Pixel Talk with John Sculley - Full Interview

Yes, I do, Teige. And first of all, it's a pleasure to meet with you. We get several hundred requests a day for various interviews, and my wife Diane, who happens to also be a mathematician and a computer scientist, said she thought the invitation from Teige was particularly interesting. So it's a pleasure for me to meet you and to be on your show. I have a lot of advice for people thinking about what they should do in high school and what they might do later on. First, the education system that we all have gone through in elementary school and now into the early days of high school is largely crafted around a model that was designed for the 19th century, early 20th century, and those kinds of jobs don't exist anymore. So it's very important that anybody who is in high school today takes seriously the STEM courses: science, technology, engineering, and math, even if you have no interest in being a scientist, mathematician, physicist, or engineer. Everybody needs to have a basic grounding, and hopefully it'll stimulate curiosity in those fields. Also, it's very good to have a balance of liberal arts as well, meaning understanding what's going on in society, politics, art, performing arts, all of those things. So life isn't going to be just STEM, but STEM is quite important.

Well, when I was in high school, we had nothing called STEM. And I had a big curiosity in science and electronics. So I was a co-founder of my high school's amateur radio club, and we were actually building our own transmitters. I became a ham radio operator when I was 13 years old, K2HEP. And I had the curiosity to say, how do you do hands-on experiments with electronics? And I think that a lot of the really 'aha' connection moments—the 'aha' moment meaning 'wow, I see why something is important, I see why something is possible'—comes when you have hands-on experience. So whether it's formalized through a STEM course, or whether it's a club that you join or even start, or whether it's projects you do with your friends, or whether it's things you just think about and dream about, hands-on experience is even more than the academic formalized courses that one takes. You'll find that the people who are most successful in Silicon Valley, many of them even dropped out of university, many of them didn't even go on to university. That sounds crazy because there are so many smart people in Silicon Valley, but the reality is they had curiosity. As Steve Jobs and I used to say, you've got to have insatiable curiosity. And they wanted to get hands-on experience, they try things. That's why you often hear the metaphor of some of the early companies started in garages in Silicon Valley. It doesn't have to be a garage, it could be a kitchen table, it could be a desk in your room. But getting hands-on experience, trying things. You were telling me earlier when we were chatting before the show that you were just taking a course in C programming and you had a curiosity to learn how to develop some apps for iOS 9 for Apple. These are all great things to try. Whether they are successful as businesses is really irrelevant at this point in your life. More importantly, get a curiosity, try things out, get hands-on experience. And you don't have to do everything by yourself. Always try to find a friend or a colleague or someone else who wants to share in a project with you. Always think projects.

Well, I can tell from just those short comments you just gave that Stanford High School is doing exactly the right thing. First of all, think of it this way. When our education system was created decades ago, even over a century ago, getting access to information was really hard. So the focus was always on memorization of facts. Yet that's not the world we live in today. Today we live in a world where you can go onto Wikipedia, you can go to Google, you can go to many different data sources, and you can get all the answers. So education really needs to completely rethink what it does, and it has to move, as you just said, from teaching to learning. Learning comes from seeing connections between information. So it's all about understanding the right questions to ask, not the answers. The answers come for free—you can go to Google or whatever. When you're in real life and you're out of school, you're now out in the workplace, the irony is that to be successful you have to share the data and work with other people. And yet we have an education system that says, 'Don't talk to anybody while you're taking a test, because if you do, that's cheating.' Well, that's a completely ridiculous idea, because everything you're going to do for the rest of your life after school is going to be working together collaboratively with other people. And understanding the right questions is far more important than memorizing the answers. The most significant thing in a high school experience, I believe, as you shift from teaching to learning—what your high school sounds like they're doing a very good job of—is the role of the teacher changes dramatically. And nothing is more important when you move on in life than the memories you have of some really, really great teacher that you had when you were in high school. I think back to it even to this day, because really great teachers lead you to the good stuff. They stimulate your curiosity, and they want to help you get that curiosity translated into projects and doing things. So learning can be greatly enhanced by great teachers who aren't trying to fill you with facts but are trying to lead you into the really interesting, cool stuff. And then you'll do the learning on your own.

