Google Acquisition and Legacy

If you were to close your eyes and think about a thermostat, I can basically guarantee you that the thing you're imagining in your mind is a design from the nineteen fifties. And for way too long, that was the best idea anybody had about thermostats But in two thousand eight, Tony Fidel, one of the most important people behind the iPhone. decided maybe he could fix it From the Virgegin of Box Media this is Versirgin History, a show about the best and worst and weirdest and most important gadgets in tech history I'm David Pice And today on the show We'm talking about the nest We all do it You have a night for yourself but don't like the sound of the silence, so you turn on the TV just for the ambiance It's a little trick that helps you feel like you've got company and aren't alone And other insurers, well, they may make you feel illow. But when you switch to GICo, you've got claims reps available around the clock. So whenever you need, you'll have people around to help. And let's turn on the washing machine. just for good measure. Isn't that soothing? It feels good to have support. It feels good to Go. Support for this show comes from etch pet insurance. Do you have a pet? Every six seconds, a pet owner in the US gets hit with a vet bill of over a thousand dollars. And it's almost always an unwelcome surprise That's where Fetch pet insurance comes in. Fetch is the most complete pet insurance. Get paid back up to ninety percent of vet bills. You can use any vet in the US and Canada. All vets are in network. Go to fetchpet dot com slash save right now for your free quote. That's fetchpet dot com slash save All right, we're back. It is time for everyone's favorite gadget thermostat Join me in the studio of the Virg' Senior Smart Home Reviewer Jen Tuy. Hi Jen Hi, David. You brought I would say, between one and sixty nests with you for this episode. Yeah, well, there you know it's been an ongoing part of my smart home journey testing thermostats and I keep them because they keep getting new features and updates and we And we'll probably talk about some of that, but eventually finally the Nest worked with Apple Home. so true. And if I have my timing right You were really starting to cover the smart home R right about that started to happen, right? Right when something else started This is true, whichich brings us to Nei Patel is also here. He You We're starting this thing called the Verge when Nest happened. Like Nest Nest and the Verge launched like same day. Was it really the same day? Yeah, it was the first big feature I wrote for the Verge was the Nest Learning Thermmostat with a Tony Fidell profile. And we didn't know how to do anything I was like, we should take a phot of Tony and then we all looked at each other in the office How do we do that? Okay, we're just gonna to jump ahead. Can I show you the picture we took? off Tony. He's wearing a blue V neck sweater with his sort of head cocked to the side and he's just holding a thermostat And if you don't think about it too hard, it's a really cool picture. and then they're just like what' Tony Fidel doing with his thermostistack? I took this picture in the bar of a fancy hotel in New York And what I know about this picture is that Tony saw it and said The Verge took better photos than wired. And then he made Nest take better photos of him. Whoa And don't I don't think I've done a better job. I've been chasing that feature for the past fifteen years. That's pretty good. But so the actual nest story startarts substantially earlier than that. So Tony Fidel, for anybody who doesn't know works Apple for a very long time was part of the iPod team and the iPhone team. I think he is the person responsible for the protype iPhone that had a click wheel. Kudos to Tony, we love this for Tony. One of my favorite things to do on this show is to try to find people's mythological origin stories. like we've all been through this, right? You run a company long enough You sort of invent a half true story about the amazing thing that led up to it. And over the years, Tony tells a bunch of them. Yeah, I noticed this. notot just Tony, but everyone from that time period. It's slightly different. Yeah. But think the story I think the truest version of the story is that there are two things going on simultaneously for Tony Fidel. is that like all rich people in the Bay area, he has a house at Lake Tahoe And he tells this story a bunch about going out to their house at Lake Tahoe, where it's very cold. and getting to the house and having to turn up the thermostat and then sleep like in sleeping bags and with coats for the first night while their presumably enormous mansion heated up in Lake Tahoe whichich is a hilarious first world problem to have, but to read this story in person Again, we were just like baby gadget bloggers I did not have a house in Lake Taho. And the specific thing about that house I remember him telling me that I found both very aspirational and completely unrelatable was that he had installed like the fanciest Geothermal, energy efficient heating and cooling system. Okay, so this is actually part two of the story. Yeah. So Tony has this house and then decides to build a better house because that's what you do. He leaves Apple travels the world for a while, and this is another one of the mythological stories is that he travels around they go to all these beautiful places and hotels and always the thermostat sucks and he gets really mad about themostats and it's like, I don't really believe any of that. But okay, Tony, sure. But then they start building this big new house in Tahoe. And let me just play you actually, this is a clip from the interview that he did with us and with you where he explains this part of the story. and I think it's really fun We've been building a green home in Lake Tahoe My architect actually gave us a spec for the heating and cooling system. It was about fifteen thousand dollars And then this fifteen thousand dollars system was controlled by three hundred and fifty dollars thermostats. It's like three hundred and fifty dollars thermostats. What do these do Cell phones are less than three hundred and fifty dollars. These things got to be amazing. So give me this spec. and they give me this spec. and I was like Wait a second. this thing has they're ugly. They look like computers from the nineties, They're all beige boxes. They have technology literally from the eighties inside of them or nineties. I'm like, whyy am I paying for such junk? I said, I think I can design a better one. This becomes kind of his thing Tony has this idea, decides he wants to do this, and then he gets connected with Matt Rogers, who has this big dream about doing the smart home. He had been an intern on the iPod team way back when. so they got to know each other, spent a long time together at Apple. You've been playing along with the Nest story for a very long time, Jim. this does that sound right to you? The story from Tony's side definitely, that's what I had heard, the Matt Rogers side was similar, but much more about the smart home. Like Matt was much more like, we need to do smart homeome. He had just moved or was renovating a house, I think. and he was still at Apple. He would stay in touch with Tony and he's like to do something different. And Tony's like, you're kind of nuts if you leave this job. And he's like, But I've been doing this, I've been working on my home and I've been trying to make it smart. And he's like, I really think this is the beginning. this is the time we need to do smart homeome. And Tony was like, no. becausecause he was right. I mean, it's an impossible dream, really, the smart home still is But then he kind of focus in it said, but there is one thing we could start with. L that's what you need. You need to find that use case and the therm that was it. So it was kind of they were both coming at it from, you know, Matt was coming at it from like, let's fix everything. And Tony was like, I've got one good thing we should fix. And then they actually built from that. I had conversations with the both of them throughout the course of sort of the nest story. where we would just argue about making light switches and plug outlets, right? Be I'm like that's what that's everything. Yeah. And they would be like it's too hard. Right? peopleeople are not going to