Skip to content
How one of history’s most talented technology teams changed Silicon Valley forever.

Pushing the Limits of an Emerging Tech Industry | Panel Discussion

In this KeyBank sponsored panel discussion, North Coast Ventures hosts a screening of the “General Magic” documentary, followed by a discussion with the film’s director and three “magicians” - original team members of the General Magic startup.

The General Magic team members talk through the innovation occurring at General Magic, competition with other technology companies, and General Magic’s timing in the industry as a driving force behind the company’s failure. The panelists also address the startup ecosystem of the midwest, and provide words of advice for future founders and early stage investors. 

The award-winning documentary "General Magic" speaks to the value of timing, the evolution of emerging industries, and the paradox of innovation often pushing the limits of practicality. This panel discussion continues to provide insight into these themes, and serves as a case study relevant to both entrepreneurs and investors in today’s technology landscape. 

Watch the video or read the full transcription of the session below.


Presenters include:



Highlightable Quotes:

  • “I don’t think you can ever know [if a startup will be commercially successful], but you can know what’s important to you, you can learn the lessons of those who have gone before you, and give it your everything” - Sarah Kerruish
  • “We were selling them on the idea that they didn’t know how to create the future and we did” - Mike Stern
  • “Culture is so fundamental and having a risk tolerant culture and a failure tolerant culture, and a culture that cares about something that isn't about money.” - Tom Hershenson
  • “That's in the nature of the development of technology and the adoption of technology. You have this moment where the limb starts creaking and breaks, but there's been weight on the limb for a long long time before that happens.” - Tom Hershenson


Todd: In a moment, I'm going to be joined by four guests, as you saw Mike Stern was an early gen magic team member, and served as the company's general counsel. He was active in the commercialization planning partnerships with strategics and IPO roadshow. Mark was also the executive producer of the movie. Tom Hershensen was a magician prominently featured in the documentary, and drove Media Relations for the company. Sara Kerruish was part of the marketing team at General Magic. She shot much of the original footage we saw. She later went on to become a director, and eventually directed the General Magic documentary with Matt Maude. Matt is a director, producer and actor. Okay, let's dive in. Alright so Hersh we will start with you, as the movie begins in the opening sequence for any of the characters are really shown a number of comments are spliced into a background footage of Silicon Valley, and you say that the reason we should care about the story in general magic, is that it involves something fundamental that failure isn't the end, it's actually the beginning. Tell us more

Tom: I think that we increasingly live in a culture that wants to identify as quickly as possible winners or losers and maybe cancel culture is part of that, but it's really foolhardy to do that especially around technology because things take a long time to develop and then all of a sudden there are these inflection points. So, you don't know ahead of time, just like a black swan event, you don't know ahead of time, what's coming and it really takes a certain amount of hubris, I would say, to think that you can know something is definitively a failed idea or something that isn't going to take off. Someone said to me recently that pivot is a Silicon Valley term for Oh bleep, but there really is something to be said for a kind of evolutionary process in the development of technology and development of many things. For example, you know, I live in Washington DC, and there are countless stories of people who were down for the count in politics and next thing you know they're back up, you know, a year later, five years later,10 years later, something like that. So I think once you have that wisdom, it gives you a different perspective on stuff and it also makes you more persistent and able to dust yourself off when you stumble because if you have an awareness that this isn't the final chapter let's keep going, I think it gives you a mind frame that is incredibly advantageous, certainly in entrepreneurship and other fields.

Todd: Terrific. Mike, part of the story of General Magic is just out of raw talent, magicians went on to do huge things at Apple, Twitter, LinkedIn, Pinterest, the White House. What was the common denominator there, you think that allowed so many people to go on to do big things?

Mike: And it was a combination of a teaching culture, and a culture that valued, what you could do rather than who your credentials or what you've done before, you know, the word diversity didn't really exist back then, you know, Dr Teddy, who was our first head of HR was a town Scout though, in which she looked for people who had done things and could do things, and had imagination and energy. She didn't care where they went to school, and she really didn't care what the previous jobs had done. And then, you know, the founders are incredibly good teachers, and what they were really good at was developing people's potential and letting them be as good as they could be. They give them the right kind of encouragement. And also, and this is a double edged sword, it gave them the right kind of freedom, they didn't matter to them very much. And that's something we'll probably talk about in the course of this about how much management matters and what kind of management matters. They gave people their head. And so they got incredible stuff out of it, a lot of which we didn't use because it was too creative and too far ahead of its time. But it was that combination of openness to different kinds of talent, and the ability to cultivate it and bring it out.

