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I think they had a shot. It seems to me that they had managed to effectively own the top end segment of the home thermostat market in term of branding and prod

I think they had a shot. It seems to me that they had managed to effectively own the top end segment of the home thermostat market in term of branding and product recognition. I don't see why that wouldn't have enabled a profitable, sustainable company. The thing is that these days people start this kind of company with their exit in mind from day one.

scarface74 7y ago
How sustainable? There are only three ways to sell a thermostat. - at the time a home is being built when it’s easy to get all sorts of add ons bundle through the builder. How many homes are being built in a year? - as a self service after market upgrade to your existing thermostat. In the grand scheme of things, how many people are willing to do that? -working with service companies or building out a network of installers. Also, how often do you replace your thermostat? Look at Roku, they knew from day one that money wasn’t ultimately going to come from hardware sells. Their business model was always ultimately to get a cut of subscriptions, sell ads, and sell viewing habits.
- eloisant 7y ago
  It probably depends on the countries but your thermostat is usually tied to your HVAC system, i.e. you usually change your thermostat when you change your HVAC, so it's more often than when homes are built. So the best way to get volume is probably to partner with a HVAC maker.
  - danans 7y ago
    > i.e. you usually change your thermostat when you change your HVAC This isn't a technical requirement (in the US at least). Thermostat HVAC connections follow a simple wiring/control scheme, which is why smart thermostats can be retrofit at all. That said, replacing an inefficient and poorly balanced HVAC system with a newer well designed one, and insulating a house to modern standards will save far more on operating costs than a smart thermostat, but it is orders of magnitude more expensive in upfront costs.
- NotPaidToPost 7y ago
  Plenty of thermostats are sold per year. Certainly enough to sustain the many existing vendors. E.g. I'm in the UK. There are 25 million homes here and pretty much every home has a thermostat. If I assume that a thermostat lasts 20 years so that about 5% must be replaced in a given year that means a market of 1.25 million thermostats every year. Every DIY and plumbing supplies shop sells thermostats, so they must sell.
  - scarface74 7y ago
    How many companies sustain entire businesses just based on selling thermostats? If Nest captured the entire market and sold $225 thermostats, that's less than a $300 million a year revenue in an entire year. That doesn't take into account wholesale prices. What does the net income look like?
    - NotPaidToPost 7y ago
      Being sustainable does not mean being a unicorn. As said the issue is that the aim always to exit. And also that they approach this as a Silicon Valley tech company and not as a "standard" company... So spending goes out of hands and it's a billion dollars or nothing.
      - TeMPOraL 7y ago
        Personally, at this point I refuse to use products and services made by startups unless I have no other choice. Seeking "an exit" is startup code word for "we don't give a flying fuck about customers and our products; it's only a vehicle to get us rich".
        scarface74 7y ago
        From a B2B side. I’ve been on both sides of a startup. On one side we were a small company with a large company as a customer who demanded that our code be put in escrow in the case we went out of business. The company did, but the customer hired me as a contractor because I was one of a few people in the world who knew how to develop on the proprietary platform. Even better, I was one of only three people in the world who knew how to modify the C++/MFC platform itself. On the other side, I was the dev lead for a company and our business consisted of 60-70% of the vendors revenue. We had them put the code in escrow as part of our contract.

scarface74 7y ago

How sustainable? There are only three ways to sell a thermostat. - at the time a home is being built when it’s easy to get all sorts of add ons bundle through the builder. How many homes are being built in a year? - as a self service after market upgrade to your existing thermostat. In the grand scheme of things, how many people are willing to do that? -working with service companies or building out a network of installers. Also, how often do you replace your thermostat? Look at Roku, they knew from day one that money wasn’t ultimately going to come from hardware sells. Their business model was always ultimately to get a cut of subscriptions, sell ads, and sell viewing habits.

eloisant 7y ago
It probably depends on the countries but your thermostat is usually tied to your HVAC system, i.e. you usually change your thermostat when you change your HVAC, so it's more often than when homes are built. So the best way to get volume is probably to partner with a HVAC maker.
- danans 7y ago
  > i.e. you usually change your thermostat when you change your HVAC This isn't a technical requirement (in the US at least). Thermostat HVAC connections follow a simple wiring/control scheme, which is why smart thermostats can be retrofit at all. That said, replacing an inefficient and poorly balanced HVAC system with a newer well designed one, and insulating a house to modern standards will save far more on operating costs than a smart thermostat, but it is orders of magnitude more expensive in upfront costs.
NotPaidToPost 7y ago
Plenty of thermostats are sold per year. Certainly enough to sustain the many existing vendors. E.g. I'm in the UK. There are 25 million homes here and pretty much every home has a thermostat. If I assume that a thermostat lasts 20 years so that about 5% must be replaced in a given year that means a market of 1.25 million thermostats every year. Every DIY and plumbing supplies shop sells thermostats, so they must sell.
- scarface74 7y ago
  How many companies sustain entire businesses just based on selling thermostats? If Nest captured the entire market and sold $225 thermostats, that's less than a $300 million a year revenue in an entire year. That doesn't take into account wholesale prices. What does the net income look like?
  - NotPaidToPost 7y ago
    Being sustainable does not mean being a unicorn. As said the issue is that the aim always to exit. And also that they approach this as a Silicon Valley tech company and not as a "standard" company... So spending goes out of hands and it's a billion dollars or nothing.
    - TeMPOraL 7y ago
      Personally, at this point I refuse to use products and services made by startups unless I have no other choice. Seeking "an exit" is startup code word for "we don't give a flying fuck about customers and our products; it's only a vehicle to get us rich".
      - scarface74 7y ago
        From a B2B side. I’ve been on both sides of a startup. On one side we were a small company with a large company as a customer who demanded that our code be put in escrow in the case we went out of business. The company did, but the customer hired me as a contractor because I was one of a few people in the world who knew how to develop on the proprietary platform. Even better, I was one of only three people in the world who knew how to modify the C++/MFC platform itself. On the other side, I was the dev lead for a company and our business consisted of 60-70% of the vendors revenue. We had them put the code in escrow as part of our contract.