replace all their light switches. lightight switches come in all different colors and sizees. like that's too hard. We have to pick the product that we can get. And I think the tony of it was, I hate this thermostat And I can definitely get you to replace your thermist. I can make a product with a beginning in middle and end that's very tony.. You don't have to know about my other plans. Like this product will make you want me to have other plans, whichich is the most apple thing totally. You put that thing on your wall and then they're like, why don't you do this other stuff I want and Apples Oh, interesting. We've never had that idea before. And you can just see that in Tony at this first So little turn The other thing I want to point out And this says This is just me, but I'm going to point this out The thing that made the thermostat work as a product is that all the thermostats were the same. I would describe it as an accidental standard. Like no one was like, we should standardize thermostats. We like we're lazy and that was the end of that.. But the nest was able to to write on top of that in a really interesting way That's interesting. And also the sort of appiness of it ends up being really useful to nest in a bunch of ways. One of which is They have I would say the easiest time raising money that I have ever heard of in. Truly, So they start this company in twenty ten. They get an office in a garage near Stanford, like all good startups do. and immediately have essentially their pick of VC's, their pick of people to hire, and their pick of partnerships because Tony Fidel is the guy who made the iPhone, right? Like this is it is the shiniest thing you can possibly be. They start hiring people from Apple, which is really hard to do. like especially at this time, this is sort of the peak of Apple's powers. And they start poaching people from senior positions at Apple to come work on this stuff at Nest Again, this pitch about, you know, make people's lives better, fix energy work. they literally like, we're going to save the world is a thing they said earnestly over and over and over again in the early days of Nest And this starts working. Tony knows everybody, he knows all the investors And they just set this thing up for success from the beginning. They have all the relationships, they become like fully functional company. way faster than your average startup. And it's all because of the Apple shine, especially at that moment, which is really interesting One thing Tony has been asked about a bunch, which I thought was fascinating is whether this was an idea that was baking inside of Apple at the time. And he's always a little squirrely about it honestly because it's like the answer I think sort of straightforwardly The Apple didn't do Homekit until several years later. It was actually behind on a bunch of that stuff But also like The Apple TV was coming out and it was It was pretty obvious to everybody who saw on Apple TV that there's a bigger play here for how do we do stuff in your house Everybody is starting to figure out interesting stuff you can do with your phone to control other devices. It's like You'd sort of be silly not to have looked at things around her house and been like, what if my phone could You what I mean? it's Was this baking inside of Apple and then he took it away becomes a point of a little bit of contention and consternation over the years? But in general, it seems like Tony's mansion story is still basically the founding myth. So anyway, so these guys They set up this company, they ra much money and they decide they need to do two things to make the thermostat work. They have to make the nice piece of hardware That's the main thing. This has to be a nice thing that people actually want to put on their wall And they decide they need to save money on their energy bill. And this iss the thing I didn't real Those are like the two founding principles of Nest in a way that I don't think I really understood until prepping for this that save people money on their energy bill was the thing The other thing I'll point out and this is half conspiracy theory If you're Matt and Tony and you're working at Apple at that time and you've done the iPod and the iPhone, however many generations you have. You are obsessed with power management a kids fight. Your entire life is like how much stuff can we turn off if people aren't using it? Yeah. R? Like that is just the way your brain is operating. You're like, I gotta turn these radios off. Like we gotta shut this down. And the nest is Basically, making it easier to program isn't A lot. It's o, you're not home. We're going to turn your your furnace off That's all it does. Yeah thenen it figures out a schedule. And that schedule at first was so aggressive that people didn't like it. But you're like, oh, that's iPhone brain. Yeah. That's like, o, you're not using a screen're to turn off. Right. Like got this battery is very important to us. It's like we are going to turn things off.. And you can see that thinking just gets applied your house No you're I'm not in my house, we should turn it use it turn it off.. And like that's how we're going to save tons and tons of energy. And you're like, oh Again, half a conspiracy theory, but if you're just operating in the power envelope of an iPhone You can see how Tony just waled around his house flipping off light switches whole. Oh yeah. yeah, he's one of those people who would definitely have just a list in his brain of how much energy every single thing is using every time the switch is on. Yeah, he just has like the AR filter his. Yeah. So okay, so they go, they spend about a year researching and building and prototyping, and then they start to put really primitive versions of the thing in people's homes to start to get data and see how it works In particular, they're testing this idea of like, can it start to automatically tune itself? to understand how you live your life. And if, you know, you always turn the temperature down at night, can your thermostat start to learn and just do that on your behalf? These are the things they' starting to tweak. And at the same time Tony goes on a road show to start showing this to investors, to start showing it to people. They need to raise a bunch more money to go and make a lot of thermostats. And I think from a little bit I of heard, you got a pretty good version of the Dog and Pony showh. No. What was it like? Tell me about the Tony showhow. Tony is like a legendary pitch man. He's very good at this. Yeah. Tony has pitched me a lot of things over the years, but I will never forget the first nest pitch Again, because he took us seriously, which I am just intereternally grateful for. There was no reason at the time to take us seriously. We wereote a blog called This is My Next. Yeah We were ity bitty and our office was just pure garbage. But he showed up at our office, we had a little conference room and he sat down and he had it covered in black cloth in the center of the table And he went on and on about unloved gadgets in the home and the big opportunity. and he kept gesturing at it, but he wouldn't tell us what it was. And he says,' we're going to reinvent these unloved gadgets in your house. This is a big opportunity pulls the cloth off and it's a thermostat and I will tell you, I think this is why Tony actually took us seriously after this. The first thing I said is, that's a round LCD screen. Those are really hard to make. at that time that was true. And he was like, yes. And then we were like off to the races. But that the fact of the object At least from a gadget perspective was just unlike basically anything that existed. If you remember for years afterward, smartwatches all had the flat tire. Right? Be it was just really hard to do a round display. And they could have gotten away with it because the sensor bar was a little flat tire under the round display. This is a compromise they could have made. We have the original one in studio. you can see it has a little flat tire of a sensor bx. Oh yeah. They just chose not to do it. They disguise it really nicely. Yeah And you just see, oh, this thing is just really well designed. It was heavy. The spinny motion was really good And so after this big show about the home is this big opportunity. You know, I'm Tony Fidel. My house is a technical masterpiece that