The Engadget Interview: Fusion Garage's Chandra Rathakrishnan

The most telling moment of our conversation with Chandra Rathakrishnan came at the end, just before the recording device shut off. The interview wrapped, and we politely thanked the Fusion Garage CEO for taking the time to speak with us. "Thank you for taking the time," he echoed, adding, "And for giving us another chance." Rathakrishnan never goes so far as to use the word "failure" to describe the company's poorly received JooJoo tablet -- at least not during the course of our interview -- but it seems clear that he harbors few illusions with regards to what the device truly was: a misfire. A grandiose experiment that was rushed out the door far too fast, with far too few resources.

The device's origins weren't all that pretty, either. The company teamed up with TechCrunch to offer up a $200 internet tablet dubbed the CrunchPad -- a plan that soon soured, with the two parting ways on a less-than-positive note. Fusion Garage rebranded the CrunchPad the JooJoo, and began a long journey of delays and price hikes. Despite its best efforts, it missed the boat, failing to release the device ahead of Apple's industry shaping iPad. When the 4GB tablet finally hit the market, it carried a $499 price tag -- more than double its initial utopian target.

Read on for the full interview.

The reviews weren't kind either. We gave the slate a three out of ten. Not surprisingly, the device failed to catch fire -- and while Rathakrishnan insists that sales weren't quite as dismal as reported, it's hard to imagine a yardstick by which the JooJoo might be considered a success. A firmware update did help matters a bit, but it was too little too late. So Fusion Garage regrouped, and in an industry where second chances for startups seem far-fetched at best, the company went undercover, working on a mystery campaign launched to coincide with the Steve Jobs keynote at WWDC.

A lot of money and resources were clearly poured into the promotion, which included a series of viral videos and the purchase of a sponsored tweet for the duration of August 15th -- the day of the company's big reveal. Whether that price actually bought the Rathakrishnan and Co. a second chance is debatable -- it did, however, afford Fusion Garage a level of press it might not have earned had it continued with business as usual. Whatever their reactions may have been to the actual announcement, people did genuinely want to know who precisely this TabCo company was.

Rathakrishnan dominated the stage during the strange little press conference, debuting the Grid 10 tablet, the Grid 4 phone and the Grid operating system, which tied the whole show together. In spite of building the OS on top of the Android kernel, Rathakrishnan also used the platform to tear into the Google mobile OS and the tablets that utilize it. The company, it seems, has no illusions about going toe to toe with Apple this time around, but the CEO is maintaining a sense of unflinching faith in the product's ability to succeed on its own merits -- even if convincing users to actually give the thing a shot will be an uphill battle.

We sat down with Rathakrishnan the night of his company's big unveiling to discuss the mistakes of the JooJoo, the importance of the Grid OS and why he believes that Fusion Garage deserves that second chance.

Have you learned your lessons from the JooJoo? Is this new tablet the result of those lessons?

I think [the JooJoo was] product that was delivered ahead of it being ready. I think we tried to rush it to the market too fast, with too little resources. We were a 14-man company then, and as much as we were earnest, we were a little overstretched in believing we could deliver a product that could challenge or create a category. So, I definitely think that was one lesson learned. The second one was that the world is going towards the web or the internet, but I don't think it's quite ready yet. I think we basically need to look at a hybrid world before that's gonna happen. I don't think that anyone is trying to do that really well today. You've seen that with the Chrome OS, trying to be completely web and nothing else. I think that's not the right path to pursue, given the expectations of the market today.

Obviously there were some things that you applied from that experience. The Grid 10 has built-in memory and expandable memory as well. Are there any other clear things that you can point to -- hardware differences between the two devices that were a direct result of the JooJoo's failings?

I think that goes beyond the hardware, because if you look at the OS itself, it's completely different right now. It's a new generation built on the Android kernel. Everything on top of that kernel has been changed almost beyond recognition to deliver what we've delivered today. It's night and day, the JooJoo was a web-only OS, and this is really what I would call groundbreaking. It's innovative, it's completely different from anything that anyone has tried to deliver since 2007, after the iPhone. So, I think that's one critical difference, having a new generation OS that's completely different in its functionality -- a different approach to UI, how we deal with the animations, all of that.

