Why We Sold to Google for $3 Billion: Nest CEO

REPLAY VIDEO
Your next video will start in
Pause

Recommended Videos

  • Info

  • Comments

  • VIDEO TEXT

Jan. 24 (Bloomberg) -- Tony Fadell, CEO at Nest Labs, discusses the company’s deal with Google, the future of controlling household products and their on-going relationship with Apple from the World Economic Forum in Davos, Switzerland on Bloomberg Television’s “Market Makers.”

Change things for nest?

For us, we have been on the market for two years.

We've been producing new products, but we wanted to roll them out to multiple countries.

We are in 96 countries where we don't even sell today because we can see these items being connected but we can get there fast enough.

For us going with google, we could get financing, no problem, but we can get access to resources to allow us to move these products much more quickly around the world.

As a small startup, you have to build this.

But why now and why was $3 billion the right number?

When we see snap chat, i like to say i'm not sure what the purpose is besides sexting, why do you want to sell at that price point when they don't? this was about a vision that larry and the board understood.

They wanted to build this out in a big way.

For us, it was about getting out to the world faster.

$3 billion is a big number.

We have a revenue-based business.

We make money.

Nice money.

We have right customers and a great band and other assets besides our radix, patents, and other things, and our vision for the future.

I'm fascinated by what you said about who will being the key to expanding geographically.

-- google being key to expanding geographically.

Will they get as much out of nest as you will get out of google?

They have offices and services around the world.

I think we're both coming together to learn from each other.

There's a lot of things that i think i benefit of sides.

Typical mergers happen when there are two competitors timing together, and they reduce overhead.

These are two like-minded visions coming together with consummate drew resources and putting those together and then letting those things grow and flourish.

You offer google data and intel and many people say that is what google is, a big data company.

Should we have privacy concerns that google will know more information about our habits?

Let's be clear.

The nest terms of service, we use it to improve the products and that has not changed and that will not change.

If it ever does, we will make sure to let you know.

Right now that data is not going into all the other -- google, sorry, you're not going to know how cold i am.

Tony, you revolutionized the thermostat business.

You're in the smoke detector business.

What other product -- i'm going to say it -- what other products are rigpe -- ripe for disruption?

There are lots of things.

Wouldn't have these bits and bytes from cell phones, billions of cell phones and smartphones, all these different ingredient pieces are tangible to put into all of these different products around is that you have never seen.

You can see refrigerators.

Or not talking about refrigerators with basically a tablet on the front, but connecting it so it gives energy signals and also when you're home or not.

It can actually turn off and use less energy and help you save more money.

It doesn't have to be a screen, but he can have these little bites into a to help you get smarter.

The internet thing, everyone loves to talk about, you actually believe all of this hype is limitless?

I don't know about limitless, but it will gradually over time come into our lives to help bring more convenience to our lives to allow us to do other things we like to do.

If you look at over the last 30 or 40 years, the only information -- information that is happened was appliances.

And five years, what is my apartment going to look like?

What you wanted to look like.

What could it look like?

At the end of the day, making sure it is safe, saving energy.

Today, we are wasting so much energy because it is cumbersome.

Why doesn't he know more about you and just to the right thing for you on your behalf so you don't have to sit there and press all the different buttons?

It is not about getting in your face with technology, maybe we think about the smartphone everyone walking around like this, but taking these cumbersome things away from you.

Is that the best opportunity, energy savings because it is so practical and the money is real?

Energy savings is one aspect, but it is also convenience.

You can overstate convenience.

Does everybody need to do everything remotely from a smart phone?

Not remotely, but there is a piece of mind that comes from having a cell phone and looking at the status of your home when you're not there, like traveling like we are today.

It is a piece of mind.

We found no one cared about their thermostat two years ago.

We have our customers and now they are actually checking their apps all the time to make sure their home was ok.

Now all of a sudden they care.

Just like you did not check e-mail before, now you have to check it every five seconds.

What is in the future for your relationship with apple?

I have lots of friends, great thank yous and support.

Today we are in the apple retail stores.

We have ios support and that has not changed.

But will you still be in the apple stores now that you're the google family?

That is their decision.

But will you be?

You should ask them.

They have been a valued partner.

We have a lot of ios device owners that use our products, and we want to offer them as products and it is that for apple to decide if they want to continue.

How might else you change what nest is?

Might you think of doing something else now that you're inside the google family, you have access to the android platform and a number of other things from inside that would have been much more difficult to do from the outside?

I think there are a lot of things we can trim about.

The transaction is not closed, let's be clear.

We cannot jump the gun.

Right now it is business as usual.

When things close -- it is premature to talk about it.

Who calls who?

How did this transaction originates?

Did you have a relationship with them already?

Google has been an amazing partner.

They were an investor.

And through that relationship, and i've known many people at google for years, it is silicon valley.

It is personal.

Did you have a bank to mediate the process?

Oftentimes when we see these things happen in old-school m&a, a bank may be infraction or introduction.

In silicon valley, you're in the same pocket.

Most of these things happen at a party.

We were not up for sale, so we did not have an auction per se.

You see a lot.

You see a lot that goes on inside silicon valley.

Eat pizza, going for beers.

What is the most interesting thing you're saying that does not involve google or nest?

That is an interesting question.

Some interesting things i seen?

Well, you can say there is a self driving car.

I'm seeing the automation of vehicles.

Really, computer-assisted driving.

I think that is really interesting to us because we are taking all of the sensor technologies and putting them in cars and making people safer.

I'm really encouraged by that and seeing where those things are going.

I think it will happen much more rapidly than we think.

How long?

Between three and five years.

How long is it going to be before you see your self owning a self driven car?

Self driving is very different.

Assisted driving, we have that today.

It is only getting better.

It will be assisted parking, all kinds of commerce and things we do in a car today that will be taken away to make it safer.

I can't take credit for

This text has been automatically generated. It may not be 100% accurate.

Advertisement

BTV Channel Finder

Channel_finder_loader

ZIP is required for U.S. locations

Bloomberg Television in   change