 The iPhone and then Android revolutionized the smartphone world and changed the way that we use technology forever. But there's a story before the story. It's a story of a technology company that few people remember today. It was called Handspring and the people who founded it were among the first to realize that the simple phone would need to stop being just a phone that eventually it would become a computer. And it's really going to happen. Every little pocket device in the future is going to have a fast, inexpensive internet connection and you're going to use it for voice and data and transactions and so on. This is the story of the people whose ideas are inside the phones that we use every day. But those ideas came just a little too early. Over 20 years ago, nobody believed them. Not the company that they worked at, not the carriers that sold millions of phones a year. Not even Steve Jobs. 30 miles south of San Francisco lies Silicon Valley. Welcome to the land of the dot com. It's the 90s. You've got mail. AOL is sending out CDs to get on the internet. Hotmail is the hot new email service and getting online means listening to the screech of a 56kbps modem. It was way before smartphones, in other words. Instead we had personal digital assistants. We called them PDAs. These things didn't get on the internet wirelessly. Instead they were big gadgety organizers. Apple made one called the Newton and it flopped. Microsoft kept trying to shrink a PC down into a handheld, which was a bad idea. Only one PDA got it right. It was called the Palm Pilot and it was a big hit. A Palm device is a little organizer. It's actually a real computer that happens to be the most popular handheld computer there is right now. Got about 11 million people using them out there. The team behind Palm were true believers that a mobile revolution was coming. Jeff Hawkins was the product mind behind the Palm Pilot. Donnie Dubinsky was the CEO and Ed Colligan handled marketing. But Palm ran into money problems early on, so it was bought by US Robotics, a modem company, which was then bought by 3Com, another modem company. And the people who ran 3Com were the first of many who didn't understand how important mobile would become. That it was the future and dial-up internet would soon be the past. So we had been bought by US Robotics and US Robotics had been bought by 3Com and 3Com didn't even know they were getting us. It was like this little note on the side. We had just gotten to the point where we just didn't feel that we could do our best work at Palm anymore. We'd been looking at the question of could we spin off Palm into a separate entity. We'd had a committee looking at it. We'd had advisors gone through a whole analysis, made a recommendation. And the end of the day. They came back and said, we're never ever going to let you guys spin out. So Donna resigned for both of us that day without consulting me first. Could have said, well, you didn't decide for me. I'm out of here. And I, we had kept this team together from the very start. And we all had personal commitments to each other. It wasn't a jolt so much as a logical next step when we wanted to have an independent company and they didn't want us to have that as a part of 3Com. We'd had such success at Palm that one of the venture capitalists literally wrote a check to Jeff saying, I'm invested before we had a set of slides. I mean, he just said, whatever you're doing, I want in. So we left to form Handspring. They left because they saw just how big an opportunity mobile would be. It's the beginning of a big new industry. It's the next generation of computing. Then when we got to Handspring, we needed to come up with some way of differentiating from Palm. Yeah, we built a 90% share of the market. We own the market for handheld computers at Palm. How do you break into that, what differentiation do you have? And that was Jeff's genius idea of creating this thing called the springboard slot. The springboard slot is this module on the back of the visor PDA. PDAs at the time couldn't do the stuff that we expect out of our gadgets today. There was no music, no cameras, no storage expansion, and no wireless radios. None of that was figured out yet. And the only way to figure it out was to experiment, to let anybody make springboard modules, and for Handspring to try out some of their own and see what worked. Peter Skillman came on board at Handspring to help design the hardware, which was no easy feat back then. We were trying to have the springboard module. And the whole idea of an expanding platform was a really new idea. And do it in a way that actually makes the experience much faster, much better. We sort of looked at the Game Boy and we said, oh, well, that'll plug things too. So we could expand this to all kinds of stuff. You could plug in not only hardware components, but you can plug in software and a backup card. The slot could be for anything. In fact, there were very clever modules that people did in the slot. One of the first camera phones was in the slot done by IDEO. My favorite was the guy who came up with a dental floss holder for this slot. There was a kickass module that I had. It was the Sounds Good module. It was an MP3 player that you would plug in to the back and then you would have your MP3 interface on the front. This thing became a music player. All of the stuff that you take for granted on your phone today. It's a camera. It plays music. It can connect to the internet. It can have lots of storage. None of that was possible on PDAs at the time, but it all became possible on the visor through these little expansion modules. So we're pretty excited about launching the visor. Now this could have been a total coincidence. 