Tony Fadell, a father of the iPod, is no longer the CEO of Nest Labs as of this afternoon. This is a bombshell for the Alphabet-owned smart home device company, but if you were reading the tea leaves, this is the way it had to be.
Fadell, who I had the pleasure of meeting not long before the release of the Nest Thermostat, is undoubtedly a hardware and product genius. The Nest Thermostat was (and still is) a thing of beauty years ahead of its time. It was his vision that helped Nest break into a forgotten and stagnant market and transformed the hardware company from a small startup with Apple pedigrees into the $3.2 billion behemoth that Google (now Alphabet) acquired in January 2014. Some were surprised that Fadell sold the company at the time, but it's hard to argue with the resources that Google could provide Fadell and his team. It seemed like Nest and by extension Tony Fadell had bright futures.
Instead, Nest's first two years as part of the Alphabet machine have been turbulent. While the thermostat continues to perform, the Nest Protect smoke alarm simply hasn't been as good of a product. The brutal blow was the avoidable recall of 440,000 Nest Protects. Of course, the Protect was back on the market in a few weeks and many Nests could be fixed with a software update, but the damage was done.
Dropcam has a similar story. Nest and Google acquired Dropcam for half a billion, but the acquisition has been anything but smooth. Dropcam's team and Fadell never saw eye-to-eye, so much so that Fadell called out the team, saying "a lot of the employees were not as good as we hoped."
It doesn't even matter if that statement is true or not -- a CEO should NEVER say such a thing about one of his/her acquisitions. Dropcam founder Greg Duffy immediately dropped the righteous anger on Fadell in a scathing and viral Medium piece that called out Fadell's harsh management style and inflexibility, among other things.
When you set aside Fadell's undeniable genius and look at his management track record since the Google acquisition, it's clear why new leadership was needed at Nest Labs. Fadell will remain an advisor to Alphabet and Nest as former Motorola CEO Marwan Fawaz transitions into his new role running Alphabet's innovative hardware division. Perhaps Fadell's departure wouldn't have happened in a different timeline, but a combination of bad luck and poor management decisions made this split inevitable.