By Jack Nicas
Tony Fadell stepped down as chief executive of Alphabet Inc.’s home-automation unit Nest, the latest hiccup at the Google parent’s businesses outside its core internet search and advertising.
Mr. Fadell’s departure follows reports that he was losing support of some Nest employees and struggling with new financial constraints from Alphabet. He said on Nest’s website Friday that the transition to a new Nest CEO has been in the works since late 2015. He didn’t offer a specific reason for leaving. He said he would continue to work as an adviser to Alphabet and its CEO, Larry Page.
Mr. Fawaz joined Motorola in 2012, when it was owned by Google, to lead the Motorola Home division, which made set- top boxes for cable television. He most recently worked at consulting firm Sarepta Advisors near Denver, according to a LinkedIn profile.
Mr. Fadell, a former Apple Inc. executive who helped develop the iPod, co-founded Nest in 2011 to create internet- connected devices for the home, such as thermostats that sense when users are around and adjust temperatures accordingly. Google acquired Nest in 2014 for $ 3.2 billion. Soon after, Nest acquired Dropcam, a maker of internet- connected security cameras, for $ 555 million.
In March, tech website The Information reported employees were leaving Nest in part because they were upset with Mr. Fadell’s leadership style.
The article also depicted an intense internal struggle between Mr. Fadell and Dropcam co-founder Greg Duffy. Mr. Duffy later wrote in a blog post that he had “extreme differences on management style with the current leadership at Nest, who seem to be fetishizing only the most superfluous and negative traits of their mentors.”
Nest appears to have expanded significantly under Alphabet. When Google purchased the company, Mr. Fadell said Nest had roughly 300 employees. LinkedIn now shows roughly 1,300 people who list Nest as their current employer.
The company said more than 12,000 retail stores carry its products, and customers in more than 190 countries use them. Sales have increased more than 50% each year since the company began shipping products, it said.
“Under Tony’s leadership, Nest has catapulted the connected home into the mainstream,” Alphabet’s Mr. Page said in a statement. “He’s a true visionary and I look forward to continuing to work with him.”
Some analysts questioned whether Google undercut Nest last month when it introduced Google Home, a voice-operated tabletop device that answers users’ questions and commands. Google said the device can serve as a hub for other home- connected devices, like Nest’s thermostat. Strategy Analytics analyst David Watkins said products such as Google Home ” only serve to confuse the company’s overall strategy for the home.”
Last year, Google restructured into parent company Alphabet, splitting off several “other bets” into separate units, including Nest, its research lab X and its life-sciences firm Verily. The company is trying to diversify from its core business of search and advertising.
Also last year, Google hired former Morgan Stanley executive Ruth Porat as its finance chief. She has suggested that she plans to rein in spending at the other bets.
In the March article, Mr. Fadell was quoted as saying, “The fiscal discipline era has now descended upon everything.” He said Alphabet executives were saying, “Hey, show us your business plan for the year. We’re going to hold you to those numbers.”
Jan Dawson, founder of Jackdaw Research, said Mr. Fadell’s departure indicated Alphabet’s other bets “won’t be given a super long leash, but they’ll be expected to hit financial milestones sooner rather than later.”
The road has been rocky for some units outside of Google’s core business. The company last year stopped selling its Google Glass head-mounted device following concerns about the device’s ability to surreptitiously record video. The project was started at the research lab X. Another research lab within Google, called Advanced Technology and Projects, has delayed plans for a modular smartphone.
Still, several Alphabet units are succeeding. High-speed internet firm Google Fiber is expanding rapidly, for example. Revenue for Alphabet’s other bets more than doubled to $ 166 million in the first quarter from a year prior.
Write to Jack Nicas at jack.nicas@wsj.com
(END) Dow Jones Newswires 06-04-160250ET Copyright (c) 2016 Dow Jones & Company, Inc.
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