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Imagine a tech company so visionary that it can take an idea<\/em> public. A \u201cconcept IPO,\u201d they called it.<\/p>\n Picture the three founders, all former Apple employees, two of whom\u2014software engineers Andy Hertzfeld and Bill Atkinson\u2014were already Silicon Valley legends for their work creating the Apple Macintosh. Atkinson\u2019s prolific inventions included the double click and the drop\u2011down menu. The third founder, Marc Porat, had a gift for seeing the future.<\/p>\n For his PhD dissertation at Stanford in 1976, Porat analyzed (in painstaking detail) a century of transition in the American labor force and predicted a sea change in work. An economy based primarily on transforming matter and energy\u2014via agriculture and industry\u2014had been giving way to one based on transforming information. Computers and telecommunications, he saw, were reshaping every industry. \u201cWe are entering another phase in economic history,\u201d Porat wrote. On the first page of the first chapter of his dissertation, Porat coined a term that would become famous: \u201cinformation economy.\u201d<\/p>\n Porat followed that up by hosting a primetime PBS documentary, The Information Society<\/em>, in 1980. In it, he positioned information technology as disruptive on a scale matched only by the plow and the steam engine. He delved at length into the power of new technology, as well as emerging problems with privacy, information overload, misinformation, and increasing inequality, and showed that most Americans had no idea that the ground was shifting beneath them.<\/p>\n In 1988, Porat joined Apple\u2019s Advanced Technology Group, where he could apply his prodigious foresight to the team\u2019s task of figuring out what the next big thing would be after personal computers. One day, Porat took a Sharp Wizard\u2014a new electronic organizer with a calendar and phone book\u2014and duct\u2011taped it to a Motorola analog cell phone. He had his concept. Soon he was making plaster models of a combination phone and digital assistant. In 1989, in a large red notebook, he drew a visionary product that would fit the future he had foreseen with eerie accuracy. He called it the Pocket Crystal. You don\u2019t need to have seen the sketch before for it to be instantly familiar.<\/p>\n The Pocket Crystal schematic depicted a thin glass rectangle with no protruding buttons\u2014just a touch screen. It would be a computer that combined a phone and fax machine; you would use it to send text messages, watch movies, play video games, buy plane tickets, and download new apps. It would fit in your pocket, and it would be beautiful. Following the sketch, Porat wrote in his red book: \u201cIt must offer the kind of personal satisfaction that a fine piece of jewelry brings. It will have a perceived value even when it\u2019s not being used. It should offer the comfort of a touchstone, the tactile satisfaction of a seashell, the enchantment of a crystal.\u201d<\/p>\n In 1989, only 15 percent of American households even had a computer, which didn\u2019t fit in anyone\u2019s pocket; zero percent were browsing the web, because it didn\u2019t exist. And yet, there was Marc Porat, essentially sketching the iPhone.<\/p>\n The project was green\u2011lit, but with a caveat: It was too big, even for Apple.<\/p>\n Early adopters were only just talking on their brick\u2011like mobile phones. The Pocket Crystal would require not only unprecedented hardware and software but networks that could link the world and new digital communication standards.<\/p>\n In 1990, Porat and Apple CEO John Sculley agreed that Apple would invest and take a board seat, but the project would spin out as a separate company and start courting partners. For this new enterprise, the founders chose a name that evoked both the country\u2019s most revered companies and the adage from science\u2011fiction writer Arthur C. Clarke that \u201cany sufficiently advanced technology is indistinguishable from magic.\u201d Thus, General Magic was born.<\/p>\n Sculley introduced the founding trio to Sony. They made their pitch, and within days Sony was on board, with a stake and a licensing deal. Next came Motorola, and then AT&T. In quick succession, the world\u2019s telecom titans and consumer electronics giants were convinced to join what became known as \u201cthe Alliance.