What’s going on at Nest? How about ‘what’s Next?’

This past week, Greg Duffy, the founder and former CEO of Dropcam published a piece on Medium in response to this piece in The Information on Nest Lab’s struggles, in which CEO Tony Fadell disparagingly referred to many former Dropcam employees as “not as good as we hoped” and “[not] very experienced.” Interesting, given what those employees had experience doing: building a leading hardware (+ storage/software) company valued at $555 million (when Nest acquired it) and using only $49 million of funding to do so.

The salacious quotes were part of a broader piece on disappointments at Nest: the portfolio of products has not grown as quickly as expected, there were some recent quality-related issues, and employee turnover has accelerated. Duffy notes that 50 Dropcam employees have resigned and that per LinkedIn, 500 people have left Nest (note: seems high). At $340 million, Nest revenues are far below what was expected of a business that was acquired in 2014 for $3.2 billion (plus another $555 million for Dropcam) and was given an annual budget of ~$500 million. The bar was high.

The tech and financial press have piled on and focused on the culture and operating environment at Nest, with turnover symptomatic of a deeper problem. TechCrunch asked “Is Tony Fadell In Nest’s Way?, in a piece that echoed this Apple Insider article from February suggesting that Fadell should be fired.

While there is more to understand about what is going on at Nest and what that means for the company’s future, given mine and my colleague Nicholas Thorne’s ongoing focus on understanding how people and networks enable great businesses (see Nick’s recent piece on Cruise), I’m more interested in what this exodus of employees and founders means for the future: what’s next?

A diaspora….

~50 Dropcam employees have left Nest so far. In Medium, Greg Duffy highlights a few, notable startups where former employees are playing important roles, including:

Specifically:

• Perhaps the proverbial canary in the coal mine, Elizabeth Hamren, Dropcam’s VP of Marketing left in 2014 and is now Head of Marketing for Oculus. One of her colleagues joined Oculus in November 2015.
• Doug Chan, who was VP of Robotics at Dropcam, and about whom Dropcam founder Aamir Virani said, “You could see a dramatic difference as he joined the team” in 2011, left Nest in August 2015, and is now Chief Manufacturing Officer at drone company Lily Robotics, which has raised $15 million, including a $14MM Series A, led by Spark Capital. Nate Bosshard, who was Director Of Marketing at DropCam and then Head of Content & Camera Marketing at Nest, left the company in July 2015, is a partner at Kholsa Ventures and an advisor to Lily.
• Jason Laska, former Research Scientist (Dropcam) and Senior Software Engineer (Nest), left in May 2015. Emily Pitts, Sofware Engineer, left in July 2015. They both joined Y-Combinator and Sequoia-backed virtual assistant startup Clara Labs.
• Wifi system eero has a lot of buzz and has raised a lot of money ($40 million from First Round, Homebrew, Shasta and Redpoint) and two former Dropcam employees have joined the hardware startup, Tyler Newman and Alexander Andrews.

… in it’s early days

And yet there’s certainly more to come.

Greg Duffy and Aamir Virani founded Dropcam in 2009, convinced Mitch Kapor to back them, developed a product people loved, built a company that employees also loved, successfully exited, and made investors a lot of money — in hardware (and with money left in the bank).

These two are on the beach so to speak, presumably waiting out the terms of their employment agreements. Greg Duffy is an “Entrepreneur,” having left Nest in February 2015 (and Google in September 2105). Amir Virani left Next in August 2015, is taking a “mini retirement” and is an “Advisor” to “Various Startups.”

How about Loren Kirby? He was employee #1 and Chief Architect at Dropcam, Sr. Staff Engineer at Nest and left in November 2015. He’s in Boston and is currently a “Builder of Things.”

What’s next?

Pattern matching.

Smart people had an idea, started a business, convinced great investors to back them, developed a product, found product-market fit, recruited people, scaled the business, and then sold the company for a ton of money.

Would you bet against them doing it again?

Something to watch.