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Nest CEO Tony Fadell went to Google's all-hands meeting to defend Nest. Here's what he said.

Fadell tells Googlers that Nest beat its first-quarter sales targets.

Asa Mathat

After a spate of damning articles about Nest, CEO Tony Fadell came to the weekly staff meeting of sister company Google to counter the negative press and defend Nest’s corporate culture and sales figures.

Nest is the smart-home device subsidiary under Alphabet, the parent company of Google, which bought Nest for $3.2 billion in 2014. Late last month, some of Nest’s struggles surfaced in a series of reports.

The first, a lengthy article in The Information, detailed a corrosive internal culture after Nest’s acquisition of Dropcam, which makes connected video cameras. Dropcam’s founder, Greg Duffy fired back in a Medium post further attacking Fadell’s management style and said he regretted selling his startup. On March 30, Re/code reported that Nest’s sales figures for 2015 — around $340 million — fell short of the initial targets set by Google at acquisition.

On April 1, Fadell arrived at Google’s all-hands meeting, or TGIF. He said he was "incredibly disheartened" by the recent press, and reassured Googlers that Nest’s culture was "improving."

"Of course, we’re not perfect," he told Google employees. "No company is. Nest isn’t perfect. I’m not perfect. No one’s perfect. But we know what our problems are. We have been addressing them over the last two years. And, frankly, we have more room to go."

Fadell also disputed reports that Nest’s product innovation has stalled and said sales have improved every year, telling Googlers that Nest was on pace to beat its sales targets for the first quarter. Alphabet reports its first-quarter earnings, which breaks down revenue for Google and its aggregate Other Bets (including Nest), next week.

Re/code obtained a transcript of Fadell’s TGIF talk, which you can see below.

A few pointers for reading: "Googlegeist" is Google’s internal employee survey system; "L&D," or learning and development, is another HR metric. "Dory" is the name for the automated system to surface questions during TGIF. Sergey Brin, the Google co-founder and now Alphabet president, welcomed Fadell onstage and also briefly mentioned the other negative recent press around Verily, Alphabet’s life sciences company. (Also, do note Brin’s joke about Boston Dynamics, the robotics arm that Google is reportedly preparing to sell due to concerns about its humanoid robots.)

Reps from Google and Nest declined to comment.

#3: Can we please have a TGIF with Nest and a Q&A session with Tony Fadell?

Sergey Brin: Why do you guys always ask Larry? [Laughter] Why is Larry the go-to person? Why doesn’t it say, ‘Sergey, do you think the articles are accurate?" Anyway …nobody seems to care about my opinion, but I’ll speak to it. [Laughter] So I’m somewhat familiar with Verily because they are a recent X grad, and Tony is actually here to speak about Nest. And we’re actually surrounded by a thousand weaponized Boston Dynamics robots that are going to express their view on this question. [Laughter] …

Tony was going to talk to us a little bit about Nest, which we’re also excited about.

Tony Fadell: Sure. Hi, everybody. I don’t normally come to TGIF, but I thought today was a very important day to come. First and foremost, you know, the articles that you see and read about either me or about Nest — they are incredibly disheartening because we don’t believe — and I don’t believe specifically — that those articles represent our culture, represent our work ethic, represent the respect we have for each other inside the team. And so it’s really — it really hurts us a lot when see those things.

Of course, we’re not perfect. No company is. Nest isn’t perfect. I’m not perfect. No one’s perfect. But we know what our problems are. We have been addressing them over the last two years. And, frankly, we have more room to go.

But it’s nice to see that Googlegeist, the source — for us the source of truth for where our organization is that, you know, many of our metrics are on par with where Google is. Now we have areas to improve, and we’re doing that. We’re doing that with L&D. We’re doing that with Google L&D helping us. We are doing in it many different ways. Our culture is improving. It is on par. And hopefully — one day hopefully all our teams succeed to go even higher than the metrics we have today. So we know that. We know we need to improve, and we are.

That said, I also want to address the whole respect thing. I do respect the Nest employees. I do respect the Google employees. I respect the Alphabet employees. We try to work very hard together and partner in many different areas around the different companies.

I also respect ex-Nesters, ex-Googlers, those kind of things. So when I read those things that say we don’t respect people, or I don’t, it’s absolutely wrong and that is not how I believe because I want to be treated with respect. And I give respect because I want to get respect.

A couple of things — I want to leave you with a couple of data points. You heard a little bit about our products in those ads — or in those articles. In those articles, being very blunt, we have shipped four all-new hardware products. WE have had our ten software releases. We’ve [launched] services and these kinds of things. We are moving very, very fast. Yes, we are breaking things along the way, but we are moving fast just like we need to be because it is a highly competitive market.

So our products are live. They’re very healthy. They are over four-plus stars on Amazon today, and they are continuing to improve. Our customers love what we ship.

Another data point is our business. Every single year our annual sales have gone up nicely, nice growth every year since our inception. We have not had any slowdown in our sales growth. It continues. And, in fact, this quarter we actually beat our numbers. Well, let’s hope in the next two days we’ll be our numbers. [Applause]

Be we are handily beating them right now.

So that’s our culture. That’s our product and our business. But that said, there’s a lot more to discuss, and we can’t address all the questions that you might have.

And a lot of people are asking — and there was a really nice Dory question today about, Hey, why don’t se just sit down and talk and let’s have lots of discussion so you can learn more about me or about our team or what we’re doing and what our vision is.

And so what we have is — we don’t have TGIF, but have something called Lunch and Learns. Because we’re a smaller team, we actually have, you know, two or three times a week Lunch and Learns, not just with me but also with various other people from our staff and people who report to me.

So we’re opening all of our Lunch and Leans over the next month to all Googlers, to all Alphabeters to come and learn anything about Nest. Come and ask me questions. Come and ask me exec staff questions. It’s an informal, open, honest format where you can come and get your questions answered.

So we take this seriously. We take these accusations seriously, and we’ll take your questions seriously. So please come to Lunch and Learn.

You are more than welcome to come to more than one. If we find that attendance is more than we thought, we’ll add more so we have no problem. But we don’t think this is the right place to answer all of your questions. We’ll do that in those.

We are looking forward to you coming over to Nest and can’t wait to have you. So thank you. [Applause]

Sergey Brin: Wait, wait. Tony, before you go off, I know I’m thinking what everybody else is thinking. What do you serve at these Lunch and Learns? [Laughter] What’s for lunch exactly?

Tony Fadell: What’s at Lunch and Learns? Actually, we have — we have an incredibly nice new cafe that we just got. And it’s right near our store, and it’s all hand-tossed fresh food. So come on over. Asian noodles and everything you could imagine. I can’t believe how nice it is. It’s really nice.

Sergey Brin: I just want to make sure the elephant in the room gets addressed.

Contributing reporting by Noah Kulwin

Tony Faddell spoke to The Verge's Lauren Goode at Code Conference 2016. Here's the interview:

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