The second one's apps -- the ability to have local and native apps. I think this is a very critical thing. We obviously delivered that today in two ways: One with the support for Android apps. The API framework is being retained. You get almost immediate app support, because through the Amazon app store, you can download any of these Android apps on the Grid 10. And with the Grid Shop, I think what we are trying to do is trying to get the best of both worlds -- leverage the Android ecosystem of app developers and let them leverage the additional APIs and the wrappers that we have created to take advantage of the significant UI work and functionality that goes with the OS. So I think that's another area that is critically different.

When you look at the hardware itself, while I thought the JooJoo was pretty good hardware, it was a little too big -- 12 inches was pushing it. I think the market has clearly shown that somewhere between nine and 10 inches is probably the sweet spot, and that's exactly what we've tried to deliver this time around. So obviously there's 16GB of on-board storage that we didn't have last time around. There's expandable memory with the microSD slot. It's really different from a hardware standpoint, and this is one hell of a sexy design -- it's really sleek, it's slim, it's a 10.1 inch that is 16 x 9 aspect ratio which gives you a 1366 x 768 resolution.

It seemed as though you were rushing the clock with the release of the JooJoo -- that you were trying to beat the iPad to market. Was that what it felt like at the time?

Yeah, I think that was part of the reason, and also, with the time we had and the resources we had, it was just unbalanced. It's a very difficult thing to try and do hardware and an OS with the people that we had. But it's very different now, we have 100-plus people. We've raised tens of millions of dollars, and we've grown to a point where we are not just doing the OS, we're trying to make sure that the experience is complemented with the various things that you need to make this product a success.

You mentioned how much the staff has grown recently, and obviously a lot of money went into the ad campaign. Where is the money is coming from?

The funding is coming largely from Asia. Angel investors and professional investors from the region. That tells you the amount of confidence people have in our vision. Like you said, the JooJoo wasn't a successful product. We all know that. We're not hiding from the fact that we rushed the product and knew it wasn't good enough, so we discontinued sales the moment we realized we weren't going to be able to make that better than it already was. And we want to give [JooJoo buyers] a free Grid 10 as a token of appreciation on our part, to say "thank you for supporting us during the period where we didn't get this right." But we're gonna nail this one, and the investment that we are getting is helping us to provide the resources to do this the right way.

How many JooJoos did you actually sell?

Well, we are not revealing numbers, but I can guarantee you that it is way more than the rumored numbers you were getting.

At today's press conference, it seemed that you were essentially telling us that you presented the device [as TabCo] to give the product a fair shake. Do you feel like you were treated unfairly by the press?

Previously? I think it was balanced. I mean, if the production is not good enough and people are calling it out for what it is, you can't hide from that. We've never tried to hide from that. I think we just needed the time away. We had to show them what we were capable of, and that's what we have done. The press gave us a fair deal. They heard us. They wanted us to succeed. I don't think anyone wanted us to fail, but the hype of the product didn't live up to its performance. I think the press was doing its job.

Taking all of that into consideration, was it difficult when you were pitching this product around, trying to get all that funding?

It's never easy, especially with the economy the way it is. You need to have a special vision, and you've got to have the ability to assure that you can make money. We obviously need to have the right financial support, otherwise we would not be attempting to do what we are doing. While it was difficult, I think the investors showed faith in the vision we had, and I think they were patient enough to let us execute it within the time we needed. We had been away for a year. We had our heads down. We were focusing on getting the product right before getting it out there.

So there never was any question that there was going to be a new tablet coming out from Fusion Garage?

Back in the day, when the [expletive] was hitting the fan, I think I would be lying to you if I said we were sure that this would all pan out the way it has. We knuckled down and accepted reality for what it is. The team that stayed behind believed in the vision as well, and we had the passion to just take the pressure -- take the hit -- and focus on what we had to do. People were saying we were not communicating, people were saying we had left all our customers in a lurch, but we had to be patient through all that process.

Did you consider a more traditional Android route when you were working on all the prototypes?

No, I don't think that's in our DNA at all. If you look at what we were trying to do with the JooJoo, while it wasn't successful, I don't think anyone can take away from the fact that we were trying to create a category that didn't exist. There was no lack of trying on our part. Like I said, we were earnest, but I don't think we realized the size of the task, along with the resources we had, and the fact that we had to rush it so that it came out at the same time as the iPad was just insane.

Are there any Android tablets out there that are doing a good job?

