With its CEO’s exit, Nest’s reintegration into Google is complete

Back in February, smart-home pioneer Nest became part of Google’s hardware group, undoing the independence it gained when Larry Page created Alphabet and spun out Nest into its own unit. At the time, Nest kept its own CEO, Marwan Fawaz, who reported to Google hardware honcho Rick Osterloh. But now CNET’s Richard Nieva is reporting that Fawaz is stepping down as Nest’s chief, while remaining at Google as an adviser. Rather than having its own CEO, Nest will be merged into Google’s home devices group, thereby integrating the company’s smart-home efforts even more tightly.

According to Nieva’s article, Fawaz’s tenure as Nest CEO was marked by unhappiness among employees, who saw him as an operations guy rather than a leader and were nonplussed by the fact that he lived in Denver and commuted to the company’s Silicon Valley headquarters. He got the job in 2016, succeeding cofounder Tony Fadell—who left as Nest was mired in controversies over its corporate culture and doubt over whether it was living up to its potential.

Nieva’s story is full of additional juicy details, including the scoop that Alphabet engaged in a “serious” discussion with Amazon about selling it Nest in 2016. That was prompted in part by Nest’s leaders being unhappy about their company being spun out of Google into an independent unit of Alphabet—which, though it may have given them more autonomy, also required them to rapidly become self sufficient.

It’s fascinating to spitball how Nest might have done as part of Amazon—or, in an alternate universe in which Google never bought it for $3.2 billion, as an stand-alone company. Though it remains one of the best-known brands in the smart-home category it helped create—and makes fine products—it’s never been clear that its existence within Google/Alphabet has been a help rather than a hindrance.

Update: Nest has released this statement from senior VP of hardware Rick Osterloh:

We are accelerating the merger of our Home and Nest teams to provide our users and businesses with even better services under the leadership of Rishi Chandra. Marwan Fawaz is a strong CEO with a track record of operational excellence who led the integration planning efforts and was responsible for determining our organizational strategy. Marwan has done a remarkable job driving revenue growth, improving product quality, expanding the product portfolio and user satisfaction at Nest. Nest’s employee retention and satisfaction have significantly improved over his time with the team. Unsourced comments suggesting otherwise are wrong. I am pleased to report that he will stay with us as an executive advisor for our hardware business, for Alphabet companies, and future strategic investments.