For most of the 10 years of lazily thinking about thermostats, I had no intention of building one. It was the early 2000s and I was at Apple making the first iPhone. I got married, I had children. I was busy.
But then again, I was also very cold. Thrilling cold.
Whenever my wife and I arrived at our Lake Tahoe ski cabin on a Friday night after work, we had to keep our snow jackets until the next day. The house took all night to warm up.
Entering that cold house made me crazy. It was astounding that there was no way to warm it up before getting there. I spent dozens of hours and thousands of dollars trying to hack the security and computer equipment tied to an analog phone so that I could turn on the thermostat remotely. Half of my vacation was spent on wiring, electronics scattered on the floor. But nothing worked. So the first night of every trip was always the same: we curled up on the ice block of a bed, under the frozen sheets, watching our breath turn to fog until the house finally warmed up in the morning.
Then on Monday I’d go back to Apple and work on the first iPhone. Eventually I realized that I was making a perfect remote control for a thermostat. If I could just connect the HVAC system to my iPhone, I could control it from anywhere. But the technology I needed to make it – reliable, low-cost communications, cheap screens and processors – didn’t exist yet.
How do these ugly thermostats cost nearly as much as Apple’s latest technology?
A year later we decided to build a new, super-efficient home in Tahoe. During the day I would work on the iPhone, then come home and study the specifications for our home, choosing finishes and materials and solar panels and finally tackling the HVAC system. And once again, the thermostat came to haunt me. All the top-of-the-line thermostats were hideous beige boxes with strangely confusing user interfaces. None of them saved energy. No one could be remotely controlled. And they cost around US $ 400. The iPhone, meanwhile, was selling for $ 499.
How do these ugly thermostats cost nearly as much as Apple’s latest technology?
The architects and engineers of the Tahoe project have heard me complain over and over again about how insane it was. I told them: “One day I will solve this problem: mark my words!” Everyone rolled their eyes: here’s Tony complaining again!
At first they were just idle words born of frustration. But then things started to change. The success of the iPhone has cut costs for sophisticated components that I couldn’t get my hands on before. Suddenly, high-quality connectors, screens and processors were being produced by the millions, cheaply, and could be reused for other technologies.
My life was also changing. I left Apple and started traveling the world with my family. A startup wasn’t the plan. The plan was a pause. Long one.
We have traveled all over the world and worked hard not to think about work. But no matter where we went, we couldn’t escape one thing: the damn thermostat. The irritating, imprecise, energy-consuming, thoughtlessly stupid, impossible to program, always too hot or too cold thermostat somewhere in the house.
Someone had to fix it. And in the end I realized that someone was going to be me.
This 2010 prototype Nest thermostat wasn’t pretty. But making the thermometer look good would be the easy part. The circuit diagrams indicate the next step: making it round.Tom Crab
Big companies wouldn’t do that. Honeywell and other white box competitors hadn’t truly innovated in 30 years. It was a dead, unloved market with less than $ 1 billion in total annual US sales.
The only thing missing was the will to take the plunge. I was not ready to carry another startup on my shoulders. Not then. Not alone.
Then, magically, Matt Rogers, who had been one of the first interns on the iPod project, contacted me. He was a true partner who could share the load. So I let the idea take me. I went back to Silicon Valley and got to work. I researched the technology, then the opportunity, the business, the competition, the people, the financing, the history.
Making it beautiful wasn’t going to be difficult. Wonderful hardware, intuitive interface, we could do. We had honed those skills at Apple. But to make this product successful and meaningful, we had to solve two big problems:
He needed to save energy.
And we had to sell it.
In North America and Europe, thermostats control half a home’s energy bill, something like $ 2,500 per year. Every previous attempt to reduce that number – by thermostat manufacturers, energy companies, government agencies – had failed miserably for a variety of reasons. We had to do it seriously, while maintaining absolute simplicity for customers.