3Com decided to announce that they were spinning off Palm into a separate company. Now this was what we had wanted to do when we were still at 3Com. And they said, no, we're not going to do that. So it seemed like a bit of a slap in the face, but it didn't dampen our enthusiasm too much. We went ahead and launched the visor. Probably the bigger issue for the launch was that we decided that we would want to sell this product on the internet. But the web was really immature at the time. It was more brochure where you could put up a pretty page about what were the characteristics of your product. But actually taking an order and processing it was very immature. And we created this system and it just didn't work. Our website melted down. We were shipping 10 units to customer ordered one. I mean, it was the craziest thing ever. We took lots of orders and when it came to shipping them, we just couldn't match orders with shipments and payments with orders. And we had an absolute mess on our hands. But the business was blowing up. We took off like a rocket. Everybody wanted this product. People wanted the visor because they liked the idea that they could expand it with those modules, even though the reality was very few people actually bought them. Honestly, it was less expensive and more fun than Palms PDAs. Handspring's visor has carved out its own niche as well, thanks in part to their unique springboard expansion technology. Today Handspring is the up and comer in the PDA market. The business continued to scale. I mean, the whole market was exploding. It was at that point in the first couple of quarters, the fastest growth company in American business history. I mean, this sounds kind of corny, but we look back at it and we felt it was like a Camelot period. When you're that exhilarated and you come to work jazzed every day. That's Rob Haitani. He was the designer of the Palm software interface that was so legendarily simple and easy to use that it got a nickname, the Zen of Palm. There was a sense like particularly getting the band back together and then we knew what we were doing and we had confidence. Chip, Donna, Ed, I mean, they were mentors. They were cheerleaders. It was really more like a family. We were always celebrating things and doing fun things. You know, I remember those one day we walk in in the cafeteria. There's a woman who had a handspring logo tattooed on her ankle. You love your company so much. You put a permanent mark on your skin. Incoming. That was it. We were all friends. We hung out. We had a summer picnic and director and PR said, hey, let's put a band together. People loved us and it became a thing. We had like a fan club that just reflected the culture. Like you could lean on people and you could trust people and you could just do ridiculously crazy things because why not? We all wanted to build great products. We worked hard on creating the sort of culture of a place that we wanted to work in. The visor was a big success in the PDA market, but the important context to keep in mind is that the PDA market was tiny. Everyone kept churning out visors, faster visors, color screen visors, thinner visors and visors with more memory. But everybody knew that the PDA market had an expiration date. And besides, selling PDAs wasn't the real opportunity. The core thing that we thought we wanted to do was to create wireless modules. We really felt the future of handheld computing was going to be wireless, that we were ultimately going to get to what became known as a smartphone. The industry was dominated by Nokia, Motorola and Ericsson. They were billion dollar businesses and they had all the proprietary technology. There weren't chips that you could go buy. You couldn't go to the market and say, build me one of these things. Just that audacity of a group of eight people making a phone. It's like eight people is like a dinner party. So imagine your next dinner party and the host says, hey, let's make a phone. If we'd integrated every one of the radios that was going on through that whole path, we would have for sure gone out of business. It would have been so expensive. It would have been a bunch of devices we wouldn't have sold. With the module, we could try all these things. The other thing about the visors, every single one of them from the jump, from the very first one, had this tiny little hole here for a microphone, but you couldn't do anything with it. And that's because they knew from the beginning that they wanted to make this thing. So you would slap this into the back and turn this PDA into a phone. It has its own radio, its own battery, its own speaker, even its own ringer switch. It's huge and it's silly, but it was also necessary because back when this was made, it was basically a beta test to see if it was even possible to take a PDA and turn it into a smartphone. These phones were terrible. We bought the radio from an outside vendor. It was very hard to integrate. It was not very reliable. The first visor phone was almost a prototype product. Sometimes you got to create and experiment a little bit before you get to what you think is the ultimate integration, and visor phone helped us do that. Around the same time, another company was making a comeback. iMac has become the number one selling computer in America. Steve Jobs had captured the world's imagination with candy-colored iMacs. Back then, Apple was far from becoming the titan that it is today. In the 90s, it was still small enough that Jobs had to keep the company focused on the Mac. So he had discontinued Apple's Newton PDA and gotten out of the handheld business entirely. Now one of the reasons that Palm OS PDAs, like the visor, had beat the Newton was that they could easily sync with any PC. And the executives at Handspring wanted to make sure that the