StarZero All shows Try the podcast clipper →

Aug 13, 2024 · 21m · y-combinator

How Nothing Founder Carl Pei Built A Multi-Million Dollar Smartphone Brand In Just 2 Years · Y Combinator

Carl Pei · 13m spoken Garry Tan · 5m spoken
0:00 / 0:00
▶ Watch on YouTube →

gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions

In this episode of The Main Function, Y Combinator President Garry Tan interviews Nothing founder Carl Pei about his journey from tech enthusiast and OnePlus co-founder to building a successful hardware brand. Carl shares insights on overcoming manufacturing crises, balancing operational execution with iconic design, and cultivating a distinct global brand.

How this conversation actually went

Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The partners hold 27.9% of the talking time here. How this is scored →

The partners as informed peer 3.4 Guest teaching 4.4 Guest disagreement 0.8 The partners pushing back 0.8
05100:0010:0020:000:25–5:27 · The partners as informed peer 4/10 Program Title Sequence: The Story of Nothing Garry Tan shows familiarity with the early Android and Cynogen ecosystem while Carl Pei recounts his entry into Chinese consumer electronics and the origin of OnePlus.5:27–10:10 · The partners as informed peer 5/10 Departure from OnePlus and Raising Seed Capital in Sweden Garry Tan brings up startup theory around single-channel customer risk with Foxconn, while Carl Pei explains the operational reality of contract manufacturers getting burned by inventory risk on failed smartphone startups.10:10–12:37 · The partners as informed peer 2/10 The Ear (1) Manufacturing Crisis and Rescuing the Company Carl Pei walks through the near-fatal manufacturing crisis of the Ear (1) pogo pin spring defect and deploying 15 engineers into apartments next to the factory floor.12:37–15:32 · The partners as informed peer 3/10 Cult Brand Building and Design-Centric Marketing Carl Pei deflects Garry's romantic 'cult brand' framing by pointing out that 'if you know you know' just means brand awareness is low, then advises hardware founders to be 90% Tim Cook rather than Jony Ive.15:32–19:22 · The partners as informed peer 3/10 Iconic Design and Mindfulness Through the Glyph Interface Carl Pei explains the anti-distraction philosophy behind Nothing's Glyph interface before engaging in a rapid-fire design lightning round where both agree on bringing back skeuomorphism.0:25–5:27 · Guest teaching 4/10 Program Title Sequence: The Story of Nothing Garry Tan shows familiarity with the early Android and Cynogen ecosystem while Carl Pei recounts his entry into Chinese consumer electronics and the origin of OnePlus.5:27–10:10 · Guest teaching 5/10 Departure from OnePlus and Raising Seed Capital in Sweden Garry Tan brings up startup theory around single-channel customer risk with Foxconn, while Carl Pei explains the operational reality of contract manufacturers getting burned by inventory risk on failed smartphone startups.10:10–12:37 · Guest teaching 6/10 The Ear (1) Manufacturing Crisis and Rescuing the Company Carl Pei walks through the near-fatal manufacturing crisis of the Ear (1) pogo pin spring defect and deploying 15 engineers into apartments next to the factory floor.12:37–15:32 · Guest teaching 4/10 Cult Brand Building and Design-Centric Marketing Carl Pei deflects Garry's romantic 'cult brand' framing by pointing out that 'if you know you know' just means brand awareness is low, then advises hardware founders to be 90% Tim Cook rather than Jony Ive.15:32–19:22 · Guest teaching 3/10 Iconic Design and Mindfulness Through the Glyph Interface Carl Pei explains the anti-distraction philosophy behind Nothing's Glyph interface before engaging in a rapid-fire design lightning round where both agree on bringing back skeuomorphism.0:25–5:27 · Guest disagreement 1/10 Program Title Sequence: The Story of Nothing Garry Tan shows familiarity with the early Android and Cynogen ecosystem while Carl Pei recounts his entry into Chinese consumer electronics and the origin of OnePlus.5:27–10:10 · Guest disagreement 1/10 Departure from OnePlus and Raising Seed Capital in Sweden Garry Tan brings up startup theory around single-channel customer risk with Foxconn, while Carl Pei explains the operational reality of contract manufacturers getting burned by inventory risk on failed smartphone startups.10:10–12:37 · Guest disagreement 0/10 The Ear (1) Manufacturing Crisis and Rescuing the Company Carl Pei walks through the near-fatal manufacturing crisis of the Ear (1) pogo pin spring defect and deploying 15 engineers into apartments next to the factory floor.12:37–15:32 · Guest disagreement 2/10 Cult Brand Building and Design-Centric Marketing Carl Pei deflects Garry's romantic 'cult brand' framing by pointing out that 'if you know you know' just means brand awareness is low, then advises hardware founders to be 90% Tim Cook rather than Jony Ive.15:32–19:22 · Guest disagreement 0/10 Iconic Design and Mindfulness Through the Glyph Interface Carl Pei explains the anti-distraction philosophy behind Nothing's Glyph interface before engaging in a rapid-fire design lightning round where both agree on bringing back skeuomorphism.0:25–5:27 · The partners pushing back 1/10 Program Title Sequence: The Story of Nothing Garry Tan shows familiarity with the early Android and Cynogen ecosystem while Carl Pei recounts his entry into Chinese consumer electronics and the origin of OnePlus.5:27–10:10 · The partners pushing back 2/10 Departure from OnePlus and Raising Seed Capital in Sweden Garry Tan brings up startup theory around single-channel customer risk with Foxconn, while Carl Pei explains the operational reality of contract manufacturers getting burned by inventory risk on failed smartphone startups.10:10–12:37 · The partners pushing back 0/10 The Ear (1) Manufacturing Crisis and Rescuing the Company Carl Pei walks through the near-fatal manufacturing crisis of the Ear (1) pogo pin spring defect and deploying 15 engineers into apartments next to the factory floor.12:37–15:32 · The partners pushing back 1/10 Cult Brand Building and Design-Centric Marketing Carl Pei deflects Garry's romantic 'cult brand' framing by pointing out that 'if you know you know' just means brand awareness is low, then advises hardware founders to be 90% Tim Cook rather than Jony Ive.15:32–19:22 · The partners pushing back 0/10 Iconic Design and Mindfulness Through the Glyph Interface Carl Pei explains the anti-distraction philosophy behind Nothing's Glyph interface before engaging in a rapid-fire design lightning round where both agree on bringing back skeuomorphism.

