Jan 19
When Google announced last week that it had agreed to acquire Nest for more than $3 billion, there appeared to be a general consensus in the tech world: bad news. … Continue reading
Jan 17
This Week On The TC Gadgets Podcast: Lockitron, Nintendo, Google’s Smart Contacts, And Nest
Posted in: Today's Chili
It’s been a big week for smart things.
Coming off the heels of CES, this week we learned that Lockitron hasn’t been shipping the majority of their smart lock pre-orders, Nintendo hasn’t been selling many Wii Us, that Google has been building smart contact lenses and buying smart thermostat companies, and that our dear Chris Velazco is leaving us.
It may not be the happiest Gadgets Podcast you’ve ever heard, but at least it’s honest.
We discuss all this and more on this week’s episode of the TC Gadgets Podcast, featuring John Biggs, Matt Burns, Jordan Crook, and Darrell Etherington.
Enjoy!
We invite you to enjoy our weekly podcasts every Friday at 3 p.m. Eastern and noon Pacific. And feel free to check out the TechCrunch Gadgets Flipboard magazine right here.
Click here to download an MP3 of this show.
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Intro Music by Rick Barr.
Jan 16
Google’s surprise acquisition of Nest was met with no small amount of horror from existing users of the company’s thermostats, but other players in the smart home segment aren’t so … Continue reading
Jan 15
Some Nest Users Return Their Purchases After Learning About Google’s Acquisition
Posted in: Today's Chili
Earlier this week we reported that Google had acquired Nest, a company founded by former Apple engineer, Tony Fadell, where they created a smart thermostat which basically had the ability to learn your favorite settings. This is a big deal as many had thought Apple would be the company to eventually acquire Nest and bring Fadell back into the fold, although Google was not a bad choice since they had vast resources that could help Nest grow and reach a larger audience. Well it turns out that not everyone was happy about Google’s acquisition and in an interview with some former Nest users, it was found that some of them were so upset over Google’s acquisition that they actually returned their products.
According to one of them, a certain Marc Rotenberg who is the president of the Electronic Privacy Information Center, the reason he said returned his unit is because Google does not respect boundaries, citing examples of Google merging Gmail with Google+ which basically allows just about anyone to email you, and how by acquiring Nest, Google’s invasiveness just got taken to a whole new level. Privacy appears to be the biggest concern here and Microsoft’s Scroogled ads in the past have poked fun of Google over privacy concerns as well. While we doubt that Nest users will be returning their purchases in droves, we can see why some of them might be upset. What do you guys think?
Some Nest Users Return Their Purchases After Learning About Google’s Acquisition original content from Ubergizmo. 
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Jan 14
Google’s acquisition of Nest is controversial, for more than a few reasons. On the one hand, there are questions around how Google Ventures-invested companies segue into Google-owned divisions; many users … Continue reading
Jan 14
Earlier we reported that Google had acquired Nest for $3.2 billion. For those unfamiliar with Nest, the device is a smart thermostat that can learn its user’s habit over the course of time. The device was co-created by Tony Fadell, a former engineer at Apple who worked on creating the iconic iPod that helped Apple launch into the music business. Now $3.2 billion is a lot of money and it might suggest that Google could have been facing a bidding war with other companies, but as it turns out, Google was pretty much the only serious bidder of the company. Prior to Google, Nest was reportedly looking to close another round of funding that would have valued them at $2 billion, but that was all tossed aside once Google came in with their offer.
Interestingly enough, it seems that Apple was not in the mix. It’s a little odd that Apple did not think of acquiring the company, especially since Nest would basically allow the Cupertino company to break into the home automation business, not to mention the design language of the Nest thermostat might be something Apple’s Jony Ive might have appreciated. Either way it looks like Nest will be Google’s property now, but as per our earlier report, Fadell claims that Google’s acquisition will not affect Nest’s day-to-day operations. What do you guys think? Should Apple have acquired Nest? Or is there a reason why they did not?
Google Was Reportedly The Only Serious Bidder For Nest original content from Ubergizmo. 
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Jan 13
Nest’s $3.2bn acquisition by Google won’t see the search giant immediately get its hands on the smart home firm’s user data, founder Tony Fadell has insisted, and nor will it … Continue reading
Jan 13
Why Nest Is Worth Every Penny
Posted in: Today's Chili
The news today that Google is buying smart thermostat-maker Nest for $3.5 billion seemed slightly unhinged
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Jan 13
CES may be finished for another year, but one of the biggest themes of the show — that anything (cars, watches, mirrors, tables, whatever) can be ‘hardware’ — is just taking off. And today’s news of Google buying Nest for $3.2 billion underscores how Google wants to be the player at the front and center of hardware.
Google’s Nest buy may not be giving the search giant access to all the data that zooms across Nest’s apps, thermostats and smoke detectors (for now at least), but it will give Google something else: top-shelf design expertise for that next frontier of hardware, by way of a team of people brought together by two senior hardware veterans from Apple, one of whom is known as the father of the iPod.
This is a significant turn of events for Google.
Up to now, the search giant has cornered business — on desktop internet, mobile devices — through software, and then monetized those markets with data — specifically advertising data.
It’s been a fundamentally different approach from Apple, the quintessentially vertically integrated company that controls not just a platform and the services that run on it, but the devices they run on, too. (And with that, the lucrative margins that come from successful, premium hardware sales.)