maybe if you're lucky, you'll get invited to. Like you know, there's a lot of that And he's just very compelling. He's like, I made all this stuff and I'm going to show you my new product. And I'm just staring at it being like, what is it? Yeah He did it years later with an Nest Protect. because I've got another one But that time I was like just guessing, like randomly was there a black cloth on mount? There was a black cloth on mount one. It was like it' no dector. Like it was great. But that first one You just looked at it and you know you have the first immediate set of questions, Who's going to pay this much money for a thermostat But How long is the software support going to be What happened? We just found? Yeah, we just found. And he was just prepared with all the answers. rightight? He just he just knew the product was complete And we had heard so many pitches at that time from people who wanted a bite of the iPod and the iPhone theirir ideas were never complete just rarely We heard an idea that had a beginning in a middle and an end and Tony is very good at that. Yeah good storyteller. And the thing looked cool. And it was That's like in that meeting, I was like, I want to a whole feature on this. We're going to take a c photo of you And he was like, yeah, round LCD guy. you get it. And I was like, we have to figure out how to takeicturey. I love that. So one of the thing that I think is really interesting and then we should take a break and get to actually launching this thing, But there's one of thing that happens in the course of this testing. Pe really like the thing people love having on their wall. People like the experience of having a thermoset that learns. They start to get the sense that like We're on to something here. This is this is powerful. this is going to work. But The thing that they had also really invested in and knew at the beginning, to your point about the accidental standardization of this, installing Nest was actually not that hard Like takes a little bit of work, you have to pull the thing off your wall, and then there's a couple of wires you have to put in. But they had done a bunch of work to make it easy. They designed a back of it that was really straightforward and well labeled and really nice. And you fundamentally just had to like pull your therm set off, put this one on, put a couple of screws, put a couple of wires and you were done mostostly they found people could do it, right? Like the people who are getting this, especially in the early days are people who are like one to be willing to do a little bit of work to put a thing on the wall, but they were into it. But they discovered that half the time that people were spending installing the Nest thermostat, they were spending finding the tools to install the Nest thermostat. Like literally, they were like, this is a sixty minute process and thirty minutes of it is just gathering the tools required to make this happen. So they decide instead of just building a thermostat, they're going to build a thermostat And a screwdriver. which best screwdriver ever That's real. It's real. And that ends up being like a sneakily important part of the Nest success story. It becomes like a beloved little screwdriver in people's. You don't get it anymore. We have one here. It's this little like bulb white screwdriver that doesn't look like a tool But it came with four interchangeable heads for all the things that you needed And it was like This this makes me think of, you know you buy a keia furniture and they all come with those awful Allen wrenches that you have to just Frank a thousand times. Like what if every one of them just came with a lovely little screwdriver? Do you know how much more I would like a key of furniture? I mean, that was the win, right? They put that brand in your hand. everyvery time you needed a screwdriver and you're like, Ohh I love this little screwdriver. I love this little brand and it totally worked. Yeah. Ring eventually copied them But the ring is not is good and by far. Yeah. No, it is great. And I think For the smart home in particular, it's the perfect screwdriver. Be there's so many little like I use it for everything still. Door locks, thermostats, smoke alms, everything. And the fact that you can switch It's just genius. Yeah.'s really There's so many times where you're going to need the flathead and then others where you're going to need the Phillips and yeah, o, it's just perfect. Yeah. You don't get it in the box anymore. which is very sad. That is a shame. I feels like we're just issuing criticisms of Google.. We haven't even launched the thing now. and we're like, I then Google shrewot it up. But again, I think it goes back to the Apple ethos, right? Like the whole thing is in the box. Yeah. and everything you need is right here. And it it again, it just makes the thing feel like a complete thought And especially for something that you do fundamentally have to open up your walls and mess with the wiring makes it feel less stressful They finished this thing and they're about to ship it. So let's take a break and welcome back. We got more to talk about We're right back We all do it You have a night for yourself but don't like the sound of the silence, so you turn on the TV just for the ambiance This's a little trick that helps you feel like you've got company and aren't alone And other insurers well, they may make you feel alone But when you switch to GaICo, you've got clas reps available around the clock. So whenever you need, you'll have people around to help And let's turn on the washing machine, just for good measure Isn't that soothing? It feels good to have support. It feels good to Gaico. reccommendations can be amazing. I mean, maybe someone recommended that TV show you've been obsessed with lately. but when it comes to home projects, it's different. If you don't like a show, you might lose a few minutes. If you hire a friend, of a friend, of a friend to fix a leaky ceiling, you could end up with a flooded kitchen. Maybe I know a guy just isn't enough for your home That's why Thumbtack works so well. They'll match you with a top rated local proro and you can see photos of past work, credentials, and reviews all right in the app. for your next home project, try Thumbs tack Hire the right pro today All right, we're. So it's october first, twenty eleven and the Nest goes on sale Im Do you remember what everybody called it That' the iPod of thermostats. Oh my God. Cool. This almost certainly was in our story. It was. This just immediately becomes what everybody calls it, which is like it's Tony Fiddel. But also it is there is such a sense of likeike the appiness of it that does it? huge favors. Everybody right out the gate just like professes deep and unabiding love for this thing, which is weird because it's a therostat And also to some extent Kudos to Tony in particular, this thing was everywhere. everywhere at the beginning They got vastly more press coverage than I assume any thermostat ever has before or s for the launch of the First Nest. This becomes kind of a phenomenon, right? Like they come to us, they were all over, you know, they were all over TV, they got a tons of media, they got a big wired story. It was like they sold themselves as a tech company making thermostats and it worked for them Yeah This is this is local newews gold. utely I have this long standing test that if you have a gadget that makes the local news, you've done something right in your story. And many, many times those gadgets are all silly. Like the smart toothbrushes are all silly, but It is coherent for a local news segment and I gets a toothbrush that measures your blah, blah, blah.'m like this is all nons sense. Yeah Thermostat Perfect local news catch a hundred percent It's a therostat, but you can control it from your phone. L no further questions. put it on the news and they got every ounce of that coverage that you can get. Yeah. Can I just put you one really delightful clip? This is from Bloomberg right around the time? make it engaging. Make it sexy? A sexy thermostatsible A former Apple exeutes who designed the iPod. They've done it. There's over one hundred fifty million residential thermostats in the United States They sell about ten millionars a year despite having no innovation. The products are ugly. early we could do a lot better. We