visor could also sync well with the Mac. So they set up a meeting with Steve Jobs. We had already heard that Steve Jobs didn't like our products. He thought they were toys or whatever. And we show up and we were blown away because as soon as we walk into the executive office suite, we see everyone has got these lanyards around their neck with these laminated cards of addresses and names and phone numbers. And it's like really geeky looking. And we asked them, I said, why is that? And one of the people whispers is because Steve Jobs won't let anyone have a Palm pilot. He forbids it. He doesn't want to see them. I'm like, oh, great. This meeting's getting off to a great start, right? The really interesting part of that meeting was the dynamic between Jeff, who's a brilliant thinker visionary, high execution product guy, and Steve, who's brilliant thinker visionary, high execution product guy. At one point, Steve got up to the whiteboard and he said, here's what the future's going to look like. So he draws a Macintosh on the board and he puts a circle around it and he puts a bunch of spokes out of the Mac and he puts photos, music, web. This is our strategy. The Mac's going to be the center of our universe and all these applications are going to hang off it and you're going to be able to do everything, movies, music, video off of the Mac. We believe the PC will be the hub, not just adding value to each of these devices, but interconnecting them as well. So I get on the device and say, Steve, I think you're wrong. I got up and I wrote on the board next to his and I said, okay, we have a different vision for the future. He got up and he drew a Palm pilot. Here's a handheld computer in the center. Around it is going to be music and documents and the web and all this. Someone thinks about what they need to take with them, that's the thing they're going to take and they're going to use it far more often. So these were competing visions of how these things were going to evolve. I think this was still the time where Steve was saying publicly that they would not do a phone. What about an iPod phone, which I desperately want, please. Thank you very much. Right. It's a hard problem. Was that the light bulb that went off saying we should go do the iPhone? I have been told, and I don't know if there's any truth to this, that right after that meeting, Steve got serious about building an iPhone. Wall Street has been roaring away to record high numbers for months now. But as one record follows another, the markets become increasingly nervous. For the third consecutive day, billions of pounds have been wiped off the value of the world's stock markets. Convincing Steve Jobs about the future of mobile was very far from the top of handsprings worries. Another thing that was happening in the early 2000s was the bursting of the dot com bubble. And that was going to force some very hard choices. There were several problems that happened at once. There was a stock market crash, and there was a recession. And when things turn, sometimes they turn really bad. And that turned into to be the dot com crash. That was an enormous world of hurt, obviously, for the country in general. But for our market specifically, it was just a product that fell lower on your desire list when you had less money. Literally happened about six months after we went public. So we had this roaring growth, incredible public offering, created a lot of wealth, and it just cratered. But despite the frenzy to buy shares in lastminute.com, many analysts expressed doubts about the true value of the business. Palm ended up with a bit of an excess inventory problem. So they started lowering prices. Unfortunately, it just kept going. And then we started having an inventory problem. And then it became very difficult to raise money. And that led to some decisions we had to make, one of which was to what we call burn the boats. You know, we couldn't do the handheld business and do the trio. We made the decision we're going to go for the future. Trio is the most amazing tool I have ever used. This is the future of communications. The idea that you could access the world's information right from your pocket. I mean, that was just an extraordinary thing at the time. It seems so logical today, but it was wild the idea that you could be out with your device and look up a map or look up an address or something. We saw texting early on and multimedia messaging happening and knew that that was going to be important. By today's standards, the trio is pretty ridiculous. The plastic is cheap. There's this totally weird and unnecessary flip lid. It has a physical QWERTY keyboard and even has an antenna sticking out of the top of it for God's sake. And also, this isn't the very first smartphone. It's not even the very first smartphone that ran the Palm operating system. But the thing is, everything before the trio just didn't get what a smartphone should be. It should be powerful enough to run apps, but simple enough for anybody to use. Another example of the genius of Jeff is to say, OK, here's a PDA that's this big and here's a phone that's that big. How do we combine these? And his first thought is, let's make something smaller than either of them. If I made it a little bit smaller and then I replaced this with a keyboard, then I'm there. Packed into this relatively tiny package are a lot of the ideas that we take for granted in our phones today. The phone app has big, touchable buttons for your speed dial. When you want to call somebody that wasn't one of these favorites, you could just type on the keyboard to search for their name. What about the ringer switch? The idea of the ringer switch, you could feel it in your pocket, you can flip the switch, and you can be guaranteed that