Todd: Sarah was it about the General Magic story that made you want to tell it?

Sarah: It was fate. Actually, I was invited to join my filmmaking mentor, David Hoffman had a little teeny company in Silicon Valley, I was in Boston at the time, and I knew nothing about Silicon Valley, very little about technology, but he said something revolutionary was happening so I got the call to adventure, heroines culture adventure and off I went. And it was life changing, so many amazing things came out of that experience.

Todd: Matt, preparing to make the movie you probably went through 100 times the archival footage that showed up in the final product. What did you see that drove you to want to tell the story in that footage?

Matt: So the first thing that I watched was actually the footage that Sara shot, and that was what really attracted me to the project, I am not a technologist and I'm not a technologist is me, and I'm particularly interested in technology, and I'm fascinated by human stories and I think being able to look at each face that was sat on the floor, wearing terrible Christmas pullovers was just the understanding that each of those people had either made a dent in the universe, or would go on to make a dent in the universe, and would be part of the creation of the products that were in my hand or in house, and I wanted to understand what was that magical ingredient that was present in that company that has led to such incredible profound impact, and success.

Todd: Great, Hersh, you drove the communication strategy and created a ton of buzz. What was it that allowed you to be so successful in getting people talking?

Tim: Well I have to give credit for the strategy to Jane Anderson and Tracy Demorods, who was at that time Tracy Byers. But what gave it the buzz I think was that it really captured people's imagination and I think that was the core of what happened, people were really captivated by the idea, but there were other things too involved. One was the mystique around the company and it was very disciplined in terms of there not being leaks and not talking about what we were doing and keeping our powder dry from a PR perspective. The names attached to it were marquee top shelf names in Silicon Valley. So there was this tremendous building interest, that was not being satisfied because things were so quiet. And then once we kind of pulled back the curtain, it was something that was, like I said, was really really captivating. I think I say in the film that the response of many journalists was to say, I want that, as opposed to you know just wanting to write a story about it. The other thing is that Mark was pretty naturally talented at communications, he just was. He would just start talking and people would be mesmerized. It's really hard to put into words and it's unlike, with the exception of maybe one or two politicians that I've seen in the last 20 years, anybody else I've ever encountered. So, you know, you kind of have this triad of great talent and great interest you have a great story to tell, and then you have a great storyteller and I think those three things together, were the foundations of the success from a communication standpoint

Mike: But I wanted to pick up on something Tom had said, you know, typically when you do a roadshow for a public offering, and I'm sure you know some of your companies have gone public. In the old days before COVID You know, determine person that you want, city to city, in most retros you talked about the financial prospects of the company and you do detailed detailed explanations of how you're going to make money, how much you're going to make when you're going to make it. Mark was so good, the finances never came up. All he did was spin the vision and demonstrate the device, we've never even presented a mock p&l And this isn't a roadshow run by Goldman Sachs. All he did was spin the vision, and rooms full of hundreds of hard nosed skeptical people swooned. That was what was working, he did a beautiful job.

Todd: I guess that speaks to the vision right of a pre revenue company that the institutional investors aren't asking you about the revenue.

Mike: Yes, Yes. And that was the power of mark as a performer, but also the power of his intellect in the vision that he had.

Sarah: Excellent, speaks to the power of storytelling, I think, often companies. Is that enough to communicate the power of their idea.

Todd: Mark, we'll circle back to you here, and you know we are based in Cleveland, Ohio, you are originally from Northeast Ohio, and Hershey, of course, is from Pittsburgh, so very much outside of the Silicon Valley bubble, most people watching tonight are not in Silicon Valley and I assume over the life of the movie screenings that most people haven't been there, either. So is there a different or more focused takeaway, we should have from the film being outside of the Silicon Valley bubble.

