 First, thanks to IEEA for having me here. It's a pleasure to speak to you all today. I'd actually like to start with a little group participation and ask, by a show of hands, who in the audience would say they love the heating controller on their heating system? Three, four, five, so a handful. It's kind of a ridiculous question in a sense, but up until recently, I think almost everybody would answer the question about how they feel about their heating controller with something on the spectrum from apathy to antagonism. It is either just something that's there that they don't think about, or at worst, something that is a problem for them and something that they would rather not have to deal with. So I want to talk with you today about a few aspects of the connected home that I think are worth pointing out and spending some time on, and then a few aspects of how this relates to the energy industry and how we can take what is emerging in this field of the connected home and use it to do some of the things that we've been talking about so far this morning. So the first thing I want to focus on is connected homes. It's almost a sort of a misnomer to think in terms of a connected home or a smart home. Nobody goes to a store somewhere to buy a smart home, like one smart home, please. It doesn't work like that. People buy products. People buy things that they want to solve a problem for them. The thermostat for us, the learning thermostat, solved a few problems. Maybe surprisingly, the biggest of which was not wasted energy. People were wasting energy with their old heating controllers. But the bigger issues that we were addressing were around comfort and convenience and how that sort of antagonism into the spectrum that I mentioned a moment ago. That was the nerve that we struck when we released this product. There was this outpouring of people who, by all appearances, seemed to have just been waiting for some venue, some opportunity in which they could spout their hatred for their thermostat. It really struck a nerve that way, and that was what got our first set of customers. If you're not familiar with the product, it certainly closes a circuit and turns a heating system off or on, but it is also packed with sensors. It's got, of course, temperature sensors, humidity sensors, light sensors, occupancy sensors, a connected device. So it's got Wi-Fi. It's got the same radio that's used for ZigBee. So this little device hanging on the wall is essentially the same as your smartphone in terms of processing capabilities and memory and can do all sorts of cool things, like figure out when it thinks you're going to be home. And adjust your temperature accordingly, remembering what you wanted your temperature to be the last time you came home. It can determine when you go to bed and make sure that you're setting the temperature back or if you're not, rather, that we're setting the temperature back for you. But all the time, it's this feedback, this back and forth, even down to when you, the screen is black until you walk up to it and it lights up when you approach it, when you change the temperature, if you get down to, depending on the season, if you get to what is an efficient temperature within your comfort range, not based on some governmental dictate as to what's efficient, but based on your comfort range, gets a little leaf that shows up at the bottom. So it's these little bits of engagement, little bits of interaction that make it a product that people want. And I think this is important because there are a lot of products out there that people don't want. There's, my favorite is the Wi-Fi connected egg tray for your fridge, which will tell you when your eggs are rotten on your phone. So this, first of all, requires that you take your eggs out of the carton you bought them in and put them into the carton in the refrigerator. It also requires that you have any worry in your mind at all about rotten eggs. I've never had a cracked an egg and I'll shoot that one's rotten, I guess. Never happens. So that's a problem that's not a real problem. There are also real problems that have poorly executed solutions such as, I certainly find myself at the market at times thinking, shoot, do I have green onions for this thing I'm trying to make it? Do I have any at home? I don't know. So one solution for this is a company has created a camera you can put in the fridge that you can remotely access to see what's in your fridge. Now, they've got one heck of a well organized fridge if they've got one place they can put a camera in there and see everything in there because you certainly cannot see through the moldy leftovers in mind to know. So you can have problems that aren't real problems. You can have problems that are real problems that aren't really being solved and in either case it fails. The second thing I'd point out is that life is chaotic, life is messy. Life doesn't conform to how you want your things to go all the time. Maybe by another show of hands, how many people have in your home a smoke detector? All right, so keep your hand up if you've tested that smoke detector ever. In the last year, okay, six months. All right, so if you, thank you. I don't know if you're aware that 60% of deaths and fires are a result, direct result of a non-functioning smoke detector. Why are they non-functioning? They chirp in the middle of the night, always in the middle of the night for some reason. You go, bang it, to get it off the wall, you pull the batteries out, you put it in a drawer, maybe sometime you put it back up. When we released our smoke and CO detector, I checked in our house, not a single functioning smoke detector. It just is not something you wanna have to think about and you certainly don't wanna have to think about it in the middle of the night. So again, this product was meant to address a real problem, as long as we're putting this connected device in, this Wi-Fi connected product, we also included a temperature sensors and occupancy sensors. Why would you need those for a smoke detector? You don't, but they can now communicate with our thermostats and can start doing smart things like when we sense carbon monoxide in the house can automatically shut off the furnace because that's typically the cause of carbon monoxide leaking at home. So by virtue of having these products in there and thinking in advance about ways that they might work together in the future and installing, including sensors like temperature sensors