Rapid Response: Why take on a turnaround, w/Magic Leap’s Peggy Johnson

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I had an ambition to be a CEO. I knew a bit about magic leap, so I decided to raise my hand very intentionally. But it was in the middle of a pandemic. That, I have to say, was an odd experience to step into a CEO role, having never met any of the team that I was going to be leading. It was different. But we got through it.

In the early days of wireless We didn't know where this technology was going. Yeah, you could make a phone call, maybe from your car, wouldn't that be great? You know? This technology has a similar ability to reinvent. The next generation of computing. My Companies.

Vision and priorities can very much be entwined with Helping The world find better solutions both within the pandemic and then post-pandemic. Она в райін край. So often from the tech industry as tech can solve it.

But we have to remember there's people involved too. And Tech needs to augment what we as humans are trying to achieve. It cannot replace it. That's Peggy Johnson. CEO of Magic Leap. She made the unusual decision to make a leap herself this year.

In the midst of the pandemic, from a safe perch at Microsoft. To a one time start up darling that's been struggling. I'm Bob Safian. Former editor of Fast Company. Founder of the Flux Group and host of Masters of Scale Rapid Response.

I wanted to talk to Peggy because even in difficult times. New opportunities can emerge. But we don't always know which ones are worth pursuing. Peggy is betting that the accelerated tech adoption that's occurred in twenty twenty will soon extend to emerging technologies. Like Magic Leaps AR.

Citing a parallel to the mobile phone revolution she was part of as a leader at Qualcomm. She's also betting. That the risk she's taken is worth it. As a woman, she says. Getting a CEO job is still harder than it is for men.

With magic leap, she hopes. She can turn that challenge Along with a tarnished brand. Into something special.

I'm Bob Safian and I'm here with Peggy Johnson, the CEO of Magic Leap. Peggy is coming to us from snowy Colorado as I ask my question from my home in New York. Peggy, thanks for joining us. Thank you, Rob. It's great to be here with you today virtually. So when the year started, you were comfortably established as a top executive at one of the most successful tech businesses in the world at Microsoft.

Magically, meanwhile, as the pandemic came down. There was talk about Bankruptcy filing. And yet you decide to leave Microsoft to move over there. What was the motivation for making this transition?

Let me say, Bob, you're not the first one to ask me that. You might as you might imagine. I had an ambition to be a CEO. And I had long held it. I was twenty five years at Qualcomm and then six years. At Microsoft, which were Amazing years. I'd arguably one of the best jobs.

Yeah. out there in the tech industry. But I really wanted to make that jump and be a CEO and I

knew a bit about Magic Leap. I was familiar with the technology. I visited the factory actually a few years ago. Roni and I knew each other from conferences. And so I'd had a chance. Ronnie is Magic Leap's founder. Correct, yeah, Rony Abovits.

So I knew the technology was solid. And I had been watching the progress of the company and they had just made the pivot to enterprise. And I felt that was the exact right move. So I decided to raise my hand very intentionally and But it was the middle of a pandemic, as we all know. And that I have to say was an odd experience to step into a CEO role having never met any of the team that I was going to be leading, having never met any of the board members that interviewed me, it was different.

But we got through it. And now you're working out of Colorado while Magic Leap is based in Florida. So Everything has been happening remote, yes. Most of it has I've gone now three times to Florida. Mostly we are just like every other company in Florida operating on a limited basis. And we have obviously all the right protocol in place, but to a large extent, our employees are working from home. So it didn't make sense to

to be there a hundred percent of the time. Each time I go, I get to meet a few more folks, and that's been wonderful. I wanna dig in on Magic Leap's business and its technology, but I wanna ask you first CO jobs for women sometimes are harder to come by. Was that a a challenge or a factor for you in finding this next move, whether it was Magic Leap or anywhere else? Did you feel that there was A different hurdle that you faced.

Frankly, yes, I did. I've seen happen. over my years in the technology industry And you've probably heard other Women leaders say this.

Women tend to be evaluated on their performance and men on their potential. And basically what that means is Oftentimes There may be a male candidate and folks will say, I think he can do it.

Where the female candidate they'll say, Has she ever done this before? And I think it's why we don't see enough women on public boards because a lot of times the criteria is well, we want people who've been CEOs. Well, there haven't been that many women who've been CEOs. So if that's a criteria, we're gonna continue to not have very many women on public boards. I think for some people it's hard to understand exactly what Magic Leap does. Your website Describes the technology as A wearable computer that brings the physical and digital worlds together.