\u201d Philips was next, and then Sony\u2019s bitter rival Panasonic (then known as Matsushita). Then NTT (Japan\u2019s largest telecom), then Toshiba, then France Telecom, and on and on, each one investing millions of dollars. General Magic\u2019s partners controlled so much of the world\u2019s communications industry that Alliance meetings had to begin with an antitrust lawyer listing all the topics they were prohibited from discussing. It was, as General Magic\u2019s general counsel put it, the biggest consortium of global companies that had ever existed in American business.<\/p>\n The buzz, and the reputations of Atkinson and Hertzfeld, became a Silicon Valley bat signal for talent. General Magic attracted Apple veterans, like Joanna Hoffman, who ran Mac marketing; artist Susan Kare, who designed Mac\u2019s graphics (like the trash can that would sit in the corner of millions of screens); even Sculley\u2019s personal publicist, Jane Anderson. It also drew the young, brilliant, and ambitious from within Apple and without, some of them sleeping on the office door-step in the hope of landing a job.<\/p>\n General Magic engineers were custom\u2011building almost everything, and innovation came fast and furious: an early form of USB; touch-screens with a virtual keyboard; \u201cskeuomorphic\u201d graphics that depicted their functions, like a filing cabinet, a game room, and a virtual street with a store for new applications (i.e., an app store); messages with stickers and animated characters (i.e., precursors to emojis); interactive graphics, like a pair of lips you could tap if you wanted to record your voice and send it as a message; Telescript, a new programming language that would allow devices to communicate in a virtual network for information sharing and ecommerce. Their name for that remote gathering space: the cloud.<\/p>\n When two employees in their early twenties\u2014Steve Jarrett and Tony Fadell\u2014traveled to Japan to do a hardware demo for Mitsubishi Electric (another Alliance member), the Mitsubishi team halted the presentation. Here is how Jarrett recalled it in an interview for Valley of Genius<\/em>, an oral history of Silicon Valley:<\/p>\n Five minutes later, guys in all these multicolor factory jumpsuits show up and fill the room. And then they say, \u201cTony, again, please. Please describe your architecture.\u201d So Tony gets to the part and he says, \u201cWell, this is where there\u2019s no modem because we\u2019ve done it entirely in software.\u201d The one guy grabs his head in his hand and just hits his head on the table. I said, \u201cIs everything OK?\u201d The guy who organized the meeting says, \u201cYou have just obsoleted Kato\u2011san\u2019s division.\u201d<\/em><\/p>\n<\/blockquote>\n With regular displays of brilliance, the atmosphere back in California was euphoric. General Magic was going to change the world. The work was nonstop\u2014one programmer who slept under his desk would ask of meetings, \u201cA.M. or P.M.?\u201d\u2014but the company maintained aspects of garage\u2011startup culture. A rabbit and parrot roamed the office freely; water\u2011fights were common; a window was accidentally broken with slime fired from a giant slingshot.<\/p>\n The vision, the scope, the camaraderie, the talent, the Alliance\u2014it was all so intoxicating that General Magic began the process of going public with hardly any revenue, based purely on the strength of its concept. One investment banker came to visit and offered Porat the literal shirt off his back to get involved with the initial public offering. Porat accepted, and the banker stripped off his suit in the middle of General Magic\u2019s office. In 1995, Goldman Sachs took General Magic public. On the first day of trading, the stock price doubled.<\/p>\n Years later, Porat would say that one of his goals in raising so much money so quickly had been to create \u201cheaven for engineers.\u201d \u201cThey were free to imagine and play and invent and write,\u201d he said. \u201cThey were inventing one thing after another, after another, after another and for an engineer, what more can you ask for?\u201d<\/p>\n The answer, it turned out: a little less freedom.<\/p>\n You have never heard of General Magic (most likely) because that brief heaven for engineers did not, in fact, birth the iPhone long before its time. General Magic\u2019s fall was even more precipitous than its rise. All of that incredible innovation never turned into a coherent device that solved anyone\u2019s problem.<\/p>\n When a product finally launched, the book\u2011sized device running General Magic\u2019s battery\u2011sucking operating system was a disaster. In six months, it sold three thousand units, many of those purchased by friends and family. A year after the IPO, the stock price was down 85 percent. Ecstatic early hires were already gone, or leaving. Soon, Alliance partners started to bail, and the prescient Porat stepped down as CEO. A rocket ship that appeared fit for the information economy had instead exploded on the launchpad.