David Friedberg

Sustainability comes from cheaper tech, not consuming less

Friedberg argues 21st-century sustainability won't come from convincing consumers to consume less, but from technology that lets them consume more while dropping price and environmental impact.

“I'm a big believer that sustainability in the 21st century does not arise from convincing consumers to consume less. I think sustainability arises from building technology-based solutions that let consumers consume more and dropping the price and dropping the environmental impact.”

Your team only achieves a fraction of what you challenge them to do

David Friedberg argues that leaders should leap several technology iterations forward, paint that distant vision for the team, then pull the timelines in to manufacture urgency. Without that challenge, teams default to a fraction of what's possible.

“your team is only as good as you challenge them to be. And so they'll, you know, if you're not challenging your team and you're asking them, what do you think you can do? They're only going to achieve a fraction of what's possible.”

Steal thisShow your team a vision several iterations ahead, then compress the timeline to create urgency.

Why Cana built for consumers, not the easy restaurant ROI sale

Cana resisted the pull to sell its molecular beverage printer to restaurants first. Friedberg's reasoning: once you have an enterprise customer, their feature requests inundate the team and trap you in the smaller market, killing the 100x consumer opportunity.

“we know restaurant owners will buy this device. I don't know if every consumer is going to buy this device. It might be too expensive. It might not taste good enough. Consumers are so, you know, fickle. If we make a device for restaurants, we know that there's an economic advantage. There's an ROI enterprise-based sale.”

Steal thisIf the easy enterprise sale would trap your roadmap in feature requests, protect the bigger consumer bet instead.

Why Cana built for consumers, not the easy restaurant ROI sale

Cana resisted the pull to sell its molecular beverage printer to restaurants first. Friedberg's reasoning: once you have an enterprise customer, their feature requests inundate the team and trap you in the smaller market, killing the 100x consumer opportunity.

“we know restaurant owners will buy this device. I don't know if every consumer is going to buy this device. It might be too expensive. It might not taste good enough. Consumers are so, you know, fickle. If we make a device for restaurants, we know that there's an economic advantage. There's an ROI enterprise-based sale.”

Steal thisIf the easy enterprise sale would trap your roadmap in feature requests, protect the bigger consumer bet instead.

Why Cana built for consumers, not the easy restaurant ROI sale

Cana resisted the pull to sell its molecular beverage printer to restaurants first. Friedberg's reasoning: once you have an enterprise customer, their feature requests inundate the team and trap you in the smaller market, killing the 100x consumer opportunity.

“we know restaurant owners will buy this device. I don't know if every consumer is going to buy this device. It might be too expensive. It might not taste good enough. Consumers are so, you know, fickle. If we make a device for restaurants, we know that there's an economic advantage. There's an ROI enterprise-based sale.”

Steal thisIf the easy enterprise sale would trap your roadmap in feature requests, protect the bigger consumer bet instead.

The $4M acquisition Google paid up to $1.2B in earnouts for

Two operators bought an ad-server company for $4M, connected it to the internet to fill remnant radio inventory, then tried to sell to Google for $100M. Eric Schmidt forced the deal through over Friedberg's objection because Google 'had to be in radio'; it ended in a multi-year lawsuit.

“So what these guys did is they bought the company that has all those servers for like $4 million, and they connected it to the internet and they set it up so that advertisers could remotely create dynamic content and fill in the unsold ad spots on that server every night at midnight. And so they were buying what's called remnant inventory and making money on it. And so it was brilliant. But for the $4 million acquisition and not a lot of technology development thereafter, you know, they were trying to sell the business to us for $100 million.”

How a $25M acquisition (Urchin) added $500M to Google AdWords

Friedberg pitched Larry and Sergey on giving advertisers analytics; they first called third-party cookies 'evil.' Google bought Urchin for ~$25M, turned it into Google Analytics, and chief economist Hal Varian showed it lifted AdWords revenue by half a billion dollars as advertisers improved conversions and spent more.

“Within a year, I think we had shown through Hal Varian, who was our chief economist, we demonstrated that Google Analytics increased AdWords revenue by half a billion dollars because so many advertisers were using it to improve their websites and make the conversions better. That they were spending more on AdWords. And so you could kind of economically show the benefit of analytics. And that was like a $25 million acquisition.”

Google's real moat: $150 disposable servers vs $3,000 Oracle boxes

Instead of buying $3,000 Oracle servers, Google breadboarded commodity hardware into ~$150-200 servers with no case. They broke every few months but were so cheap they were just thrown away, letting Google crawl more of the web more often and build a structural moat from the ground up.

“And so their cost was like $150, $200 instead of $3,000. Their servers broke every couple of months. But guess what? It was so cheap to make it when it broke. They threw the thing away. And so it didn't matter. They didn't need to have a 5-year server.”

Google's real moat: $150 disposable servers vs $3,000 Oracle boxes

Instead of buying $3,000 Oracle servers, Google breadboarded commodity hardware into ~$150-200 servers with no case. They broke every few months but were so cheap they were just thrown away, letting Google crawl more of the web more often and build a structural moat from the ground up.

“And so their cost was like $150, $200 instead of $3,000. Their servers broke every couple of months. But guess what? It was so cheap to make it when it broke. They threw the thing away. And so it didn't matter. They didn't need to have a 5-year server.”

Dare to Dream: why smart people compromise the moonshot

Friedberg's TPB principle 'dare to dream.' Successful people only do things where they know X yields Y, so they take the path that gets them a quarter up the mountain instead of the riskier route to the top. They minimize the big vision, promising to 'dream big later,' and never do.

