The Lyric, The Nest and Sexy Thermostats: A Little Push Goes a Long Way

Everyone needs a thermostat in their house or apartment. Thermal controls was a massive captive market – a cash cow with commodity products. Until the Nest, the thermostat had no sex appeal. Tony Fadel and his team built something beautiful and functional that also happened to save money and make a house more livable. It was so sexy that Google bought it, quite literally – for $3 billion. The pull of the Nest was rather extraordinary. A significant chunk of buyers came from design-conscious European countries. This was well before Nest sold or marketed in the EU.

Now we have the Lyric from Honeywell. And it looks pretty good. The design is not quite as nice as the Nest but its definitely more chic than the standard plain vanilla thermostats. Earlier Honeywell thermostats had offered voice-command and WiFi connectivity for temperature management. The Lyric differs from the Nest in offering geo-fencing. While the Nest “learns” user behavior, the Lyric will change temperature when a user is closer to home based on their smartphone app location. This is smart because people’s behavior may be generally consistent but not always.

The most important thing about all this to me is the impact of competition and innovation. For the most part, the innovation around the Nest and the Lyric is industrial design, User Experience, and smartphone integration. These devices don’t boast breakthrough new materials or hyper-fast chips. But they both use existing technology to tackle boring markets previously deemed unaddressable. (Sexy thermostat? Pass the oatmeal, please). What’s more, Nest drove Honeywell to answer with a comparable product.

I have no doubt that Honeywell has had Nest-like devices in testing labs or even on store shelves for ages. But they obviously couldn’t have been that Nest-like because, well, we never heard of them. So with Apple-like marketing genius and gorgeous design, Nest cracked the code on how to get people excited about thermostats. Seeing this success, Honeywell had to respond and forcefully. The company also aspires to great things in the Internet of Things. And unlike the Nest, Honeywell has decades of experience and connection in putting thermostats and other home-management devices into the hands of contractors, construction firms, and home improvement retails who will ultimately drive the nascent Sexy Thermostat Market.

This is a beautiful story. I love it because it has a huge upstart winner (Nest), a forcefully responding legacy player (Honeywell), a happy customer (you and me) and a great societal benefit (more efficient energy usage). In fact, one guy – Tony Fadel – could single-handed in a few short years instigate a massive shift in an enormous, stagnant multi-billion dollar industry.

The other key lesson I take from this, and something I see everywhere? The solutions to most great social challenges lie well within reach. Maybe it’s rockstar marketing of the Nest. Maybe it’s better distribution of water treatment technologies. Maybe its special financing to help alternative energy technologies with long payback cycles get over the hump. Maybe it’s leverage lightweight distribution technologies like Uber or social sharing apps like Relay Rides to better utilize existing transportation capacity. And just maybe it’s something so boring that we can’t imagine it will be sexy. Like the thermostat. Which no one will ever look at the same way again.