Last week, Nest co-founder and CEO, Tony Fadell decided to call it quits with Nest and left the company. After numerous reports surfacing on the issues inside Nest, it wasn't a huge surprise to see him leaving the company. After all, the company was in trouble. The demanding culture that Fadell had built inside Nest was getting a lot of outside attention, and even Dropcam's CEO Greg Duffy came out and said that he regretted selling the company to Nest. While we do know that Tony Fadell is out as CEO at Nest, which he said he made the decision last year, what's the real reason for Fadell leaving the company?
To put it in a nutshell, it's due to the struggle that Nest had once Alphabet was formed and Nest became its own company and not a company under the Google umbrella. Meaning that Fadell was forced to make money and grow Nest, instead of just being the visionary CEO and spending time on innovation. His decision was ultimately to walk away from the company he founded and ran for eight years.
If we go back to 2014, when Nest was bought by Google, the main reason that Nest opted to sell to Google was the promise that they would have a long runway to grow within Google. They were supposedly going to be modeled after YouTube, which took around a decade to actually pay off for Google. Many saw this purchase as Google investing in hardware to take on Apple, who they continually battle to be the most valuable company in the world. The acquisition had gone well, but where things began to break down was when Nest bought Dropcam in June of 2014. Nest CEO, Tony Fadell's management style didn't mesh well with Dropcam CEO, Greg Duffy's approach. Duffy left the company in January, about six months after the acquisition.
The next bump in the road was when Alphabet was formed in 2015. While under Google, Nest was able to float and didn't have the need to make money as quickly as they do under Alphabet. Under the Alphabet umbrella, Nest needed to be tightly constrained and was also asked to demonstrate financial discipline. This meant that Fadell's role changed pretty quickly. This also meant that Nest's focus went from growth to financials. Sources at Nest say that the pressure is what likely led to the slow pace of new products at Nest.
What led Fadell to leave Nest was the changing in priorities. Currently, there's no rumors going around about Alphabet looking to sell Nest, nor put it back under Google's wing. But we can't rule that out. Especially after they sold Motorola so quickly after buying them.