want to take our iPod experience and really apply it to the space. You can see the point This is all the greatest hits right there, right. there there's a slide with all the ugly thermostats. That's pure Apple. There's the iPad reference, that's pure Apple. There's makeake It Sexy, which I don't know if Steve Jobs would have said that, but he probably did at some point or another But like that was the vibe. L a sexy thermostat was the whole story of NestT at the very beginning. And it really worked for them. And like looking at the piece of hardware now, right? Like if you haven't seen one of these, you should. Well they're lovely. But it's basically Jen, I wonder if you can just describe this thing as a piece of hardware. Like it's fundamentally just a big, heavy round hockey buck. with a screen in the middle. You did a good job there. And it is and it' the heft is actually one of the one of the features that really kind of stands out because most thermostats were just pl and they feel like throwaway, whereas this feels like something that's going to last. And I think when you're controlling, I said, one of the most expensive systems in your home and controlling one of the most expensive expenses of your home, the energy use, you know having something that feels solid and well made was a real win. It's also it's not a touchs screen which I think is great as well because having tested many touchscreens on home appliances over the years, when the touchscreen stops working, you are SOL. and that is again, not something you want have to deal with on old on something that's controlling an important part of your home. Instead it's the press. So it has and it has so much physical and tactile interaction. So this it's got this beautiful metallic ring that actually twists as you turn it. And then the other really fun thing was the screen. shows different colors. So it would show blue when it was cooling and it shows orange when it's heating. So you have this visual interaction that you can see from anywhere in the house And big numbers. it shows the internal temperature and the target temperature in large numbers on the screen. so you're able to see at a glance what's happening with the heating and cooling. The hardware here just tells you what you need to do. And I think that's you know, that's a design achievement that they really excel that. Yeah. Nia, there was this really funny moment in your story that you wrote about NestT at the very beginning where you're sort of explaining the thing in context of conversation with Tony and you're like, it's you know, it has all these nice new things. It looks way better. It has the screen But it fundamentally still looks like a thermostat. And then immediately, Tony butts in and it is like, no, no, no, no no. Tony seems to hate that comparison. He's like absolutely under no circumstances does this thing look like a thermostat? Like he seems to it acts like a thermostat, but it seems very important to Nest that they wanted to build something sort of unrecognizable in a good way. But it looks like the original Honeywell thermostat. That's I mean, got that inspiration from there. and then that's why they got sued. And then interestingly, it's CES I want to say twenty nineteen. Honeywell took me down into the basement of CES and they had a little room and they showed me there next that smart thermostat. looked like in that. Oh, interesting. It was beautiful. It looked it was an upgraded version of their original around themostat. They hadd gone the way of everyone else into plastics and then Nest came out and then they came back at. They were going to release this beautiful new round, tactile thermostat. But then the pandemic came and the thermostat never arrived. I've asked him about it multiple times and they're like We had to abandon it sadly. I'm sorry. it took nine years for them to be like, we should be round. Yeah, because they started round. Then they went square rectangle. This came out. That's horrible. And then and they sued Nest. Yeah. And then They eventually went to go round and then didn't. And now they've come out square again. Yeah. So we'll come back to the Sue, but the almost immediately Honeywell Sue's nest. for a bunch of patent infringements and a bunch of Honeywell's argument. And explanation for why it's suing Nest is, oh, we've built all of this stuff, We have all of this technology, we've patented all of it. And most of it never, ever, ever launched from anyone at Honeywell ever. Yeah. And it's just and like for years Nest's response to this lawsuit was basically like, no, you didn't. Noone of this is really your patents or nonsense. I mean, this is the danger of the monopoly. Yeah, right. Honeywell was making however much money selling every single thermostat in the country. No one is upgrading. this is not their business. Yeah. Nest comes out, they take one percent of market share on anyone. it's like, wait Look at all the technology we patented so no else could use it They immediately had to get better, right? And you can see a little bit of competition open that market up. but I think again, Nest looked at that Honeywell lawsuit as the ultimate validation. Totally. I think it was the best thing that happened to them. Absolutely. They end up not settling this lawsuit by the way until twenty sixteen Yeah, after which Nest' is a Google company, and I'm guess Google just had less interest in fighting this fight in the same way that you definitely think Tony would have happily just run this thing to ground. Y. Like nobody would have wanted to get up in court and and compare thermist. That's more than Tony. Yeah. He would had the blacklothle exactly But okay, so this thing comes out. It's a huge hit. The reviews are great. Almost every review was the same thing, which is like this thing is amazing. It was kind of annoying to install. L over and over and over. And it seems like a bunch of them had Nest employees come to their house and help them install it, which is not a perfect representation of the real experience But everybody is like, yeah, this stuff works. There are a couple of little wonky things. It's not greatreat at knowing when I'm home and away. littleittle bits of software that weren't quite worked out in the first model. But the two features that were the thing and were the thing everybody really latched onto were A, the routine learning that it would know when you were home and when you were away, it would learn how you liked the temperature during the day and how you liked it at night And Tony promised so many different amounts of time for how long it would take. It like It was a week. It was ten days, It was two weeks, it was a month, but it was basically over time, this thing is supposed to get smarter and smarter about knowing how you like the energy use in your house to be and what you like the temperature to be, and it should just do it for you And then the other one was that it would use all that information to also try and save you money, that it was smart about when energy was cheap and expensive and when you were supposed to use it and when things could be off, and it would make all this work. Did that did that stuff pan out? With this first model, like did that? I actually have no memories of I didn't have an Nest for a very long time after this, but Did it do those things? in those early days? Not well, no. Okay The biggest issue was the home in awayay. It was so originally it was tied to one person's phone caused issues if you left the house and there were other people still in it. I mean, there's a sense' in the thermostat, but if depending on where your thermostat is, if someone didn't walk past it. It wasn't, you know, they didn't have enough inputs originally. although they they fixed that. They added more ways to input you could have family accounts or you could have more phones assigned. The Nest Protect wired became a censor. They started to bring more pieces in to help And that's been the biggest struggle with sort of the home and away feature. And that's the key feature for saving money is when no one's there, we're going to set your thermostat back and that's how you save energy. I mean, that's the basic concept , but they and and The other issue it had Again, the thermostat was the main sensor. That's this little sensor in the front is PIR and it was using that