Led By Ex-CEO Of Willow Garage, Savioke Gets $2M From AME, Google Ventures To Build A ‘Service’ Robot
CES may be finished for another year, but one of the biggest themes of the show — that anything (cars, watches, mirrors, tables, whatever) can be ‘hardware’ — is just taking off. And today’s news of Google buying Nest for $3.2 billion underscores how Google wants to be the player at the front and center of hardware.
Google’s Nest buy may not be giving the search giant access to all the data that zooms across Nest’s apps, thermostats and smoke detectors (for now at least), but it will give Google something else: top-shelf design expertise for that next frontier of hardware, by way of a team of people brought together by two senior hardware veterans from Apple, one of whom is known as the father of the iPod.
This is a significant turn of events for Google.
Up to now, the search giant has cornered business — on desktop internet, mobile devices — through software, and then monetized those markets with data — specifically advertising data.
It’s been a fundamentally different approach from Apple, the quintessentially vertically integrated company that controls not just a platform and the services that run on it, but the devices they run on, too. (And with that, the lucrative margins that come from successful, premium hardware sales.)
Nest will give Google an opportunity to diversify its revenues by tackling a whole new market — connected home devices — with that vertical approach.
“This is the new hardware movement,” as one person described it. “Devices + services, product-market fit and research done through crowdfunding platforms, mix of retail partnerships and direct online sales.”
For Google, Nest is a particularly attractive example. Not only does it make an integrated piece of connected hardware for the home, but it’s designed with interoperability at its heart — in the initial case, by way of apps that you control on your iOS or Android smartphone, along with a well-developed, direct and online retail channel and loyal following.
It’s an area, in any case, that Google appears to have already been eyeing up for some time. In December, for example, The Information uncovered a test Google was running called EnergySense, which appeared to be a smart thermostat program that helped people lower energy consumption. This reportedly was being trialled on third party devices from Nest competitor Ecobee, but could now potentially find their way to Nest’s thermostats instead.
“Will Nest and Google products work with each other?” co-founder Matt Rogers asked in a hypothetical Q&A post earlier today. “Nest’s product line obviously caught the attention of Google and I’m betting that there’s a lot of cool stuff we could do together, but nothing to share today,” he answered.
Yet, to say that the acquisition is a boost for Google alone is not the whole story.
For months now, Nest has been facing a growing cacophony of criticism from customers that the software on its products was buggy. Leaning on Google’s software expertise could come in handy here (although the overlap between Google haters and Nest lovers could pose a problem in this regard).
And there is also the issue of Nest’s intellectual property and patent fights. Nest is facing patent infringement lawsuits from Honeywell and First Alert maker BRK. To help fight those and also to protect itself from copycats, it’s been aggressive on the patent front, with 100 patents granted, another 200 filed and a further 200 ready to file; and an ongoing licensing agreement with Intellectual Ventures. Bringing Google into the mix will be another major boost for safeguarding the company in these battles, too.
The Nest acquisition also raises questions of how Google’s other hardware interests may come into play going forward.
Motorola, which Google acquired for $12.5 billion in 2012, at one time looked like it could be a way for Google to take a new, vertical approach to smartphones and tablets. Ultimately, Motorola remained a partner among equals with other Android OEMs, and patents became one of the most crucial parts of the deal. Could the Nest acquisition, bringing a new focus on hardware creation, see Google bring in some of the IP and talent that Google picked up in that Motorola deal?
Many in the tech world and Washington have railed against the encroaching and limiting effect of patents on innovation, but when the chips are down, IP and patents remain key cornerstones in how tech companies and their founders are making sure they will be able to build their businesses and stick around for the long haul. Tony Fadell, the legendary former hardware supremo at Apple and now CEO and co-founder of new smart home device startup Nest, today revealed that Nest already had 100 patents granted, with 200 more on file with the USPTO and another 200 ready to file.