Mark: Good question, and I'm from Nashville, which is sales town. Nashville in the 50s was the best town, the 50,000 with factories, and people employed making cars, making steel making tires. It’s a big employer now as a hospital. What it tells you is that as the, you know, is that the Midwest has been through cataclysmic deindustrialization and that kind of change, nevertheless, that creates opportunity as well as loss. And so, the green economy. The Midwest is perfect is really well suited, both in terms of the talent pool you've got problems that originate there in terms of what does the post carbon economy look like and how to how to, you know, how to make that happen. And your companies would be really well positioned to work and to have the kind of salt of the earth people who come from the Midwest. You know there are, you know, not gonna have the same kind of wild parties that people did in the valley, but you're gonna get a lot more done.

Todd: Well it's been a while since you've been to one of our parties you might be surprised. So Sarah in Greek mythology, there's the figure of Cassandra, who was cursed to know, and other true prophecies, but she was never believed. Does that analogy ring true to you here, the idea of seeing the future but if not necessarily coming to fruition in that time frame?

Sarah: I think you can't ever really know all you can do is follow that call to adventure that passion and see where it takes you and know that it, and maybe not hold too tightly to any particular outcome, but know that if it's something you really care deeply about the adventure is going to be incredible, you're going to learn an awful lot. Your work will have value and maybe it'll be value in the company that's realized Tony had 10 years of failure before he did the iPod and the iPhone and the rest, which itself was 3.4 billion. I don't think what it's going to take you but I think it's fundamentally about doing things that are important and that you care about, and that it will have meaning and it will have value, maybe not in the way that you see it but I think um, you know, when you look back you'll see how it was part of, part of a bigger story like with us broke doing we do medical AI for breast cancer detection, and I know that our work is important. I know that it's making a contribution. I don't know ultimately if Mia, which is our product, is the one that's going to be commercially successful at scale. But I know the science that we're doing is playing a contribution, so I guess that's how I think about all of that now. I don't think you can ever really know but you can know what's important, you can know what's important to you, and you can learn the lessons of those who have gone before you, and give it your everything, right.

Todd: Absolutely. I think for us, sometimes the distinction is that we're playing in markets that are just a little closer to reality. So we don't know if we're going to be the winner, necessarily, but we know there are going to be winners and we think we're coexisting in this pool of those that are competing to be the big winners. What’s so extraordinary about General Magic it's just how early. The vision was, when in reality the, the new moon the initial forays from Microsoft and others were not the ultimate winners either.

Sarah: Yeah I think that's right as an investor too I think it's a really interest or as an entrepreneur, I think is really interesting to understand your sense of timing because I think you can get a sense of that to your point, I think you can get a sense are you somebody who typically thinks 10 years out, are you somebody who took the next five years or are you somebody that's in a market of three to five and you know there's going to be a market I think it's a really useful analysis.

Todd: And then Mike. Mike, you were involved with driving in assembling the partner network at&t, Apple, Sony, Motorola, Philips these big publicly traded companies that were often tooth and nail competitors of each other and each somehow paid you $6 million to be part of the club. How'd you pull it off, getting them in the same room, let alone leaving that room as partners having each paid you $6 million?

Mike: Well again I have to give credit to Mark for that guy was his sidekick and helped make it happen, but again it was his. He was building the ultimate alliance against Microsoft, that was really the point. People forget that Microsoft had the house of a Google Plus, back in the 90s, everybody's business plan was about how they were going to either get bought by Microsoft, or other avoid being crushed by them, and we're putting together what was going to come after the desktop. After Microsoft and that was why these big players that consumer electronics in particular wanted to be part of the club. It was extraordinarily difficult work in that their CEOs for the first five were on the board, we have a CEO of at&t, Philips, Apple, Sony, on the board and so it made dealing with more electric Kabuki play than a real board process and would take two weeks to get to the CEO of Sony through the layers of intermediaries before I could actually speak to them, and then it was through translation, you know, so it was difficult. But the other thing was, the day after we had made our public announcement in 1993 I got a subpoena from the Justice Department to explain how we had gotten six companies in the room and how they weren't fixing prices and dividing markets. So, I spent the next two years sending freight cars or documents to Washington. And, and, you know, gradually convincing him that this was pro competitive. 