I think online education is going to be increasingly important. For example, we've just reached the point now where we can take video conferencing for granted. If you go back even three or four years ago, it was a little bit of a primitive experience. You had to go through various logging steps, and maybe it worked, sometimes it pixelated. Could you easily bring other people into a video conference session? Well, all of that stuff is really simple, and for the most part it's free. So the ability to incorporate video—that by the way can be seen over a smartphone just as easily as it can be seen over a personal computer—is going to be huge. One of the really interesting facts is that in the United States, 80% of mobile videos are viewed over Wi-Fi, which means you've got a higher quality technology experience over Wi-Fi than you're going to have over 4G LTE, which is the servers you would use when you're out of range of a Wi-Fi hotspot. So I think there's no technology obstacle to have better and better experiences for online education. The real challenge is how do you get people who have very fixed ideas in their mind what education is—teacher telling students facts, students remembering facts, repeating those facts back to teachers on exams—how do you shift that? And that's a glacial shift. It doesn't move quickly. It has nothing to do with technology or the curiosity of students. It has to do with long-term entrenched ways of doing things. And what's really exciting to hear about your high school, Stanford High School, is that sounds like you have that environment to be able to encourage online together with face-to-face. It's not that one takes over from the other; it's really a combination of both, I think, where the success is going to be. And to have the kind of teachers you just told me that you have—what a great opportunity you have. I wish every student had similar types of high school environment and teachers that you do at Stanford. But it's a great message to get out, because the more people hear what you have available to you at Stanford, the more interested they'll be to say, 'Gee, why can't our students have the same thing?'

Sure, I'd be happy to. When I started out in marketing, it was the early days of television advertising. So everything was about creating commercials that would go one way from the advertiser out to the audience. And the audiences were huge because there were only three television networks at that time. So you had very large audiences, and you were telling them messages that were written by the advertiser about what we thought. Back in those days when I was in marketing at Pepsi, we said we can't possibly compete with the amount of money that Coca-Cola spends on advertising. In many markets, we were outsold by Coca-Cola—Pepsi was outsold 10 to 1. So yet we knew that when we let people try our beverage where it was not identified, it was Pepsi—they thought they were maybe drinking Coca-Cola, they didn't really know—we actually came out equal or slightly better than Coke. So we said, why not turn everything around? Why not go out to Coca-Cola drinkers in these markets like San Antonio, Texas, which was our first one where we were outsold 10 to 1, and run a taste test? And then when it's revealed which drink the person had selected, we were particularly interested in the Coke drinkers who selected Pepsi. Capture their emotions, capture their expressions, capture the reaction of people around them when they realized that for the first time in their life they tasted a Pepsi and they actually chose it over Coca-Cola. So the shift was to the customer, not the competition. Up until that time, advertising had always been focused on the competition. It always said, 'I'm better than some other automobile company, I'm better than some other product company.' And we said no, it's all about what do customers say. Well, when I met Steve Jobs, by then Pepsi had actually passed Coca-Cola and become the largest selling consumer product in America using this approach. And Steve Jobs said, 'I'm working on a new computer that's for non-technical people, and it's going to be a creative tool for the mind.' He called it a bicycle for the mind. And he said, 'Everyone in Silicon Valley is talking to technologists. Please come and join me as my partner at Apple.' This was the early days of Silicon Valley, and we together have to be able to convince the world that the Macintosh—still over a year away from being a formal product when the Macintosh comes out—that it's going to change the world. And it's the customer's experience that's going to change it. It's not the company advertising it's a better product. And that's what we did. That's really what we called experience marketing, and Apple does it to this very day.