to determine where you if you were in the home So if you were upstairs in your office and the thermostat was downstairs and for whatever reason the phone wasn't sending its location, you know for some reason, software doesn't always work as we know. you know, your system was shut off and you would be freezing or warm or too warm. So there were definitely a lot of bugs that worked out. And then the learning. Now the learning was incredibly finicky. and You didn't know what it was doing. Right. You had very little control over it. You could go in and whichich is by the way another very happly thing sing to interrupt. But it's just this kept occurring to me that it's like, o, what you could do is just let you have a schedule and Nest is like, no, no, no to this we'll figure it out for you. N schedule interface is like go away. It it's torches and spikes. It does not want you in there. No No. And it's very well the original on the Nest app Almost impossible to change And the Google homeome app. Yeah you're not smart enough to know when you leave for work. Theres no chad to tell you getet outt of here. Yeah I did. So you had to sort of you had to rely on it and I never felt like they really cracked it. And in fact, they kind of almost admitted to not cracking it with the last thermosat that came out, which is the fourth gen It now tellells you whenever it's going to change your schedule. which it never used to do before. And so you get a little warnings saying, oh, we've adjusted your settings. I'm like, oh, nes, no, no, no,, no. I don't want it to be seventy two degrees in the middle of the night. Come on. So I'd go in and fix it. But yeah, it was a reallyally neat idea But I don't think it really fit with most people's lifestyle. And it did cause a lot of issues, I think. So this so was the learning, which is important. The idea that anyone's gonna actually program a thermostat and even understand what it is that a thermostat does. That first Honeymal thermostat, the round one, deeply confused a lot of people about what it is a thermostat does. And they're confused to this day the temperature is not the temperature of the air blowing out the vents. It's the temperature your house will get to Yeah. And the temperature that comes at your vents is always the same peopleeople are to this day just brutally confused about this difference. And then they do not think about in the same way. They just turn therace up down, which is all you want them to do. So the big program here, I'm sorry, the big innovation here was understanding, okay, at night, you might turn it down and we can get way ahead of that. And we can cool your house down at night. and we can start it early or we can blow the fan at certain times or we're aware of the outside temperature and we can manage all this energy use. But fundamentally all they were doing turnurning the furnace on off, Turning the air on off. But at the right time, but at the right time compared to when you go up and go, I'm cold Frank it up and and then turn it down again. right? So people are using the thermostat the way they've always used it. and then NASTA is trying to back out this other complicated energy saving thing So you see this mishmash of metaphors in people's minds. likeike this is what I think the thermostat is doing. Here's what Nest knows it's actually doing. And then here's what we're going to tell you it's doing and to solve all of this and to like back out of you're going to spin the dial randomly because you have no idea what's actually happening. So here's a plan that will save you energy. They invested a ton into like machine learning and artificial intelligence. I think they hired I believe her name was Yoki Matsuka. She was like a Macrthur Gius grrant awward winner. Right Yeah from Google to run a full AI division to figure out the learning And like which for a startup in twenty ten, twenty eleven is a big thing to do. It's a big thing to do to make the iPod of thermostats.. R. And their whole point was you're going randomly spin this dial throughout the day and eventually you're going to stop because the house will always be the perfect temperature because the AI has figured it out. and we're talking to your utility company to manage the use of energy in your area and do all the rates in this You just they have landed it and we need we need a MacArthur Genius grrant Award winning AI researcher to solve that problem because it's so hard. and Google with all of its Tensor processing units still is like Yeah, we can't figure that out. It's still too hard. Yeah. Well, this ends up being an important part of the whole thing too, because I think the way they got away with selling a thermostat for two hundred forty nine dollars was by promising very loudly that it would pay for itself. twenty percent is what they said originally. twenty percent for your cooling. And this causes one of the really funny problems that people had with the early nests which is that the thing was a nag. Like it really, really, really wanted to save you money on energy, which is a good and noble goal, but it would be kind of a dick about it. It would basically people had this perception of like, why is my thermostat like judging my choices about temperatures And so it took them a while to learn how to basically reward good behavior rather than sort of punhing bad behavior. Yeah. And so they had this thing that had the little leaf when you were doing the most energy efficient thing and it would try to be very clever in the background. They're trying to balance all this stuff where they're like we want to be automat. We want to make you comfortable But it's very important to us to save you energy and money. That is like a foundational principle of this device. and I don't know that anyone has ever correctly tuned all of those things against each other, but the first nest suuper didn't. And it took them a while to figure out like, okay, how do we sort of ach you and give you information and tell you how much you're saving and why as opposed to just being like, turn the temperature down. You' wasting money, you monster. Also again, people have very specific reactions to specific temperature numbers But we all have a family member who can perceive the exact difference between seventy two and seventy one. Oh, yeah. Everybody has that family. Yes it's my wife. Our house is seventy two degrees, three hundred sixty five days. And that's the solution, by the way. J never ever changed the temperature. Don't change it. Becauseuse it used to just, it would kind of bounce between a few degrees as well, which is your point earlier, and like people would feel it. You can feel it really upset people. But the twenty percent thing was actually untrue and they eventually walked it back Like they launched at At launch, it was loudly proclaimed, this is going to save you twenty percent on your heating and cooling bills, which is a significant amount of money. And then eventually they did studies and Nested studies and it they came to the conclusion it's ten percent to twelve on heating and up to fifteen percent on cooling, I think, was what they came to. But what's interesting about that is if you compare that percent figure That is the amount the Department of Energy says you would save if you just installed a programmable thermostat and programmed it. But it's that second st. remains the most important thing.. than almost more than fifty percent of people with them with programmed thermostats had not programmed them. I believe that. So that was actually the key saving that you got from this device is it programmed itself in theory, or you if you you can have the access to more easily program it using your phone or your computer rather than having to hit the little buttons on a Yeah that interface talk about a keepway interface. That was thing. And you know those animals that turn bright red to keep like those thermostats like stay away from this. Poison works behind these windows The little bubbles you had to kind of like slide up and down and like tiny little touch points, ye, it wasn't great. But yeah, so in theory, this actually was going to save you as much money as a regular programmable thermostat, according to all the research if you just used it as a basic programmable thermostat. But again, I think a big part of the reason This ends up not