your mind, you know, and he was right, he was right. We probably sold more units sitting here right now that we did of that first product, ’cause it shipped, it got all this like great buzz. We were product of the year in Time Magazine and it was sort of, and we sold like 5 of them. Because it had all these problems but we knew that there was this cool technology and that was this like really interesting intersection of wait, we didn’t stay true to the kind of customer experience and the problem that we were trying to solve for the user. We compromised all these things to meet all of these schedule criteria or funding and they’re real constraints, right.

Jessica Livingston [15:40] – You didn’t follow your instinct.

Hosain Rahman [15:42] – Didn’t follow the gut, that gut instinct. We knew better and that was probably the hardest thing about my conversation with Steve, and I did send him an email after that saying, “You were right on everything, I appreciate that you actually took the time to be honest with me because few people are.”

Jessica Livingston [15:57] – Did he respond?

Hosain Rahman [15:58] – Yeah, and it was sort of, he was always like that with us and then we launched several other products with Apple, like the Jambox and UP and all those things so we had a great relationship with that company and we continue to, but we sort of learned a lot from experience. And so going a little bit further on what happened we ended up launching this thing, it was totally stillborn, it didn’t sell any. We ran out of money and now it was like oh my God, what do we do. And again, very long story short people at the time that were supporting us, our investors sort of lost faith and they shut the company down. People don’t realize it, Jawbone was shut down. All the employees were laid off, they literally chained the doors.

Jessica Livingston [16:38] – They chained the doors to the office?

Hosain Rahman [16:41] – They chained the doors, they changed locks, the whole thing. I have a letter that says, everyone, we don’t see any value in this thing, we’ve terminated all the employees, it was gone, right. ‘Cause in those days too…

Jessica Livingston [16:50] – Wow.

Hosain Rahman [16:51] – As entrepreneurs and founders, it’s a lot more friendly now than it used to be from investors. Like you actually get to control your company, actually we were kicked off the board, we weren’t sort of…

Jessica Livingston [17:00] – You were kicked off the board of your own company?

Hosain Rahman [17:02] – Kicked off the board, you know we didn’t have a say in these kinds of corporate decisions, it was like thanks very much for your ideas, like we’ll take it from here.

Jessica Livingston [17:08] – So what did you do?

Hosain Rahman [17:09] – That’s changed a lot, so what happens is…

Jessica Livingston [17:10] – You show up and there are chains on the door,

Hosain Rahman [17:12] – There are chains on the doors but the thing that I had and my cofounder really had is we still believed that we had created something special and we still believed in the mission. And we still believed that we could improve people’s lives and that we could allow them to communicate better and that we could sort of push this stuff forward. What we ended up doing is we kind of wrestled it back from those investors, I think when we took it back we had 60 grand in the bank, 600 grand in debt. We took another DARPA contract and we focused in and said, what are all those mistakes that we made, that we knew better on? Often failure is the best teacher that you can have, right. Because you learn so much more ’cause you think about every single angle at 540 degrees, you’re looking again and again, and again, and you’re like what went wrong and why did that happen?

Jessica Livingston [17:58] – Are you independent at this point? Or that your investors still involved?

Hosain Rahman [18:03] – Well, they said just go take it, every one was sort of gone off the board…

Jessica Livingston [18:06] – We’ve lost hope, go off.

Hosain Rahman [18:07] – Whatever, it wasn’t even they were, it wasn’t even a considered decision.

Jessica Livingston [18:11] – But your sort of starting with the blank slate.

Hosain Rahman [18:13] – So we’re starting with a blank slate right…

Jessica Livingston [18:15] – Okay.

Hosain Rahman [18:16] – And we had this cool technology that had all this promise and people resonated with it when they got it so we figured out that it had to get into the right package or the form or the right way that people could access it and interact with it, right. And so we had failed on what I think about as sort of is all what design is all about which is the attention to the right details and resolving those details to make the best possible experience for the customer, right. We’d missed that, right and we missed it in a big way and it nearly put us out. We focused for the next two years, we worked for no salaries, DARPA sort of kept the lights on as did you know our friends and families and then we focused on our first headset and that was when we started to think about wearable computing, actually. It’s funny ’cause now everyone talks about wearables, every day, probably every hour I get a question about wearables and where is it going and what’s happening. That’s when we started to think about these things on your body that have all this computing power, how are they going to tie to services and all that stuff. We powered through that, that was two years of probably another two days of crazy stories.

Jessica Livingston [19:20] – Can you talk at all about the shipping story?

Hosain Rahman [19:22] – Oh, you love the…

Jessica Livingston [19:23] – I love it so much.

