 Welcome to the thermostat aisle. It's basically my favorite part of any hardware store, because it's kind of like taking a trip back in time. I mean, you can still buy this guy, which I don't think has changed since 1975. And actually, it controls about 50% of the energy usage in your home. It's pretty important. And it's not very smart. Now, you can try to upgrade and get something like this. It costs about $100. And it's the smart model. It's got a three-inch black and white-resistant touch screen. It has Wi-Fi. It has a Marvell processor. But because it was essentially a smart phone, it's not a Marvell processor, but because it was essentially designed by a plumbing company, you can see it's kind of huge. It requires external power to work. And it's got this interface with all these buttons and a bunch of arrows and stuff that don't make a lot of sense. Now, I was thinking about something like this. This is an iPod Touch. It costs $200. It has a 3 and 1 half inch multi-touch color display. You probably already know how to use it. And it's really thin, with integrated Bluetooth and Wi-Fi and a battery that kind of lasts forever. Now, what happens if we take something as smart as this and use it to control something as important as that? I'm Tony Fidele, and I'm CEO of Nest. I used to work at Apple for nine years. Basically, I managed the iPod division, created the iPod 18 generations, and then three generations of the iPhone. It took some time to decompress. After running a marathon for nine years, we wanted to just take some time. We went around the world. We traveled all around and just kind of got our head out of Silicon Valley and started really concentrating on our kids and learning about energy and learning about how we might be able to leave the world in a better place for our kids and our grandkids. We were building a green home in Lake Tahoe. My architect actually gave us a spec for the heating and cooling system. It was about $15,000. And then this $15,000 system was controlled by $350 thermostats. It's like, $350 thermostats? What do these do? Cell phones are less than $350. These things got to be amazing. So give me the spec. And they give me the spec. And I was like, wait a second. This thing has, they're ugly. They look like computers from the 90s. They're all beige boxes. They have technology literally from the 80s inside of them or 90s. I'm like, why am I paying for such junk? I said, I think I can design a better one. We decided to take all of the things that we've known in terms of building cell phones and portable devices and apply the expertise to a space of energy savings that we think is really important that could help to reduce your energy bills and save the world. Traditional thermostats today, all they are are basically light switches. They just turn on and off these two wires. But there are lots of nuances about how you turn things on and off. There's no standard interface. Like, we have USB or FireWire or different types of interfaces for a computer. These interfaces are all different for many, many systems. And these systems can be 50 years old. So we had to come up with all the technology to identify the types of heating and cooling units you have. It's simply a dial. Because 99.9% of the time, all you're doing is turning up and down your heating and cooling. If you click anywhere on the face, here or here, that's a button. That's all it has is a ring and a button. You can then scroll through various menu items. We have five different sensors. We have temperature, of course, and humidity. But we also have light sensors. And we also have activity sensors, near and far field activity sensors, which gives us a lot of sensor data to do all kinds of very interesting things today with the first product and also in the future. We can detect when you're out of your house for a period of time and then turn it down to a lower energy setting. When you come home, we turn right back on as if you were at home the entire time. So we've saved that amount of energy just by you just walking out of the house. After the first five to seven days, it learns everything it needs to know about your schedule. You can actually use our iOS apps for iPad, iPhone, Android, as well as a web browser to get into all of the different settings. It can help save the environment and save a lot of money. And by the way, it requires guys with my type of skill to do. It's really cool. And we're not going to be competing with Apple. We could make another cell phone or whatever. But competing with Apple would be hell on earth. Let's do something that is not like Apple. Let's go after big, dumb, slow companies. Paparazzi. Yeah. OK, I'm going to do the model thing. Great. Do it, man. Get nuts. You're shooting for the verge. All right. Here we go.
 Welcome to the thermostat aisle.
 It's basically my favorite part of any hardware store,
 because it's kind of like taking a trip back in time.
 I mean, you can still buy this guy, which I don't think has
 changed since 1975.
 And actually, it controls about 50% of the energy usage
 in your home.
 It's pretty important.
 And it's not very smart.
