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I have a hard time believing Nest sold due to scaling issues. I find an easier time believing that they did not have the money to achieve their (expensive) vis

by codex 13y ago

I have a hard time believing Nest sold due to scaling issues. I find an easier time believing that they did not have the money to achieve their (expensive) vision, and selling to Google was easier than raising a massive round. It's the classic "our product is good but doesn't make any money; solution: double down." Nest has a huge staff for what it currently sells.

cloudwalking 13y ago
I don't think so. Nest was in the middle of closing a $150M round at a $2B valuation. That doesn't smell like a company going out of business, that sounds like a company preparing to scale like crazy. Fadell has intimate knowledge of Apple's scaling troubles—LaLa, iTunes Store, App Store, MobileMe, etc—and Apple has infinite money. Building truly scalable web services is no easy task, and Google is head and shoulders more capable than anybody else. Do not look at Nest as a thermostat company. Look at what they could be 10 years from now—the timescale Fadell is surely thinking on—and you begin to understand the real scaling issues they will face.
- codex 13y ago
  I see a $150M round as a failure: a company that has big dreams but can't make enough cash at what they currently do. Even Tesla only raised $200M at IPO, and that's for a car company with huge overhead and manufacturing capital costs. $150M for a company that assembles products from COTS parts in China is ridiculous.
  - cloudwalking 13y ago
    You can see it however you want, but that won't change what it actually is. Companies raise huge rounds when they've nailed their product, their production lines, and their sales funnel. They know what they're doing and need cash to accelerate. Venture capital is not charity.
grinich 13y ago
Nest has a huge staff for what it currently sells. I thought something similar. And then I worked there for a summer. Building hardware is much more difficult than you think, in ways that aren't immediately obvious. Someone like Tony can easily raise capital in Silicon Valley, and Nest's products were selling extremely well across many retail locations. I'd be astonished if they were running out of money. Why is it surprising that scaling is the issue? Tony's entire background is in devices and hardware, not large software systems. They have a huge complex stack. Imagine building a system with tens (or hundreds) of thousands of connected nodes, all streaming realtime data that must be analyzed, and which can't ever go down. A Django app just won't cut it. And that's just the tip of the iceberg for Nest. The machine learning is surprisingly sophisticated.
- hueving 13y ago
  >which can't ever go down. The thermostats don't cease to function if they can't contact nest's website. I agree that it's important, but it's no more critical than any other day-to-day website.
  - AVTizzle 13y ago
    They do have smoke detectors too though. 100% uptime is critical.
    - tlrobinson 13y ago
      Presumably they'll still function like a normal smoke detector if Nest's servers go down. Right? RIGHT?!
      - smackfu 13y ago
        Of course. Interesting also is that the Nest Protects form a mesh network to set off the alarm across all of them, even if the wifi is down.
        13y ago
Angostura 13y ago
One issue is that thermostatic systems apparently work substantially differently outside of the U.S you can't buy NEST in the UK, for example because of this wiring incompatibility.
- roel_v 13y ago
  I've wondered about this. To what extend does a Nest drive the CV system? For example does it do modulation? If so, does is use OpenTherm - and thus only works on new CV systems? If not, how is it not 10 (OK, 5) years behind?

by codex 13y ago

cloudwalking 13y ago

I don't think so. Nest was in the middle of closing a $150M round at a $2B valuation. That doesn't smell like a company going out of business, that sounds like a company preparing to scale like crazy. Fadell has intimate knowledge of Apple's scaling troubles—LaLa, iTunes Store, App Store, MobileMe, etc—and Apple has infinite money. Building truly scalable web services is no easy task, and Google is head and shoulders more capable than anybody else. Do not look at Nest as a thermostat company. Look at what they could be 10 years from now—the timescale Fadell is surely thinking on—and you begin to understand the real scaling issues they will face.

codex 13y ago
I see a $150M round as a failure: a company that has big dreams but can't make enough cash at what they currently do. Even Tesla only raised $200M at IPO, and that's for a car company with huge overhead and manufacturing capital costs. $150M for a company that assembles products from COTS parts in China is ridiculous.
- cloudwalking 13y ago
  You can see it however you want, but that won't change what it actually is. Companies raise huge rounds when they've nailed their product, their production lines, and their sales funnel. They know what they're doing and need cash to accelerate. Venture capital is not charity.

grinich 13y ago

Nest has a huge staff for what it currently sells. I thought something similar. And then I worked there for a summer. Building hardware is much more difficult than you think, in ways that aren't immediately obvious. Someone like Tony can easily raise capital in Silicon Valley, and Nest's products were selling extremely well across many retail locations. I'd be astonished if they were running out of money. Why is it surprising that scaling is the issue? Tony's entire background is in devices and hardware, not large software systems. They have a huge complex stack. Imagine building a system with tens (or hundreds) of thousands of connected nodes, all streaming realtime data that must be analyzed, and which can't ever go down. A Django app just won't cut it. And that's just the tip of the iceberg for Nest. The machine learning is surprisingly sophisticated.

hueving 13y ago
>which can't ever go down. The thermostats don't cease to function if they can't contact nest's website. I agree that it's important, but it's no more critical than any other day-to-day website.
- AVTizzle 13y ago
  They do have smoke detectors too though. 100% uptime is critical.
  - tlrobinson 13y ago
    Presumably they'll still function like a normal smoke detector if Nest's servers go down. Right? RIGHT?!
    - smackfu 13y ago
      Of course. Interesting also is that the Nest Protects form a mesh network to set off the alarm across all of them, even if the wifi is down.
      - 13y ago

Angostura 13y ago

One issue is that thermostatic systems apparently work substantially differently outside of the U.S you can't buy NEST in the UK, for example because of this wiring incompatibility.

roel_v 13y ago
I've wondered about this. To what extend does a Nest drive the CV system? For example does it do modulation? If so, does is use OpenTherm - and thus only works on new CV systems? If not, how is it not 10 (OK, 5) years behind?