Nest faced serious problems due to weak sales and employee dissatisfaction
Yesterday, Dropcam founder Greg Duffy, who was acquired by Nest last year, issued a statement criticizing the latter, talking about not-so-impressive revenue and management problems. A day later, unofficial data on Nest income over the past year appeared on the network , which amounted to $ 340 million - a good indicator for a company that produces devices in a completely new market for consumers. But these results were lower than internal forecasts by Google, which acquired Nest for $ 3.2 billion in 2014.
As a result, Nest may face serious problems inside Alphabet - for Google in 2014 this takeover became one of the largest in the history of the company. At that time, it was assumed that Nest would be able to compete with Apple in the growing market for smart devices, while Tony Fadell, who previously worked at Apple, would be able to bring Google a piece of Apple’s approach to developing new devices. Now it became apparent that this idea had completely failed.
From a financial point of view, Nest is also experiencing a bad situation - in 2013, during the takeover, Tony Fadell approved the receipt of the operating budget and a separate fund from Google, which made it possible to guarantee that key employees would not leave the company. The budget for Nest was calculated for the next three years and amounted to approximately $ 500 million. If Alphabet does not continue financing by the end of this year, the Nest budget may end earlier than this year.
Along with this, at the end of the year, the date of the possibility of selling blocks of shares of key Nest employees is approaching, and Nest's revenues could not exceed $ 300 million. More precisely, the company was able to do this only after the acquisition of Dropcam for $ 555 million.
But even after that, the situation at Nest remained ambiguous - several co-founders left the Dropcam team, and Greg Duffy openly opposed Tony Fadell. If we take into account the impending crisis within the company, we can expect a wave of dismissals from Nest at the end of this year. Moreover, even Dropcam sales, which account for most of the revenue according to Greg Duffy, began to decline after rebranding by Nest.
