Why did NOTHING buy a CLOSED company?

Summary

Carl Pay, founder of Nothing, explains why his company acquired the Essential brand in 2020, despite it being a closed company. The acquisition was primarily for the name, trademarks, and valuable assets like the web domain. Carl also reflects on the challenges of starting a new venture, including the pressure from investors and the stress of building a brand from scratch. He reveals that while the Essential brand had potential, Nothing focused on creating something unique. The conversation delves into the complexities of launching a new product and the mindset required to succeed in the tech industry.

Takeaways

• 😀 Carl Pay acquired Essential, a company that was no longer operating, primarily for its name, trademarks, and domain.
• 😀 Essential's product line included the PH1 smartphone and a nearly released device codenamed Project Gem, which had a unique, postage stamp-sized screen.
• 😀 The name 'Essential' was initially considered for the new brand, but Carl Pay ultimately decided to rethink it after realizing it might confuse the market into thinking they were reviving an old brand.
• 😀 The company considered names like 'Stone,' but the final choice was to go with something entirely new for their brand identity.
• 😀 Carl Pay emphasized that a brand name is less important than the products a company creates, pointing out that even a strange name like Apple can work if the company is successful.
• 😀 Essential's acquisition did not include any patents, just trademarks, social media handles, and the valuable essential.com domain.
• 😀 The cost of developing a unique product like Project Gem would be high, especially for a custom screen, with estimated costs around $5-$10 million for just the custom cut.
• 😀 Despite the buzz around smaller phones, Carl believed a device like Project Gem wouldn't have sold well due to the need for essential features like a good screen, battery, and camera.
• 😀 The pressure to succeed in the new venture, 'Nothing,' was immense, especially after previous failures in the industry. This led to significant stress for Carl, including heart-related issues from the stress.
• 😀 Carl acknowledged that investor pressure was a major stressor in the early stages of starting 'Nothing,' but his prior experience in the industry helped him cope with the challenges.
• 😀 Carl declined to reveal the cost of acquiring Essential due to an NDA, but reiterated that the acquisition was about acquiring a nine-letter word: 'Essential.'

Q & A

Why did Carl Pay decide to buy the Essential brand, despite it no longer being active?

Carl Pay and his team were mainly interested in acquiring the Essential brand for its name, trademarks, social media handles, and web domain. The brand name was simple, elegant, and meaningful, making it valuable for their new venture.

Was the decision to acquire Essential related to its products or patents?

No, the acquisition was not driven by Essential's products or patents. Carl clarified that the company was not interested in Essential's patents, as they didn't see much value in them. The real value lay in the brand name and related assets.

Did Carl Pay consider continuing with the Essential brand name for his new company?

At first, Carl's team considered keeping the Essential brand name. However, after discussions, they decided against it, fearing that reviving the brand would confuse the market. They ultimately decided to build their own legacy and move away from the Essential name.

What were some alternative brand names Carl Pay considered for his new company?

One alternative brand name that Carl liked was 'Stone,' which he found short and cool. However, the team eventually concluded that brand names, while important, are secondary to the products and the legacy a company builds.

How did Carl Pay feel about the importance of a company name?

Carl Pay expressed that the name of a company is not as important as the products it delivers. He used Apple as an example, noting that an unconventional name could still become iconic if the company succeeds in creating great products.

What was Carl's perspective on the potential success of the Project Gem phone?

Carl believed that while the Project Gem phone would have garnered a lot of buzz initially, it likely wouldn't have sold well. People tend to prioritize features like a good screen, battery, and camera, which the Project Gem phone lacked in comparison.

How much would it cost to produce a unique phone like the Project Gem?

Carl estimated that producing a unique device like the Project Gem would cost between $5 to $10 million just for the custom screen, with an additional $250 to $300 added to the device's cost for the custom screen itself.

Why does Carl think that smaller phones may not be successful in the market?

Carl argued that while smaller phones might attract initial interest, they would likely fail in the long run due to a lack of essential features like a good screen, battery, and camera. These elements are non-negotiable for a phone to succeed in the market.

What challenges did Carl Pay and his team face when starting Nothing?

Carl Pay and his team faced several challenges, including rejection from suppliers who were skeptical about the success of a new phone company. They also had to overcome the stigma of past startups that didn't succeed in the same industry.

How did Carl cope with the stress and pressure of starting a new company?

Carl admitted that he struggled with stress, even experiencing heart problems due to the pressure. He felt immense responsibility to deliver returns for investors and feared letting them down, though he later realized much of the stress was self-imposed.