being a huge problem for Nest. And it's worth saying that for all this, all of these issues, all of the wacky stuff it dealt with, this thing was a monster hit from day one. They essentially sold out. You couldn't find it anywhere for a long time. The lawsuit doesn't stop it. This thing is like a smash hit fromom the very beginning, people love it. but they're able to update it over time. This is the other big promise And I think they lived up to it for a long time. Like they cut off software updates for the first Nest in twenty twenty five. And I think we can argue whether fourteen years of software support for a thermostat is good or bad. I think you can actually You can land on either side of that, and I think it's fair enough. They did, they did the thing, right? They they kept it alive for a long time. It got better over time. And this is one of the challenges of a device like this is like no one is going to buy a thermostat with like a two or three year shelf life. No. And particularly for a brand new startup that has not done it before, it's very hard to make a first product and then support it. for fifteen years That's a big thing to ask for and a big thing to pull off. And I think Nest deserves a lot of credit the fact let me just back off They deserve credit for doing it because most companies pull the trigger and whatever This is a software controlled onon off switch. Yeah.. When the nexts came out, I lived an apartment Brooklyn I couldn't put one in, but I put three in my parents' house in Wisconsin.ice. And they're still there. I was just at home and I'm basically singing If You don't know me by now to my parents' thermostats. Because after fourteen years that thing hasn't figured out their schedule. L I don't know what rosters to do. fair. Nothing else can be done Right? And It's just an on off switch. like att its core, it is just a very complicated on offs. Yes. And the idea that they It's some big investment to continue providing software updates. Yeah. Like maybe they should keep providing security updates and that's not fair after fourteen years. Okay you can have that conversation. But feature wise needs to do the same thing it was doing on the first day. and I think they still will. It's not going to Yeah because they work entirely without the internet. which was a core design feature, I think that was very important. So you can if you have one, You can connect it to your thermostat, to your HVacC system and control it completely locally. But you just won't get any. Th then you can't use the app anymore, which is fine because I never asked my parents to use the Google Home apppp anyway Be you love your parents. Yeah. I was like, I don't want you near this. And so one day we'll replace them, but that It's that first step. it's the thing Jen is coming back to over and over again. Maybe you weren't going to save more money than a regular programmal thermostat, but most people were never going to do that.gram. And so there are three in that house. They have learned when my parents are in different parts of the house They can just do that forever now. and that is probably fine. My parents schedule is not changing very much. s just going to be fine. The thing that they could not do in the beginning, which some of them can do now is they didn't talk to each other very well. Right. And so a lot of people who are buying these srmer setats where they had big houses, right? They're early adopters of tech. they have money, they have big houses. And they realize that thermocats are fighting each other. And so this is another thing they just had to figure out over time, which is like one thermostat would be heating and another would be cooling. It'ss both on the internet You should figure this out. But eventually they figure that out too. Yeah. All right, so I think just this is more or less, I think, where the story of the first one ends. They ship the second product a year later, they ship another nest three years after that. The Nest protect comes out later. Well all of that is for future episodes. But I do think the last bit of the story of this one is in twenty thirteen when Google buys Nest. And I think Tony will tell you that he made a mistake. Yeah. Everyone should read Tony's book Build which is half really, really smart management advice and half just absolutely dunking on Googles. And like chapter to chapter, you don't know which one you're going to get. And it is so much fun to read on both dimensions. Yes That's I mean that's where the story of this product and that company just comes to. It's screeching hope. Yeah. And you can see all the ideas in here eventually show up in Google's home products and home ideas and a R If Google can just see the data in house they can do all the blah blah, blah blah, whatever they're going to do. But they don't have the discipline to finish the ideas which is just the most googly culture or problem that you can have up against. The Apple hardware guy who says we're going to finish the ideas. R It's a good book. I encourage everyone to read it. Yeah. But it does seem like the promise of Nest came to an abrupt halt in a very specific way. at the Google Aquisition. Yeah. Yeah. And that's what Grant Erkson had said to me is like when we to Google There were so many competing different areas. Pe other branches of Google that were doing similar things to what we were doing, but there was no cross pollination. And whenever we tried to sort of push an idea forward, we would, you know, kind of get a little knocked back.ike culture clash was a significant issue at that point. and they had also dropped c at that point too. So there was like three different companies coming together. and ultimately the roadmap kind of started to fall off the cliff and the product line sadly because it really was and still is, I would say the most This is one of the strongest smart home devices and ecosystems that we have seen. It worked well, it's iterated well, it looked good. They created some compelling additional products in the ecosystem, but today the nest brand and Smart homeome leegacy has kind of become very watered down and lost a lot of that initial innovation and excitement, which is kind of sad.. Yeah, I do think that is actually the right place to end this story, but I have one other fun fact for you, which is that I found some indication in researching the acquisition You're right that Google had lots of ideas about data and about connecting people to the internet and about how this might be in your home. And this is around the time of Google TV. So everybody is trying to figure out like how do we sort of get into your physical space and bring technology into that? But one other idea that Google also had was that maybe it could put ads on your nest that Of course. And so that's where it really all fell apart. O course. So let's take one more break, and then we're going to go back and we're going to do the Vversion history questions and try to figure out the legacy of this thing including all of the ads on the Nest H set. What very than. support for the show comes from KPMG In any organization, disruption is inevitable, but struggling through it doesn't have to be The KPMG Adaptability Index is your blueprint for building capabilities to handle what comes next. It uses real data to look at how your culture, strategy, and partnerships all work together to help your business thrive Stop reacting and start adapting. Visit kpmg dot com slash us slash adaptability to explore the addaptability indndex and Pulse surveys today picture it. Summer Are you and your girls at your favorite patio bar? The sun's out, the breeze is perfect, and you're looking stunning in that new sundndress And what are we drinking? A Campari Spritz. It's just Campari, prosecco and soda water. Bld, iconic, and perfectly bitter, just like you. Check out official cocktail recipes at compampari dot comot Campari Spritz, stay Bter. Camppari liqueur twenty four percent alcohol by volume forty eight proof. twenty twenty six Campari America, New York, New York Please enjoy responsibly All right, we're back. It's time now for the eight version history questions, the eight questions we ask about every product to see if we can figure out its legacy. The first one is the time matrix, everyverybody's favorite, completely normal concept that makes perfect sense. So