Prompt Cast
The Rise and Fall of Nest: From Startup to Google Acquisition
TLDR Google's acquisition of Nest was initially successful, but cultural clashes and a lack of clear vision ultimately led to Nest being integrated back into Google's hardware team. Despite this setback, Nest was able to generate significant revenue and establish itself as a leader in the smart home market.
Timestamped Summary
00:00
Google acquired Nest in 2014 and has recently announced that it is bringing Nest back into its main hardware business.
06:16
Tony Fidel, co-founder of Nest, grew up with a passion for tinkering and computers, eventually working at General Magic, a startup founded by legends from the initial Mac team, where he was part of the team with a vision to build the iPhone before its time.
13:04
Tony Fidel, after leaving General Magic and failing to build a connected PDA at Phillips, tries to get into the music industry and starts his own company called Fuse Systems to build audiophile quality hardware to play MP3s, but eventually runs out of cash and receives a call from John Rubenstein at Apple to come in and help build the iPod.
19:26
Tony Fidel shuts down his startup, Fuse Systems, and joins Apple to work on the iPod, eventually becoming the head of the iPod division, while Matt Rogers, an intern on the iPod team, makes a big impression on Tony and joins Apple full-time.
25:47
Tony Fidel leaves Apple and, along with Matt Rogers, decides to start a company called Nest to reinvent the home.
31:52
Nest co-founder and VP of technology, Yoky Matsuoka, joins the company after leaving Google X, and in 2010, Nest raises a $9.5 million series A funding round and decides to focus on creating a smart thermostat as their entry point into the home.
37:55
In 2013, Nest launches its second product, a smoke and carbon monoxide detector, and in January 2014, Google acquires Nest for $3.2 billion in cash, with Nest remaining independent and given a five-year runway to build the OS layer for the connected home.
44:33
Google acquires Nest and it becomes a complete disaster from a cultural standpoint, leading to the founder of Dropcam leaving and tensions between the two teams.
51:11
Nest hits its revenue goal of $300 million in 2015, and in 2017, Nest's revenue contributes about three quarters of the other bets category, which is on track to exceed a billion in revenue.
57:33
Nest is estimated to be generating over half a billion in revenue annually and is being integrated back into Google's hardware team.
01:04:11
Google's acquisition of Nest was a result of not knowing what category they were buying and not realizing the best vision for the company, ultimately resulting in Nest being integrated back into Google.
01:10:23
The head start that Amazon's Alexa has in the smart home market gives them a significant advantage over Google Home.
01:16:14
The tech theme is that successful computing platforms require a combination of hardware, software, and services, and startups should focus on building a product with a network effect before expanding into a platform.
01:22:21
Nest nailed the timing by being about six to 12 months ahead of when people really wanted smart home products, and they were able to hit their stride with products that integrate with people's ecosystems.
01:29:08
The biggest miss for Google in the Nest acquisition was the delay in releasing a Google home product, which didn't come out until November 2016.
Categories:
Technology
Business
