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This whole saga serves less as a warning to customers and more as a warning to businesses. Be careful about acquiring other companies - liabilities come in many

This whole saga serves less as a warning to customers and more as a warning to businesses. Be careful about acquiring other companies - liabilities come in many forms. It may have seemed like a great deal when Nest bought Revolv - after all, we know acquihires are usually based on the fact that the acquired company was going under anyways. Pay a minimal amount for a failing company and get some great engineers. But it sounds like they didn't anticipate the brand problem they would ultimately face for ending support for a product that was inevitably going to disappear in either case. Something early messaging (say, at the time of the acquisition) could have helped soften. Nest didn't build this product - Revolv did. And they banked their company on its success and lost. Nest might be alive and healthy but it doesn't seem right to say they somehow acted dishonestly just because they picked up the pieces of a failed company but didn't want to prop up a product which nobody wanted.

studentrob 11y ago
> it doesn't seem right to say they somehow acted dishonestly just because they picked up the pieces of a failed company but didn't want to prop up a product which nobody wanted. Agree with all of your comment except except this part. Had Nest acquired the company after Revolv independently announced it would discontinue its product, then customers wouldn't have reason to be unhappy with Nest. M&A is risky and research is important. This case seems like a catch 22 for Nest. Acquire the assets early and inherit the legacy product burden. Don't do that, and risk losing access to the same assets. I'm sure they did their research. What is not known at this point is the cost of keeping up the systems that enable Revolv's product. Were they more open about that, I might be more sympathetic. As it is I'm not sure what could be done to right this other than give Revolv customers a refund.
- abraae 11y ago
  This is the key point indeed. Some of us probably have a mental image of a large ec2 instance plugged into an Oracle RDS instance, nicely monitored, disaster recovery plan tested and ready, chugging away just fine. Maybe a few $10Ks per year to keep it running. Why would they piss their customers off just to save a few thousand bucks? But in reality, maybe the back end is a teetering pile of doggy do, running on old bare metal machines in a couple of racks, backups not trusted 100%, lots of humans involved in keeping it running and answering customer support inquiries - so more like many $100Ks per year (indeed some companies would be able to spend $1Ms). In this case it would be crazy to try and keep it running, since there is no new business coming from it. Likely the truth is somewhere in between. Some transparency here from Nest would be a PR win.
  - newjersey 11y ago
    I don't know how they could spin this in a positive light. Here's a story from Joyent from about four years ago https://news.ycombinator.com/item?id=4391669 https://news.ycombinator.com/item?id=4391669 I will bring this up every time someone wants to give Joyent money. Do NOT give Joyent money. They will screw you over. Edit: > In an ideal world, Hub owners would be free to point their devices at a different central server, run by a third-party competitor or a trusted friend, or even run such a server on their own. They would likewise be free to collaborate on improved software that would unlock the potential of the Hub hardware or purchase such software from a competitor to Nest. > We work to improve the law and protect your right to tinker with technology. But there's another way to push back against untrustworthy devices, and that's refusing to buy electronics and software that prioritize the manufacturer's wishes above your own. Certainly Alphabet, which owns both Nest and Google, is going to have trouble selling its hardware in the future if it doesn't provide customers some assurance that they won't be left in the cold like those who rely on the Revolv Hub. A few years of deprecation warnings alongside a free and open source server that works as a drop in replacement for the server would mitigate much of this bad will. Alphabet cannot isolate this to just Nest. This leaves a bad mark for unrelated projects including on hub https://on.google.com/hub/ https://on.google.com/hub/ > OnHub keeps getting better. > Future friendly > OnHub is designed to support a growing number of "smart devices" over time because it includes Bluetooth® Smart Ready, 802.15.4 and Weave. > Always improving > OnHub often updates its router software with newly released features without any interruptions to your Wi-Fi. > Stays secure > OnHub's software includes advanced and always-evolving security features to keep your network safe.
    - themartorana 11y ago
      "We appreciate and value you as one of Joyent's lifetime Shared Hosting customers. As this service is one of our earliest offerings, and has now run its course, your lifetime service will end on October 31, 2012." "Lifetime..." "has now run its course..." /me smh
  - kevin_thibedeau 11y ago
    The solution is to deploy new Nest firmware on the Revolv hardware, not axe your customer base. Then you at least get to exchange the loss of features with entree into the current Nest ecosystem. The message now is that all Alphabet supported hardware can't be trusted. Ha ha sucker. You just blew $300 on a fancy doorstop.
