The Most Important Company that You Have Never Heard of
How an Apple spin-off almost invented the smartphone
Imagine an ensemble of the biggest rockstars of Silicon Valley: think Marc Porat, Andy Hershfield, Joana Hoffman – all assembled together in one building with a common vision- the vision to change the world. General Magic is the story of a handful of people who set out on a journey to impact the lives of billions.
The year was 1989. Marc Porat could be seen pacing around the Apple building with a giant red book. This red book was what would lay the foundation of what General Magic would do for the next 10 years. Porat was a visionary and he had a way with his words. Quite unsurprisingly, he convinced the likes of Bill, Andy, and Atkinson that these drawings scribbled in his notebook were not merely ideas but a peek into what the future could look like, and in front of them was the once-in-a-lifetime opportunity to design and shape the very future of personal computers.
This was also around the same time Jobs was fired from Apple and people were speculating what would come after. How could you possibly top the Macintosh? The Macintosh was one of the most ambitious technological ventures in all of human history. But Porat was convinced that he was onto something and it didn't take him long to get Sculley on board who gave him the green light to spin off a new company. Thus was born General Magic- the most important company out of Silicon Valley that no one has heard of.
Porat, Hertzfeld, and Atkinson were soon joined by Joanna Hoffman and others from the original Macintosh team. Many other members of Apple's System 7 team, including Phil Goldman, also became a part of the General Magic team. They had clarity with their vision- they wanted to build a computer you could carry around in your pockets, a tiny device you could carry around in your hand that gave you access to everything.
General Magic had an undeniable charm. It was clearly the biggest thing happening in Silicon Valley in the early 90s. The team would sit on the floor, bounce ideas off each other and build projects overnight. But this same charm to General Magic had started becoming the bottleneck to their relentless innovation- the technology simply wasn't there yet. Remember this is the 90s, there was no internet, there was no wireless. They were struggling to find the hardware and software infrastructure necessary to build what they wanted to build. A lot of these primitive prototypes, however, set the foundations for some of the greatest technological innovations of the 21st century including but not limited to the USB, touchscreen mobile phones, and apparently even emoticons!
Partly what contributed to the hype around General Magic was the secrecy. The employees were instructed never to talk about or mention in any way the work that they had been doing at General Magic, not even to Apple employees. Everyone in Silicon Valley knew that Porat had assembled a team of some of the brightest engineers and software developers but no one knew for sure what they were trying to do. Was it a computer? A mobile phone? A touchscreen device? It was probably all of them combined and even more.
It wasn't long before industry giants across the globe started to notice these developments and they simply couldn't afford to miss the bus. The hype around them was so intense and the fear of missing out was so strong that they got Sony, AT&T, Philips, Motorola, and Matsushita to partner with them signing cheques of $6 million, each, forming what would become the General Magic alliance. The biggest corporations in the world were ready to sit under one roof if it meant getting an opportunity to jump on the General Magic Bandwagon. No one company had shown such promise and potential, and with the hardware and software capabilities that the alliance brought with itself, it was becoming increasingly clear that the vision was only going to expand from here.
But in 1993, approximately a decade after the Macintosh was introduced, Apple CEO John Sculley unveiled Apple’s in-house competitor to General Magics’s ideas - the Newton, during a keynote speech at CES, branding it as a "Personal Digital Assistant". Sculley also revealed the work being done at General Magic much to the team’s surprise. The GM team was livid. “It was like our closest partner was trying to kill us,” said Hertzfeld.
While the general public was excited about the Newton there were two clear speculations: Why would Apple launch the Newton now? Especially when General Magic was at the helm of a breakthrough in Personal Computing and Why would Sculley so abruptly reveal What General Magic was trying to build? It almost seemed like the Apple board was becoming impatient. We don't know for certain what was happening behind the scenes but one thing was clear, General Magic had to move fast.
The stakes were high, and General Magic had to make sure that the vision was communicated clearly to all stakeholders. The General Magic press launch took the world by storm. The idea of a future where people would walk around with these tiny devices with such utility and the opportunity to connect to people, send them emails, fax, and get reminders- It looked like something straight out of a Star Trek movie. The idea was brilliant but the problem was just that, these were just ideas. When Porat was asked in a Radio Show when people could expect to actually have these devices in their hands, he couldn’t really give a concrete answer.