Todd: and Tom, in retrospect, what was obvious to your team wasn't obvious to the consumer? It makes sense, it was a big bet, especially at a time when most Americans didn't have an email account, didn't own a cell phone or even have a pager. So was it a huge miss to be not more connected to the consumer, or because you were early, did you feel that you had to put blinders on, focus on the future of where you needed to go, because it was indeed so transformative?

Tom: Well, the film kind of gets into how Newton came out and stole our thunder and that accelerated the timeframe and you know the kind of the dominoes kind of start to fall from, from that, I, it's hard to, to explain to people who haven't experienced that, but when there's a very powerful vision, or outlook that are binding people together, there is just this laser like focused on it. You know, there's the movie Good Morning Vietnam and there's this disc jockey who's just horribly unfunny, who in one scene, says, I know in my heart I'm funny. It's a last line in the movie, but one of the things that was remarkable at General Magic was we knew we were right, and that's what made the defeat so crushing. We had certainty about the correctness of the idea, but at the same time we had a respect for how difficult it was to explain it to people. we talked about we use the phrase paradigm shift all the time. And as a communications guy have since worked at other companies that really are dealing with paradigm shifts in one way or another, and it's very hard to do the messaging around that in a kind of consumer oriented way. It's hard to tell a very quick emotionally powerful story. If you'd sit down with with Mark or Bill Atkinson was another guy who would sit down with reporters, and they would be mesmerized but those were those were longer conversations, those were not 30 second ads. I was gonna say that there's a saying that all innovation begins with an audacious act of imagination and I think that that's kind of the irony or the paradox that General Magic faced which was that investors want their returns now what you're dealing with something that is really truly a transformative shift in culture, technology and society. So, you really are caught between those two poles of wanting to focus on consumers adopting it now because you've got investors and whatnot breathing down your neck, but then understanding that there's no way this happens overnight. It's not a viral hit. It's a slowly but surely kind of thing.

Mike: Let me pick up on that for a minute. What was mobile gonna be? We were selling them on the idea that they didn't know how to create the future and we did. But the problem was that future. It was too far out, but that was where the allies came from is that these were, these were, they were terrified. They didn't know what to do and we were, we were strong in the way it actually didn't turn out to be the way it was 20 years later.

Todd: And despite that, looking back, do you think there's things that General Magic could have done to ultimately be successful? or was the outcome inevitable because it was just too early?

Mike: That's the question. I think it's easy to pose and very difficult to answer. We don't know. Sure, we screwed up all over the place and the movie makes some of that clear, you know, we were under Managed, we kept letting ourselves be late. We didn't ship and iterate, those are classic mistakes. But on the other hand, we were dealing with an eight megahertz processor, we were using the taxi hailing spectrum for radio, who can imagine that you know the bandwidth is 2400 bucks a second, but that's not, we're not you know we're not given megahertz here, you know, or gigahertz we're talking eight megahertz processors. And in Silicon Valley we had to design ourselves because nobody else could make it that small. We couldn't have delivered on what we were promising, I don't think. But I’ll let Sarah and Tom and Matt answer. 

Matt: To me I think it's just the iterative process that was missing from General Magic, but that was an iterative process that just didn't exist in the 90s, you created a product called the war room that would last for years and years and years and years, and you'd create a computer that the consumer would own for five years plus. That's not in Apple's model, a success now, you buy an iPhone and you're expected to buy another iPhone two years later. and the way in which the iPod was delivered and iterated brought the consumer with them, brought them with you so that you were learning every single time you picked up a new version of it. So by the time the iPhone arrived in 2007, we were used to holding something in our hand, we were used to interfacing with hardware and software and services. So the consumer was ready, General Magic was just too soon because it was really just playing to a very niche audience. what Apple did 2003 to 2007 Is it carried an audience of everyone into the mainstream. So competing was no longer seen as geeky, it was no longer seen as nerdy, it was seen as cool because it allowed you, the user, to do everything you wanted to do and also feel smart doing it. you didn't feel like an idiot picking up, it took it with you.