- tomc1985 11y ago
  They probably saw this hazard and determined early-on to cut the product. Most likely, all messaging up until now has been lies.
lutorm 11y ago
When you pick up a piece of a company, you pick up assets AND liabilities. I'm not sure how it could work any other way. If a "lifetime warranty" can define lifetime as "until we don't want it to live any longer", then it lacks meaning. But unless they can get away with such a claim, they acquired the liabilities of those warranties and should honor them.
- matthewmcg 11y ago
  Actually, in the U.S. it is very common for acquirers to structure an acquisition as an "asset purchase" precisely so that they can pick and choose the assets they are purchasing and the liabilities they are agreeing to assume. In general, the buyer and the seller are free to agree to whatever arrangement they wish in the purchase agreement. There are of course limitations in background law for protection of creditors, employees, the environment, and the government's interest in certain kinds of government contracts. Also the Common law concept of "successor liability" is sometimes applied to buyers that try to escape liability. But there is no general principle requiring liabilities to follow the assets of a business.
guhcampos 11y ago
So what you're saying is a company can buy another and get all of its assets and none of it's liabilities? Wow that's a win-win situation!
- mschuster91 11y ago
  Of course. Buy the assets, sign hiring agreements with the old people, close down the door on the old company once everything is transferred.
PhasmaFelis 11y ago
> Nest didn't build this product - Revolv did. And they banked their company on its success and lost. Nest might be alive and healthy but it doesn't seem right to say they somehow acted dishonestly just because they picked up the pieces of a failed company but didn't want to prop up a product which nobody wanted. When you buy a company, you inherit its customers as well as its assets. If you decide that you don't need those customers and can afford to alienate them, that's your decision to make, but you don't get to blame the previous owners for your own actions.
- CaptainZapp 11y ago
  If you decide that you don't need those customers and can afford to alienate them, that's your decision to make I don't know about American law, but herearound, when you acquire a company you acquire the contracts, which this company has underwritten. You can't just tell your counterparties: "Tough shit and sorry mate! We apologiese for the inconvenience!" and just tear up valid, legal contracts at your discretion.
  - ceejayoz 11y ago
    In America, most contracts customers get with devices like this read along the lines of "we can eat your children and you're required to applaud while we do so".
  - sib 11y ago
    In many cases, what you read about as "acquisitions" are actually "asset sales," meaning that the seller and the acquirer have specifically agreed on what assets have been transferred (say, real estate, IP, brand names, machine tools, whatever), and what have not. Similarly for liabilities. There are, of course, laws relating to fraud, consumer protection, etc. It's only when you actually acquire the company (buy the outstanding shares) that basically "everything" transfers to the purchaser. And even there, they can agree on carveouts for specific liabilities or other things, such as existing customer support.
pcurve 11y ago
Nest could've handled this a lot better by doing the followings: 1. Provide 2 more years of support. 2. Provide incentives to current owners by letting them upgrade to new version at discount, or offer discount to other Nest products. Yes, people are pissed because they're bricking their devices. But people are more pissed because the compensation Nest is offering is nil and comes across as absurdly greedy.
- chaostheory 11y ago
  My guess as to why they're offering nil 1. Alphabet is tightening the purse strings 2. Nest's hub, coded named 'Flintstone', is really behind schedule. It's so behind schedule that Google came out with their own hub, called OnHub. This was a really botched acquihire
  - newjersey 11y ago
    I hope you mean nest when you said it. Occam's razor > CEO Tony Fadell, a former Apple exec, has tried to infuse his former company’s DNA across Nest. That means a preference for only pushing polished products out the door, an antithetical approach to its sister company, Google. > Since joining Google’s fold two years ago, Nest, the connected-device maker, has yet to release its own new connected device.* > * Its only new hardware, the Nest Cam, was a repackaging of its acquired Dropcam product. https://recode.net/2016/03/24/nests-next-frontier-for-the-smart-home-is-all-about-security-if-it-can-pull-it-off/ https://recode.net/2016/03/24/nests-next-frontier-for-the-sm... I'd say Tony Fadell is the weakest link here. Things work differently outside the reality distortion field. > "Larry Page is said to be a friend of Fadell, but he would do very well to stay completely out of it," remarked Mr Gwyther. http://www.bbc.com/news/technology-35925139 http://www.bbc.com/news/technology-35925139 As an outsider, I think whether alphabet and Tony Fadell part ways soon or not will be indicative of things to come.
    - tamana 11y ago
      The OnHub is a quite polished product.
jusben1369 11y ago
I think the issue is mostly how they're bricking the device. Can't they let it keep running while no longer providing any support?