Hosain Rahman [19:25] – So, we went through two years, no salaries, we had you know, Vinod and David Weiden from Khosla Ventures that helped us get a deal with AT&T to launch our you know, kind of next generation Bluetooth headset and every thing’s lined up, we have this big customer, we still couldn’t raise that much capital to get it off the ground. It was tough, but Vinod and David sort of saw some promise so they were kind of just advising us to see what would happen and we were trying to launch, it was late in December, we had product in a dock in New York and the manufacturer wouldn’t release it to us because we didn’t have any money in the bank. We literally had like $2,700 in the bank. And we had to figure out how to get those products released out of U.S. customs so they could deliver to AT&T, it was Cingular at the time to get into stores.

Jessica Livingston [20:14] – For like Christmas.

Hosain Rahman [20:15] – For Christmas and for anyone that’s launching a product, like December 21st is not a good time to launch a product for Christmas, it’s kind of too late. That was a whole ‘nother story so, we convinced AT&T to still take it in, and then one of our earliest angels, these guys Chris Burch and Austin Hearst, they gave us a letter of credit to unlock it and I had to like go to JFK to go find the customs people and figure out what the harmonized code was for this type of product and get them to release the stuff so it could get in to the stores and Mossberg wrote about it in the journal and it sold out in a few hours.

Jessica Livingston [20:52] – Wow.

Hosain Rahman [20:53] – I think we went from like zero to 70 million revenue in our first year.

Jessica Livingston [20:56] – Whoa.

Hosain Rahman [20:57] – That’s the thing that I learned that I hope people take away is when you actually go focus on ruthlessly what those things are that you’re trying to solve and those problems, you can transform your business like that. The other stuff sort of, you got to figure it out, it’s not easy, but that’s the core thing, right. If you don’t do it everything gets really bad and if you do then you can build from there. And things transform over night like that.

Jessica Livingston [21:22] – So literally it was like, this…

Hosain Rahman [21:24] – It was like overnight.

Jessica Livingston [21:25] – Overnight.

Hosain Rahman [21:25] – Overnight.

Jessica Livingston [21:27] – Then what happened?

Hosain Rahman [21:27] – Then we had to go build a business, we had to scale, we had to build a team. We weren’t fortunate in that situation where you know we had raised a bunch of money, built out our team, made the product, it was a success and then we could scale from there. We had no infrastructure, right, so we went zero to 70 million with a consumer, hardware product with like at that moment, in the beginning of December, oh sorry, the beginning of January in ’07, we had six people. We scaled that, with revenue it grew to like 22 and that’s when like Vinod and Marc and Ben, Ben Horowitz and Marc Andreessen, the Sequoia guys all kind of came in and we started to build the company. And then you know we had this sort of screaming, 2008, business was growing, growing, growing and then all of a sudden, you know, you had the big melt-down of 2008. Where Lehman Brothers exploded, we found ourselves with a million units on back order and all of a sudden those orders just got canceled so we had like 70 million, or 50 or 70 million dollars worth of inventory in China. We had to go, then learn to work that down, we spent a lot of 2009 working that down to zero, did a big deal with Costco to move it. It was just, you know all of these bumps and bruises and again, we experienced it in the fall of 2011. You know we had, I had announced this UP product on stage, this 4A, using all the stuff we’d learned about sensors and headsets and now translating it to health, it was this massive problem, I literally debuted the thing on stage at TED. We had like a billion media impressions around it and the most hyped product, I still think it was the fastest selling, third-party product in the history of Apple retail that fall and it was going out there and all of a sudden we were starting to hear issues of them breaking, at scale. We couldn’t even get units back to figure out what was wrong fast enough. And here was this sort of incredibly hyped product, we had tried, we were thinking about levitating in that category even before we had learned how to crawl, let alone sort of walk. All this hype, and you don’t even know what to do with respect to the consumer. I think we’re fortunate because we’ve been through some hard times. There is a DNA in the organization where we could sort of take a step back and say, you know what, like let’s just try to figure out what’s happening, first principle is let’s make sure we take care of the customer. Make sure user’s are happy, that you know, the first question I ask is are we doing any physical harm to people?

Jessica Livingston [23:58] – Right.

Hosain Rahman [23:59] – Is there anything wrong, is it like hurting people, if not okay, what’s next?

Jessica Livingston [24:01] – Is it catching fire?

Hosain Rahman [24:02] – Is it catching fire, is it burning people’s wrists? That happened to one of our competitors, not good. You got to sort of go from there and we’ve been fortunate that we’ve been through hard times and it was never this sort of straight shot of success. And I often tell people like look, the problems that you experience when you’re five people with you know, tens-of-thousands of dollars in the bank, versus you know worth billions in market-value and you’ve got hundreds-of-millions of dollars, and big channels, of course they’re no less existential or nerve-racking, they’re just at different scales. So if you learn to sort of persevere through those things and you focus on the things that matter, you’ll carry those skills with you through the whole journey, right?

