Carl Pei of Nothing: Building a Hardware Startup

Nothing's Ear (1) Launch: A Deep Dive with Founder Carl Pei

On July 27th, the innovative hardware company Nothing will unveil its inaugural product: the Ear (1) wireless earbuds. Remarkably, despite releasing minimal concrete details, the company has successfully cultivated significant anticipation for this launch – a notable achievement within the highly competitive wireless earbud market.

Building Hype and a Proven Track Record

This level of excitement is justified and understandable. Nothing’s founder, Carl Pei, possesses a strong history of success in the tech industry. He was only 24 years old when he co-founded OnePlus in 2013. The company has skillfully leveraged growing expectations, revealing product information incrementally, like assembling a complex puzzle.

An Exclusive Interview with Carl Pei

We had the opportunity to speak with Pei prior to the upcoming launch to gain insights into the Ear (1) and the overarching vision behind Nothing.

Addressing Launch Delays and Design Challenges

TC: It’s known there was a postponement of the launch date. Was this connected to the challenges of COVID-19 and disruptions in the supply chain?

CP: The delay actually stemmed from our design choices. You may have seen the initial concept showcasing the transparent aesthetic. It became apparent that there’s a reason why transparent consumer technology products are relatively rare. Achieving a high-quality finish is incredibly difficult. Every internal component must appear as visually appealing as the exterior. The team has been continuously refining the design, though the subtle differences between iterations might not be immediately apparent.

This involved sourcing the correct magnets – typically designed for internal placement, not consumer visibility – and determining the optimal adhesive. These are considerations that don’t arise with conventional, non-transparent products. The primary hurdle has been finalizing the design, and we are now very close to completion. We anticipate a product that will genuinely excite people upon its release.

Supply Chain Resilience

So, were there no significant supply chain disruptions?

Not for this particular product category. We are in a good position with true wireless earbuds. While starting from scratch – with no existing team or established partnerships – presented initial challenges, we have steadily overcome them.

Future Product Development

That suggests you are already considering future products. Has development begun on other offerings?

We have numerous products in the pipeline. Earlier this year, we conducted a community crowdfunding campaign, raising $1.5 million. As part of this funding round, we presented a roadmap outlining several products under development, each internally codenamed after a Pokémon. We are exploring multiple categories, though we haven’t publicly announced specifics.

Why Earbuds as a First Step?

Why did you choose earbuds as the initial product offering?

The market is clearly demanding differentiation. Following Apple’s introduction of the AirPods, the entire market largely followed suit. People express themselves through their clothing, so why shouldn’t they have that same freedom with devices worn for a significant portion of the day?

We are collaborating with Teenage Engineering, renowned for their exceptional design capabilities. True wireless earbuds provide an ideal platform to showcase this strength. Furthermore, from a business standpoint, this product category is experiencing rapid growth, with projected shipments reaching 300 million units worldwide this year. A first product should target a market with strong business potential.

Aesthetics and the Current Market

“Screaming for differentiation” is a compelling observation. When assessing AirPods and the broader industry, are aesthetics the primary area where the market is lacking? Is it a matter of features, or purely stylistic design?

Stepping back and considering the consumer perspective, we believe that consumer technology, as a whole, has become somewhat uninspired. Previously, young people aspired to become engineers and astronauts. Now, many aim to be TikTokers or YouTubers. Perhaps this reflects a decline in the inspirational quality of technology. Our conversations with consumers indicate a diminished focus on features and specifications.

Companies like Tesla, for example, are driven by a larger purpose – accelerating the adoption of renewable energy – with the vehicle being merely one step toward that goal. Their open-source patent approach further supports this mission. Within the consumer tech landscape, there are fewer companies with such a broad vision. Product design and user experience are both crucial. How can we seamlessly connect all the technology around us, and, as a brand, inspire optimism about technology again? This is the space we are navigating.

A Broader Vision Beyond Connectivity

Is this ambition comparable to Tesla’s goal of “accelerating mankind’s adoption of renewable energy”? Are you focusing specifically on concepts like connectivity or ecosystem integration?

