For most of the 10 years that I idly thought about thermostats, I had no intention of building one. It was the early 2000s, and I was at Apple making the first iPhone. I got married, had kids. I was very busy.
However, it was still very cold. Bone-chillingly cold.
My wife and I would have to wear our snow jackets until the next morning every Friday night when we drove up to Lake Tahoe’s ski cabin after work. It took the house all night to heat up.
Walking into that frigid house drove me nuts. It was mind-boggling to find a way of warming it up before we arrived. I spent thousands of dollars and dozens of hours trying to hack security equipment and computer equipment connected to an analog phone to fire up the thermostat remotely. My vacations were spent elbow deep in wiring and electronics on the floor. Nothing worked. The first night of each trip was the same. We would huddle under the sheets of ice, on the frozen block of a bed. Our breath would turn to fog as we watched until the house warmed up in the morning.
Then, on Monday, I would return to Apple to finish the first iPhone. I soon realized that I had created a remote control for a thermostat. My iPhone could connect to the HVAC system and I could control it anywhere. The technology I needed to make it work–reliable, low-cost communications and cheap screens and processors-–wasn’t available yet.
How come these shabby, useless thermostats cost nearly as much as Apple’s most cutting-edge technology.
One year later, we built a super-efficient house in Tahoe. I worked on my iPhone during the day, then came home to look at the specs for the house. I chose finishes and materials, and finally, I tackled the HVAC system. The thermostat was back. The top-of the-line thermostats were ugly beige boxes with confusing user interfaces. None of them saved any energy. None of them could be remotely controlled. And they cost around US $400. The iPhone, meanwhile, was selling for $499.
How come these clunky thermostats cost nearly as much as Apple’s most advanced technology?
I complained to the architects and engineers working on Tahoe about how crazy it was. I said, “One Day, I’m going fix this–mark your words!” They all laughed again, and Tony complained once more!
They were at first just idle thoughts born out of frustration. Things changed. Because of the success of the iPhone, the cost for sophisticated components that I couldn’t find earlier was reduced. Low-cost, high-quality connectors, screens, and processors suddenly became available in the millions. They could then be reused for other technologies.
My life was also changing. I quit Apple to travel the world with my family. It was not my plan to start a startup. It was a break. It was a long one.
We went all around the world and tried hard to forget about work. No matter where we traveled, one thing was constant: The thermostat. The infuriating, inaccurate, energy-hogging, thoughtlessly stupid, impossible-to-program, always-too-hot-or-too-cold-in-some-part-of-the-house thermostat.
It needed to be fixed. And I finally realized that it was me.
This 2010 prototype of the Nest thermostat wasn’t pretty. The hard part would be making the thermostat beautiful. Circuit board diagrams show the next step: making it round. Tom Crabtree
It wasn’t possible for the big companies to do it. Honeywell and the other white-box competitors hadn’t truly innovated in 30 years. It was a dying market, with less than $1 million in annual sales in the United States.
Only thing that was missing was the will to do it. I was not ready to carry another startup. But not then. You are not the only one.
Matt Rogers, one of the original interns on the iPod Project, reached out to me. He was a true partner and could share the load. The idea caught me by surprise. I returned to Silicon Valley to get to work. I did research on the technology and then the opportunity, as well as the competition, the people, financing, and the history.
Making it beautiful was easy. Beautiful hardware and an intuitive interface were all possible. These skills were honed at Apple. To make this product meaningful and successful, we had to solve two major problems:
It had to conserve energy.
We had to sell it.
In North America and Europe, thermostats control half a home’s energy bill–something like $2,500 a year. Every attempt to lower that number, whether by thermostat manufacturers, energy companies, or government bodies, has failed. There are many reasons why. It was necessary to make it real while making it easy for our customers.
We had to sell it. Nearly all thermostats were then sold and installed professionally by HVAC technicians. We weren’t going to get in that old boys club. We needed to get into people’s heads first and then their homes. We had to make it so simple to install our thermostat that anyone could do this.
It took around 9 to 12 months of making prototypes and interactive models, building bits of software, talking to users and experts, and testing it with friends before Matt and I decided to pitch investors.
“Real People” Test the Nest
After we made prototypes of our thermostats, we sent them out to people for testing.
It was much bigger than we expected. It wasn’t what I expected. It was almost like the original iPod. It worked. It connected to your smartphone. It learned which temperatures you like. When nobody was home, it turned itself down. It saved energy. Self-installation was a potential stumbling block. Everyone waited anxiously to see how it turned out. How did people shock themselves? Set ablaze a flame. Abandon the project halfway through because it wa