Those Beautiful Nest Eggs

Congratulations to Tony Fadell, Matt Rogers and the world class team at Nest! Today Nest announced that it has agreed to be acquired by Google. As investors in the company since the early days, we here at Lightspeed have been honored to be a partner of Nest. Nest is a very special company with a truly exceptional team… a VC’s dream. We are thrilled to see Nest have an opportunity to further accelerate its business as part of Google.

I first met Tony Fadell, co-founder and CEO of Nest, in the summer of 1991. I was an intern at a then 30 person startup called General Magic (GM) while I was a student at Stanford Business School. Unbeknownst to the rest of the world because it was in deep stealth, GM was trying to create what we now know as the mobile Web with the world’s largest telecom service providers and consumer electronics companies based on GM’s technology. Tony was a fresh U of Michigan grad and part of a small team that worked on low-level software and hardware to develop prototypes of PDAs (the ancient predecessors of what is now an iPhone) that companies like Sony, Panasonic and Motorola would manufacture. As I look back, Tony’s success throughout his career starting at GM has been his uncanny ability to make software and hardware meld together as one to create a sublime user experience. In a company full of talent (the founders of eBay, WebTV, Android all came from GM), Tony stood out even at a very young age. Not only was he exceptionally gifted technically, he gained everyone’s respect for his integrity and strong convictions about the company’s product direction and overall strategy. Tony even as an individual contributor in those very early days of his career was already a leader with vision and capability.

Tony –working on “iPhone” circa 1992 Me–product manager, having a ball

After General Magic went public and Tony and I went on with our respective careers, we would bump into each other from time to time whether it be at tech conferences, at a General Magic alumni gathering at Zot’s, for Halloween at the home of our mutual GM friends Marco & Tracy DeMiroz, or at Hobee’s in Cupertino. I had a long-standing “joke” with Tony that whenever I would run into him, I would tell him I had Lightspeed’s checkbook handy and was ready to write him a check whenever he wanted to start a company. Not sure he knew, but I was dead serious.

After many years and all the success Tony had at Apple — from creating the iPod to leading the development of the first iPhones — I finally had the opportunity to write Tony a check. There was no hesitation from my partnership. That’s what we here at Lightspeed live for: to back visionary, world-changing entrepreneurs like Tony Fadell. And our excitement went off the charts when we met Matt Rogers, Tony’s co-founder, who was responsible at Apple for iPod software development and one of the first engineers on the original iPhone team. We would have invested had they been looking to start a food truck. We had a deep belief that Tony and Matt would make something BIG happen no matter what — it would have been a game-changing food truck no doubt!

Already thrilled to work with Tony and Matt, our enthusiasm for Nest was compounded because of our strong belief in a disruptive wave of next generation, connected devices. The opportunity is massive as even the seemingly most mundane items (like the smoke detector or the thermostat) will be innovated on and brought to life. At Lightspeed we are convinced that we are at the dawn of new era where every product stands to be improved through innovation around Internet connectedness, cloud-based services and data. We are big believers in the use of disruptive Big Data technology (such as from our companies DataStax and MapR) that can make these devices smarter, more capable, and easier to use.

We had high expectations for Nest given all this, but the team exceeded even those expectations. The vision and product design were all exceptionally compelling and powerful, but what really impressed me was their relentless execution and focus on every little detail. I was one of the beta testers for their first product. Matt personally brought a beta unit of the first Nest thermostat to my house and took copious notes as he watched me install it. Thereafter every single bug I reported was attacked until squashed and every piece of feedback I gave was voraciously devoured. What also struck me was the team’s ability to make decisions through instinct but backed up by hard cold numbers and analysis. The team was supremely confident but at the same time incredibly paranoid. They got the Ying & Yang thing down! I honestly wish I could have done more to help them, but it seems like great teams like Nest’s that we are fortunate to back don’t need much help. Any time I attempted to add some insight, they were already at least two steps ahead of me! Our role was really to be consistent supporters as the company rapidly grew and tackled all the challenges they faced.

We applaud and thank them for their amazing accomplishments. It has been personally fulfilling to work with Tony again and thrilling to see him, Matt and the team build an incredible Nest and hatch their first couple of eggs. The acquisition by Google is just a milestone along the way as these brilliant, visionary founders and world class team continue their quest to change the world. I can’t wait to see the rest of their eggs hatch and how they will continue to bring magic to all those unloved things in our homes…