Utilities

Nest Labs' Bixby talks future of utility partnerships, challenges to growing market share

How is Nest Labs providing utilities with game-changing technologies that both promote efficiency and engage consumers? During today's OnPoint, Ben Bixby, director of energy products at Nest Labs and the CEO and founder of MyEnergy, discusses the impact of innovative technology on demand response, and talks about Nest's partnerships with utilities in California and Texas.

Transcript

Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. With me today is Ben Bixby, director of energy products at Nest Labs and the CEO and founder of MyEnergy. Ben, it's great to have you here.

Ben Bixby: Thanks so much for having me, Monica.

Monica Trauzzi: Ben, the idea behind Nest is to be innovative, simple, smart and beautiful. It's kind of the same concept that we see out of companies like Apple, but this is all in an effort to save energy. How is Nest a game-changing technology for the utility sector?

Ben Bixby: Well, you know, Nest tries to fight those two kind of false dichotomies that we just accepted in the energy space. One is that folks need to make a trade-off between comfort and savings. You know, Nest's technology, Nest's algorithms, Nest's software and hardware are able to strike the balance dynamically for folks, which opens up interest to consumers.

And then of course there's kind of the false dichotomy between something that's effective and efficient, and something that's sexy and desirable. Right, it doesn't have to be the white plastic box that nobody wants, and by building something, building an object of desire, using the same type of engineering that our founders, Matt [Rogers] and Tony [Fadell], brought to the iPhone and the iPod, using this to thermostats has really created a new dynamic.

We've had -- we have customers now pulling for energy programs, changing the dynamic that utilities are used to where programs have to be pushed and forced upon them.

Monica Trauzzi: Right, because your founders are formerly of Apple?

Ben Bixby: Yes, formerly of Apple. When Tony had departed from Apple, the father of the iPhone, the father of the iPod, he was up in Tahoe building a house as one does after inventing the iPhone and the iPod and, looking around the house he just -- he found some things that weren't fulfilling their destiny, weren't fulfilling their potential, you know, these plastic boxes that were sitting on the wall; thermostat, smoke detector, that just -- they didn't meet his aesthetic and they didn't meet his sense of what they could be, and what they could be for him, for customers, for all of us, and so we started making thermostats.

Monica Trauzzi: So I saw you give a speech earlier this week where you identified two groups when it comes to Nest: the folks who adopted the technology early and those who haven't yet but you hope will soon. What's holding that second group back, and how are you tapping into that space in the market?

Ben Bixby: You know it's the first -- the first transition point is simple awareness. You know, the most effective way to -- we find to engage new people in the Nest ecosystem is when they walk into the home of a friend, and there are quite many folks who have friends with Nest.

They see the thermostat light up as they walk by. It starts a conversation, and then all of the sudden as with the iPhone you remember having your little Razor and thinking, you know, "Why would I ever want music, Web, apps on this?"

But as soon as you saw one you realized, "How did I not know that I didn't want this all along?" We tried to achieve the same thing. We've succeeded in achieving the same thing with the Nest thermostat, with the ecosystem of products for the home.

The second key driver though that we're finding is by working together with industry, working together with utilities. Energy efficiency programs and utility programs had been extraordinarily effective, both in raising awareness and introducing incentives that make it that much of a no-brainer, that much of an easier economic decision for folks to go Nest.

Monica Trauzzi: And you're working with utilities like Southern California Edison and Austin Energy. How are these partnerships helping utilities meet their energy savings goals and then also helping consumers sort of simplify their lives when it comes to having data, when it comes to energy?

Ben Bixby: Sure.

Monica Trauzzi: We're not used to seeing those raw numbers.

Ben Bixby: Oh, that's right. You know, the two key points, what a utility needs out of a program with Nest, they need a delivered energy savings, you know, a reliable, large, persistent energy savings, and they also -- some of them need a demand response. Nest offers a product called Rush Hour Rewards. The Nest device is very smart. Baked into the device you can build a custom thermal model of your home, figure out how to pre-cool it, figure out how to adjust the air conditioning with the customer remaining in control the whole time to deliver capacity in addition to energy efficiency.

And the kind of -- the added bonus that you get when you work on Nest is when you work with a product that really is truly an object of desire, you know, the sexy thermostat. We also deliver delight. You deliver delight to customers, and it comes back with our utility partners.

It's all, it's great for us to share in the known, reliable history of a utility brand, and it's great for us to be able to bring to the utility brand the halo, the delightful consumer electronics experience.

Monica Trauzzi: There are some utilities though that haven't quite taken the leap into the new business model of more consumer engagement.

Ben Bixby: Sure.

Monica Trauzzi: What are the primary hurdles that you encounter when you reach out to utilities like those?

Ben Bixby: Sure, well, you know, utilities, there are venerable enterprises, you know, like a great ship of state, they don't shift altogether quickly. Some are captained by folks that are able to steer in the new directions that technology is making possible more effectively.

Others take a good amount of time, but the thing that has been on Nest's side has simply been just the overwhelming drive from consumers kind of forcing the issue. Nest has really been pivotal in the energy efficiency conversation because we've seen programs start at Home Depot, at Lowe's, at the Apple Store.

Customers by the thousands go out and purchase a device because they want it, because it's going to deliver something to them and perhaps energy isn't even their primary consideration in wanting to get this convenience, but you know it delivers on the energy efficiency.

It delivers on the capacity. It opens up the possibility for utilities to partner on the basis of an existing, installed base, as opposed to as they've had with other efficiency programs to labor to create one.

Monica Trauzzi: How safe is the technology from hacking, and what are you doing to keep data safe?

Ben Bixby: You know data security and privacy are perhaps the most important core of the Nest promise and the Nest brand. It's something where you make a single mistake on security, you make a single mistake on privacy and you'll spend decades recovering.

We don't want to find ourselves in that position, so we invest very heavily. We have the very best security engineers, the very best privacy advocates making sure that we stay a couple of steps ahead and it's our -- that's our promise and our commitment and that's reflected in the trust that's been -- our brand has been fortunate to build.

Monica Trauzzi: So that's happening internationally or looking to broaden to some international markets?

Ben Bixby: Nest is a funny product. It's one of those -- earlier this year we were available in only two countries, but when you see on the map they're popping up in over 120 countries. So there's -- I can't comment on what smuggling of thermostat markets are existing.

Nest has no role in that, so we're working to make it official, to make it possible to buy Nest on the shelf all around the world. This past couple of weeks, we've added France, Ireland, the Netherlands, Belgium and we had previously added the U.K. earlier this year.

In each of these countries we're working with utility partners to -- you know -- Nest's energy partners to drive increased adoption and to make sure that from the get-to we are able to deliver on the promise for customers, first and foremost, but to deliver on the potential for the energy sector.

Monica Trauzzi: All right, very interesting. We'll end it there.

Ben Bixby: Great.

Monica Trauzzi: Thank you so much for coming on the show.

Ben Bixby: Oh hey, thanks so much, Monica.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.

[End of Audio]

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