THE FOUNDER

Before the crash, she was one of the youngest executives in America. Her firm, Rotarie Communications, had managed to develop the first real challenger to Apple's mobile phone hardware since Samsung's line of Galaxy phones in the mid 2010s.

She's no longer wealthy, by new standards or by old, but her home is lovely—a two-story townhouse just outside of Oakland, California. As we sit on her porch, and she pours herself a tall glass of Syrah.

It was like 9/11, really. When you realize that everything is going to be different, going forward—that sticks in your mind. Everybody remembers where they were on 9/11, right?

I was in fourth grade.

The principal came over the intercom and told us that something bad had happened in New York City. She said she wanted us to know we were safe, and that some parents were going to come pick up kids early, and to just come to the office if your name got called over the intercom. And, she said, if we wanted to see what was happening on the news, we could go to the library to watch on TV.

They were letting kids watch?

Oh yes. So I ran straight to the library. I saw the footage live as the first tower collapsed.

The reporter, she was running toward the camera. And her cameraman ran ahead of her, keeping the camera trained on her, so you could see the tidal wave of metal and dust and death billowing up behind her as she ran.

They zoomed right in on the other building, and you could see little people falling.

That's when the librarian turned the TV off.

My ability to recall that day stops right around that moment. Where were you on 9/11?

Oh, I was even younger than you. Probably six or seven, so I don't remember much.

My little sister was about that age. I remember her asking my parents why the streets were so dirty on TV. Who made them dirty? And my parents just said, "Bad people." It's the sort of answer you give to a kid, but to be fair they really didn't understand much more than that themselves.

I think 9/11 hurt adults worse than kids. For kids, it was like, right—bad people do bad things in the world. This all checks out. It doesn't shatter your worldview. The adults were really shaken, at a moment when they thought they had things more or less figured out. They'd grown acclimated to the world as it was before. They had more invested in the idea that they were perfectly safe.

I guess my dad was less affected than most adults, though.

He had the day off for some reason on 9/11. He tells this story about how he was driving down to the Gulf Coast to buy a tractor.

He had already lined up a deal, and he just had to go down there and pick it up. He says when he got inside the building, everybody was just standing there watching TV with their mouths hanging open.

He just walked right up to the counter and said he was ready to pick up the tractor he'd ordered, and the guy looked at him like he was crazy.

The guy said, "Are you sure you want it today?"

And dad had to talk him into it. Like, yeah, just because there's been a massive terror attack doesn't mean I don't still need a tractor.

The tractor guy thought—I don't know what he thought—but it was almost like he couldn't imagine doing anything normal. Not on a day when everything had changed.

That's how it was in our office on the day of the Kobek demonstration.

THE FOUNDER pours herself another glass of wine. Swishes it around. Then continues.

Everybody started out watching recordings of the Kobek demonstration on their individual work computers. Not the live feed—re-uploads from people watching at home.

Folks started getting together in groups to watch. You know, when something that big happens, people have this natural urge to stop doing individualistic things. The group mind takes over, and they want to congregate to try to make sense of it together. There's some form of catharsis there.

So we were all watching it, and nobody—not even me—had yet realized what it meant for us, for our company, for our products.

I remember one guy in particular sort of setting off a chain reaction.

He just said, "We're fucked." Really calm like that.

And it was like that moment when the second plane hit the towers, you know? People went from confusion to something different.

I had been day-dreaming about what I could do with my own rep. You know, infinite Pop-Tarts if I wanted 'em, that sort of thing.

Then that one guy had jumped ahead and started thinking about what something like this would mean for a company that makes smartphones. Snapped me back to reality.

After Kobek got done with his demonstration, all my employees were sort of listlessly milling around. Nobody was even pretending to do work. I overheard people saying shit like, "What's the point? We'll never sell a phone ever again."

A lot of people had put years of their lives into this company. And I'd been telling them, "Just hang in there for the IPO." People had given up better comp packages at bigger companies for the chance to strike it big working at my little smartphone company. And it was pretty goddamned clear to everyone that now there wasn't gonna be any IPO. Hell, it didn't look like there would be a stock market.

But I wasn't thinking about all that. What I was thinking about was that dipshit tractor salesman on September 11th. His business had nothing to do with the events in New York City, but he just froze up. Shut down shop. Could barely bring himself to make a sale. That's not who I wanted to be.

So I went into my office, and I wrote an email to the entire company. Subject line: "MANDATORY ALL-HANDS MEETING IN ONE HOUR."

I said to expect a big announcement.

So you had already figured out your plan?