<\/p>\n General Magic had it all: a visionary leader at the helm of a driven team, an anything\u2011is\u2011possible attitude, vast resources, loads of freedom, and talent\u2014so much talent. In addition to members of the original Mac team, General Magic alumni went on to become executives at Apple, Google, Adobe, Samsung, and other household\u2011name companies. They designed or led Safari, the iPod, iPhone, Apple Watch, Dreamweaver, search at Google, and AI at Apple. \u201cMagicians,\u201d as they were known, also cofounded LinkedIn, Nest, and Android, among other companies. One young engineer was later appointed the first female chief technology officer of the United States by President Barack Obama.<\/p>\n How could a company with such an obviously correct vision of the future, and an almost unbelievable roster of talent, collapse so spectacularly? An answer to that question happens to be unusually well documented, because General Magic hired a pair of in\u2011house videographers to record the history\u2011making effort in real time. One of those videographers, Sarah Kerruish, grew up on a tiny island in the Irish Sea and was 27 when she was hired at General Magic. \u201cI was on Mars,\u201d she told me in 2023. \u201cThese people are wearing shorts, and there are rabbits running around, and there was a ton of buzz in the Valley about them.\u201d She met her husband there\u2014Steve Jarrett, he of the halted Mitsubishi Electric demo.<\/p>\n More than a decade after the collapse, she dug up the old footage and began to turn it into a documentary. General Magic<\/em> (the movie) debuted in 2018, and it is a remarkable portrait of brilliance and downfall. As Kerruish told me: \u201cIt was just too much creative freedom fueled by too much money.\u201d Too much freedom and too much money<\/em> is not an idea one hears every day, but it is what the footage and interviews show.<\/p>\n For starters, General Magic custom\u2011built everything from scratch as they pushed the limit of what was possible, on several fronts at once. One engineer likened it to hand\u2011building a car instead of using a factory. Another said that instead of standing on the shoulders of giants, \u201cwe were building the giant from the toes all the way up to his head.\u201d That was exciting but also reckless.<\/p>\n As it turned out, even with their prolific in\u2011house innovations, the technology needed to realize the Pocket Crystal vision was years away. As the project dragged on, it became clear that General Magic would have to start with a less\u2011majestic intermediate step, but nobody had a clear idea of what that should be. As Megan Smith, the magician who went on to become a Google executive and then CTO of the United States, put it: \u201cProbably the most challenging part of the product was deciding what not to do. What to do, and what not to do.\u201d<\/p>\n With their combination of resources and talent, the team could do anything, so they often did. If an engineer had an idea they thought was cool, they went ahead, even if it was superfluous or pushed back a deadline\u2014when deadlines existed at all. Kerruish recalled sitting late at night with a frustrated marketing executive. \u201cShe\u2019d say, \u2018Yes, we have a walking lemon [animation], but the device will keep shutting down, and the battery life is terrible,\u2019\u201d Kerruish told me. \u201cShe was actually doing a valiant job of trying to put constraints in place.\u201d<\/p>\n In a poignant moment in the film, cofounder Andy Hertzfeld reflects on a looming deadline: \u201cI was still in creative mode, working on a flipping coin so the game room would have something in it. I was setting a bad example for the team by doing stuff that was relatively frivolous, when we needed to concentrate on the boring but necessary parts.\u201d<\/p>\n But even the necessary parts weren\u2019t particularly clear. The General Magic team only vaguely defined their target customer (\u201cJoe Six-pack\u201d), which meant they didn\u2019t have clear user needs to help focus the project. (And Joe Sixpack, whoever he was, probably did not yet have email.) As Tony Fadell reflects in the film: \u201cI started to understand where the cracks are starting to begin. And where we didn\u2019t have a real message and a real clear [idea of] what we were building and what we weren\u2019t building and for whom and how much was it gonna cost and when it was gonna ship.