Then we had to sell it. Almost all of the thermostats at that point were sold and installed by professional HVAC technicians. We were never gonna break into that old boys’ club. First we had to find a way to get into people’s minds, then into their homes. And we had to make our thermostat so easy to install that anyone could do it themselves.
It took 9 to 12 months to build interactive prototypes and models, build bits of software, talk to users and experts, and test it with friends before Matt and I decided to propose investors.
“Real people” try the nest
Once we got the thermostat prototypes, we sent it to real people for testing.
He was fatter than we wanted. The screen wasn’t quite what I imagined. Kind of like the first iPod, actually. But it worked. It connected to your phone. He learned what temperatures you liked. He refused when no one was home. It saved energy. We knew auto-installation was potentially a huge obstacle, so everyone waited with bated breath to see how it went. Were people shocked? Light a fire? To abandon the project in the middle because it is too complicated? Soon our testers reported in: The installation went well. People loved it. But it took about an hour to install. Crap. An hour was too long. This was supposed to be an easy DIY project, a quick update.
So we delved into the relationships – what was taking so long? What did we miss?
Our testers … spent the first 30 minutes looking for tools.
It turns out we didn’t miss a thing, but our testers did. They spent the first 30 minutes searching for tools: the wire stripper, the flat head screwdriver; No, wait, we need a Phillips. Where did I put it?
Once they gathered everything they needed, the rest of the installation flew away. Twenty, 30 minutes maximum.
I suspect most companies would have sighed with relief. The actual installation took 20 minutes, so that’s what they would tell customers. Great. Problem solved.
But this would have been the first time people interacted with our device. Their first experience with Nest. They were buying a $ 249 thermostat – they were expecting a different kind of experience. And we had to exceed their expectations. Every minute from opening the box to reading the instructions for putting it on the wall to turning on the heater for the first time had to be incredibly smooth. A buttery, warm, joyful experience.
And we knew Beth. Beth was one of two potential clients we defined. The other customer was tech-savvy, loved his iPhone, was always on the hunt for cool new gadgets. Beth was the one she decided: she dictated what came into the house and what was returned. She also loved beautiful things, but she was skeptical of super-new, untested technology. Looking for a screwdriver in the kitchen drawer and then the toolbox in the garage wouldn’t make her feel hot and buttery. She would have rolled her eyes. She would be frustrated and annoyed.
Shipping the Nest thermostat with a screwdriver “turned a moment of frustration into a moment of joy”Dwight Eschliman
So we changed the prototype. Not the prototype of the thermostat, the prototype of the installation. We have added a new element: a small screwdriver. It had four different head options and it fit in the palm of your hand. He was elegant and cute. Above all, it was incredibly useful.
So now, instead of rummaging through toolboxes and cabinets, trying to find the right tool to lift their old thermostat off the wall, customers have simply reached out to the Nest box and pulled out exactly what they needed. It turned a moment of frustration into a moment of joy.
Sony laughed at the iPod. Nokia laughed at the iPhone. Honeywell laughed at the Nest Learning Thermostat.
At the beginning.
In the stages of mourning, this is what we call Denial.
But soon, when your disruptive product, process, or business model starts gaining ground with customers, your competitors will start to worry. And when they realize you could steal their market share, they get pissed. Really pissed off. When people hit the rage phase of pain, they lash out, cut your prices, try to embarrass you with advertising, use negative press to undermine you, make new deals with sales channels to shut you out of the market.
And they could report you.
The good news is that a lawsuit means you’re officially here. We threw a party the day Honeywell sued Nest. We were thrilled. That ridiculous cause meant we were a real threat and they knew it. So we got the champagne out. That’s right, f — er. We come for your lunch.
Nest is searched on Google
With each generation, the product has become sleeker, thinner, and less expensive to build. In 2014, Google bought Nest for $ 3.2 billion. In 2016, Google decided to sell Nest, so I left the company. Months after I left, Google changed its mind. Today Google Nest is alive and well and they’re still making new products, creating new experiences, delivering their version of our vision. I deeply, sincerely, wish them well.
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