“And so they minimize the dare to dream circumstance and then they always say, well, you know what, we'll come back and dream big later. But guess what happens?”

Steal thisVividly define the moonshot up front and find aligned capital, because smart teams default to short-range bets where they already know the outcome.

99% of every beverage is just water (or water plus sugar/alcohol)

The core insight behind Cana: 99% of any beverage is water (or water plus sugar or alcohol), and only ~1% is the chemistry that makes its flavor, smell, color and texture. That 1% is all you need to turn water into any drink.

“I mean, you know, the, the, the big discovery, the big kind of aha with this business is based on the idea that 99% of beverages are water. Or maybe water plus sugar, or maybe water plus alcohol. And one— only 1% of all beverages is the chemistry that makes the flavor, the smell, the color, and the texture of the beverage.”

Wine has 500 flavor compounds but only 30-40 hit your palate

Friedberg explains wine has ~500 flavor compounds from grape, skin, branch, leaves and oak, but chemically only 30-40 actually register on the human nose and mouth. The same holds for coffee, tea, juice, soda, liquor and beer, which is why ~80 compounds can recreate most drinks.

“And it turns out that of those 500 compounds, chemically speaking, only about 30 to 40 really matter to your sensory palate. So your nose and mouth can only really pick up and really cares about the 30 to 40 compounds. The same is true in coffee, in tea, in juice, in soda, in liquor, in beer.”

Cana preorders: $499 device for first 10,000, then $799

Cana launched preorders with a fully refundable $99 reservation fee; the first 10,000 devices are $499 and the price rises to $799 after that. Friedberg spent ~3 years and aimed to ship the Gen 1 device early next year.

“we're starting preorders today for, for $99. You can reserve a fully refundable $99 reservation fee and the first 10,000 orders are $499 for the device and $799 after the first 10,000.”

Permissionless beverage brands: be The Rock without the $5M

Cana's pitch: with only ~150 retail slots for all wine, beer, coffee, tea, juice and soda, brands are faceless. On Cana, a podcaster or creator can launch their own branded drink at near-zero cost, mirroring how YouTube/TikTok created a long tail of creator media.

“In the future, you're going to have your own brand, right? So you and your podcast can make a branded beverage, put it on Canna, and your followers can buy your beverage. And it can be your favorite blueberry hard seltzer or your wife's favorite tea.”

Steal thisTurn your audience into a beverage brand: formulate a drink digitally and let followers buy it with zero packaging, retail, or capital.

There is no perfect product, only perfect products for each segment

Coca-Cola's 44g of sugar is the lowest common denominator picked to win the biggest single audience. But offering 20/30/40/50/60g versions would sell more in aggregate. Without shelf-space limits, you serve every segment its own ideal version instead of one compromise.

“But it turns out some people would buy more Coca-Cola if it was 20 grams of sugar, and some people would buy more Coca-Cola if it was 60 grams of sugar. So if Coca-Cola had a 20-gram, 30-gram, 40-gram, 50-gram, and 60-gram version of Coca-Cola, they would sell a lot more in aggregate of all those versions than if they sold just the one 44-gram sugar.”

Steal thisStop optimizing one product for the lowest common denominator; offer a version tuned to each segment and capture the aggregate.

There is no perfect product, only perfect products for each segment

Coca-Cola's 44g of sugar is the lowest common denominator picked to win the biggest single audience. But offering 20/30/40/50/60g versions would sell more in aggregate. Without shelf-space limits, you serve every segment its own ideal version instead of one compromise.

“But it turns out some people would buy more Coca-Cola if it was 20 grams of sugar, and some people would buy more Coca-Cola if it was 60 grams of sugar. So if Coca-Cola had a 20-gram, 30-gram, 40-gram, 50-gram, and 60-gram version of Coca-Cola, they would sell a lot more in aggregate of all those versions than if they sold just the one 44-gram sugar.”

Steal thisStop optimizing one product for the lowest common denominator; offer a version tuned to each segment and capture the aggregate.

Only 3% of new beverage brands ever hit $10M in sales

Friedberg notes only 3% of beverage brands that launch and get retail space reach $10M in sales, and it costs ~$5M to formulate, package, and convince retailers to carry a drink, which is why only mega-celebrities like The Rock succeed.

“And that's the thing. So only 3% of beverage brands that launch and get retail space actually make it to $10 million in sales.”

Consumers spend $2.3 trillion a year just to move water into homes

Friedberg frames bottled/canned beverages as an archaic centralized system: ~half a billion tons of CO2 emitted yearly, ~400 trillion liters of water used in production, and $2.3 trillion in annual consumer spend, largely to move water into homes that already have water.

“And consumers are spending $2.3 trillion a year on this archaic, insane system of centralized manufacturing to use a ton of energy and a ton of carbon and a ton of land to just move water into your home when you already have water in your home.”

Consumers spend $2.3 trillion a year just to move water into homes

Friedberg frames bottled/canned beverages as an archaic centralized system: ~half a billion tons of CO2 emitted yearly, ~400 trillion liters of water used in production, and $2.3 trillion in annual consumer spend, largely to move water into homes that already have water.

“And consumers are spending $2.3 trillion a year on this archaic, insane system of centralized manufacturing to use a ton of energy and a ton of carbon and a ton of land to just move water into your home when you already have water in your home.”