this chart's idea and time, wasas it the right idea at the right time, the wrong idea at the wrong time, or somewhere in between. U. Jan, I want you to go first. whereere do we put the n thermostat on the time matrix Well, it's arguably starter product for the smmart homeome two point zero the app controlled wireless smart home. And so from that perspective, I think it was definitely the right time. Like it came just before the sort of the iPhone, the app control of the home. kicked off. It was one of the original devices that made us realize like Oh, we can control our homes from our phone. This is like amazing. And as we've discussed on previous episodes of Virgin History, today we're like, I don't want to use my phone. But then This was Aazing and being able to do it from somewhere, you know, outside of your home, being able to adjust your thermostat remotely. That's a good point. Fantastic. That's worth like underlining because It's so normal now But the idea that you could control your thermostat when you were not at your house was such an unbelievable killer app for this thing at the beginning that Forget all the rest of this. I can raise the temperature of my house before I get home. Yeah. was meaningful and new and exciting. I have to find this. This is a total tangent Kara Swishert once tweeted a screenshot over screen timee Okay, the number one app was messages and the number two app was Nest. And someone said, why are you in the Nest app all the time? And her only response was, I like to change the temp It's the power I mean, I feel like It's a little much to give Tony Fidal and Mamrooges the concept of the thermostat. Like thermostat had been around for a long while time. Well and like you said, it's just an on off switch. All they did was kind of put a nice package around it.. So it sort of depends how you define the idea. No no this is the upper left or the upper right quadrant all the way, R at the time. All the peget in the corner. I don't know, man. I think the question of it depends on what you think you're doing if you're Nest right? If the idea is we can build a better thermostat that saves you money and energy, like Right idea, right time. The technology was available, they could do the thing. they had the right experience. It was like it was a perfect sort of amalgamation of things to make this happen If you're trying to Build your Trojan horse into the smart homeome It was too early. I'm not sure theostat's the way to start. Yeah.. I'm not sure it's the right ideio or the right time. This is what you're trying to do. wait, let me make the case. I can make the case. Okay. You brought up Google TV. This was the time of Apple TV as well. The dream of convergence in the living room, the tech industry been chasing for one thousand years. Digital liivving room is a phrase that's coming up a lot on this season ofversion. Everybody wants this thing Right? We're going put a we're going to put a PC in your living room. This is the dream. We're going to get there. And they're all attacking the TV because it's a screen and they understand the screen. And they're like if that screen just ran windows, we'd have it made. And consumers every single year were like, no It just that idea just never took re The thermostat unloved ugly We can automate a thing that you have no interest in automating. We'll get ten percent to fifteen percent savings for free just because we know that if you automate this a little bit, you get ten percent to fifteen percent savings. And it's got a little radio in it that lets us establish a network in your house. outside of your wiifi, that lets us do all the rest of things I don't know that there's a better place to actually start Hm. Yeah. I mean, and no one had had that idea before. like it was like, oh wow, this was right here all along. We could have yeah. And in that respect, I mean, it is a smart home. It's the center it could have been theart center of your smart home. It ended up just being a really good thing. The mach, whichich is good enough, right? Like I think I think if you're Tony Videl, you take that as a video. Take that as win. Yeah. Yeah. All right we'll give it a right idea a right time. I'm fine with it m over it Question number two, was this peak anything? I have several to offer you. Okay. Was this peak thermostat? this I'm serious. Is this first nest the best thermostat anybody's ever made? No. Purely as a thermostat I think hardware wise, every nest after this was worse But ecoas are better cheaper M Yeah, there are probably better e, but they're called eoB. This is great. I tell people do Eo be. EoB actually came first. Yeah, the Ggle will also remind you of this. I believe that too. But peak is not first and best. It's like a combination. Yeah. you I'm not saying peak therostat. I'll give you peeak a bunch of other. therostat type. Yes, unquestionably, yes. Never ever before or since has a thermostat been as cool as this was in twenty eleven. But in terms No question. No, that's true. But in terms of its functionality, I don't think it was peaked. said peak thermostat I'm just asking questions. this was this peak Tony Fidel Tony Fell is like a big character in the history of the Virge, in the history of technology I think this might have been Pek Tony was his shining moment in the sun Tony has to be fair, Tony has been an investor for many years now. Yeah. He's not been trying to pull the cloth off a gadget in a long time. So Pk Tony as a product guy This was his moment as a product person. Yeah. I think Tony has lived many lives since then. For sure. I think he got his house in Tahoe. Yeah where we're all happy for him. Did you guys have anything else? Pak anything? I think is absolutely peak What if all of this stuff became a smartphone app? Oh interesteresting. Right We're beginning of the app store era, the idea that Apps on your phone can do more than just internet stuff that they're going to do stuff out in the world is just beginning. L this is the very beginning of Uber in a real way. And the idea that you can push a button on your phone and something will happen in the real world has not begun Now it's we always take it for granted The idea that I can change the temperure my m for my phone or the That thing should be a little smartphone unto itself This is the peak of that era. Yeah. It is only good It's only been weird, bumpy ride ever since then. All right, question number three. If you could time travel back and develop it yourself, we're putting you on the foundounding Nest team, couldould you make this product more successful What would you have told them that they didn't know at the time No one's gonna to figure out your weird radio ideas for about a decade Uhhuh That's a good one. I would have told them Don't take the Google money. Not Well, absolutely, don't take the Google money I think that the thing I would have said is don't go after the smoke detector a second. You need to come up with something as useful And the Stackers is like say They're not supposed to be useful It's right. If you are interacting with your smoke detector, has got horribly wrong. Yes. And so and they were expensive. And I think they would have gotten to a different place faster if their second product had had some obvious utility And I think that's actually where they got a little sideways because they did need all the sensors and stuff and it I think they thought smoke detectors were ugly. I got the big story about smoke detectors being ugly If they had done something a little more useful with the second product, I think something else would have changed. I don't know that I have notes on the first one I don't have a ton either Jeny you have any I just my pet peeve with all smart home products is don't put your logo on it. It's in my home. It's a good one. Take nest off. Yeah. but they never would have because they wanted the recognition. But when you're putting something like this, I theoss old ones had honeywell on. This wasn't like they were breaking a mold here, but they made something that look good and their name on it and' want I wouldn't want that. Yeah. But I don't have a lot of notes on the first one. I think they did a wonderful job for a first generation product. I just if they didn't have Nest on the top, it'd be even better. Yeah, that's fair. All right, question number four Will youth