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Google to Acquire Nest Labs

By Goedekershomelife @goedekers
founder Tony Fadell holding Nest Protect

Photo from The Verge.

On January 13, 2014, Google formally announced through a press release that they plan to purchase Nest Labs for $3.2 billion. This deal is expected to close in the next few months.

Nest Labs was founded in 2010. Since then, they have been committed to reinventing thermostats and smoke alarms. “From the beginning, our vision was to create a conscious home. A home that is more thoughtful, intuitive – and nice to look at,” Tony Nadell, founder and CEO, explained about his company’s goals.

Currently they offer Nest Thermostat and Nest Protect, a combination smoke and carbon monoxide alarm. They also have an app which gives you weather updates, lets you create a heating or cooling schedule, alerts you when the batteries need to be replaced in your devices, and much more.

From as early as 2011, Google has been involved in the success of Nest, but now they want to take this support a step further. “We’ve had great momentum, but this is a rocket ship,” Tony said.

Nest will still be operating under Tony’s leadership, and it will retain its own distinct brand identity.

Nest investors see huge returns

Kleiner Perkins Caufield Byers and Shasta Ventures, a couple of Nest Lab’s earliest investors, reap impressive rewards from Google’s recent acquisition. KPCB reported a return of $400 million, and a Shasta representative hinted that they netted around $200 million.

Both KPCB and Shasta participated in Nest’s Series A round of funding in September 2010, as well as the Series B round in August 2011.

Questions of privacy

Some concern has been expressed over how much Nest data will be available to Google. Twitter has exploded with commentary about how much access Google will have to the data and how they might use it. Tweets such as this one have been widely circulating the last few days.

Oh PS with Nest’s built-in sensors now Google knows when you’re home, what rooms you’re in, and when you’re out. Just FYI.

— Ryan Block (@ryan) January 13, 2014

Matt Rogers, Nest founder and head of engineering, briefly addressed these concerns in a Q&A post on the Nest blog. He referenced their privacy policy, stating that customer information is only used to provide and improve Nest’s products and services, and promises that this won’t change.

However, much is still ambiguous, so many reporters have felt compelled to contact one or both of the companies to determine exactly how this part of their relationship will be handled.

Energy efficiency

The Nest Thermostat can reduce a home’s energy consumption, and now with Google’s support, Nest will be able to promote this approach to energy efficiency worldwide. “Google has the business resources, global scale and platform reach to accelerate Nest growth across hardware, software and services for the home globally,” Tony said. “Google is committed to helping Nest make a difference and together, we can help save more energy and keep people safe in their homes.”

Apple strikes out

Many believe Apple has taken a blow with Google’s Nest acquisition. Tony and Matt both happen to be former Apple employees, and Tony was actually one of the head designers of the iPod. Not to mention, Nest’s products would have aligned well with Apple’s. It was commonly assumed that someday Nest would be acquired by Apple and “return to the fold” as it were, but they’ve missed out on their chance.

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