studentrob 11y ago

> it doesn't seem right to say they somehow acted dishonestly just because they picked up the pieces of a failed company but didn't want to prop up a product which nobody wanted. Agree with all of your comment except except this part. Had Nest acquired the company after Revolv independently announced it would discontinue its product, then customers wouldn't have reason to be unhappy with Nest. M&A is risky and research is important. This case seems like a catch 22 for Nest. Acquire the assets early and inherit the legacy product burden. Don't do that, and risk losing access to the same assets. I'm sure they did their research. What is not known at this point is the cost of keeping up the systems that enable Revolv's product. Were they more open about that, I might be more sympathetic. As it is I'm not sure what could be done to right this other than give Revolv customers a refund.

abraae 11y ago
This is the key point indeed. Some of us probably have a mental image of a large ec2 instance plugged into an Oracle RDS instance, nicely monitored, disaster recovery plan tested and ready, chugging away just fine. Maybe a few $10Ks per year to keep it running. Why would they piss their customers off just to save a few thousand bucks? But in reality, maybe the back end is a teetering pile of doggy do, running on old bare metal machines in a couple of racks, backups not trusted 100%, lots of humans involved in keeping it running and answering customer support inquiries - so more like many $100Ks per year (indeed some companies would be able to spend $1Ms). In this case it would be crazy to try and keep it running, since there is no new business coming from it. Likely the truth is somewhere in between. Some transparency here from Nest would be a PR win.
- newjersey 11y ago
  I don't know how they could spin this in a positive light. Here's a story from Joyent from about four years ago https://news.ycombinator.com/item?id=4391669 https://news.ycombinator.com/item?id=4391669 I will bring this up every time someone wants to give Joyent money. Do NOT give Joyent money. They will screw you over. Edit: > In an ideal world, Hub owners would be free to point their devices at a different central server, run by a third-party competitor or a trusted friend, or even run such a server on their own. They would likewise be free to collaborate on improved software that would unlock the potential of the Hub hardware or purchase such software from a competitor to Nest. > We work to improve the law and protect your right to tinker with technology. But there's another way to push back against untrustworthy devices, and that's refusing to buy electronics and software that prioritize the manufacturer's wishes above your own. Certainly Alphabet, which owns both Nest and Google, is going to have trouble selling its hardware in the future if it doesn't provide customers some assurance that they won't be left in the cold like those who rely on the Revolv Hub. A few years of deprecation warnings alongside a free and open source server that works as a drop in replacement for the server would mitigate much of this bad will. Alphabet cannot isolate this to just Nest. This leaves a bad mark for unrelated projects including on hub https://on.google.com/hub/ https://on.google.com/hub/ > OnHub keeps getting better. > Future friendly > OnHub is designed to support a growing number of "smart devices" over time because it includes Bluetooth® Smart Ready, 802.15.4 and Weave. > Always improving > OnHub often updates its router software with newly released features without any interruptions to your Wi-Fi. > Stays secure > OnHub's software includes advanced and always-evolving security features to keep your network safe.
  - themartorana 11y ago
    "We appreciate and value you as one of Joyent's lifetime Shared Hosting customers. As this service is one of our earliest offerings, and has now run its course, your lifetime service will end on October 31, 2012." "Lifetime..." "has now run its course..." /me smh
- kevin_thibedeau 11y ago
  The solution is to deploy new Nest firmware on the Revolv hardware, not axe your customer base. Then you at least get to exchange the loss of features with entree into the current Nest ecosystem. The message now is that all Alphabet supported hardware can't be trusted. Ha ha sucker. You just blew $300 on a fancy doorstop.
tomc1985 11y ago
They probably saw this hazard and determined early-on to cut the product. Most likely, all messaging up until now has been lies.

