The Mobile 15: Our picks for the most innovative companies


CEO: Tony Fadell

Number of employees: 120

The business:

Nest has created an Internet-connected thermostat that uses algorithms to reduce the amount of energy your heating and cooling system uses by 20 to 30 percent.

The backstory:

Former Apple designer Tony Fadell – who led the design of versions of the iPod and iPhone – decided he wanted to focus his design innovations on an entirely new sector: the boring and lowly thermostat. His team spent months crafting a beautiful and simple thermostat design, raised money from venture capitalists like Google Ventures, Kleiner Perkins, and Al Gore’s Investment Group, and launched their thermostat to much fanfare.

The innovation:

Most thermostat makers create and sell a brain-dead — and ugly — device that controls a home’s heating and cooling. Usually that means the homeowner doesn’t ever really engage with the gadget and typically the device is sold through a utility or other third-party distribution partner.

Because consumers don’t think much about their thermostats, they tend to use them inefficiently. The Nest team’s thesis is if they could make a device that looked cool, it would be as coveted as an iPhone, and consumers would buy it directly from big box retailers, and actively engage with it in their homes. The device cuts down on energy bills by learning its owner’s habits and then reducing energy around those habits. If you like the A/C cranked at night, it may either find ways to reduce your consumption during other times of day, or at night, have you crank up more slowly than you normally would, to save some energy there.

The plan:

Nest doesn’t disclose how many thermostats it has sold, but when it first launched in October 2011, it nearly sold out immediately, with a small, initial production run. Nest thermostats are more available these days — they’re now sold at Apple stores, Amazon, Best Buys and Lowe’s, among other retail outlets. The company has received enough attention that one of the world’s largest thermostat makers has taken notice and delivered Nest a patent infringement lawsuit earlier this year. (Nest is fighting the suit.)

Beyond consumers, Nest wants utilities use Nest thermostats to collectively reduce their customers’ grid loads. Here’s how that would work: Picture a hot summer day, and the grid is getting dangerously overloaded with all that air conditioning. A utility could send a signal to, say, the 10,000 Nest thermostats connected to its residential network and ask them to turn down their HVAC systems by a couple degrees.

—Katie Fehrenbacher