Steve Jobs recruited Tony Fadell to build Apple's first iPod. Fadell's team worked on the first 18 generations of the iPod before moving on to create the iPhone.

In his new book, Build, Fadell reveals one crucial lesson he learned from Jobs, who Fadell considers his greatest mentor.

Jobs taught Fadell that storytelling is everything.

"Every product should have a story, a narrative that explains why it needs to exist and how it will solve your customer's problems," writes Fadell. "The story of your product, your company, and your vision should drive everything you do."

According to Fadell, a good story has three elements: It appeals to emotion, simplifies complex concepts, and solves a problem.

Jobs incorporated each of the three elements in the 2007 iPhone launch, a presentation I still consider a masterclass in business storytelling.

1. Appeal to emotions.

Most people who watched the iPhone launch still remember the now-famous segment of the presentation when Jobs tricked the audience into thinking that Apple was going to announce three products. "The first one is a widescreen iPod with touch controls," Jobs said. "The second is a revolutionary mobile phone. And the third is a breakthrough internet communications device."

After repeating the list several times, Jobs said, "Aren't you getting it? These are not three separate devices. This is one device, and we're calling it iPhone."

Jobs could have simply announced the product and turned to his slides for detailed technical descriptions. Instead, he chose to surprise the audience. That's the emotional part. Don't be afraid to have a little fun. Once your audience is laughing and cheering, they'll be more receptive to your message.

2. Take complicated subjects and make them simple.

Once Jobs had the audience's attention, he explored -- in simple and clear language -- the category of smartphones that Apple was about to enter.

"The most advanced phones are called smartphones -- or so they say," Jobs began.

"The problem is that they're not so smart and they're not so easy to use. They're really complicated. What we want to do is make a leapfrog product that is way smarter than any mobile device has ever been and super-easy to use. This is what iPhone is."

Audiences, especially customers, appreciate simple products -- and simple explanations. 

3. Solve a problem.

Jobs then explained why the iPhone's interface solved customers' problems -- even problems they didn't know they had.

"We're going to reinvent the phone starting with a revolutionary user interface," Jobs said.

"Now, why do we need a revolutionary user interface?" Jobs asked as he showed a photo of four smartphones that were popular at the time.

"The problem with them is they all have keyboards that are there whether or not you need them. And they all have these control buttons that are fixed in plastic and are the same for every application. The buttons and the controls can't change. They can't change for each application, and they can't change down the road if you think of another great idea you want to add to this product."

Jobs then explained that the product would solve the problem by eliminating complicated, fixed keyboards and replacing them with a giant multi-touch screen. Customers would use their fingers as a pointing device.

In an interview for CNN, I called Steve Jobs the world's best business storyteller. Tony Fadell clearly feels the same and has used what he learned from Jobs to market his own product, the Nest Learning Thermostat. Google bought Fadell's company for $3.2 billion.

"Telling the story is how you attract people to your team or investors to your company," according to Fadell. "It's what your salesperson puts in their slide deck and what you put in your board presentation."

Build your story using Fadell's three elements -- and tell the story early and often.