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

How did Carl Pei get into tech?

Carl Pei's journey into tech began with a deep fascination for gadgets during his childhood. Growing up in Sweden, he was one of the first in his circle to get Apple's iPod and later the iPhone. These early experiences with Apple products left a lasting impression and fueled his passion for technology.

At the age of 18, Carl acquired his first iPhone, despite its US exclusivity. He managed to import, jailbreak, and use it, showcasing his resourcefulness and enthusiasm for cutting-edge tech. Unfortunately, his beloved iPod broke just a week after its warranty expiration, leading to an unforgettable trip to an electronics market in China.

There, he discovered Meizu, a Chinese brand that surprised him with its quality and design. Carl's admiration for Meizu drove him to create a fan community, which eventually caught the company's attention. This initiative led to his recruitment by Meizu after he completed university.

Through these early experiences, Carl Pei's passion for tech and his knack for community building laid the foundation for his future ventures in the smartphone industry.

What led Carl Pei to start OnePlus?

Carl Pei's transition to OPPO came after his stint at Meizu. At Meizu, he expanded his understanding of the tech industry. When Meizu's founder failed to inspire confidence, Carl sought new opportunities.

Reaching out to OPPO in 2011 led him to a new chapter. OPPO wanted to enter the online market, building on their offline success. The idea was to leverage OPPO's supply chain and quality while targeting a different sales channel.

Carl, just 24 years old, pitched to handle everything outside China. He spotted an opportunity to create a global brand.

OnePlus was born from this vision. Collaborating with Cyanogen provided the software needed for markets outside China. His relentless drive to innovate and expand globally laid a solid foundation for OnePlus.

How did the idea for Nothing come about?

Carl Pei's departure from OnePlus in 2020 marked the beginning of a new chapter. Initially, he planned to take a long vacation, intending to travel the world for at least six months. However, after just ten days, boredom and a sense of unfulfillment set in. Staying in luxury hotels and enjoying fine dining offered him no real satisfaction.

Returning to Stockholm, Carl began networking with local entrepreneurs. He sought advice on raising funds, a skill he had yet to master despite his experience at OnePlus. The Swedish entrepreneurial community proved to be incredibly supportive, offering various insights and guidance.

Within a few weeks, Carl acquired essential knowledge about fundraising. He raised a seed round, albeit with a concept that he later admitted was poorly defined. The initial goal was straightforward: leverage his learnings from OnePlus to build a better company. This drive soon evolved into the foundation of Nothing, focusing first on smaller products like earbuds before venturing back into the competitive smartphone market.

What challenges did Nothing face in its early days?

Nothing faced several hurdles in its early days. Raising funds proved challenging without a clearly defined concept. Carl Pei admitted the initial pitch was poorly constructed, making it harder to attract investors.

Gaining trust from manufacturers was another significant issue. Notably, Foxconn, the giant contract manufacturer, along with others, was reluctant to collaborate due to past failures with other startups. This mistrust forced Nothing to approach smaller, less reliable manufacturers.

Initial product issues complicated matters further. The first batch of Nothing's earbuds, the Ear One, had a critical manufacturing defect. A 90% failure rate in charging nearly spelled disaster. However, Pei and his team quickly rectified the issue by placing engineers on-site to ensure quality control.

These early struggles underscored the complexities of hardware startups but also set the stage for the company’s subsequent growth.

Why did Nothing start with earbuds before smartphones?

Nothing started with earbuds to build credibility before diving into the competitive smartphone market. The initial idea was to create a high-quality product that would reassure both investors and manufacturers of their potential.

Launching a smartphone required substantial capital and trust, both of which were challenging to secure.

Starting with earbuds allowed Nothing to:

• Establish a foothold in the consumer tech market.
• Demonstrate their engineering and design prowess.
• Build a relationship with manufacturers more cautiously.

However, early production wasn’t without challenges. When they first entered the market, many manufacturers were skeptical. Securing a contract was tough, and they had to work with a factory on the brink of bankruptcy. This partnership led to significant issues. For instance, 90% of the first batch of Nothing’s earbuds failed to charge properly.

Facing a potential disaster, the team quickly intervened. They halted production and assigned engineers to oversee factory operations, ensuring quality control. This hands-on approach resolved initial defects and helped Nothing sell around 600,000 units of Ear One.

Starting small with earbuds was a crucial strategic step, setting a solid foundation for future smartphone ventures.

How did Nothing cultivate its brand identity?

Nothing's brand identity hinges on a blend of design and creativity. The focus on aesthetics appeals to both tech enthusiasts and a creative audience, including individuals interested in fashion and music. This dual allure has attracted a unique user base beyond traditional tech consumers.

The Glyph interface stands out as a defining feature. Created in collaboration with Jesper of Teenage Engineering, it features distinctive lights on the back of the phone. Functionally, the lights notify users of key updates, permitting them to stay informed without becoming screen-dependent.

Additionally, influencer and user-generated content further promote the brand. A curated Instagram feed blends luxury fashion visuals with tech, reinforcing its design-centric approach. This meticulous attention to detail helps Nothing differentiate itself, fostering a growing yet niche brand culture.

What advice does Carl Pei have for hardware startup founders?

Carl Pei emphasizes balancing design and practicality for hardware startups. He advocates being 90% Tim Cook and 10% Johnny Ive, meaning focusing primarily on operational efficiency while allowing for some design creativity. According to him, survival is the name of the game. In the early stages, pragmatic decisions are crucial to build a sustainable business.

Carl mentions the beauty of not having another option. It forces startups to adapt and survive, turning challenges into learning experiences that strengthen processes and teams. He suggests:

• Prioritize operational efficiency: Focus on creating robust processes.
• Increase risk gradually: Start with minimal design risk and expand as you grow.
• Value engineering: Ensure technical soundness to gain trust.

Finally, Carl finds immense satisfaction in seeing people use products he's developed. To aspiring hardware founders, the real joy lies in witnessing tangible impact, especially when users appreciate the product's quality and innovation.