The Success Of Nest And How It Almost Wasn't

The Success Of Nest And How It Almost Wasn't
How did the Nest thermostat go from being an almost-failure to one of the most successful smart home devices in the world? We break down their journey.

Nest is a company that designs and manufactures smart home products, including thermostats, cameras, and doorbells, as part of the Nest Product Line.

But did you know that the company almost failed before it was acquired by Google in the Google Nest Acquisition and became the success we know today?


Let’s take a look at how their out-of-the-box thinking and creative problem solving saved their product and company alike - making them the go-to smart device for home temperature control and more as part of their upscale smart home solutions.

Failure to Success Stories: Failure To Launch From The Nest

In the early days of Nest, the company was struggling to make its products work. The first version of the Nest Thermostat had a lot of bugs, and customers were unhappy with it.

Nest Installation was a pain and consumers didn't feel like they could easily install a Nest device themselves as part of their DIY home temperature control. In fact, installing one was taking testers as long as an hour or more.

This ultimately meant that sales were slow, and the company was steadily running out of money while simultaneously trying to launch an upscale smart home technology solution. Not a great combination at the best of times. If they were to become a key home automation application, they’d need to figure out something else fast.

The situation was so dire that Nest's co-founder of Apple iPod development fame, Tony Fadell, considered shutting down the company once and for all. But instead of giving up, he and his team decided to double down on their efforts to fix the problems with the product, showing true perseverance in business.

They went back to the drawing board for more product innovation.

The Nest team spent long hours testing and debugging the thermostat, working tirelessly to make it work better. The problem was this: the device was finally working great as part of the Nest Product Line. So why were early adopters not enjoying it as much as expected?

The answer is that not everybody is a handyman. You see, the biggest obstacle consumers had was that many of them didn't have the right tool to handle the installation easily. Not everyone would have the skills or inclination to fiddle with the wiring and the wall for more than a few minutes.

Nest realized early on in this process that if they wanted the kind of adoption they were aiming for, they would have to think of customer-centric solutions to save everything.

And they came up with an ingenious solution.

Meet the Nest Screwdriver

If consumers were given the perfect toolset right from the get-go, suddenly installation would take mere minutes instead of an hour. It would complete the product user experience and prevent the buyer from first having to scrounge through their garage in order to find the right tool.

The Nest screwdriver is a simple, multi-headed screwdriver suitable for all easy installation of smart devices needs and much more.

Meet the Nest Screwdriver

Many in the company doubted that this approach would work, however. After all, manufacturing these screwdrivers was just another cost to cover. What if they were just over-engineering? Did they know their market well enough to know this would work?

But Fadell held fast and the Nest Screwdriver became a common inclusion with the product, enhancing the product user experience.

Suddenly, the customer experience improved. People loved that it was easy to install even if you weren’t technical, and it became the household name we know today. In fact, buyers LOVED the screwdriver - and it became a key part of the company’s branding and marketing strategy.

The Nest team also listened closely to customer feedback in product development, using it to make improvements and tweaks to the product and the app until it was a seamless experience.

You could say all their hard work and previous struggles had paid off, leading to Nest's growth and success.

What Happened Next For Nest

The second version of the Nest thermostat was a hit with customers, and sales began to pick up.

The company's other products, including its Nest cameras and doorbells, were also well-received.

The Nest Learning Thermostat is based on a machine learning thermostat algorithm: for the first weeks, users have to regulate the thermostat in order to provide the reference data set. The thermostat can then learn people's schedule, at which temperature they are used to, and when.

Nest's success caught the attention of Google, which acquired the company in 2014 for $3.2 billion, utilizing strategic partnerships.

Nest's success caught the attention of Google, which acquired the company in 2014 for $3.2 billion. 

With the backing of Google, Nest continued to innovate and expand its product offerings. Today, Nest is one of the most successful smart home technology companies in the world - and with the growth of AI integration in smart home technology we can expect newer versions to be able to do much more.

Ultimately, Nest products are used by millions of people around the globe, and the company continues to push the boundaries of what's possible in the smart home space.

So what can we learn from Nest's story? 

That perseverance is key. Even when things look bleak, it's important to keep pushing forward and working hard. And look outside the box if you need to. Remember as Fadell says - your product is more than a product, it’s an experience from beginning to end.

Second, listening to customer feedback is crucial. It can help you identify problems with your product and make improvements that will resonate with your target audience. If Nest didn’t identify its teething troubles, it would never see the adoption rates they have been able to achieve.

Last but not least, partnerships can be game-changers. And having your company be a game changer itself is a great way to draw in their attention.

Nest's acquisition by Google gave the company the resources it needed to continue growing and innovating. 

If you're struggling to make it on your own, don't be afraid to seek out strategic partnerships that can help you succeed.

That's it for today's post. 

Thanks for reading, and remember: no matter how tough things get, there's always a way to turn things around and achieve success. 

Whether it’s by being creative, working with a staff augmentation agency, or other methods, many roads can lead to success- even the unorthodox ones.

Andrew Amann
Andrew Amann
Building a NineTwoThree Studio
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