Tony Fadell developed the first iPod (and 17 subsequent versions) and departed Apple in 2009. Now he's selling a thermostat—but not, of course, just any thermostat. It's a $250 piece of shiny electronics called the Learning Thermostat, which is programmable, learns your preferences as you use it, and regulates your home to save energy. "After 10 or 20 twists of the dial, it can just do it for you automatically," says Fadell, whose new firm is called Nest Labs. But, most important, it's built on a decade's worth of lessons Fadell learned at Apple.
Reintroduce a product
//Apple is credited with creating new markets, but that oversimplifies the feat. What Apple really did was let people interact differently with products they already knew. That's why Fadell saw so much promise in thermostats: 10 million are sold every year, but only 11% of users actively program them to save energy. "People treat it like a light switch, adjusting it manually 1,500 times a year," Fadell says. "What we're doing is making them think, Yes, there's got to be a better way."
Build up slowly
//Fadell has plans for a full thermostat ecosystem—multifunction, iOS-like software upgrades, connecting with lots of devices. But for now, he's just offering the ability to control it from any laptop or mobile device. That's because Apple taught him to go slow: Let people understand and buy into the device, then build a world around them step by step. "If we'd come out with the iPhone of home-energy management, people would just get confused," he says.
Design for one function
// The thermostat, like the iPod, is controlled by one large circular dial—and not just because people like whirling their fingers. "You have to think, What are people going to do with the device 99% of the time? Make sure every detail supports that main interaction," Fadell explains. "The iPod is about scrolling through long lists with one hand, and a thermostat is about dialing the temperature up or down."
The experience starts in the box
//The iPod was exciting before you even turned it on, thanks to what Fadell calls the "unboxing experience"—the compact, comprehensive packaging. His thermostat's unboxing is built with that in mind. It comes with a custom-manufactured screwdriver, and a level indicator is built into the back casing so customers know if the unit hangs straight on the wall. "This isn't cheap," Fadell says. "But when you take it out of the box, you want it to be easy to install—at all costs."
Make it a status symbol
//The iPod's earphones were designed to give it an "iconic design language," Fadell says—a symbol of hipness, intended to be shown off. He similarly designed the thermostat to be a badge—a "jewel on the wall," he says. "It's a symbol of a green home. You've never seen a kid go up to a thermostat and go, 'Whoa, cool!' But kids who see ours do that. And if they're interested now, they'll be even more so in 20 years when they become homebuyers."
A version of this article appeared in the December 2011/January 2012 issue of Fast Company magazine.