speaking balance: gold is the partners, purple is the guest (3 minute bins)

0:00 · the partners 36% · guest 64%0:00 · the partners 36% · guest 64%3:00 · the partners 15.6% · guest 84.4%3:00 · the partners 15.6% · guest 84.4%6:00 · the partners 32.4% · guest 67.6%6:00 · the partners 32.4% · guest 67.6%9:00 · the partners 23.4% · guest 76.6%9:00 · the partners 23.4% · guest 76.6%12:00 · the partners 32.5% · guest 67.5%12:00 · the partners 32.5% · guest 67.5%15:00 · the partners 14.7% · guest 85.3%15:00 · the partners 14.7% · guest 85.3%18:00 · the partners 41% · guest 59%18:00 · the partners 41% · guest 59%21:00 · the partners 24.3% · guest 75.7%21:00 · the partners 24.3% · guest 75.7%
Sharpest disagreement ▶ 13:23 Carl Pei reframes 'cult brand' status as low awareness

When Garry Tan asks how Nothing cultivated a mystical 'if you know, you know' cult following, Carl bluntly punctures the romanticization by saying it simply means their brand awareness is far too low.

 Hardest push from the partners ▶ 8:45 Garry Tan questions Foxconn's supplier game theory

Garry challenges Foxconn's refusal to work with new startups by citing classic startup game theory and single-channel risk against Apple.

 Biggest teaching moment ▶ 9:10 Carl Pei explains hardware inventory risk mechanics

Carl Pei educates Garry on how contract manufacturers like Foxconn were repeatedly burned taking on inventory and engineering risk for failed startups, explaining why they shut their doors to newcomers.

 The partners hold their own ▶ 8:55 Garry Tan articulates single-channel customer risk

