The best business model is a combination of hardware, software, services, and content: Carl Pei

The CEO and co-founder of London-based firm, Nothing, shares his thoughts on how the company is becoming a formidable competitor in the mobile (consumer electronics) market, the reason he chose hardware to scale up instead of software, and his company's expansion plans

Scaling a consumer tech company in the hardware industry is challenging due to the complex business model involved, said Carl Pei, CEO and co-founder of the consumer tech company Nothing. He added that many well-funded hardware companies have not yielded good returns because they need to handle several aspects such as manufacturing, supply chain management, industrial and hardware design, software engineering, sales, marketing, and customer support. Integration of resources and capabilities in various fields is necessary to succeed.

On being asked why he chose hardware to scale up instead of software, Carl highlighted that the best business model is a combination of hardware, software, services, and content. He cited the example of the app economy, where initially making apps was difficult but distributing them was easy. Now, with AI, making apps is becoming easier, but having distribution power is crucial. Hardware serves as the critical entry point to software.

Talking about design, Carl mentioned that having the youngest group of consumers in the industry gives Nothing an advantage in terms of product design. Design is the lowest-hanging fruit and helps them to stand out as a small company with limited resources. Big companies like Apple and Samsung design products for a mass-market audience. As a small company, Nothing seeks to differentiate to avoid competing head-to-head with large brands.

Carl also mentioned that, as opposed to large companies, Nothing needs to differentiate in a way that is easily perceived by the consumers. He then emphasised the importance of industrial design, software UI, UX, and seamless product integration in consumer technology. Although Nothing currently offers only headphones and smartphones, they plan to expand their product line and focus on creating an ecosystem where devices can easily interact with one another in a user-friendly manner.

Carl talked about his expansion plan as a natural cycle for any company and suggested that it would be a step-by-step process. He also talked about the challenges they faced in the initial days of funding. Despite appearing to be successful in raising funds, Nothing has faced many rejections. He advised entrepreneurs to keep going despite the setbacks and to find investors who believe in their vision.

Carl Pei shared his thoughts in a session \”Building a Challenger Brand: Decoding Nothing\” at the 7th edition of the ET Global Business Summit (GBS). Some of the biggest names in business and academia, as well as key leaders from the Indian government, spoke at GBS\’s main stage.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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