that really aren't all that expensive, that gives you the option value to do more than just sense smoke and carbon monoxide. And you might ask what does that have to do with energy? A couple of things, first of all, remember these products are things that people are going out and picking one by one. Some people might come to the thermostat first, some people might come to our protect first, but once they get used to that experience and they want to expand it, it gets more people buying the thermostat. It also means with more occupancy sensors through the home, we can do a better job of figuring out when you're home and when you're gone, which we can use to better determine when we can scale back your energy consumption. So the third thing to point out is that this space is way too big for any one company. In ESB's interactive display back there, I noted that they cited a statistic from Gartner that estimates in the year 2020, the average connected home will have 500 connected products. I don't know if that's true, but even if it's 100, even if it's 50, it's a massive space and highly unlikely that any one company is going to be making all of those products. So what we've done at Nest is we've created a program called Works with Nest. It's essentially an API way for devices to communicate with one another. This picture here, you see a little Nest thermostat, and it's communicating with, and I'm using the company's name here, I'm not just cursing for cursing's sake, Big-Ass Fans. Those are called Big-Ass Fans up on the ceiling there. And they can cool a house, they can also, it turns out, help make the house more comfortable when you're trying to warm a house by better mixing the air. So the fans can speak with the thermostat and help to figure out when there are times, when you actually don't need to run the heating or cooling system, you can actually just use the fan to better mix the air so that you can do that instead of running the heating or cooling system. You can look through this picture and see all sorts of other places where connected devices might be speaking with a Nest, there could be WiFi connected LED light bulbs in there, there could be different interactions even through services. So it doesn't have to be products that work with one another, it could simply be somebody who's got a voice control on their phone or something like that and use that to control their Nest. But the important part for us is having 50 or 100 or 500 products in your home aren't likely all to come from one company. It's also unlikely to have a single control where you go in and touch a screen somewhere to make things happen, that's just too many products. They need to do these kinds of things in the background without you having to do anything about it at all. So that approach lets products start talking to one another so that now when we run a demand response program in a variety of places, we can broadcast that message to other products in the home, so it's not just the AC system that we're turning off it's the, we're not turning it off, we're using it less. We're communicating that to other products as well so that your dryer differs its drying cycle until the end of the period and the like. So it's already happening, that kind of thing is already happening today. Which brings me to the conclusion here which is what are a few things, what are a few implications for how we can proceed to take advantage of this kind of technology in the electricity industry and the energy industry? Because I think there is a notion out there that because these things are technologically possible consumers will welcome them into their home and will be quite happy to have us take control of whatever types of systems they've got running in their home which I do not believe to be the case. I think first and foremost we have to lead customers along on this journey. They need to see where we're going and we need to bring them along with us. The technology in the iPhone today it was around, much of it was around when the first iPod came out. There's no particular reason that that first iPod didn't have a touchscreen except you didn't really need it in order to get people to take that first step into that sort of connected device in their pocket. And it would have been maybe a little bit overkill and would have probably not pulled the same number of people in. You want to bring people along and step them through this process rather than trying to dump everything on them all at once. Second thing is a couple of words that I'll borrow from Apple that I think typically would not have thought about in the energy industry where just a few short years ago our customers were ratepayers. We didn't think of them as customers as people in homes as much as we do now but I think we need to move more towards this notion of surprise and delight. What can we do to surprise and delight our customers? They're not surprised and delighted unfortunately just by keeping the lights on despite the fact that that's a pretty monumental achievement. What else can we do to surprise and delight them? Can we bring them other services, other insights, other tools to manage their life in a way that makes them happier and healthier in their homes? And then the third thing which I can't stress enough and I don't know a better way to say it than we can't be creepy about this. I just talked about all the sensors that are going into customers' homes. That has enormous potential to alienate people by virtue of this sort of sense of big brother watching. We are very careful at Nest to be very, very circumspect in what we do with data. We don't even share it with our parent company, Google. It is a sort of a sacred ground we need to be incredibly vigilant about making sure that even the perception that somebody could be getting access to data from inside your home from how you live your life, even the perception could be disastrous for the whole space. So we are very careful about that and think that that's a sort of a good guidepost for the industry as well. So just by way of conclusion, if you remember nothing else, please remember that last part because I think that's the part where we have the biggest potential for tripping up and thinking about customers as sort of abstract concepts who don't feel emotionally about what it is we're trying to do here. And if we can remember that emotion, remember to surprise and delight them, I think we can do great things with them. So thank you.