Garry applies venture capital domain expertise to supply chain dynamics, noting how 100% reliance on a single buyer like Apple leaves suppliers vulnerable.
the scores for every segment, with the reasoning behind each
ChapterTopicThe partners as informed peerGuest teachingGuest disagreementThe partners pushing backWhy
Program Title Sequence: The Story of Nothing 4411 Garry Tan shows familiarity with the early Android and Cynogen ecosystem while Carl Pei recounts his entry into Chinese consumer electronics and the origin of OnePlus.
Departure from OnePlus and Raising Seed Capital in Sweden 5512 Garry Tan brings up startup theory around single-channel customer risk with Foxconn, while Carl Pei explains the operational reality of contract manufacturers getting burned by inventory risk on failed smartphone startups.
The Ear (1) Manufacturing Crisis and Rescuing the Company 2600 Carl Pei walks through the near-fatal manufacturing crisis of the Ear (1) pogo pin spring defect and deploying 15 engineers into apartments next to the factory floor.
Cult Brand Building and Design-Centric Marketing 3421 Carl Pei deflects Garry's romantic 'cult brand' framing by pointing out that 'if you know you know' just means brand awareness is low, then advises hardware founders to be 90% Tim Cook rather than Jony Ive.
Iconic Design and Mindfulness Through the Glyph Interface 3300 Carl Pei explains the anti-distraction philosophy behind Nothing's Glyph interface before engaging in a rapid-fire design lightning round where both agree on bringing back skeuomorphism.

Statements from this episode (12)

Assertion Not checkable as stated
Pei: OnePlus was created to sell D2C using Oppo's supply chain
“There were new companies like selling products online that were really disrupting via D to C, so that was the original vision for OnePlus. Like, how can we take the OPPO supply chain advantages Huge scale, low cost, good quality, and sell products online, and …”
Carl Pei Aug 13, 2024 ▶ 3:50
Insight
Pei: Building a smartphone startup requires at least $100M in capital
“So we need at least a hundred million USD to make a phone.”
Carl Pei Aug 13, 2024 ▶ 7:55
Assertion Not checkable as stated
Pei: All five smartphone startups Foxconn previously partnered with failed
“Foxconn at that time had worked with like five startups that made phones, and all those five startups have failed.”
Carl Pei Aug 13, 2024 ▶ 8:09
Assertion Not checkable as stated
Pei: Foxconn historically took inventory risk for phone startups and got stuck
“Foxconn and their competitors, they took on the inventory risk for the startups as well. So when the startups made a big projection in terms of the unit sales and they couldn't deliver, they were fine. Foxconn was stuck with inventory.”
Carl Pei Aug 13, 2024 ▶ 9:25
Assertion Not checkable as stated
Pei: 90% of Nothing's first 5,000 Ear (1) units had charging defects
“For the first batch of year ones 90% of them couldn't charge properly. And at that time, I think we had shipped like 5000 units”
Carl Pei Aug 13, 2024 ▶ 11:27
Assertion Supported
Pei: Nothing sold approximately 600,000 Ear (1) units in year one
“So we ended up selling about 600,000 Units for year one.”
Carl Pei Aug 13, 2024 ▶ 12:26
Opinion
Pei: Nothing's cult reputation simply reflects low brand awareness
“I think it simply just means that our brand awareness is too low.”
Carl Pei Aug 13, 2024 ▶ 13:24
Insight
Pei: Early hardware founders must act like Tim Cook, not Jony Ive
“I think for most people they should be 90% Tim Cook, if I'm honest, because survival is the name of the game for hardware. Only when you survive and you pick up in volumes, you pick up in When you pick up the volumes, you can get stronger engineering teams, yo…”
Carl Pei Aug 13, 2024 ▶ 14:32
Insight
Pei: Products should have a defining feature sketchable after two seconds
“For every product you make imagine if a user sees it for like two seconds, and then has to sketch a defining feature of the product. So we try and build each product with something iconic that people can immediately remember and attach themselves to.”
Carl Pei Aug 13, 2024 ▶ 15:37
Opinion
Pei: Modern smartphones make people addicted, sad, and consume garbage content
“However, the modern smartphone is just so far away from that idea. It's making us more addicted. It's making us sad. It's making us watch garbage content on TikTok.”
Carl Pei Aug 13, 2024 ▶ 16:15
Opinion
Tan: Tech should bring back skeuomorphism over flat design
“We need to bring skeuomorphism back. I love it. I hate flat design personally.”
Garry Tan Aug 13, 2024 ▶ 18:22
Insight
Pei: Hardware startups must sequence products to build manufacturing credibility
“If you want to do it, I think you should go ahead, but maybe think about like the sequencing of things. Like in our example, like we had to get the earbuds to sell really well before going into the phone. Like how can we build credibility to the next thing?”
Carl Pei Aug 13, 2024 ▶ 19:59
Made with StarZero

Turn any episode into a week of clips.

This entire site, over 300 episodes transcribed, diarized, checked and made playable, runs on the StarZero media pipeline. Drop in your own episode and the podcast clipper finds the moments worth sharing, cuts them, captions them, and reframes them for every feed.

Try the podcast clipper Learn more