the phone's not going to make any sounds for anything. So I said, this is obvious. Interestingly enough, the competition thought it was stupid. Phones at that time had things called profiles, and you could set multiple profiles. And there's an outdoor profile with this vibration setting and this volume setting and it's hardware. By the way, it's cost. You're adding cost to the product. I think the thing that people don't realize is just how nascent this technology was in those days. You put a web browser on the Trio, and was the web ready for a mobile phone at all at that point? No, the web was not the least bit ready for it. In fact, I have a very clear memory of looking up Google the first time on the handheld, and it just, it was a disaster. It didn't reformat for the small screen. So you couldn't find the text. You had to try to scroll all over. If you can imagine it as a little window on a big screen, it just didn't work. So I went over to Google and I met with them. I can't remember actually whether it was Larry Page or Sergey Brin. I think it was Larry. And I showed it to him and I said, look, we need to be able to do this and it doesn't work. And he immediately went and got it fixed. It was like the next time I looked at it, it was working. So they just hadn't contemplated people using Google on a little teeny device. But as soon as they saw it, they went, oh yeah, that's going to happen. None of these features seem like a big deal, right? Today they're not. Every phone can do this stuff. But in 2001, these ideas were new. Handspring thought them up. And if they hadn't, who knows how long it would have taken for somebody else to come up with all of it. One of Jeff Hawkins incredible talents is being able to look where he wants to be 10 years from now, and then backing down to what he can do today based on today's technology to increment his way there. Making a smartphone back then wasn't easy, but selling it would be even harder. The only companies that could make any phone a success were the companies that actually sold the phones. Working with the carriers was definitely one of the most difficult things. The carriers did not get smartphones. The thing to remember is that before the iPhone, the carriers had almost total control over what happened on phones. Not just which phones were sold, but how they worked and what they were allowed to do. Handspring had the vision, but they couldn't build the phone that they wanted. So instead they built the phone that they could. Sometimes these deals were so big. You're talking about the survival of the company. The degree of gamesmanship can get so intense. Your entire dream will fail unless you agree to put this app on your launcher. They were interested in adding features to their phones. They didn't view it as a computer. They said, it's a phone. Everyone's going to have phones and phones are dominant. We were thinking, no, the future is going to be, these are going to be computers and the phone is an app. I remember clearly going to Sprint and saying, great idea. Now guess what? You can take a photo right on this thing and send it to somebody. And they said, no, we don't want to do that. Our other devices can't do that. They also were one of the principal resellers of the product. It went through their stores. We made the first products and they wouldn't sell them. They said, no, we can't sell, we're not going to sell these things. You have to make the following changes. Okay. Now those first products, they included the Trio 180, a version with graffiti instead of a physical keyboard called the 180G, and later a color version called the 270. Handspring got some interest from Sprint, but it had to spend nearly an entire year redoing the phone to work on Sprint's CDMA radio network. So the Trio 300 came later. But the truth is they weren't selling in big enough numbers. The carriers wouldn't sell them and those that did demanded changes that hampered the software experience. There was potential in these phones, but it was unrealized. Handspring just had to try again. The very first couple of trios were not that successful. It took a couple of rounds for us to get a reasonable device that operated well. The radios had to get better. The quality had to get better. And I think just people had to get more comfortable with the idea. And even in the early 2000s, you could tell that this first Trio was not the right shape. The second iteration of the Trio was simpler and better. It was the Trio 600. And it featured an SMS app that actually threaded your conversations into a single screen instead of making you jump between an inbox and an outbox and an inbox and an outbox, which is how messaging worked before the Trio. The Trio 600 was the first of what would become the shape of trios for years to come. And it was the first to get more interest from the carriers. But time and money were both running out. Competitors were coming and the economy was crashing. And then things were about to get even worse. Handspring ended up in a weakened position. I had signed a massive lease for two buildings under construction in Sunnyvale. The problem was is that it was huge new debt in the face of a rapidly worsening financial situation. And it became very clear that we needed to get out of that lease. And the only way to get out of that lease was to make a pretty major payment. I really view that lease as the biggest mistake I've made in my career. It was devastating for us. We were running out of money and we had to do something. To me, that was the fundamental decision. How long would Handspring as an independent company last on $40 million? Nobody at Handspring wanted to make that decision. Everybody wanted to remain independent. Everybody wanted to go on our own. The only