Nest will give Google an opportunity to diversify its revenues by tackling a whole new market — connected home devices — with that vertical approach.
“This is the new hardware movement,” as one person described it. “Devices + services, product-market fit and research done through crowdfunding platforms, mix of retail partnerships and direct online sales.”
For Google, Nest is a particularly attractive example. Not only does it make an integrated piece of connected hardware for the home, but it’s designed with interoperability at its heart — in the initial case, by way of apps that you control on your iOS or Android smartphone, along with a well-developed, direct and online retail channel and loyal following.
It’s an area, in any case, that Google appears to have already been eyeing up for some time. In December, for example, The Information uncovered a test Google was running called EnergySense, which appeared to be a smart thermostat program that helped people lower energy consumption. This reportedly was being trialled on third party devices from Nest competitor Ecobee, but could now potentially find their way to Nest’s thermostats instead.
“Will Nest and Google products work with each other?” co-founder Matt Rogers asked in a hypothetical Q&A post earlier today. “Nest’s product line obviously caught the attention of Google and I’m betting that there’s a lot of cool stuff we could do together, but nothing to share today,” he answered.
Yet, to say that the acquisition is a boost for Google alone is not the whole story.
For months now, Nest has been facing a growing cacophony of criticism from customers that the software on its products was buggy. Leaning on Google’s software expertise could come in handy here (although the overlap between Google haters and Nest lovers could pose a problem in this regard).
And there is also the issue of Nest’s intellectual property and patent fights. Nest is facing patent infringement lawsuits from Honeywell and First Alert maker BRK. To help fight those and also to protect itself from copycats, it’s been aggressive on the patent front, with 100 patents granted, another 200 filed and a further 200 ready to file; and an ongoing licensing agreement with Intellectual Ventures. Bringing Google into the mix will be another major boost for safeguarding the company in these battles, too.
The Nest acquisition also raises questions of how Google’s other hardware interests may come into play going forward.
Motorola, which Google acquired for $12.5 billion in 2012, at one time looked like it could be a way for Google to take a new, vertical approach to smartphones and tablets. Ultimately, Motorola remained a partner among equals with other Android OEMs, and patents became one of the most crucial parts of the deal. Could the Nest acquisition, bringing a new focus on hardware creation, see Google bring in some of the IP and talent that Google picked up in that Motorola deal?
Jan 13
Who Gets Rich From Google Buying Nest? Kleiner Returns 20X On $20M, Shasta Nets ~$200M
Posted in: Today's Chili
Google just bought Nest for $3.2 billion cash, and that means the startup’s early investors Kleiner Perkins Caufield Byers and Shasta Ventures have struck it rich. Multiple sources say Kleiner invested $20 million in Nest and got a 20X return to pull in $400 million. [Update: Meanwhile, the deal returned “almost all” of Shasta’s second $250M fund.]
Nest didn’t disclose the size of its Series A and B rounds or who invested how much. That makes it’s hard to pinpoint who earned what on the sale of the home automation startup that sells smart thermostats and smoke detectors.
Shasta and KPCB funded all of Nest’s Series A round back in September 2010, just a few months after the connected device startup was founded. Then in August 2011, they both participated in Nest’s Series B, which also included Google Ventures, Lightspeed Venture Partners, Intertrust, and Generation Investment Management.
Multiple sources say Kleiner Perkins was Nest’s biggest investor, and was able to invest $20 million in Nest across the A and B rounds. Our sources say the $3.2 billion cash price Google paid for Nest will generate a 20X return for KPCB — which matches the 20X multiple Fortune’s Dan Primack heard from a source. The money came from 2010′s $650 million KPCB XIV fund, which means Kleiner returned over 60% of the fund with just its Nest investment. The treasure should also boost the status of KPCB partner Randy Komisar, who sourced the investments and sat on Nest’s board.
The win for Kleiner Perkins Caufield Byers is reminiscent of its early home runs on investments in Google, Amazon, AOL, and Intuit in the 1990s. Recently, it’s gotten a piece of huge exits like Facebook and Twitter as well as rising stars like Square and Spotify, but not until later rounds when potential returns are much lower. But with Nest, KPCB got in on the ground floor and will reap the benefits when the acquisition by Google officially closes.
Shasta Ventures’ Managing Director Rob Coneybeer, who led its Nest investment
As for Shasta Ventures, today is a massive win for the firm and its managing director Rob Coneybeer, who we hear fought relentlessly to get the $250 million Shasta II fund into Nest’s Series A and B rounds.
[Update: A source familiar with Google’s deal to acquire Nest tells us Shasta’s investment will bring it enough money to return “almost all” of the $250 million Shasta II fund. That means Shasta pulled in $200 million or more from the Nest acquisition.]
The Nest deal almost surely trumps other Shasta hits like Zenprise which was bought by Citrix, and Mint which was bought by Intuit. The returns could bolster confidence in limited partners and help Shasta raise its next fund.
Google Ventures also pulled in big money today, as it led Nest’s Series B and C rounds. Oh, and so did Nest’s founders Tony Fadell and Matt Rogers.
For the venture capital industry as a whole, the Nest acquisition may contribute to a frothy market for hardware entrepreneurs. If companies like Google are out there paying billions in cash for young startups that build devices instead of software, it may become easier for hardware tinkers to raise serious capital and move from their garage to a real laboratory.
[Additional reporting by Kim-Mai Cutler]
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