But it's not VR and it's not AR like on my smartphone. Can you try to encapsulate for folks in audio what that means? We make a headset and when you put it on, you still see the world around you, your physical world is still there, but we augment it with digital content. And that content can be pictures, text, video. It can be a 3D volumetric image of somebody live who's not co-located with you, which I think is some of the real exciting use cases that we'll see with the technology going forward. But it doesn't just sit there as perhaps AR does when you view it through your smartphone is not just a viewer, you actually can interact

with the digital content. And to do so Essentially that headset needs to be a computer. So think of it as a computer on your eyes. So for instance one that Ericsson worked on recently with our headset. They do these things called gemba walks, which is a Japanese term. It's when the manager walks the floor of a factory.

and looks to make improvements along the way. And the factory manager can put the headset on and as they walk up to a piece of machinery Above the machinery in digital can be a set of characteristics how that machine is doing, what the uptime has been, any red flags, does any sensors need to be changed? Do you need to call an expert? You can do so right from inside of the headset. So that's the sort of interaction that

We think really sort of augments human potential. When I first heard about Magic Leap, this was several years ago, it raised just a ton of money. Three, three and a half billion dollars, something like that, right? And then offered relatively little, at least publicly, to show for it, and there was this kind of backlash, that it's hype versus reality.

As you come in knowing there's that legacy That has both positive and negative parts of it. How do you manage through the skepticism?

I mean, to be honest, I haven't loved some of the headlines. And so as I came in, I wanted to help do a reset publicly of who magic Leap is Because I think a lot of what they have done over the last nine, ten years or so. Has been missed.

Before Magic Leap was in the game. I don't think people had seen anything like that. Digital content superimposed in our in our physical world. It's amazing the first time you see it. Because if my background is in wireless and I got to see the wireless industry evolve. Really from nothing to

One one and a half billion hands had shipped every year. It's very similar. Two augmented reality. In the early days of wireless We didn't know where this technology was going. Yeah, you could make a phone call, maybe from your car. Wouldn't that be great? You know, who would have expected it would have taken the place of so many devices that we once owned all wrapped up in a mobile phone of today. And I think this technology has a similar

ability to really sort of reinvent. The next generation of computing. And when you see where the technology that magically has today and this vision that you see for what it can be in the future. How much of that transition is about that the technology itself needs to evolve and how much of it is

Like the technology's there, but we just have to adopt it and use it in a different kind of way. I mean We've certainly seen a lot of technologies being adopted over the past year at a pace that they never had been before. Where does this technology fit in that continuum? between the creation and the adoption. So I think that's a very good point that

COVID accelerated so many technologies and it accelerated AR as well. I think AR was not on many CEOs' radar. even a year ago, and now we're getting incoming calls from folks saying, Can you help us? We need to get our teams together. What can you do? So the Technology is solid and it's really about aligning real world business needs to the technology. You can't just build a piece of hardware and put it up for sale and say, come get it. You have to sit down

with traditional industries and say, Okay, what are you trying to solve here? And then we work together We've had an engagement with a company calling lab for the last couple of years. And they make three D visualization software for the brain. Just recently. At UC Davis, where they separated some conjoined twins. They trained the surgical teams using

the brain lab software and the Magic Leap devices. So people could get a good picture of what the twins' brains look like, how they were going to go about the separation of it, which was just a powerful way To train a team. When you build substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious. Creative planning works with business owners to build a strategy around concentrated equity.

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I'm Rana El Chayubi. And on my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show.

Because every Friday we release a second rapid response exclusively in the Rapid Response feed the guests and topics are just as compelling and timely from Ford CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there. It sounds a little bit like the earlier years of Magically maybe they got a little distracted by the consumer market, maybe because that's where the funding was. Many of the listeners here are entrepreneurs and so there is that roadmap that you go through within the organization.

Yeah, I think What happened, and it's not unlike what we've seen. You say, Wow, I've got a great technology. Where is it best used earliest? And you're looking for a place to point it.

And I think in the early days of Magic Leap, they were looking everywhere across consumer and enterprise, even back in the beginning. And that was challenging for the company. But it's not unlike the mobile industry. People tried all sorts of early use cases and many of them just weren't right or they weren't developed enough for them to really resonate. And so it's part of the process. The more challenging thing is

Is that Magic Leaf was making hardware and software. There's so many things that have to be solved all at once. You know, they'll have a calibration machine and I'll say, Well, who made this device for you? Oh, we just built it ourselves. Because nobody made those devices. And so

It's just an impressive team. That Unfortunately, some of the headlines of the past several years. I think overshadowed the good

innovative work that that team has done. What are the challenges of taking over from a founder? Yeah. I think there can be challenges because they have a vision that they'd like to see continued to be pursued.