No. I think the benchmark is the iPhone and the iPad, and that's the benchmark that we're trying to raise up. I don't think Android has been good enough.

So why use the Android kernel if it's a flawed system?

There are two things that Android has that are pretty solid. One, the fact that there is a very strong kernel that has been worked on for years. Even Apple did not try to start from scratch. They built on top of UNIX. We approach Android in a similar fashion. We took the kernel and completely branched out. This is no re-skin. This is a complete change from what Android is. It was stable, and it was in a good position for us to leverage and build on top of it.

The second thing is the app support. I think it is one thing to say you are going to have a lot of apps eventually, but I think it is another thing to say that you have app support from day one. Android has an ecosystem that is maybe not as striving as Apple, but it is there, and I think it was important to leverage that ecosystem right from the beginning.

The Android ecosystem is thriving, the iOS ecosystem is thriving. Palm / HP, on the other hand, is having difficulty bringing developers over to its side. Do you foresee difficulty on your end getting people to develop for your specific app store?

No, for two reasons. One, the compelling experience that we give will see consumer adoption, and the developers will come. The second thing is, if we were asking people right from day one to trust that it's going to get adopted, trust that its going to be great, trust that we are going to be able to deliver this so you should start writing for us from day one, that's not going to work. That's what webOS is trying to do, and that's what everyone else coming up with something new is trying to do. What we are telling people is that you already have an Android app, it already works well. We have the Grid Shop, we'll have it for our devices, and if this goes the way we say it's going to go, then you can easily extend upon that and use our API to provide a way better experience that ties in back to the innovations that we have created.

How do you convince consumers, when all everyone knows is the iPad and a handful of Android tablets? How do you convince users that this is a better experience for them?

While Apple is thriving, I'm not sure that everyone is really happy with the current conditions in the App Store. You see it with all the newspapers and magazines that are all trying to come out with their own HTML5 version to try and bypass the App Store. That tells you that they do not want to be held for ransom. We are starting to see people rebel, they are looking for alternatives that can let them rise to that challenge. I think we are seeing that in discussions we've been having in private as well.

The second thing is, if you're looking at Android, it's one thing to say the Galaxy S is selling very well, and it's another to say how Android marketplace actually works, and is it easy for people to find apps on these devices? I don't think this is happening in the way that this is happening with Apple. Both sides have a different set of problems, and I think that presents an opportunity for someone to take advantage of it. That's exactly what we are trying to do with the innovations that we have created.

What kind of goals do you have? What would you consider a successful amount of units shipped by the end of the year?

If you are spending the kind of money we are spending with the marketing campaign and the product development that we've invested over a year in, we clearly have financial goals. We clearly have business goals that we are looking to achieve, but I don't think it's about that right now. I think it's about awareness and about market acceptance and penetration, which is our focus. I think it's too early to talk about numbers right now. We want people like yourself to pick up the device when we give you a review unit and for you to say, "Wow, these guys have a chance. These guys have come up with something that is completely different." And I think that's exactly what we are looking for in the first phase of this roll-out. That's what we are expecting from consumers who are picking the device up from us.

Do you feel like you're overreaching at all by launching two devices in two totally distinct spaces?

It is two very different spaces. But the way we built this allows it to power more than one device, and I think it shows the seriousness of what we are trying to embark on and the commitment to the market when we launch two devices. I think it sends a completely different message about how serious we are about this, how confident we are about this, and how we believe this will shape both those spaces.

You did mention that you will be announcing carriers at some point. Do you have carriers lined up for this handset?

It's very early to say this right now. We are still in discussions. As the new Fusion Garage, we'd rather have the news first and then make the announcement, rather than promise and not deliver on it.

How many people attended the event today?

It wasn't a public event for sure. It was an event that had friends of the company, our suppliers and relationships and people working on the content side. This was a closed event that was attended by people who are part of the extended family, rather than by the public.

You weren't really reaching out to the press at that point?

The press was there. We obviously wanted the media to attend. That's why we did reach out to the media. I think the announcement was done the way it was done to show the seriousness of what we are trying to do, and to show how much we believe in the innovation that we've created.

We're not Apple. If I were to call you guys and say that Fusion Garage is trying to make an announcement about how they are coming back into the market, how many of you would really attend the event? And how many would have taken us seriously given what has happened in the past? So we're definitely confident. I know who I am, but I also know who I'm not.