\u201d<\/p>\n Another telling scene features a young Darin Adler, who had already led a team that built a Mac operating system before coming to General Magic. Engineers are sitting on the floor in a circle listening to Adler as he tells them that there are \u201cmoments where somebody has to start doing something, and what we\u2019ve decided is that for each of those important moments we want to make sure that there\u2019s real responsibility for someone to say, \u2018I\u2019m at this important moment, start doing your work.\u2019\u201d The response, Adler recalled: \u201cThey said, \u2018Oh, we don\u2019t need a manager. We don\u2019t want you because we don\u2019t need a manager. Our leaders are Andy and Bill. That\u2019s what makes this place great is we don\u2019t have managers.\u2019\u201d<\/p>\n Meanwhile, balancing the 16 global partners in the Alliance\u2014some of whom were anxiously waiting to manufacture devices\u2014added enormous complexity to an already complicated endeavor. One reason General Magic went public so early was to be less financially reliant on the Alliance partners it had courted. But that just raised the stakes. The money was used to hire more engineers, and the project kept growing. At every step, it kept getting bigger when it desperately needed to get smaller. The IPO scene in the film, rather than a triumph, feels like a death knell. As Michael Stern, General Magic\u2019s VP of business affairs and general counsel, told me: \u201cWe had too much money. We never had to worry about payroll. What startup in the world never has to worry about payroll?\u201d<\/p>\n In the end, the first device running General Magic\u2019s operating system didn\u2019t appear for more than four years after the company was founded and the Alliance formed. It had a unique interface\u2014a grayscale office with a desk, calendar, and inbox, from which users could touch the screen to navigate down a virtual hallway to a library and game room, or \u201cdowntown\u201d to a street with stores for shopping and new apps.<\/p>\n But that appealing imagery belied the complexity of using a massive array of features that filled a 200\u2011page user manual and overburdened the hardware of the time so much that the user experience was choppy. It was much larger than an iPhone and didn\u2019t include a phone; it had to be plugged into a phone line to make calls or send messages. It was a mobile device in the sense that it was small enough to carry (albeit not in a pocket), but not in the sense we use today\u2014connected on the go. It was expensive, and demand was nonexistent. It was ahead of its time but didn\u2019t seem to solve any pressing problems for the mythical Joe Sixpack or any other consumer. The many tantalizing innovations never cohered into a single product. And during that time when General Magic was repeatedly pushing back deadlines, the internet exploded, which rendered the notion of a proprietary cloud obsolete.<\/p>\n General Magic didn\u2019t use the technological environment around them to find useful limits, or at least an understanding of what might be possible in a given amount of time. Nor did they create their own project boundaries internally, based on a clear sense of who they were building for, and why, and when they would get it. Overflowing with resources and talent, they were bereft of helpful constraints. As the renowned venture capitalist Bill Gurley (Uber, Zillow) told me, \u201cWe have a saying in venture: \u2018More startups die of indigestion than starvation.\u2019\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Save StorySave this storySave StorySave this story Imagine a tech company so visionary that it can take an idea public. A \u201cconcept IPO,\u201d they called it. Picture the three founders, all former Apple employees, two of whom\u2014software engineers Andy Hertzfeld and Bill Atkinson\u2014were already Silicon Valley legends for their work creating the Apple Macintosh. Atkinson\u2019s […]<\/p>\n","protected":false},"author":1,"featured_media":50011,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":{"0":"post-50010","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business"},"_links":{"self":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/50010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/comments?post=50010"}],"version-history":[{"count":0,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/posts\/50010\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media\/50011"}],"wp:attachment":[{"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/media?parent=50010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/categories?post=50010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/agooka.com\/news\/wp-json\/wp\/v2\/tags?post=50010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n