In Silicon Valley, $3 billion now price for start-ups «
Now the new de facto price tag for a hot Silicon Valley start-up appears to have tripled. The founders of Snapchat, a revenue-free start-up that has created an ephemeral texting service, reportedly turned down an offer from Facebook for $3 billion.
Sergey Brin, co-founder of Google Inc., wears Project Glass internet glasses On Monday, the founders of Nest Systems decided that $3.2 billion was just dandy and agreed to be acquired by Google Inc. /quotes/zigman/93888/delayed/quotes/nls/goog GOOG -0.49% . Nest Systems, at least, develops and sells a smart home thermostat system, which is also slimmer and uses less voltage than many in current use. Google clearly wants Nest as part of a connected home strategy, in which consumers can control many aspects of their lives with a smartphone. It is clearly a move to be a player in the growing arena of the “Internet of Things,” where every device is connected to the Internet. Google is also working on a smartwatch based on the Android operating system. Linking all these devices together and selling ads to or owning the customer who uses them is now the strategy at most tech giants.
Nest also recently introduced a $129 smoke alarm/carbon monoxide detector that talks to you instead of shrilling loudly. It also lets you silence the device with a wave of an arm, if it goes off without a reason, hoping that consumers will no longer disable their smoke alarms because of the annoyance factor.
Still, Nest was only just founded in 2011. And the home thermostat manufacturing industry reported a total of $3 billion in total sales in the U.S., with Honeywell International Inc. /quotes/zigman/234291/delayed/quotes/nls/hon HON -0.11% and Johnson Controls Inc. /quotes/zigman/230763/delayed/quotes/nls/jci JCI -0.45% the two biggest forces, according to IBISWorld, a market research firm in Los Angeles.
Clearly, Google has big plans for Nest and it was not averse to paying up to make the deal happen. The deal also won’t likely make much of a dent in Google’s massive horde of cash and marketable securities, valued at about $56.5 billion last quarter.