CEO Tony Fadell announces he's leaving Nest

The co-founder of the company that makes the Learning Thermostat says the time is right. He'll stay on as an adviser to Larry Page at Alphabet.

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Tony Fadell is departing Nest but will take on a new role at Alphabet, Google's parent company.

James Martin/CNET

Tony Fadell, co-founder of smart home device maker Nest, will in his own words, "leave the Nest."

The high-profile executive said Friday he's stepping down as the company's CEO to be an adviser to Google's parent company, Alphabet, and its CEO Larry Page. Former Motorola executive Marwan Fawaz will become the CEO of Nest, which makes Web-connected thermostats, smoke detectors and security cameras.

In a blog post, Fadell wrote that the timing is right for his departure. "Considering that when Nest launched less than five years ago, connected home sections didn't exist at retail, it isn't an understatement to say that the connected home went mainstream because of Nest."

He's right about the market becoming more broad. Amazon has scored a hit with its speaker and smart home hub, called the Echo. Apple is reportedly following suit with its own device. Even Google, which bought Nest in 2014 for $3.2 billion, has made smart home plans outside of Nest. The search giant unveiled its own Echo competitor, called Google Home, at its I/O developer conference last month. (Google CEO Sundar Pichai said in an interview at the time the decision to make it a Google product and not a Nest one had more to do with Google's ambitions to bring its computing expertise to users wherever they are, including their homes.)

Still, Fadell's departure coincides with mounting troubles at Nest. The company reportedly fell short of the search giant's sales expectations and employees complained about a harsh corporate culture. Fadell on Friday told The New York Times, though, that revenue growth has been "in excess of 50 percent" a year since Nest began releasing products in 2011.

Public drama unfolded after Nest bought Dropcam, maker of the security camera it eventually turned into the Nest Cam, for $555 million in 2014. Since the buyout, Dropcam's CEO Greg Duffy called the acquisition a "mistake."

Fadell said his "transition has been in progress since late last year."

Jan Dawson, an analyst with Jackdaw Research, said the split was necessary because of the increased tension between Fadell and Alphabet's management, and the outsize media attention it was getting. "This should allow Nest to move on without the distraction of the recent news stories and criticisms," he said.

Nest joined Google two years ago with much fanfare. Fadell, a former Apple executive and disciple of co-founder Steve Jobs, is known as the godfather of the iPod, and played a key role in the early development of the iPhone. His joining the search giant was seen by many as Page's attempt to inject Google with Apple's vaunted hardware sensibility.

But ultimately, Fadell's Apple DNA may have been the biggest reason Nest's tenure under Google has been so rocky. Apple's rigid and secretive culture is a stark contrast from Google's open and experimental one. Other Google employees reportedly created Internet memes deriding Nest and its culture.

On Friday, Page touted Fadell's time at Nest. "He's a true visionary and I look forward to continuing to work with him in his new role as advisor to Alphabet," Page wrote in a statement.

Fadell's replacement, Fawaz, is the former executive vice president of Motorola Mobility. He also served as CEO of Motorola Home.

Other than his new advisor role, Fadell wasn't specific about what exactly he'll be doing next.

"This will give me the time and flexibility to pursue new opportunities to create and disrupt other industries," he said.

Update, 3:07 p.m. PT: Adds information throughout.