Our aim is to connect all the devices in our lives. We are surrounded by numerous technology products, each with its own dedicated app. Managing ten different products often requires ten different apps on a smartphone. This is not an ideal user experience. Why must it be this way? If we can streamline a person’s digital life, it represents a significant step toward our vision of a seamless digital future.

Strategic Approach to Product Categories

Companies like Apple, Samsung, and Huawei typically center their strategy around the smartphone as the core hub. By starting with earbuds, are you working backward to some extent?

We are beginning with smart devices, with the Ear (1) being our first offering. We believe it has the potential to gain significant traction.

The Genesis of Nothing

Did you feel constrained in executing your vision for Nothing while at OnePlus?

I dedicated much of my twenties to OnePlus, gaining invaluable experience. This vision began to take shape after my departure. Through conversations with friends and fellow entrepreneurs, I discovered a shared interest in these ideas, which ultimately led to securing seed funding late last year.

So, the initial discussions and funding solidified the company’s formation?

Precisely. It wasn’t a fully formed vision from the outset, and it remains an iterative process, with ongoing discussions among the team.

Funding and Investment

Your current funding stands at approximately $23 million, correct?

That is the amount we have publicly announced.

Is GV the leading investor?

GV is the sole investor in the Series A round and holds the largest stake.

Addressing Market Saturation

Given the crowded wireless headphone market, have you encountered skepticism regarding potential oversaturation?

We have remained focused on being authentic to our vision. During the early brainstorming phase, we asked ourselves: How do we create the best possible product? This is likely our third or fourth design iteration. A turning point occurred when the founder of Teenage Engineering questioned whether we would purchase the product ourselves if we were consumers in a store. When the answer wasn’t a resounding “yes,” we knew we needed to refine the design, even if it meant delays or increased costs. We have been intensely focused on creating products that are not only exciting but also something we would confidently recommend to our friends and family.

Pricing Strategy and Target Audience

How does pricing factor into your overall strategy?

Our primary focus is on creating the best possible product that we can proudly share. It will incorporate leading features like noise cancellation and superior build quality. By prioritizing online sales channels, we aim to offer a competitive price point – not necessarily “affordable,” but fair.

The Ear (1)’s transparent design adds to the production cost compared to conventional models. We anticipate a price of US$99, €99, and £99. While there are cheaper alternatives, their quality is often questionable. The AirPods Pro, for comparison, are priced at $249.

Reaching the Target Customer

You’ve been proactive with press releases, but reaching journalists is different from reaching consumers. What does that process look like?

We have already established partnerships with several retailers and are actively pursuing additional collaborations. We aim to target a creative audience that values design and trends. We will collaborate with relevant individuals and utilize appropriate sales channels to reach this demographic.

Initial Market Focus

Which markets are you initially targeting?

Our primary markets will be the U.K., India, Europe, and North America, followed by Japan, Korea, and several other countries currently under negotiation.

The Essential IP Acquisition

You mentioned the acquisition of Essential IP. Will any of that technology be incorporated into this first product?

No. Before we became Nothing, “Essential” was one of the names we considered internally, which is why we acquired the trademark. We have no plans to utilize Essential. The name resonates with us, but we believe Nothing will be our unique creation, rather than a continuation of another company’s work.

The Meaning of "Nothing"

Ultimately, what does “Nothing” represent to you?

It signifies a focus on what truly matters. Product development involves a series of trade-offs. How can we make the right choices to deliver the best possible user experience? “Nothing” embodies that principle – striving for products that are intuitive and interconnected, seamlessly integrating into a user’s life to the point where they become almost habitual.

Navigating the Complexities of Trade-offs

“Trade-offs” is a pragmatic perspective on consumer hardware. What specific trade-offs are you currently addressing for this first product?

Everything involves trade-offs. Pursuing this design has numerous implications. Battery life impacts size and cost. Material choices affect cost. Every decision influences the timeline. It’s a complex balancing act, akin to a four-dimensional chess game.

Influencer Partnerships

I noticed Casey Neistat’s name among the investors. Are you collaborating with other influencers?

We have known each other for a long time, and I greatly admire his ability to stay attuned to consumer preferences. That’s why I invited him to invest late last year. We will be working with influencers as part of the product launch, but our relationship with Casey is particularly special.