None of this seemed to change the unwavering trust that people had in the General Magic team. In fact by 1994, the "General Magic Alliance" had grown to include 16 multinational telecommunications and consumer electronics corporations. The General Magic team was smart enough to leverage the trust that the media had created in the general public. They went public in February 1995. This was the first so-called “Concept IPO” as there was no real product or revenue just a vision that people believed in and a team they were ready to bet on. General Magic raised $96 million in the IPO and a total of $200 million from 16 different investors.
With Silicon Valley’s first concept IPO behind them, General Magic now had the mammoth task of meeting the expectations that they had raised through their fantastic storytelling. This time, however, the expectations were not just coming from John Sculley or Sony and AT&T executives or admirers of the engineers working there. This time the team had a newly minted $96 million fiduciary duty to its investors to convert the dreams they had created into tangible, market-ready products for the general public. The heat to get to market was on.
This environment turned out to be one of the most productive and creative in General Magic’s lifetime.
Marc Porat recalls reaching the office one day to find some of his engineers drilling holes in the wall. He was surprised when he told them they were building bunk beds. The engineers were literally living out of the office working nearly all of their waking hours to ship General Magic’s first great invention and they were going all out. Having invented or built from scratch and greatly improved most of the components of the device, the device itself was now nearing completion.
They could finally see and touch and use the machine they had dreamed up. With the deadlines from General Magic’s partners fast approaching, Marc Porat decided to launch even though some engineers working on the software believed they should have waited.
Then came the ‘launch’ of the Magic Link, developed by General Magic and produced by Sony. The moment of truth. The point in time when everything they had been working on for so long would finally be put into the hands of users. Judgement day was here but where were the customers?
An $800 price point, store staff not trained to demonstrate the device, similarities to the Newton, problems with the AT&T network all led to empty parking lots at stores that were selling General Magic’s first major device. Nobody came.
The company that had set out to change the lives of billions sold just 3000 Magic Links, just about all of which were bought by friends and family of the employees themselves.
With all of the technologies that General Magic was inventing and improving, their fatal error was that they ignored the rise of one of the most fundamental technologies since. A network of computers slowly taking over the world known as the Internet. The early internet with its low bandwidth networks and text based non-interactive websites felt rudimentary compared to what was being built at General Magic.
With no revenue, a colossal failure in its first device and no real timelines for when its futuristic vision was going to become reality, shareholders started losing trust in the company. Rumours, both true and otherwise, about General Magic’s partners like Sony dropping from the Alliance caused the stock to fall from double its IPO price to almost nothing. Porat resigned, the company laid off over half its workforce and eventually filed for bankruptcy.
General Magic was thus a failure. It failed to bring to life its vision for a personal computer in every pocket. It failed to create a single product that made the lives of the general public better.
But even with its colossal business failures General Magic created success impact is by no means trivial especially in terms of the people it harboured and the experience it gave them. General Magic’s employees went on to found some of Silicon Valley and the world’s most iconic companies including Ebay, Android and LinkedIn. Megan Smith, a mechanical engineer at General Magic went on to become the first female Chief Technology Officer of the USA under Barack Obama’s leadership. Other employees went on to join the leadership teams of Adobe, Apple, Google, Blackberry, Twitter and so on. But perhaps General Magic can be most proud of Tony Fadell who along with Steve Jobs co-invented the iPod and the iPhone, bringing General Magic’s vision full circle.
The General Magic story can be taken in many different ways. It can be a call to rein in the crazy ones, the misfit inventors and innovators who try to bring us closer to the future but end up wasting society’s resources if they fail.
The image below is a drawing of a helicopter taken from Leonardo da Vinci’s notebook. Da Vinci, the dreamer that he was created such renditions of several devices and machines of the future. Today, he is considered one of the greatest minds to have ever existed. Imagine a scenario where he would have been obsessed with one of his drawings, say the helicopter and started to devote a portion of his life to creating a real life version of it. Without the advancements in material science and physical knowledge that the Wright brothers had the advantage of he would most likely have failed, with years of his own time spent tinkering with his design and numerous resources in the failed prototypes. Would we then consider Da Vinci, any lesser than the man he is considered today?
This is the dilemma of General Magic. In our opinion, the story is a reminder that smart people motivated by common ambition have the power to change the course of history and realise the future they envision. And even if they do fail, they roll the ball forward and pave the way for the next set of inventors.
Is there a way to purchase that "Red Book"?