Todd: I wonder if you ever look at the timing issue the other way. There was a comment in the movie that it was a little bit like inventing the television in the 1800s right, that there were just no supporting technology no shows nothing to compliment it but in reality, this was only 10 to 12 years off and a lot of ways and you in that short period of time went from interviews and stores where people had no idea what this was or why they needed it to people camping out in every city in the country overnight to get an iPhone and be the first person to get the iPhone. And that's pretty amazing to happen in such a short period of time.

Tom: We have these inflection points and adoption of technology, I mean you have it and everything, everything that involves an idea, you know if there's a slow build and then all of a sudden it's, there's this bursting forward of stuff but if you really examine it, I kind of randomly have done research on the development of airbag. Airbag was first conceived in 1952. It did not appear in cars in great numbers until the mid 90s And it seems like such an obvious idea, but there's a long slow build with everything and then all of a sudden poof people are standing in line or every dealership has it or whatever else it is. So I think that's in the nature of the development of technology and the adoption of technology. You have this moment where, you know, the limb starts creaking and breaks, but there's been weight on the limb for a long long time before that happens.

Todd: As we think about several of you on the coasts, either in the San Francisco area which has challenges with population costs and currently wildfires and on the East Coast, there are some challenges with cities density and other issues, are there things you think we should be doing in the Midwest to make it more attractive for the next generation of General Magic type entrepreneurs and startup team members to want to build companies here?

Sarah: I would say my perspective on that is capital is obviously really really important. But it's about developing the ecosystem in which you need to lots of different things to develop an ecosystem. One of them is a fundamental tech talent and Megan Smith has been doing amazing things with her company, ShiftSeven. They’re going in and up-skilling and attacking areas of the country where they don't have a lot of people who, for example, know how to code. And I think that's probably the single most important thing you can do, as well as to create a way of tracking success and growth. Cambridge did this really really successfully; obviously they have a lot of talent which helps because they have a lot of people coming out of Cambridge University and that's known as a life sciences and tech hub, but it was actually founded very simply with tracking who was scaling, helping investors identify qualities of the companies to look for. Just by doing that very quantitative tracking of the ecosystem, they've massively grown and become really a center, a  huge center in not just in the UK but in the world. So I think that's a very practical thing to do but I think you're in a great position the quality of life and the Midwest, the values, the history of the nature as Matt said, Yeah, I think just tons and tons of potential.

Tom: I would add that I think that the culture is so fundamental and having a risk tolerant culture and a failure tolerant culture, and also a culture that cares about something that isn't about money. To put it crassly I mean, in Pittsburgh where I came from, there's a saying that you describe somebody who brings their lunch pail to work every day. And this idea that someone keeps chipping away at it, not because they want fame or fortune, but because it's the right thing to do and I think that that's something that was, You know a General Magic. We felt so motivated, not because we had, stock options in our eyes, but because we just thought this is the right way to pay homage to this idea, this idea demands that we work in a certain way with a certain intensity. And so I think that, at least in Pittsburgh where I'm from and my impression is Cleveland's much the same way. There is a culture of working hard and keeping at it and not quitting, and that is respected and I think that those cultural factors can't be overlooked in terms of something that provides a really sound foundation for success. 

Todd: Mike we’ll give you the final question here, vision and market timing issues aside, what other lessons do you think we should take away from General Magic as founders and early stage investors. 

Mike: Ship sooner, manage more.

Matt: I would go with really questioning your employment and employing strategies and, and look for diversity of thought of experience, background, and make sure that all your staff aren't the same age, or come from the same place. You need people to really interrogate what it is you're doing and check your blind side and to think, is there a way of being better? is this what the customer actually wants? It’s good to have that kind of have those people every once in a while that are called Doctor knowns, so that they can really get to be thrust back to go and question it again and again and again, because you’re making it, you’re building it you’re selling it, you're the first person that interacts with it, you've got to think about the next 1000 People who are going to interact with it, and the next 10,000, 600,000. And if you don't have that diversity of thought, you're not going to have those questions. So, yeah, diversity matters, not just because it's the thing to say but because it brings all of those questions and all of those experiences, and all those ways in which people can approach your product or services, and you have to design it for those people.

Todd: On behalf of North Coast Ventures, and KeyBank, our Venture Flicks sponsor, I'd like to thank you for participating and joining us tonight and telling the General Magic story!