“At Nest what we did was make sure that we are putting [effort in] a ton of patents,” he said on stage today at the LeWeb conference on Paris. “This is what you have to do to disrupt major revenue streams.”
Nest, which first hit the market last year with a smart, design-friendly thermostat that you can control remotely with an iPhone app, this year added to its range with a smart smoke and carbon monoxide detection and alarm system. But the company has also had its share of patent heat.
It has been embroiled in a thermostat-related patent infringement suit brought by appliance maker Honeywell initially in February 2012, and in November 2013 saw another patent suit get filed from BRK, makers of the First Alert smoke alarms, for infringements related to Nest’s second product.
Nest has also taken steps to buy insurance from elsewhere to shore up its patent position. In September it announced a deal with Intellectual Ventures — one of the most well-known of the patent hoarders — for access to some 40,000 patents via IV’s “IP for Defense” subscription-based product. Nest can draw on these patents as a defendant or in the event of a counterclaim — as it happens to be in the case of Honeywell.
Part of the IV deal also included the acquisition of an unspecified number of patents, “in areas of interest to Nest, including systems and methods for automatic registration of devices.” It is unclear whether Fadell’s patent citation today — totalling some 500 in all if you count granted patents, those waiting approval, and those yet to be filed — include the patents that Nest would have picked up from IV.
You might argue that part of Fadell’s bullishness about patents comes out of necessity because of these suits, but on the other hand you have to remember that he comes from Apple, one of the most aggressive technology companies when it comes to using patents to defend its products, and also filing a lot of them almost as a smokescreen to mask what it may be planning next.
Patents are not the only game in town, of course. In talking about what he saw as important elements of building a business, Fadell also touched on the challenges of hardware startups, and the pitfalls of Kickstarter. You can get a lot of public support (and even financial support) for an idea, but “if you do not plant the seeds early enough” for how you will manufacture and distribute that concept at scale, he said, you will not go anywhere. (Yes, he said this last year at LeWeb, too.)
The other area that Fadell believes we are seeing a shortfall is in how disruptive products are being marketed to consumers.
“You have to communicate what the problem is and what the benefit of the solution is,” as well as giving people an easy way to purchase it, he said. That is part of how you build trust for new, intelligent devices. “If people cannot trust our brand, our things will never sell,” said Fadell. “The ‘Internet of Things’ will never take off if people do not trust the products.”
Big things are coming for littleBits - the New York-based startup that makes lego-style electronics kits. The company, originally conceived by founder Ayah Bdeir in the MIT Media Lab (and backed in part by its head, Joi Ito), has already picked up traction for its first product: kits for children and hobbyists to create fun objects at home (see more in the video below). Today, it is announcing a Series B of $11.1 million to take that concept to the next level: building out a B2B platform for hardware innovation.
There are a number of science and tech partners already working with littleBits and its platform, although Bdeir says it will not be disclosing the names until next year, when the first products come out.
This latest round is being led by True Ventures and new investor Foundry Group, it it also includes new investors Two Sigma Ventures and Vegas Tech Fund (Zappos' Tony Hseih's fund); as well as Khosla Ventures, Mena Ventures, Neoteny Labs, O'Reilly AlphaTech, Lerer Ventures and angel investors. Brad Feld of Foundry is also joining littleBits' board. The company has now raised over $15 million. That includes a $3.65 million in a Series A, and $850,000 in Seed funding. During the Series A announcement in June 2012, littleBits also struck a manufacturing and supply chain management deal with PCH International.
Moving to a B2B model from one targeting consumers was always on the cards, says Bdeir. “It was a part of the strategy ever since I raised the seed round.” It was a two step strategy: step one was inventing kids for kids/education “to lower the barrier for entry to make it easier to start with electronics as possible, and the platform is step two. It's about raising the ceiling and putting the power in the hands of designers.
That is because at its heart, Bdeir says littleBits “is a tool and platform for others to invent.” Focusing on B2B will help littleBits position itself as “a leading hardware innovation platform in the world that others can use to invent and make their products and designs.”
