What Nest teaches us about the emotion of hardware

Most startups proposition their products as obvious, rational purchases. Most of them are lying.

Hardware purchases have two drivers

Whether you like it or not, every purchase decision is both rational and emotional. Almost always, explicit content (like taglines, product descriptions, and reviews) is geared toward your rational brain and implicit content (like images, colors, and commercials) is designed to feed your emotional brain. There are tons of examples of products that do this, but my favorite is Nest:

So much of Nest’s copy is focused around saving energy. Image courtesy Nest (www.nest.com)

Nest makes two incredibly strong promises to you. The first and most explicit promise is “Nest saves you energy and money.” It coaxes buyers to think of that $250 purchase as an investment rather than a gadget. Nest-sponsored ‘studies’ report “consumers save up to $1200 over the expected 10 year lifespan of the product.” Saving $1200 is about as rational as it gets.

But this isn’t why people buy a Nest. Do you think the company would be just as successful if their marketing images looked like this:

Would Nest be successful with the same rational promise but an un-sexy product? Image courtesy my amazing Photoshop skills and Nest/Honeywell (www.nest.com and www.honeywell.com)

Probably not. It would be hard to sell a product like this for $250, even though the features of these two wifi-connected thermostats are nearly identical.

The second promise the product makes is more subtle but far more powerful. It says “no other thermostat in the world looks this good.” This promise speaks to consumers who value aesthetics, clean user interfaces, and unique qualities to make them stand out from their peers. It’s emotional and aspirational. No surprise Tony Fadell came from Apple.

Like nearly every successful consumer product, the reason people pay an irrational price for a highly rational device is emotion. The Nest design and brand drives target consumers (most commonly middle-aged technophile DIY-ers/homeowners) to the checkout counter but as soon as someone (significant other, partner, or parent) questions that irrational $250 purchase, the rebuttal is simple: “It saves us energy! It’s a long-term investment! We’ll save so much money!”

Why it matters: brand

The valuation of a consumer hardware business is the difference between the cost of selling a device and the irrational price consumers are willing to pay at the checkout counter. The difference between these two numbers is the brand (sometimes called the ‘brand premium’).

Contrary to popular belief, a brand is not a nice logo and some elegant marketing copy: a brand is a promise.

Brand is an unspoken language directed at a consumer’s identity. It makes us feel. And feelings always trump rationality when it comes to buying products.

Consumers don’t buy features, they buy into the promise a brand makes. GoPro promises you’ll be an adventure-seeking hero. Fitbit promises a healthy lifestyle you can’t forget about. Tesla promises to showcase how much of a forward-thinking, world-changer you are. These promises make us open our wallets without really knowing why, even though we quickly make up a reason as soon as we’re asked to.

The most valuable thing a consumer hardware startup can do is convert a rational product category into an emotional one. When startups set out to build a consumer product, they should remember that they’re not just building a gadget with a set of features, they’re building a brand powered by emotion.

Ben Einstein was one of the founders of Bolt. You can find him on LinkedIn.

Bolt is a venture capital firm investing at the intersection of software and physical goods. Often writing founders their first check, Bolt focuses on concept-stage companies: pre-seed, pre-product. Portfolio companies build a foundation for success by leveraging Bolt’s engineering team, prototyping environment, and experience building multi-billion dollar companies. Bolt has offices in San Francisco and Boston.

Bolt invests at the intersection of the digital and physical world.