Nest Labs is revolutionizing the home heating and cooling industry with its smart learning thermostat. It aims to reduce the 42% of home energy expenditures spent on heating and cooling through cost savings of $201 per year on average. With its growing patent portfolio and partnerships, Nest sees significant market potential as 91 million households currently use thermostats and demand increases for easy-to-use, connected devices that lower energy bills.

1. Nest Labs
Innovation for Energy and the Environment
Mario Avila, Jeffrey Quackenbush, Carlos Saborio Villalta, and
Christopher Yoder
S

2. Executive Summary
S Nest Labs
S Smart Thermostat
S Revolutionizing the heating and cooling industry
S 42% of consumer home energy expenditures
attributed to heating and cooling (EIA) or
roughly $1,000 a year
S Large thermostat market and an even larger
home appliances market
S Savings of $201 per year

3. Introduction
S 1st and 2nd generation Nest learning thermostats
S Constant connection via a smart phone, tablet, and Internet
S Sold at Lowe’s, Best Buy, Amazon, and the Apple Store
S 130 employees
S Based in Palo Alto, CA
S Kleiner Perkins, Google Ventures, and 5 other well established
venture capitals

4. Current and Future Demand/Market
Typical Energy Consumption of US Households
$85 $257
Heating and Cooling
Water Heating
$269 $1,056 Appliances
Lighting
Electronics
Other
$287
$317

5. Nest Learning Thermostat
S The results of a October 2012 report found that
homeowners using Nest’s Auto-Schedule and Auto-Away
features saved 20.1%.4
S Works with 95 percent of all 24V systems including
gas, electric, forced air, heat pump, radiant, hot
water, solar, and geothermal

6. Rich Patent Portfolio
User Friendly Interface Thermostat Graphical Thermostat User
for Control Unit - US User Interface - US Interface - US 8,195,313
2012/0203379 A1 2012/0131504 A1 B1
Thermostat With Self-
System Methods for
Configuring Connections Adaptive Power Stealing
Updating Climate Control
to Facilitate Do-It- Thermostat – Under
Algorithms – Under
Yourself Installation - US Review
Review
2012/0248211 A1

7. Tony
Chip
Leadership
Matt
Yoky Erik
John

8. Market Demand
Customer Preferences
17% For Smart Thermostats
23%
Cost
Savings
13%
Interface
Ease of Use
Connectivity
7% 20%
Reliability
Features
15% 5%
Tugrul U. Daim, Ibrahim Iskin, (2010),"Smart thermostats: are we
ready?", International Journal of Energy
Sector Management, Vol. 4 Iss: 2 pp. 146 - 151

9. Thermostat Competition
Nest Competitors
$350
$300
$250
$200
Cost
$150
$100
$50
$-
Honeywell Heat Only Honeywell Programmable Nest Ecobee Smart Thermostat Honeywell Prestige
Thermostat Thermostat
Thermostats

10. Other Competitors
S Pulls information from smart
meters and certain GE
products
S Doesn’t allow customers the
ability to control units remotely
only provides information
S Tado is currently only sold in
Germany
S Free hardware but $126
annual subscription fee

11. Current and Future
Demand/Market
S 91 million households have thermostats with 25 million
smart thermostat.3
S $200 X 66 million = $13.2 billion 91 million
25
million

12. Economic Analysis
Nest Average GHG Emissions Savings by Region
0.9 (U.S.)
0.8
0.8 0.8
0.7
0.6
Tons of GHGs
0.6
0.5
0.4
0.4 0.40.4 Heating (Natural Gas)
0.3 0.3 Cooling (Electricity)
0.3
0.2
0.1
0.0
Northeast Midwest South West
Data: EIA, 2005.
Geographic Region

13. Economic Analysis
Nest Average Energy Bill Savings by Region (U.S.)
$250
$213
$200
$169 $172
$150
Dollars
$118
$100
$50
$-
Northeast Midwest South West
Data: EIA, 2005. Geographic Region

14. Economic Analysis
$181 $20 $201
Energy 1.1 Ton Total
Savings GHGs Savings

15. Learning and Diffusion
Smart Thermostat Market
30,000,000
25,000,000
Number of Smart Thermostats
20,000,000
15,000,000
Nest
Industry
10,000,000
5,000,000
-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year

16. Learning and Diffusion
Smart Thermostat Market
100,000,000
90,000,000
80,000,000
Number of Smart Thermostats
70,000,000
60,000,000
50,000,000 Nest
Industry
40,000,000
Market Saturation
30,000,000
20,000,000
10,000,000
-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year

17. Environmental Management
Systems
Government
Product Standards Private Partnerships
Programs

18. Private Partnerships
S Energy providers
S Retail stores
S HVAC professionals

19. EMS Framework
Research
Assess Define Strategy
Strategy & Targets
Relationship
Lobbying
Management
Recordkeeping Communication

20. Life Cycle Assessment
S Manufacturing –
materials, processes, location, regulations
S Transportation – Pacific Ocean, North America
S Energy Savings – energy bill, emissions, geography
S Disposal – silicon, IC’s, no collection program, e-waste
S Minimal impact on water

21. Externality Analysis
S In using the Nest, customers are reducing GHG’s and
other associated emissions with power plants based on
geographic location
S CO2 currently valued at $21/metric ton
S Nest alone accounts for reduction of 744,624.8 metric
tons CO2/year
S Net savings of $15.6M / year in CO2 costs

22. Nest Learning Thermostat

23. Sensitivity Analysis
Nest Smart Thermostat Tornado Plot
Energy Saved
Electricity Price
Fuel Cost
Discount Rate
Capital Cost
-$500.00 $0.00 $500.00 $1,000.00 $1,500.00 $2,000.00

24. Sensitivity Analysis
$1,200.00
Net Present Value of Purchase
$1,000.00
Discount
$800.00 Rate
Capital
$600.00 Cost
Fuel Cost
$400.00
$200.00 Electricity
Cost
$0.00
0% 50% 100% 150% 200%

25. If you don’t trust us, ask them!

26. 1. http://gigaom.com/cleantech/nest-makes-its-smart-thermostat-er-smarter/
2. http://bits.blogs.nytimes.com/2012/10/02/nest-second-generation/
3. http://www.energystar.gov/ia/partners/prod_development/revisions/downloads
/thermostats/Summary.pdf
4. http://downloads.nest.com/summer_2012_savings_white_paper.pdf