When it comes to consumer products and cleantech, the two companies that have distinguished themselves over the past few years are smart thermostat maker Nest and electric vehicle pioneer Tesla. So as we ready for GigaOM’s Roadmap Conference, which is devoted to connected design this year and will feature Nest founder Tony Fadell and Tesla’s retail experience head George Blankenship (both are ex-Apple), it’s worth stopping to consider why Nest and Tesla are having signs of early success.
While it can be easy to look at the end products of both companies and simply say, duh, that’s just a great looking piece of design that works seamlessly, each of this companies has approached product design and the overall market in strategic ways that set them apart. So, without further ado, the principles of great design in cleantech:
1) Design first, sustainability second: As unfortunate as it is to admit, study after study suggest that consumers are not motivated in their purchasing decisions by environmental concerns (the most recent study was about Zipcar and car sharing, showing car sharers don’t think much about the environment, they think about convenience and cost).
Both Nest and Tesla have a sustainability angle, but they are first and foremost design companies. More importantly, they don’t market themselves as pro-environment. Nest sells itself based on the simplicity of the design and the fact that it saves consumers money. Tesla’s sell is about the very best in electric vehicle technology, and that’s why when sitting in a Model S, you have a sense that you are basking in the latest tech. Tesla’s philosophy has infected their retail storefronts, which similar to Apple, occupy malls so that customers can get to know all of the neat design aspects of a Model S.
2) Find markets with little innovation and no competition: Tony Fadell has described the competing thermostats he saw when he first considered building a smart thermostat as “PCs from the 90s…square, beige, the same LCDs, the same kind of interfaces.” There had essentially been very little design innovation in a long time and he saw the opportunity to take some of the principles he’d learned as chief architect at Apple and apply them to a staid industry. On Tesla’s side, the company essentially created the market for a luxury EV sports car, which didn’t previously exist. Now we have Fisker and there’s talk that Audi has a $200,000 R8 e-tron in the pipeline, but only because Tesla demonstrated that consumers would buy such a vehicle. Which takes me to my next point….
3) Start at the high end to develop your brand. No one understood this better than Tesla. While GM had taken a stab at the EV market with its famous 90’s failure, the EV1, Tesla didn’t start with anything your average buyer would consider. It started with a toy for wealthy people. In many ways, it seemed that Tesla CEO Elon Musk designed the Roadster for guys like himself—internet millionaires enamored with next generation technology.
Even the Nest thermostat is much more expensive ($249) than your typical Honeywell thermostat, which runs around $80. But Tesla and Nest were designing for that higher end market that is more sensitive to great design and less sensitive to price. With EVs, the car is going to be more expensive than internal combustion competitors from the start due to poor economies of scale and battery expense, so why try to shoe horn that more expensive car into the middle market and fight an uphill battle of convincing consumers that it’s worth the extra expense.
Rather, start with folks with more disposable income who are relatively price insensitive. Then, once that’s established, move toward the middle market as Tesla is slowly doing with the Model S and eventually it’s mid-market EV, due in 2015 for about 30K. Now that the buzz is all around the Nest, it’s moving to get utilities to buy its thermostats at volume (and I presume some modest discount) for its customers.
The initial push for both these companies was never the mass market, it was always carefully calibrated for folks that love technology and design, which is why even the sustainability aspects are sold with a high tech wow, not a treehugger conscience. In Nest’s case, it’s a network of next generation sensors and an interface for crunching all that sensor data to improve energy efficiency. With Tesla, it’s about building the fastest cars (Motor Trend has dubbed the Performance Model S as “the fastest American sedan”) with the best on board computers.
It’s never easy getting consumers to pay a premium price for a product that is going to use less energy because having an environmental conscience is a generational shift that takes decades. And which is often subjugated to economic concerns, unless it’s regulated into the market, which we tend not to like doing here in the U.S. But in the mean time, we should let American companies do what they are good at, which is design next generation products that become “must-have.” And if they’ve got a cleantech element, that environmental element becomes just one more part of why the product is so well designed.