Well, here's how I think about it. I always look at a big market, particularly commoditized markets, because wearables are a young market but they're already commoditizing. There are literally thousands of companies selling wearable activity trackers today. So what we did at Misfit, we said look for the design gap, the design gap in industry. And you say, well, what's a design gap? I'm a designer by training, and I've always been involved with technology and design and consumer marketing. So we looked together with my co-founders, Sonny Vu and Sridhar Iyengar. The three of us looked at the wearable industry and we said, let's find a design gap in this wearable industry that focuses on something that we can differentiate with and expand the market. So we said wearable products should not have to be charged every night. Many of the most popular wearable products literally have to be plugged in every night and recharged. So we said we will optimize low power, and our Misfit wearables will last about six months until you have to replace it with a hearing aid battery. The second thing we said was we'll focus on beautiful design. When I worked with Steve Jobs, Steve used to have a saying: 'Technology has to be either beautiful or it needs to be invisible.' So we said we're going to make it beautiful or we're going to make it invisible. So if you look at a Misfit wearable product, you'll see that it's very simple in its appearance. It uses the highest quality materials, it has laser lights which give you the feedback, and it is synchronized with your iPhone or your Android smartphone so you get the full readout of what your experience is. And people love it. It's doing particularly well over in China. It's become a fashion statement. So we call this fashion electronics. It goes beyond the functionality of just activity tracking. People love to wear it. And I believe that when you're looking at a commoditized industry, don't focus on the competition, focus on the customers. Same principles we had back at Pepsi, that I had working together with Steve Jobs at Apple. You see Apple still doing that to this very day, and we're doing it at Misfit Wearables. But I'm involved in quite a number of entrepreneurial companies. Many of them revolve around data, because data is the most important resource today in building any company. That's why STEM is key: science, technology, engineering, and math. And data, unlike other resources—we're running out of oil someday, we're running out of potable water, meaning drinkable water—but we're not running out of data. There's an incredible amount of abundance of data. So learning how to harness data, whether it's getting better information about customers, what their likes are, being able to connect customers to other customers—the big shift in marketing is that we're seeing an era where the power in the marketplace is shifting from the producers, the big giant companies who are incumbents in their industries who have dominated those industries for decades. The power is shifting to customers. And customers, because of social media, are able to pay more attention to the opinions of other customers, and they respect it more than the propaganda messages they get from large companies. So you see companies that are growing to incredible size that don't do any advertising now. Look at Google, look at Facebook, look at LinkedIn, look at Twitter. These companies don't go out and run a lot of advertising. They depend upon word of mouth, people saying 'I love this service, I give it five stars, I tell my friends about it.' So the power of the consumer has never been greater, thanks to social media, thanks to mobility, thanks to cloud. All of these key technologies that people in your generation are going to be able to learn how to harness and turn into incredible entrepreneurial companies.

