Google — whose self-described mission is to organize all the world’s information — just bought Nest with $3.2 billion cash. On the surface, they’re getting a four-year-old company that makes smart thermostats and smoke alarms.
But when you probe deeper, you realize they’re actually getting much more. Jokes aside (like needing a Google+ account to change the temperature in your house or getting ads for fire extinguishers while your house burns down), there’s something subtly different happening here. This isn’t just another corporate giant acquiring a well-loved startup and its users.
It’s not just an acquisition — it’s an annexation. The kind that involves planting a flag. Because now we’re talking physical territory, which is the case as the internet inexorably and increasingly reaches into the real world. Simply put: People invited Nest into their houses. Not Google.
About
Dan Hon crossed over from the startup world to become an Interactive Creative Director at Wieden+Kennedy, an independent advertising agency based in Portland. (Full disclosure: Clients include Facebook and Sony.) Previously, Hon was an alternative reality game designer with Mind Candy (Perplex City) and Six to Start (We Tell Stories). Follow him on Twitter @hondanhon.
It was one thing when services like AdMob got acquired by Google or Flickr and Tumblr got acquired by Yahoo! It’s another thing when the companies — really, their devices and users — getting acquired are services that have a persistent physical presence in our lives. People have always thought of online places as distinct spaces, but with a sense of place comes a sense of territory, belonging, and community.
That’s why, despite Google and Nest’s statements that Nest would remain separate, Google essentially bought its way into your house — literally so if you’re a Nest user. An annexation indeed: You didn’t have a choice. You woke up and the new ruler was in town. There was no resistance. There are no good alternatives to Nest (yet). In fact, gaining users this way is the M&A equivalent of the military shock and awe tactic — rapidly dominating through billions of dollars instead of firepower; imposing will upon user communities without consent. And nowhere in this campaign does anyone put effort into winning hearts and minds. (Marissa Meyer’s tumblr, although admirable, doesn’t count.)
Am I saying that all such acquisitions are a bad idea? Not necessarily. But given a rapid-fire startup culture, I do think we need to question our values of designing magical experiences for devices and services that will create personal relationships with people (and potentially transform lives). How are those communities going to feel when they’re bought out? Are they going to feel like sports fans who suddenly have to contend with the unknown foreign investor, coming in to buy (and, potentially save, let’s be clear) the team they’ve supported for years? Is Google the wealthy unknown foreign investor buying a beloved property here?
Yes, it makes sense for Nest to partner with the likes of Google to get what it needs to scale. That’s the same argument Mailbox shared for why it agreed to join Dropbox. But as with all such acquisitions, Google’s long-term intentions regarding Nest aren’t clear. Smart tech thinkers are talking about Nest being a foothold into the home and the Internet of Things. (And I think we can safely assume that all those Nests aren’t going to be shut down in yet another Incredibly Journey due to an acqui-hire.)
Still, we need to examine why Google gaining a foothold into our houses with home automation devices feels creepier than, say, Xfinity providing us with home security. Do we actually trust a cable provider more than we trust Google here — if so, how can that be? I think it’s because Google’s stated mission of organizing the world’s information is in danger of becoming significantly more creepy. Because there will always be more information to organize. It turns out that “all the information in the world” includes not only streetviews of houses but might even include our heating patterns or when we’re away from home (which, to be fair, Google already knows about because our plane tickets are in Gmail and our searches on its servers).
That’s why this acquisition feels like an annexation: an occupation of territory, the application of irresistible force. When a Google+ logo or Yahoo! logo appears inside our service, that’s the stationing of a garrison, reminding us that the new owners are in town.
Yet the acquisition of a user doesn’t bring with it an automatic acquisition of loyalty and relationship.
We need to question what it means for people to have relationships with devices and services coming out of well-funded, fledging startups — especially when those startups reach beyond the digital into the physical world. Companies like Nest raise the bar for what’s needed in trustful relationships. It’s one thing for the economics of startup exits to ignore users in a digital space. But in a physical space, those “users” are people who are harder to ignore, because their relationships with the service is in part physical. Physical trust, let alone loyalty, can’t be transferred on someone else’s whim.
I’m sure Tony Fadell and co, like other visionary founders before (and after!) them, want to build something long-lasting. There just has to be a viable alternative to building a long-lasting, scaled company other than being acquired by the likes of Google. Like building it oneself.
Otherwise, it’s starting to look like a monoculture out there.
Profile photo courtesy of the author; image credit: The Kitten’s Toe
Editor: Sonal Chokshi @smc90