Jessica Livingston [24:50] – Yeah.

Hosain Rahman [24:51] – And don’t forget those lessons of what it was like to be on the ground, you know with your teeth kicked in, the taste of that blood and how you go through it. Then what we ended up doing with UP is we figured out that we had an issue and I sat down and wrote a letter and said to people that I’m sorry, we made a mistake and we screwed this up and give you your money back and you keep the product. We’ll take you through it and we’re going to go fix this stuff and we’ll be back. And when we came back consumers embraced us and you know people, I was surprised, ’cause the reaction of that letter went from, I was getting death threats on Twitter to, literally, my wife will remember this. To you know all of a sudden people saying wow, like that’s the example of how you treat customers and we weren’t trying to think about that we were just like, what’s the right thing to do, right, so?

Jessica Livingston [25:35] – I feel like I tell people to never start a competitor to Jawbone or any of your products. Your like the toughest founder who’s been through so much. they’d never survive. We have a couple more minutes and I know there’s so much I wanted to get through.

Hosain Rahman [25:48] – Hopefully that was a good narrative?

Jessica Livingston [25:50] – That was good we talked about some of the near-death ones that I love. Can you talk about how hard it is to take software and hardware and data and bring them all together? Because you’re so good at that.

Hosain Rahman [26:02] – It’s cool, I mean what we’re doing now is I feel like everything over the last 14 years has been a preparation for it. I feel like we’ve been going to school where we learned how to build these great, high-design products and we’ve been fortunate enough to be sort of recognized for it. One of the things that was interesting about the first UP launch is we had built our own application from scratch. We’d never done that before. You know in 2011, beginning of 2011, we didn’t have an application team. We had to build that from scratch. And so one of the things that the hardware defects match was how crap our app was. It was really bad, a lot of my friends, like Zuck, and all these other guys, like what are you doing making software? I said we’ve always made software, just at the algorithm level and firmware and all this stuff, but you know it was a really tough learning experience to get people who come from the application world to work with people who work in hardware and not to have them work in silos and at some magical point for it all to come together you realize that doesn’t actually work. And so I used a lot of 2012 to kind of rip it all down and say, look, you know what we learned in hardware is you have to make stuff that people will pay you more than what it cost you to make. Which is a really interesting discipline because you end up being really focused on, is this good enough that someone would take a dollar out and pay you for it, right? In app development and in lots of web development mobile apps, people don’t have that discipline ’cause you don’t, everything’s free and it just sort of moves quickly and so people iterate and you just sort of figure out stuff but there isn’t that discipline of like is it good, are we solving that problem, will people pay us for it, right?

Jessica Livingston [27:42] – Right.

Hosain Rahman [27:43] – And so we took that, sort of the sensibility from the hardware team and we kind of tried to get our software guys to think about their experiences in that way around trying to resolve it to a point where, yeah, we’re making decisions and we’re making judgments on where this is going to go and how it comes together, but then we got this speed at which the software guys could iterate to sort of infuse our hardware team and so they kind of tried to get what the best of each of these things were. And then ultimately what I did is I organized it against the user problem. I said we are solving this customer problem and we are going to use these things as tools, whether it be the software app or we’re going to solve that in hardware or we’re going to solve it in the cloud with the data. That was another new thing for us is to build the whole data science team, I think we have a world-class one, we started to publish a lot of those results. I measured us world-class because Google and Facebook and all these guys are trying to recruit out of our team. Which I think is a sign that you’ve arrived when the big guys are trying to steal your people. But you know putting all those elements together and getting them all to talk to each other because they speak different languages is really difficult and I think that’s the new tip of the arrow, right. And I think that this comes back to that advantage that we have against people who’ve traditionally been successful in CECs, totally different than what it was. They’re no longer these dumb boxes, they’re boxes where the application experience and software is just as important as what you physically touch. And there’s a melding of those lines, I tell people when we think of design in mobile applications it’s something between three dimensions and two dimensions, it’s not just like a little visual thing. You’ve got to interact with it and that’s not quite three dimensions where you can feel the button but it’s something in-between and so we’re sort of putting all those pieces together but again, it’s all about here the problem we’re trying to solve and how do these pieces, how do you move them around to actually go solve that?

Jessica Livingston [29:32] – Well sadly we are over. Thank you…

Hosain Rahman [29:35] – My pleasure.

Jessica Livingston [29:36] – And congratulations on all of your hard-won success. I’m obsessed with my Jambox Mini and thank you for coming today. It was awesome!

Craig Cannon [29:44] – Okay, thanks for listening. As always, please rate and subscribe to the show and if you’d like to read the transcript or watch the video they’re both at blog.ycombinator.com. See you next time.