I have to say my partnership with Roni's been amazing. He's still on our board and He is a creative genius. Hands down and I'm more of the enterprise focused, commercial focus. And so it's actually a could mix.

And we've worked well together. I don't know that every founder has been like that. When someone else has taken over, I think we've heard some stories. Hasn't been the case here with Roni. I know a lot of your expertise and much of your

higher profile at least successes. have come through partnerships that you've helped put together for both Qualcomm and Microsoft. At a start up like place like magically As you're describing It sounds like there's a tendency to want to do everything yourself as opposed to look at partnerships. Is that a kind of

cultural transition that you're working through with them? It absolutely is. Yeah. I do think the company was very focused, again, because they were making hardware and software, so they were making the full stack. When you're first Trying to Bring a new piece of technology to light.

That is a good way to go about things because you have control of everything up and down the stack. But going forward Really the only way we're gonna scale is to partner. And again, that's a muscle I bring, as you said, from Qualcomm and from my six years at Microsoft. But you're right, I had to do a bit of cultural transformation within the company.

I had a front row seat. Epic. cultural transformation of Microsoft over the last six years. And learned. A lot about how to do that.

It starts with listening, learning, understanding the background, and then introducing an open mindedness to change. It's not always easy. It hasn't been without its challenges, but we're on a good path going forward. Any specific Episodes that helped Illuminate that?

Yeah, I am all about transparency. And I think in the early days of the company, because they had harnessed sort of magic in a bottle, they were very secretive about the the abilities of the technology while they were developing it. But now in where we're at on the spectrum of the growth of the company, I wanna be very open, both with the external community, but also with the internal community.

So I've really upped communications across the team. We have every other week All hands meetings, we call them the loop every other week. Ask me AMAs associated with the all hands meeting. So any question, it can be teed up. And I share good news and bad news. And I've done that from day one and I'll continue to do that.

And I think The teams have appreciated that. It's helpful for them to understand. the state of the company, where we're headed. The focus that we have.

I repeat it every other week in front of them our goals. And our vision and our cultural values and we want Everybody to know. When they come in virtually or physically

what they should be working on that day. And we try to keep things very crisp and clear. I know you've only been there Still a few months, so I know it's It's still early, but I'm curious.

Do you see any lessons from working at bigger places like Microsoft and Qualcomm that apply particularly well to an earlier stage business like Magically. Well one thing that we used to talk about as one of our leadership

values at Microsoft was to create clarity. And I do think that is a discipline that I'm going to continue to hone across the company, across our leaders. That there's never any question. I think with any startup of chaos at any given point.

particularly when you're pivoting, you know, is this the right direction? No, they're going off in that direction and I'm trying to Keep the flexibility high and the clarity high and the chaos low. You've become CEO also at a moment when there's

increasing pressure on businesses to engage on social issues. Is that something you have a philosophy about? Yeah. I am deeply involved in

Issues around diversity in tech. Having been a woman in tech for over Thirty five years now. And just seeing the challenges along the way and the good people we lost along the way because there wasn't an environment that was inclusive. I'm a bit of an introvert and To come into a room and you know, to be

In a meeting room, the only woman there, not super talkative was hard for me and likely would have washed me out early on if not for a manager I had that recognized that My form of communication was different than others. And that's just one form of being inclusive. But we

really as a company, as an industry, across the broader industries, uh across the US and the world, we all just have to be a bit more inclusive. Otherwise you'll Lose out on some Some talent that could be part of the solution. I've built a pretty diverse management team because I want that diversity of perspective, diversity of thought. I think we build a better product if we have that. So four

of nine members of my management team are diverse. And it means a lot to me. And actually just being in South Florida, we've got a wonderful Latinx population at the company almost twenty percent. And In covet, I think companies have an opportunity to increase their diversity because we've realized you can work.

Remotely. So why not? Hire it from everywhere. And I think people can increase their numbers. just by continuing with some of the lessons we've learned from the pandemic about

our ability to be productive. Remotely. The NASDAQ recently proposed new rules to have more diversity on boards. You feel like that's something that's overdue or like Oh, why did we even have to do this? We shouldn't need to.

I feel both those things. Nasdaq's move I applaud it, and I think Adina Friedman. CEO of NASDAQ was amazing to put that proposal. Up and to speak about it.

Companies need to realize the value of diversity. You just make better products, you offer better services, if you reflect the people that you're trying to sell to. I don't know why that is such a challenging concept for people to get their heads around. You're gonna make a better product. Do it.