Well, that's a great series of questions. And Obi World Phone, I think, is a perfect example of giving you my point of view. We went into the world's largest commoditized market, which is smartphones. Smartphones have now exceeded the importance of television. It's the most significant industry from an electronic standpoint around the world, yet incredibly tough competition. And one company dominates the smartphone industry. All the profits, almost 94% of the profits at the high end of the market, are made by one company: Apple. People love the iPhone, it's an incredibly admired product. But here's the challenge. There are another one billion, eventually two billion people around the world who aspire to be part of the middle class. And their middle class model is going to be different than the middle class model we've had in the States. They aren't going to have two cars in a suburban house with four or five bedrooms. They're going to have an apartment most likely in a large city. They may or may not have a car, and if they do, it's probably costs under $10,000. And they will have a middle class experience, but it has to be at a much more affordable basis because they don't have the same income levels that we have in the West. So if you look at the smartphone industry and you say, where are those people who are going to be joining the middle class? Well, they tend to be in about 70 countries that are growing extremely rapidly with smartphones. While you can buy a really cheap smartphone as low as $35 off a street vendor in Indonesia, you don't know whether it'll work a month later. And if you want to buy a fashionable electronic product—Apple's fashionable, Misfit is fashionable—if you want to buy a fashionable smartphone, Obi World Phones. I took the original team that had worked with me at Apple. They're the team who had also worked on creating Beats, which was later sold to Apple, the headset company. And these guys really understood, because we'd all worked together at Apple, how the Apple magic is done: how software and hardware and designs and materials are put together to create incredible products. But we said we're going to do it in an entirely different part of the market than Apple, not at the premium end of the market, because not everybody in the world can afford $800 to buy a smartphone. A smartphone typically costs about $800 outside the US, and for many people that's two months' wages—two months' wages to buy a smartphone. So we said we want to build just incredible, beautiful, best materials, best technology, the highest quality design. Fill a design gap in smartphones we can, but we want to sell them for hundreds of dollars less than what the premium brands sell for. And we'll want to target young people. Most of these countries that we are going into—the 70 countries—are in the Middle East, they're in Central Asia, they're in Southeast Asia, they're in Africa, they're in Latin America. They're in places where the industry is moving from low bandwidth feature phones to higher bandwidth smartphones. And that's probably a three or four year conversion for the wireless operators to make that conversion. So we've said it's a perfect time to come to the market with Silicon Valley beautifully designed smartphones we can sell for $150, not $800, for $200 for higher configured products. And the reception we're having is just amazing around the world. People love it. We're trying to move as rapidly as we can into these markets. And it's all about focusing on the customer. Same principles that Steve Jobs and I worked together on back in the early days of Silicon Valley: focus on the customers, make the technology beautiful or make it invisible, take advantage of the relationships that we have with the very best component companies in the world, and we're differentiating in a commodity industry with what we hope is a product that customers will tell their friends about. And they'll tell their friends about Obi World Phones, and we hope to build the business that way.

Well, here's what's interesting, and it's why math is so important. You don't need to be a mathematician, but you need to understand math enough that you grasp what I'm about to say. When you're an engineer, almost everything you do involves mathematics. So for the early days of Silicon Valley, math was very much focused on algebra, calculus. And these were technologies that were very important in building foundation engineering. But when you get to large amounts of data, where you have literally hundreds, thousands of different attributes you're trying to track in real time down to the individual person, you can't solve it with algebra, you can't solve it with calculus. So you have to use what is called statistical analytics, specifically Bayesian statistical analytics. And this is called probability theory. Probability theory says, what is the likelihood of something being attributable to another attribute? So for example, with data analytics today, it does not say with precision that there's a cause or effect with something. We cannot be precise with probability. The word probability, if you look it up in Google, says the likelihood of something occurring. And so the probability of one piece of data being associated with another piece of data may be 60%, it may be 70%, it may be 20%, it may be 90%. Now the beauty of cloud computing is that we can actually calculate not just the probability of one data attribute, but we can calculate millions of data attributes almost in real time with hundreds of millions of people. It seems like science fiction. If you and I were having this conversation even 15 years ago, if I were telling you this, you'd say, 'Come on, that's ridiculous, that's impossible. How can you have hundreds of millions of people that you're looking at in real time, looking at hundreds even thousands of different attributes, and you're calculating the probability of those attributes having some relationship with each other, and out of that you're building profiles of people and what people like and how they're likely to behave based upon how other people with similar attributes were likely to behave?' So that's the field of data analytics or predictive analytics—the ability to make predictions off of the likelihood or the probability that there is a likely occurrence of something that has happened before between two attributes, that you make a prediction that it will happen again in the future. So it's very important even in high school that you get exposed to this field of what's called probability theory or statistical analytics, or technically it's called Bayesian statistics. And it's the core technology in mathematics that enables all of the things that you see going on in social media today, all the things that are being done with data marketing. I co-founded a company back in 2007 called Zeta Interactive, and today we're one of the largest data analytics companies in the world. We have almost a thousand employees. We have employees in Hyderabad, India, we have employees in Silicon Valley, we have employees in New York. So this is just one example of many, many data analytics companies that are out there. And what do we do at data analytics companies? We help large companies acquire customers, we help them retain their customers by being able to do analysis with probability statistics as to what things they are likely to be interested in, to make sure that the marketers are paying attention to their customers. It gives the marketers better information about their customers because we're tracking information about those customers that we analyzed. So the field of marketing has shifted from big television campaigns to large audiences now to data analytics becoming a major way in which marketers can engage with their customers, not just have to focus on their competitors.