Hell no. I just knew that if I didn't move fast, people were going to go home and never come back in for work ever again. And then it really would've been the end of us.

But in my mind, I had this sense that there was a path forward, and that I could figure it out. I took an hour in my office to think through the options, and by the time that hour was up, then I really had figured something out. I didn't make any slides or even a script, I just headed to our auditorium and got up on stage while everybody filed in.

It didn't take too long, because everybody was pretty worked up about that email I had sent. I think most of them expected a mass layoff.

The theater wasn't cold, but I was shaking. Just a little bit, and I hoped people couldn't see. I started off with a joke: "In case anyone here hasn't already seen, magic is real and we live in the Star Trek universe now." That got some nervous laughter.

Then I launched in with my pitch.

I said, "Starting tomorrow, this is a different company. It's going to be a different economy and a different country, too, so if anyone wants to leave, I've directed HR to pay out exit packages worth six months full wages to anyone who wants it. However, for anyone who wants to stay with us, there's going to be another deal. And I think many of you are going to want to consider it, because this company is about to make a hell of a lot of money." (Laughs.)

I got their attention with that.

Then I said, "Pretty soon, every one of our customers is going to have one of those machines in their home. And for each of these people, the cost to acquire one of our products is going to be something pretty close to zero dollars. That's because they can just get anyone else who has bought one of our phones to create a perfect replica of it and give them one for free. You might think that this poses a business problem for us, but you'd be wrong. It's an opportunity."

At about this point, a couple of people were shaking their heads. One guy got up to leave and yelled, "Yeah, I'll take the exit package!" I could tell I didn't have much more time to convince people, so I just kept plowing on.

I said, "We are NOT the first business this has happened to. It happened to the music industry, to the movie industry, and the video game industry. The cost to replicate their products dropped to zero. And yet every person in this room pays for music, for movies, and for video games. Why?"

Now I had momentum. So I went straight for it. "All we have to do to survive and THRIVE is to make the same pivot that those three industries made. We become a service company. Starting tomorrow, we're going to start looking at how to get our hands on some of those magical copy machines. And when we do, we're going to start giving out our phones for free to anybody that wants one. At the same time, we're going to start charging a small monthly fee for unlimited cloud storage service for all our devices.

"We have enough capital in the bank to run for 18 months with zero revenue coming in. But we're only going to save enough money for six months of runway. All the other cash is going to be invested into the production of the finest phone hardware money can buy. We're going to create the greatest, most premium devices that have ever existed, and we aren't going to have to worry about manufacturing costs, because we're only going to produce one of each. Then we'll replicate that phone, and give it away for free.

"The marginal cost to create hardware is now effectively zero. That means we can create a one hundred million dollar phone and put it into the hands of everyone on the planet."

People were just sort of silent in their seats. I had no idea if they were following along with me or what, so I just kept going with it.

I said, "The first phase of this plan starts tomorrow. I want everyone to go home tonight and think about what sort of device you could make if the marginal cost to replicate it was zero. What would you make, if you could make a one hundred million dollar phone? What kind of software services could you sell if everybody in the country had your device, for free?"

I closed by promising that anyone who decided to stay would get direct revenue sharing on future sales alongside their regular salaries. I said, "I hope to see many of you here tomorrow. We'll have employees present their pitches tomorrow at 9:00 a.m."

And I walked off the stage.

How did people react?

Everybody just sort of filed out of the room and went home. That night, I told my husband that I was pretty sure the next day would be the company's last. He and I tore through two and a half bottles of wine and talked until the early morning. I went to sleep convinced that I'd lost everything I'd spent the last ten years building…

THE FOUNDER trails off.

So, what happened?

Well, I was right, of course. (Laughs.) Almost every single person at the company took the exit package. Those who didn't left a couple of months later.

You know, looking back, I really don't blame anyone for leaving.

The only way anyone is willing to spend their life making a better cell phone for some corporation is if you pay them like kings. Otherwise, why wouldn't they just go work for themselves?

We didn't have enough money to pay people like kings. In fact, we ran out of capital after only three months. When our investors saw how much talent we'd lost, they cut their losses. Probably retreated into their bunkers like most of the other really rich people.

THE FOUNDER tips her wine glass up high and drains it in two big gulps.

I'll tell you what, though. I'm looking on the bright side of things.

What's the bright side?

Well, being a CEO sucked ass, mostly. The pay was good. The meetings, the stress, the media attention—all of that was shit.

So, sure, everything changed. A machine flew into my life and wrecked my company. But really, who gives a fuck? Shit happens. Doesn't mean you gotta act like a little bitch. Keep selling tractors, you know?

She laughs and pours herself another glass.