Interestingly, this is actually a part of a bigger trend we're seeing in the hardware movement, to create products and platforms that help others realise their hardware visions. There is of course NYC neighbor Makerbot, and over in the UK, design agency Berg has launched Berg Cloud, a platform for those making connected devices - interestingly also a progression from a hardware product.
(In Berg's case, it was their Little Printer project that inspired CEO Matt Webb and others at Berg to pivot the company. It's also picked up a $1.3 million seed round from Connect Ventures, Initial Capital, and Index Ventures to realise their ambition of making it as easy to develop connected hardware as it is to develop for the web.)
LittleBits is not revealing any figures for how the electronics kids have sold (we have noted before that they are wonderful but are priced at a premium, with starter kits today costing just under $100). But Bdeir tells us that sales have quadrupled in the last year. In fact, part of the funding will be used to help make sure that the company can keep up with the demand its getting for the products - effectively that means more business development and sales people to close retail deals, and developers to continue making more things to add to the modular library to expand that offering. “The number of SKUs that we have is close to 80 and we have hundreds more on the way,” she says.
Back to the platform vision, the idea will be for new prototypes, and perhaps even products, to sit alongside those that are coming from littleBits itself. LittleBits will take a revenue share as part its business model. “We definitely want to support other businesses who want to start their own product lines,” she says. “A lot of game changers start in the hands of large companies these days, and then concepts get democratized and put in the hands of everyday people. But that is changing in areas like game development and manufacturing with the likes of Makerbot. We're doing the same with electronics. It remains a very top down industry, but now we are bringing it into the hands of everyone.”
A video of how littleBits' kit works:
Nest Labs, the home hardware maker co-founded by two ex-Apple luminaries, is today unveiling its second product, Nest Protect, a $129 smart device that hopes to do for the smoke and carbon monoxide detection market what Nest’s Learning Thermostat did for home temperature control. That is, it wants to turn what has become for many a mundane, malfunctioning domestic necessity into a reliable and stylish must-have. Artfully designed, connected up with your smartphone, and full of features that work better than what it wants to replace, Nest Protect is the startup’s biggest play yet to make a global name for itself and position itself as a serious player in the connected home.
Of all the many things to disrupt in the home, why smoke detection? A couple of reasons, one personal and the other strategic.
“It was when I looked at it on the ceiling when i was lying in bed. I thought, What does this thing do? Is it going to wake me up tonight? Is it actually going to alarm properly?” explains Tony Fadell, co-founder and CEO of Nest, in an interview (which you can watch in full below). “Every time I thought about it, I [realized I] didn’t know anything about it. It was this strange product on my ceiling that just annoyed me. It never really was there for safety.” Talking to more people like his co-founder Matt Rogers, others at the company, and his wife and friends, Fadell said that everyone had a story about smoke detectors, all with a common theme: “A product that is supposed to keep you safe, except that it is annoying. Annoying, annoying, annoying.”
And yet, 30-40 million of them are sold every year. “Why don’t we like or appreciate them? That was the genesis for the whole idea of doing the Nest Protect.”
But it’s not just the sales volumes and existing bad, old products that spoke of opportunity to Nest Labs. While a thermostat is at its heart a (very) nice-to-have device, Protect takes Nest into the world of essentials. Smoke detectors are mandated in new-home builds in many countries, and insurance companies and others require you to have them installed, too. While Nest’s thermostat has some scaling issues to it — for example in the UK people cannot simply plug and play, but have to get professionals to install the devices because of the difference in electrical voltage — the same is not true for the Protect, which comes in a battery-powered version that can work, and therefore be sold, worldwide.
Just as Apple has taken technology and managed to both make it slick/aspirational but at the same time human and personal, so too is Nest Labs hoping to do the same with the Nest Protect.