Definitely, yeah.

Well, it's really interesting because I spend a large part of my life with my wife Diane. We were over in Asia, and we were just recently in Beijing meeting with the CEOs of some of the most successful new companies like Baidu, JD.com, WeChat, Xiaomi. I spend a huge amount of time in countries like India, Southeast Asia, Africa, Middle East. And why do I do that? Because there are so many inquiring minds, so many people who say, 'Tell us what it's really like in Silicon Valley. What can we learn from your experience there? And what can we do if we will never physically go to Silicon Valley? What can we do in our own countries? How can we too be entrepreneurs? How can we join into this incredible new era where technology is enabling every industry to be rethought?' As Steve Jobs and I used to say, 'There has to be a better way.' So we were always focused on how do you connect our curiosity for a better way, connect the dots with other points of view, and create ways for people to have amazing new tools that they can do things that they would think was only a dream in the past. And the important thing to explain to people in your generation is that not all the good stuff's already been done. Sometimes I speak to people in my generation, they say, 'Well, what can you tell the young people? All the good things have already been created—Apple, Amazon, Google, and all these other companies.' I said, 'No, no, you don't get it. It's just the beginning.' There's an abundance of data. The tools are getting less and less expensive. There are people all over the world who have the talents and the curiosity. If you go to Silicon Valley, by the way, you'll see that the majority of the people running these companies are immigrants from other countries. There's a huge influx of people from India in Silicon Valley who are the senior executives, often the CEOs of the Silicon Valley companies now. The same thing is happening from China, the same thing is happening from Israel, the same thing is happening from Russia, from countries all over the world. So you don't have to go to Silicon Valley. But the principles that we learned in the early days—people like Steve Jobs and myself and Bill Gates and others—those principles are standing up, and they're even more important today: focus on the customer, focus on the user experience, always look for 'there has to be a better way,' and start connecting the dots between different industries. Steve Jobs used to call this 'zooming out.' Zoom out, connect the dots. His example was that when he went to Reed College, which he dropped out of, he was in love with calligraphy. He loved beautiful type fonts. When he and Woz created the Apple II, they showed the world that you could take something that was very expensive and do it very inexpensively, and people could have their own computers. When Steve Jobs went to Xerox Research Center in Silicon Valley, he was invited there, and he saw that they were working on $70,000 engineering stations with a new interface that was graphics-based and used the mouse. He said, 'I can connect the dots and put those together. I can take the new user interface that's designed for engineers for $70,000, I can take those beautiful fonts that I fell in love with when I was at Reed College, and the computers we can use the graphics technology that he learned from Xerox.' And he said, 'But I can make with Woz really inexpensive personal computers that can do all of these things. And John, with your help, we can market them not to technology people or to business people, but we'll market them to consumers, and we'll make them bicycles for the mind.' So Steve was brilliant at recruiting talent and connecting the dots and seeing the future ahead. I always think a great definition, Teige, of a genius is someone who sees the obvious 20 years ahead. And Steve had that ability.

Sure.

Coffee.

Pen.

Pen.

Florida or California?

Poets or quants?

Marathon.

Early bird.

What's the first one?

Rock.

White.

Cash.

And I saved the best for last. Coke or Diet Coke?

Diet Coke.

I'm really impressed about how knowledgeable you are and articulate. I wish I was as articulate at your age as you are. Sounds like you're in a very exciting school with some wonderful teachers and a wonderful way of thinking about the high school experience. And I hope your message gets out to people all over the world, because this is not a US story. This is a world story. The growth of the world economy is largely going to happen in developing markets around the world, where the next billion, the next two billion people who are aspiring to join the middle class actually do it. So I'm a huge enthusiast of how do we get people around the world to learn how to become entrepreneurs, to learn how to do the things that we've learned and been fortunate enough to be a part of here in the United States and in Silicon Valley.