Google botched Nest integration: Tony Fadell, some other ex-employees

Some early employees of Alphabet’s smart-home company Nest, including co-founder Tony Fadell, are frustrated by how the company’s history has played out currently in which in which has been rolled back into Google.

Google bought Nest for $3.2 billion in early 2014, less than two years before in which blew up its corporate structure to form the holding company Alphabet. Under Alphabet, Nest became an independent company along with also was heralded as the design business inside “some other Bets” category, which also includes Alphabet’s venture capital arms, its smart city project Sidewalk along with also some other experimental businesses.

although looking back, these early former employees say in which the split ended up being a setback for both companies.

“through the outside in which looked like Nest was the perfect poster child for Alphabet although, at the same time, separating in which was undoing the thing in which was most essential for both companies — figuring out how to make them work together,” former Nest CEO Tony Fadell tells CNBC via email.

Fadell stepped down as CEO of Nest in mid-2016 after a turbulent year in which included product issues along with also missed revenue targets. Some employees had complaints about his management style as well, as highlighted in an exposé by The Information.

Google reportedly tried to sell the company in 2016, although ended up keeping in which.

in which week, the company said in which bringing Nest back into the fold could help in which “supercharge” the company’s mission. However, in which phrasing felt ironic to another former Nest employee, who requested anonymity because he feared repercussions through his former employer.

in which employee worked at Nest since 2011, when in which was still independent, along with also says in which when Google CEO Larry Page came to Nest employees before the acquisition, he pledged in which Google could accelerate Nest’s mission.

“although in which didn’t last two years,” in which person says.

Once Nest was turned into a separate company within the Alphabet family, there were no incentives for Google along with also Nest employees to work together. Nest along with also Google even worked simultaneously on extremely similar products, including a protocol for smart-home products to talk to each some other.

“I think in which could have helped had the M&A team had put something in place inside early days to structure along with also incentivize Google along with also us in a way in which could have led to more cooperation,” a third early former employee says.

The real pain point came when Amazon released its smart speaker, Echo, in 2014. As in which grew into a hit, Google subsequently increased its own focus on the home. although with Nest as a separate company, employees there were largely kept inside dark about Google’s efforts, along with also vice versa.

“The rise of digital assistants in smart speakers along with also many some other household objects has upended the idea of maintaining a separate company focused on the home,” Forrester analyst Frank Gillett tells CNBC, adding in which Google currently needs to make up for the time in which lost by quickly roll out better integration between Nest hardware products along with also Google artificial intelligence.

To Fadell, in which should have already happened.

“Nest was acquired by Google for a specific reason,” Fadell says. “I pitched in which as ‘We are the senses along with also you are the brain.’ For the sake of Nest customers along with also talent, I wish they follow through on their commitment they made to us 4 years ago instead of trying to sell in which off like they did just 2 years ago.”

Nest did not immediately respond to a request for comment.

On earnings calls, Google has highlighted Nest among the few “some other Bets” in which generates considerable revenue, alongside healthcare company Verily along with also internet service Fiber. currently in which Nest is actually no longer an “some other Bet,” revenue in in which category could drop in Alphabet’s next earnings report.

The re-merger could also result in employee attrition, as Nest workers Just as before find themselves part of a much larger company.

Nest’s some other co-founder, Matt Rogers, just announced in which he plans to depart the company inside next few months. One of the early employees CNBC spoke to says in which they have already received several anxiety-ridden phone calls through people who are still at Nest who are worried about how their roles will change post-merger. Titles along with also roles are still being ironed out, in which person says, although Google has confirmed in which current Nest CEO, Marwan Fawaz, will currently be reporting to Google hardware boss Rick Osterloh.

Reflecting on his more than a few years at Nest, in which former employees laughs ruefully: “in which was like a soap opera.”

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