real serious acquirer that was interested was Palm. We and Palm had really grown in complimentary ways. We had gone off in the direction of communications, which they hadn't done at all. And they were just realizing that they needed to do. We found ourselves like the two parts of the same company. So coming back together was a pretty easy product fit at that point. If Handspring selling itself to Palm sounds distracting, that's not even the half of it. The history of Palm and Handspring is a history of corporate mergers, spin-offs, and screw-ups. Just think of all of the fiascos that Jeff, Donna, and Ed had to go through just to get to this point. They founded Palm, which was bought by US Robotics, which got bought by 3Com. 3Com refused to spin off Palm, so Donna and Jeff quit to start Handspring. Meanwhile, their old company 3Com finally did spin off Palm, but they split it into two divisions, one for hardware and one to sell software. The Palm hardware division screwed up the market with excess inventory, and the Palm software division, well, it didn't accomplish very much at all. Handspring then runs out of money, so the Palm hardware division buys them, but they refused to buy back the Palm software division. So the family's back together again, and they would continue to sell Trios for years to come, but the family drama isn't over. Here's what was going to happen next for Palm. Jeff and Donna would step away, but Ed Colligan stayed on to give it another go at the new Palm. But that separate Palm software company sold off and withered away, so the new Palm had to sell Windows Mobile Trios and then start over again with new software called WebOS. Then they ran out of money and had to sell to HP, and then HP finally killed Palm. Oh, and there's one more thing that really needs to go on this timeline. This is a day I've been looking forward to for two and a half years. This is one device. And we are calling it iPhone. What do you think it was about the iPhone that let it break through? It's a tricky question to ask. Yeah. Well, first of all, I was out of the business at that time, and I could see as soon as they announced the product, I could see that it was going to be very successful. I know that many people think somehow the device was magical. Oh, they created touchscreens. No, they didn't create touchscreens. A lot of the things they did weren't new and they were missing a lot of features in the beginning. We could look up a name in the address book, it was like, you know, you type a few letters and there it is. And, you know, they had this little tabs on the side and you had to go click on the end and then scroll pages. It was like they were imitating paper. But on the other hand, I think they sort of nailed the ultimate form factor. The iPhone did some things that felt magical because they had the courage to build the supply chain to make that possible. Apple has done the most incredible job of like buying entire supply chains. It takes a level of investment and commitment that very few companies can do. They totally, totally redefined the relationship with the carrier. We would never get a product like that past a carrier. If we tried to present that to a carrier, they wouldn't buy it from us because it was just too different and we were constantly constrained. They had, I think at the time, a hundred million iTunes customers. They could walk into a carrier and go, would you like new customers? Because when I bring them this product, they are going to want it and it'll be on your network. Right. That was a pretty compelling argument. Okay, to say you're going to take what we're going to deliver. When we'd walk in, we'd have 10 million Palm users maybe, and Verizon had a hundred million wireless customers and they'd say, do you want our hundred million Verizon customers? And we'd say, yes. And they'd say, well then you're going to put this email on. That was the difference in the conversation. Now there's some hyperbole in Ed's numbers there, but the point stands. Apple just had way more leverage. While Handspring was struggling to invent the phones of the future with just the resources it could cobble together right away, Apple was developing in secret with a Skunk Works iPhone project that was funded by the Mac. Scrappy only gets you so far. If we had not built Palm, would Steve Jobs have lived long enough to develop the iPhone? He was smart enough to realize, you know, after the Newton that, okay, this isn't ready and we won't do this until we're ready. And then did we lay the groundwork where he said, okay, now it's ready. Now I'm going to step in with a totally different vision and kick their ass. That is the question, isn't it? What would phones look like today if the pioneers at Handspring hadn't tried to invent the future before the world was ready for it? How much longer would it have taken to get to this? When I look at the trio, I don't just see an old gadget, one that I admittedly have a lot of nostalgia for. I see a vision for the way that we use technology today just trapped in this primitive shell. This phone had apps for eBooks and games and directions and email and calendar and music, all of it five years before the iPhone. If a company's products don't succeed, is the company a failure? If the company itself goes out of business, does that mean that they had the wrong ideas? My gut answer to these questions was yes, but that was before I met the people who made Handspring. These lifelong friends, they pursued a vision together. And even though their influence on the technology industry has been obscured by the mythology of modelists like Apple, it doesn't change the fact that whether we realize it or not, Handspring's ideas are still with us today, sitting right in our pockets.