lutorm 11y ago

When you pick up a piece of a company, you pick up assets AND liabilities. I'm not sure how it could work any other way. If a "lifetime warranty" can define lifetime as "until we don't want it to live any longer", then it lacks meaning. But unless they can get away with such a claim, they acquired the liabilities of those warranties and should honor them.

matthewmcg 11y ago
Actually, in the U.S. it is very common for acquirers to structure an acquisition as an "asset purchase" precisely so that they can pick and choose the assets they are purchasing and the liabilities they are agreeing to assume. In general, the buyer and the seller are free to agree to whatever arrangement they wish in the purchase agreement. There are of course limitations in background law for protection of creditors, employees, the environment, and the government's interest in certain kinds of government contracts. Also the Common law concept of "successor liability" is sometimes applied to buyers that try to escape liability. But there is no general principle requiring liabilities to follow the assets of a business.

guhcampos 11y ago

So what you're saying is a company can buy another and get all of its assets and none of it's liabilities? Wow that's a win-win situation!

mschuster91 11y ago
Of course. Buy the assets, sign hiring agreements with the old people, close down the door on the old company once everything is transferred.

PhasmaFelis 11y ago

> Nest didn't build this product - Revolv did. And they banked their company on its success and lost. Nest might be alive and healthy but it doesn't seem right to say they somehow acted dishonestly just because they picked up the pieces of a failed company but didn't want to prop up a product which nobody wanted. When you buy a company, you inherit its customers as well as its assets. If you decide that you don't need those customers and can afford to alienate them, that's your decision to make, but you don't get to blame the previous owners for your own actions.

CaptainZapp 11y ago
If you decide that you don't need those customers and can afford to alienate them, that's your decision to make I don't know about American law, but herearound, when you acquire a company you acquire the contracts, which this company has underwritten. You can't just tell your counterparties: "Tough shit and sorry mate! We apologiese for the inconvenience!" and just tear up valid, legal contracts at your discretion.
- ceejayoz 11y ago
  In America, most contracts customers get with devices like this read along the lines of "we can eat your children and you're required to applaud while we do so".
- sib 11y ago
  In many cases, what you read about as "acquisitions" are actually "asset sales," meaning that the seller and the acquirer have specifically agreed on what assets have been transferred (say, real estate, IP, brand names, machine tools, whatever), and what have not. Similarly for liabilities. There are, of course, laws relating to fraud, consumer protection, etc. It's only when you actually acquire the company (buy the outstanding shares) that basically "everything" transfers to the purchaser. And even there, they can agree on carveouts for specific liabilities or other things, such as existing customer support.

pcurve 11y ago

Nest could've handled this a lot better by doing the followings: 1. Provide 2 more years of support. 2. Provide incentives to current owners by letting them upgrade to new version at discount, or offer discount to other Nest products. Yes, people are pissed because they're bricking their devices. But people are more pissed because the compensation Nest is offering is nil and comes across as absurdly greedy.

chaostheory 11y ago
My guess as to why they're offering nil 1. Alphabet is tightening the purse strings 2. Nest's hub, coded named 'Flintstone', is really behind schedule. It's so behind schedule that Google came out with their own hub, called OnHub. This was a really botched acquihire
- newjersey 11y ago
  I hope you mean nest when you said it. Occam's razor > CEO Tony Fadell, a former Apple exec, has tried to infuse his former company’s DNA across Nest. That means a preference for only pushing polished products out the door, an antithetical approach to its sister company, Google. > Since joining Google’s fold two years ago, Nest, the connected-device maker, has yet to release its own new connected device.* > * Its only new hardware, the Nest Cam, was a repackaging of its acquired Dropcam product. https://recode.net/2016/03/24/nests-next-frontier-for-the-smart-home-is-all-about-security-if-it-can-pull-it-off/ https://recode.net/2016/03/24/nests-next-frontier-for-the-sm... I'd say Tony Fadell is the weakest link here. Things work differently outside the reality distortion field. > "Larry Page is said to be a friend of Fadell, but he would do very well to stay completely out of it," remarked Mr Gwyther. http://www.bbc.com/news/technology-35925139 http://www.bbc.com/news/technology-35925139 As an outsider, I think whether alphabet and Tony Fadell part ways soon or not will be indicative of things to come.
  - tamana 11y ago
    The OnHub is a quite polished product.

jusben1369 11y ago

I think the issue is mostly how they're bricking the device. Can't they let it keep running while no longer providing any support?