“We didn’t just want to make a better one,” Fadell says of the square-shaped device that comes in white and black (yes, even in aesthetics the Protect departs from the circular look of today’s detectors). “We wanted to create something really emotional. Something that people could really like and embrace in their home, not just buy because the government tells them they have to.”
Indeed, there are many things about the Protect that take the product from bureaucratically-ordered home essential into more personal territory. For starters, the device has a human voice, which currently can be set to English, Spanish or French. The voice is there to warn you in a calm way if, for example, its batteries are low, if it detects carbon monoxide, or if it’s about to make a very loud alarming noise. “Heads up,” is the common refrain of the female, American voice sounds rather a lot like the U.S. Siri — perhaps not a coincidence.
It speaks more urgently simultaneously when an alarm is going off — a feature Nest says it created after reading research that noted children often sleep through the ringing noise of an alarm but will wake up at the sound of a voice.
Nest then takes those signals of reassurance and runs with them, for example with a feature it calls “Nightly Promise.” This is a flash of green light that the device emits after you turn off the light, to let you know that it is working. If you walk under it in the dark, it detects your movement and lights your way.
The human touch continues from there. If the alarm is possibly overreacting, rather than pushing lots of buttons or angrily tearing out 9-volt batteries (both usually involving clambering on to chairs or ladders to do so), you simply wave your arms — a double hat-tip not just to the frantic air-batting you may have done with a dishtowel in the past to get a mis-fired alarm to stop screeching, but also to the very 21st century wave of gesture-controlled gadgets.
“Touch” is as much an operative word here as “human” is. While smoke alarms are usually completely out of reach on the ceiling, Nest has followed the route of many hardware makers and created smartphone and tablet apps that let you communicate with and control the detector. These apps — completely rewritten so that they also work with Nest’s Learning Thermostat for some ecosystem building — alert the user of low-battery alerts, alarm notifications, and one-touch access to emergency numbers. You can use the app to monitor several Protect detectors at once.
Those detectors also work together to alert you to problems in other rooms in the house. The apps, of course, work even when you are not at home, giving you a remote way of monitoring if there are any any smoke, fire, heat or carbon monoxide issues when you are not there.
The Nest Protect has not been a quick follow-up to the Nest Learning Thermostat, the company’s first product, which launched two years ago almost to the week. But it has been no less anticipated.
Nest Labs’ CEO Tony Fadell is commonly known as the “father of the iPod” (maybe we can call him co-parent). And that makes him and Nest Labs immediate magnets for attention, sometimes foiling the company’s best efforts to keep things like this launch under wraps until now.
Just as Nest has been iterating on its Learning Thermostat (most recently opening up its APIs) we can expect to see more to come coming from Nest Protect in the future.
Taking a leaf from the playbook used by sensor-filled smartphone app makers, you can also imagine that Nest will come up with further ways of using the many sensors built into the Protect to roll out further services. The sensors disclosed by Nest in the device include a photoelectric smoke sensor, a CO sensor, a heat sensor, a light sensor, ultrasonic sensors and activity sensors. “I don’t know what else we are going to do but it seems like there are many exciting things in the future,” Fadell says. This is also important considering that Nest is not the only one going after the smart smoke detector market (here and here are two other players).
Just as one example, you can imagine several of these working as a house alarm system (remember, it’s called “Protect”). No surprise, then, that Nest says that in 2014 the Nest Protect will integrate with wired security systems. This is not just a hardware play, though: this also sets up Nest as the single app that can act as a hub to run all your connected home devices.
We have a hands-on demo of how the device works — and how to install it — from co-founder and VP of engineering Matt Rogers, who boldly let us install the Nest Protect on one of his office’s walls to see how it works (this guy! amirite?). Stay on the stream directly following that to hear the one and only Tony Fadell talk about how he came up with the idea of the Nest Protect, defend against the idea of extra features as gimmicks, and much more.
Nest Protect’s two black and white models are going on sale in November via Amazon, Apple, Best Buy and Home Depot in wired (120V) and battery-powered versions, starting first in the U.S., UK and Canada.