The Most Important Company You’ve Never Heard Of
In a Nutshell
General Magic collapsed because unlimited funding and talent without constraints caused endless feature creep and an inability to decide what not to build. The company's alumni internalized the lesson that constraints clarify priorities and later founded or built LinkedIn, eBay, Nest, Android, iPod, and iPhone. Tony Fadell applied this by forcing the Nest team to prototype packaging first, proving that deliberate limits prevent waste and focus effort.
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General Magic was a company that went down in flames but became important because of the people that came out of it. The story illustrates the danger of having too few constraints.
General Magic was founded by three former Apple employees, two of whom designed the original Mac. The third founder, Mark Porat, had worked inside Apple seeing what the next frontier was after personal computing. In 1976 at Stanford, Porat coined the term information economy on the first page of his PhD dissertation. He saw the future, including the promise of technology and the dangers with automation and misinformation.
In 1989, in his big red leather notebook, Porat drew a thin glass rectangle with no protruding buttons and a touchscreen with rectangular apps that would function as a phone, computer, fax machine, ATM, video games, and messaging system. The web did not exist yet, and only 15% of American households had computers.
The vision was so compelling that money and talent poured in. General Magic formed a 17-member alliance of international telecom companies. Their meetings had to start with an antitrust lawyer listing all the things they were not allowed to discuss. They had unlimited money and unlimited talent, so they frequently did anything.
Any good idea was pursued for the personal communicator. The customer was defined as "Joe Sixpack," which was effectively no definition at all because nobody had met that person. They created precursors to USB and emojis, but the company kept growing without focus until it collapsed under its own weight.
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