For bottom line reasons. And when you're inside a big company, do people mostly recognize that, but they just can't figure out exactly how to do it. What gets in the way? You know, you have to make it a priority. So it's about having diverse slates. It's about having people who are doing the interviewing being diverse. So a diverse candidate

knows they can feel comfortable at the company. It's about tracking the numbers and shining on them. They're uncomfortable. And it can be maddening at times because you think you have a way to increase the numbers and it doesn't work, and you've got to try other things. So it's hard work. And that is Something that

Companies Niet to recognize and to embrace But with the understanding it's gonna make them a better company, it will affect their bottom line, they'll make better products, better services. It's hard work.

But The payoff is Enormous. You mentioned the changes that have happened with Covid nineteen and the pandemic. How much do you worry about the external environment, COVID nineteen numbers rising, job losses, political uncertainty?

Relative to your strategy. Well, it's interesting given the product that we make. My Companies. vision and priorities can very much be entwined with

Helping The world find better solutions both within the pandemic and then Post pandemic. I think it's Slower to travel again. I don't know about you, but I used to

Fly to New York and back cross country for a two hour meeting. I don't think I'll be doing that anymore. There's the impact. On the environment of doing that, on my time. time away from family. There's so many things that we sort of put up with because that's the way it was done, that I think we won't

Do so much post pandemic. But that means that the tools that we're using to engage need to continue to improve. I think all of the video conferencing has been wonderful. You can you imagine us getting by without it. We've been able to actually continue to

Run our businesses. But I think everyone would agree that that experience could be improved. I do feel that the technology that we're building can play a role. In helping Both

With the issues during the pandemic of communicating as well as post pandemic. I had a guest on last week who argued that while these digital tools are convenient they may be making us more isolated, which could undercut long term productivity and creativity. It sounds like you see AR maybe as an antidote to that.

Yeah, I think There's something about being inside of a 3D meeting that feels like a meeting again. We were in it the other day laughing at one of the guys what they were doing. When people talk, the feeling that they're right there. is very present. And that is something that is

Unfortunately, really missing in all of the video conferencing we're doing today. What do you think is at stake in this moment? One of the rallying cries so often from the tech industry is tech can solve it. But we have to remember there's people involved too. I think

In any of The solution In covet or Post. Covid.

We need to think about the human side of things. And you see it in headlines. kids can't be with their friends and family can't be together. We don't talk enough about that side of it, the emotional aspect of it and the isolation that This pandemic has caused. And

Tech needs to augment what we as humans are trying to achieve. It cannot replace it. And I think All of us need to think about that when we look for solutions going forward. It pains me to see the pain that so many people are in. It's not just jobs, which is one whole level of pain, clearly, but the separation that we're all feeling. Has to be addressed.

I played a little bit with the Microsoft HoloLens, which sounds like It's a competitor, similar kind of technology to what you're doing it magically. Is Microsoft now one of your competition? In some ways, yes. I would say in other ways We both want the AR industry to continue to evolve, to develop, and to accelerate.

And from that standpoint, we are Very symbiotic. We want the same thing, which is for this technology to be Accelerated to the point where It becomes more of a day to day experience. So while we may compete from a hardware perspective, from a broader industry perspective, we have a lot in common.

And does it mean you have the same in common with people who are pursuing virtual reality? Virtual reality is a technology where you're fully occluded. So you put the device on and you enter. Another world, you don't see your world, and you're part of another world. That's That's one aspect.

And super interesting for media and for many consumer plays, I believe. Augmented reality. There's sort of two inch of that spectrum. You have devices, for instance, your mobile phone, the Pokemon Go sort of thing.

Where You have digital content you can see. it as you're viewing through the phone. And then you have the higher end of that spectrum, which is all about interacting with the digital content. And this is why the

The enterprise is a good starting point because they have a need to interact with data. whether you're in a factory, whether you're in an operating room, whether you're in some area of public sector. You need and want to be able to interact with your data. And this

technology can allow you to do that. I'm doing the best I can to bring that all to light. Well, Peggy, thank you so much for sharing all of your time and your thoughts and your experience with us. I really appreciate it. Thanks, Bob. Very much appreciate you having me.

Masters of Scale Rapid Response is a wait what original. The show is recorded remotely using sanitized audio gear. It's hosted by me, Bob Saphian, Masters of Scales editor at Large, and Masters of Scale host, Reed Hoffman. Our executive producers are June Cohen and Darren Triff. Our supervising producer is Jay Punjabi.

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