 Now, you can try to upgrade and get something like this.
 It costs about $100.
 And it's the smart model.
 It's got a three-inch black and white-resistant touch
 screen.
 It has Wi-Fi.
 It has a Marvell processor.
 But because it was essentially a smart phone, it's not
 a Marvell processor, but because it was essentially
 designed by a plumbing company, you can see it's kind of huge.
 It requires external power to work.
 And it's got this interface with all these buttons and a
 bunch of arrows and stuff that don't make a lot of sense.
 Now, I was thinking about something like this.
 This is an iPod Touch.
 It costs $200.
 It has a 3 and 1 half inch multi-touch color display.
 You probably already know how to use it.
 And it's really thin, with integrated Bluetooth and Wi-Fi
 and a battery that kind of lasts forever.
 Now, what happens if we take something as smart as this and
 use it to control something as important as that?
 I'm Tony Fidele, and I'm CEO of Nest.
 I used to work at Apple for nine years.
 Basically, I managed the iPod division, created the iPod 18
 generations, and then three generations of the iPhone.
 It took some time to decompress.
 After running a marathon for nine years, we wanted to just
 take some time.
 We went around the world.
 We traveled all around and just kind of got our head out
 of Silicon Valley and started really concentrating on our
 kids and learning about energy and learning about how we
 might be able to leave the world in a better place for
 our kids and our grandkids.
 We were building a green home in Lake Tahoe.
 My architect actually gave us a spec for the heating and
 cooling system.
 It was about $15,000.
 And then this $15,000 system was controlled by $350
 thermostats.
 It's like, $350 thermostats?
 What do these do?
 Cell phones are less than $350.
 These things got to be amazing.
 So give me the spec.
 And they give me the spec.
 And I was like, wait a second.
 This thing has, they're ugly.
 They look like computers from the 90s.
 They're all beige boxes.
 They have technology literally from the 80s
 inside of them or 90s.
 I'm like, why am I paying for such junk?
 I said, I think I can design a better one.
 We decided to take all of the things that we've known in
 terms of building cell phones and portable devices and apply
 the expertise to a space of energy savings that we think
 is really important that could help to reduce your energy
 bills and save the world.
 Traditional thermostats today, all they are are
 basically light switches.
 They just turn on and off these two wires.
 But there are lots of nuances about how you turn
 things on and off.
 There's no standard interface.
 Like, we have USB or FireWire or different types of
 interfaces for a computer.
 These interfaces are all different
 for many, many systems.
 And these systems can be 50 years old.
 So we had to come up with all the technology to identify the
 types of heating and cooling units you have.
 It's simply a dial.
 Because 99.9% of the time, all you're doing is turning up and
 down your heating and cooling.
 If you click anywhere on the face, here or here,
 that's a button.
 That's all it has is a ring and a button.
 You can then scroll through various menu items.
 We have five different sensors.
 We have temperature, of course, and humidity.
 But we also have light sensors.
 And we also have activity sensors, near and far field
 activity sensors, which gives us a lot of sensor data to do
 all kinds of very interesting things today with the first
 product and also in the future.
 We can detect when you're out of your house for a period of
 time and then turn it down to a lower energy setting.
 When you come home, we turn right back on as if you were
 at home the entire time.
 So we've saved that amount of energy just by you just
 walking out of the house.
 After the first five to seven days, it learns everything it
 needs to know about your schedule.
 You can actually use our iOS apps for iPad, iPhone, Android,
 as well as a web browser to get into all of the different
 settings.
 It can help save the environment and save a lot of
 money.
 And by the way, it requires guys with my type of skill to
 do.
 It's really cool.
 And we're not going to be competing with Apple.
 We could make another cell phone or whatever.
 But competing with Apple would be hell on earth.
 Let's do something that is not like Apple.
 Let's go after big, dumb, slow companies.
 Paparazzi.
 Yeah.
 OK, I'm going to do the model thing.
 Great.
 Do it, man.
 Get nuts.
 You're shooting for the verge.
 All right.
 Here we go.