ever make it cool again It doesn't apply to this one. I don't know that we'reaking thirs. Weid to change this one for the smart home? I know. the There's resser nostalgia for the al smart home. You know what there is a lot of nostalgia for the vibe of the tech industry in this period. Yes. We hear this loud and clear from our audience, from people, Kids on the street, just why isn't it fun anymore? And this was so fun. And I do think some of that will come back in some way Agreed. All right, questestion number five. What feature of this thing should every current version have someome of the features again. Yeah. They've just been stripping the features I know. I'm putting the metal ring back. I think the actual physical control has gotten worse and worse and worse over time on almost every therostat. And to me, it's just like, give me the stainless steel thing that I can move around. Totally. So the newest one has that tactile fill, which they took away in the middle for a while, but it's not the same. It's not as heavy and it doesn't have that Solid feel. And I think actually that was one of Tony Fidel's best insights was that actually If we can make it feel good to use, that goes an enormous distance towards making this whole product work for people. I do think it's the heft It's absolutely the heft There's something substantial about having this thing on their wall. that was fun. We have an old one it was copper And I just don't want to take it off the wall Yeah, I think there's a really interesting sort of ongoing question that Nest really starts about like are these devices supposed to be statement pieces, R? And like you've seen Google struggle with this. Yeah. O is it supposed to be cool and loud and something you really notice and becomes a talking point in your house, or should it completely blend into the wall And then they made one that completely b right into the wall. And I think there are rational arguments on both sides of that debate, but this one is so loud and clear that it is supposed to be a statement piece. And Tony Vidi even talked about it, He's like, I want people to go to someone's house, see the thermostat, ask questions about the thermostat, and then go buy a thermostat. And the idea of going to someone's house and asking about their thermostat is so insane. Our copper first people asked us about the copper one It was a third gen And it was only at one store that you could get a copper one And we went and I think was lows. We went to that store, and we bought the copper one and we put it the wall, and everyone asked us about it for a year. Yeah it works. It is. If you can do that successfully, it winds up being very powerful. Three more questions. These are the Vversion History Hall of Fame questions, a product has to make it through all of these tests to get into the Hall of Fame. And I have a note here in the outline that I've never noticed before that says host gets final veto power. All right I reject this not. Hall of fame question number one, did this product do something truly new? I think this one's easy for the best. The answ The answer in a bunch of ways is yes. Yeah. Yeah, you could almost pick Any feature of Nest. And it was new at the time Except for Ecobe I hear all of you. Don't email me. I mean, the first ecoview was like a jump of wires Yeah Innet connected was was the Even if all you do is what if thermostat but nice, it passes this test. Yeah. right L. Okay. Question number two, was it either remarkably good or remarkably bad It was remarkably good. Yeah I think. likeike that's's that's a big high bar. We talked about all the things that it fell on its face trying to do. The only reason we know about those things is because we knew the level it was it set out to achieve It eventually did some of it. It was remarkably good in the sense that a bunch of people who had figured out a very complicated user interface for the iPod and the phone brought all of that skill to this device and they did the same thing. And then importantly, you knew when it was not doing the thing it was supposed to do, so you could complain about it. And those are. That's not true of most products in this class. Yeah. I think I think it's core use case being able to take something that was very confusing and difficult for people to to understand programming a thermostat and making it easy, either by doing it itself, sometimes not well, or by letting you use a phone to do it or a computer to do it. That was remarkable and very good. Like that really helped it helped people save energy, which is what its original goal was. Why am I leaving this all fired up to buy a new H frac? happen to me. This might be the most expensive version history episode I've ever made All right, so we'll give it that one. It's super for two. Qion number three change history. there Is there a world before Nest and a world after Nest? Absolutely in my world. There is a before N smart home. This one. This one. It was the first Internet connected smart device that sort of attention of the tech press and the and the public, you know they brought everything together and it was like, oh, now we can use our phones to control our homes. And that was the beginning of the smmart home that we're in today. Do you agree with that It's a qualified yes. in the sense that It's an absolute yes if Google hadn't ruined this company. And Google just ruined this company. It is a really interesting thing because like I think the part of this question that I struggle with is like this thing happens There is immediately so much enthusiasm for the smart home. Everybody gets really excited. Everybody sort of sees the possibility. Tony Fidel is a star, Matt Roggers is a star. like this becomes a big thing and then it all kind of collapses all at once And I think a big part of that is Google Buys Nest and it just it all sort of screechhing into a wall. This is also when you know, Alexa starts to really invest in this smart home. This is when Google Assistant starts to hit big. There's like a sense that this is going to happen and then none of it works the way it's supposed to. and it also is way down. But it only happened because this came. I think. That's fair. That first run of investment, I think you probably can trace back to this thing. Yeah, because captured the imagination of the consumer and the text. Wellld And the general homeowner got excited because of the savings. It was one of the first timees I feel like we were able to see a tech product sold to the mass consumer as this isn't just about being cool and new technology. This is actually going to help you save money greatreat addition to your home. So I do think it changed history. All right. Kave in thinking this one was a toss up. We've had some that are I think, obvious one direction or another But I feel good about it. It makes it into the Hll of Fame. Welcome to Hall of Fame Tonyellll. conongatulations. Yeah., this is the career accomplishment you've been waiting for. We finally reached this is this moment now is peeak Tony. We are absolutely going to have to do a follow up episode where Tony and Matches tell us everything we got wrong about this story. I love it. All right. That's it for the show. Thank you both for being here. This has been delightful Jen gets to now take her many, many thermostats home. Thank you both for being on here. Thank you to everybody for watching and listening. If you want to support all of this, you can get all of our podcasts ad free. You can make sure that we get to keep buying old gadgets to make episodes about. Subscribe to the Vverge theverge dot com slash subscribe Thank you as always, we'll see you next time. Virgin History is a ab productuction of the Vge and of Vox Media podcast networ It's produced by Victoria Barios, River Brandon, Eric Gomez, Owengrove, Brandon Kefer, Travis Larchruck, Andrew Marino and Alex Parkin O editorial director is Kevin McCain Studio support from Matthew Heffren and Joe Neeverress. Our theme music is composed by Brandon McFarlan Follow the dedicated Vversion History podcast feed to get every episode as soon as it arrives, and you can also watch full video episodes on our new YouTube channel at Virion History Podcast And to support everything we do and get access to all of our podcasts, including this one ad free, become a paid subscriber to the Verge. Thanks.