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Summary:

Working with a small team of less than 20 people on a first-time hardware product is tough to do things perfectly the first time, Tony Fadell, founder of Nest Labs said Monday. He talked about how customer feedback informed a quick redesign of the company’s product.

The Nest thermostat debuted just over a year ago and was a blockbuster hit, selling out faster than Nest Labs could restock its supply several times. But that doesn’t mean the device was perfect. At GigaOM’s RoadMap event on Monday, the designer and founder of the internet-connected “learning” thermostat, Tony Fadell, talked about how after years of perfecting the initial product, the company totally redesigned the Nest in less than 11 months.

When you’re working with a small team of less than 20 people on a first-time hardware product, it’s tough to do things perfectly the first time, Fadell said. Tiny Nest Labs didn’t command the same respect among vendors and didn’t have the volume advantage in pricing that Fadell did in his days running Apple’s iPod division. And that impacted design decisions: the first Nest thermostat that went on sale didn’t have a stainless steel bezel, for example, because it was a little too expensive to source.

The new Nest, which started shipping a few weeks ago, is slimmer but also has a single stainless steel bezel. The difference this time around? “This time we can purchase parts in much higher quantities,” Fadell said. “The first time you make a hardware product it doesn’t usually go the way you think it does in terms of cost. You have to redesign it to get your costs in line.”

It wasn’t just visual stuff that they tweaked though. “We looked at everything we did wrong” the first time, Fadell said. That included software. The biggest complaint Nest got from the first-generation thermostat was lack of compatibility: it worked in about 70 to 75 percent of homes in the U.S. and Canada. The new device promises 95 percent compatibility. (Still that didn’t stop customers from all over the world from installing the Nest. Though it’s only sold in two countries, Nest Labs found through IP addresses on its network that shows its thermostat is being used in 63 other countries, Fadell said.)

The folks at Nest also learned a lot from their learning thermostat. The “auto away” feature knows, for example, when people are going to be away (example: when you generally leave in the morning and when you come back in the evening on weekdays). In the previous model, if a house emptied on a weekday morning, Nest’s algorithm would adjust the thermostat to conserve energy after about an hour and a half.

Based on looking at the data they’d collected over a year and a half, Nest changed auto away so it turns on after an hour and a half hour. Fadell says that can save 1.5 to 2 hours of energy, in someone’s home.

Check out the rest of our RoadMap 2012 live coverage here, and a video recording of the session follow below:

  1. “…Nest’s algorithm would adjust the thermostat to conserve energy after about an hour and a half.

    Based on looking at the data they’d collected over a year and a half, Nest changed auto away so it turns on after an hour and a half.”

    But that’s exactly what is stated to be the old model’s behavior. Which takes an hour and a half: the old one or the new one?

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    1. Oh, sorry, the second one should have said “half an hour.” I’ve updated it in the post. Thanks for flagging!

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      1. Np, I just really wanted to know how much it was cut down. Half an hour seems perfect.

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