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Despite Bringing in $340M in Revenue, Nest is in Trouble

March 31, 2016 - Written By Alexander Maxham

This isn’t new. We’ve been reporting on the troubles at Nest for a few months now, and it looks like their troubles aren’t anywhere near finished. After hearing how Nest CEO and one of the co-founders, Tony Fadell has belittled employees in front of their co-workers and have even heard that Fadell has had employees scrap projects when they were in their final stages. We also heard that Fadell has turned the workplace at Nest into an uneasy place to work. Where employees are scared to share their opinions about things. Now we’re hearing that the company is underperforming. Well considering they have yet to release a new product since being bought by Google two years ago, that’s not surprising.

Nest did bring in about $340 million in revenue for 2015. Take that with a grain of salt, considering Alphabet doesn’t report Nest’s revenue and profit individually, it’s part of their “Other Bets”, and this is coming from those familiar with the matter. Alphabet feels that the company is underperforming, and this year could be the most critical year yet for Fadell and his team. It has been said that when Google bought Nest in 2014 for $3.2 billion that there were two conditions. One was for Fadell and key executives to remain on board, and the other was for an operating budget from Google. That budget was set for three years, again according to people familiar with the matter. Which means this is the last year of that budget unless Alphabet decides to renew the funding. Making it a critical year for Nest.

After this year, we may see some key executives leave Nest. And after seeing roughly half of Dropcam’s staff leave the company after being acquired by Nest, it’s likely there might be a big number of people leaving. Nest was brought in to be Google’s (before Alphabet was announced and formed) smart home and hardware team. With Tony Fadell being a former Apple executive – who actually designed the original iPod way back in the day. So far it seems that Fadell hasn’t accomplished much of anything. Before Google bought the company, they sold the Nest Learning Thermostat and Protect, their smoke detector. Now they’ve added the Nest Cam, but that was only because of their purchase of Dropcam for $555 million, which was 6 months after being acquired by Google.

It’s not looking good over at Nest, and while $340 million in revenue for a company solely in a niche market does look pretty good. Google was and is expecting more from them.