The mining and construction equipment maker wants a piece of the industrial Internet. Its strategy? Turn to the startup world for help.
General Electric isnât the only industrial giant attempting to jumpstart its business with data and software services. On Thursday morning Caterpillar announced it has made a minority investment in Uptake, a Chicago-based data analytics platform co-founded by long-time entrepreneur Brad Keywell, who is profiled in the current issue of Fortune.
As part of the agreement, Caterpillar and Uptake will co-develop âpredictive diagnosticsâ tools for the larger companyâs customers. (Uptake says it is also working with other players in insurance, automotive and healthcare, though it wonât disclose other names.) The idea? To take the mountains of data spewing from bulldozers and hydraulic shovels and turn it into meaningful information that can help Caterpillarâs customers catch potential maintenance issues before breakdowns occur, minimizing downtime.
âWe had some experience in this [data analytics] because of our our autonomous mining equipment,â Doug Oberhelman, Caterpillarâs CEO, said in an interview with Fortune last month. âBut we were really looking for somebody to help us jumpstart this. And thatâs where the lightbulb went on between Brad and I.â
Oberhelmanâs company, based in Peoria, Ill., is a 90-year-old manufacturer whose performance is often seen as a gauge of the health of the global economy. Uptake, meanwhile, is the brainchild of Keywell, a serial entrepreneur best known for co-founding daily-deal site Groupon. But the two CEOs bonded at a Chicago-area breakfast hosted byâof all peopleâBritish prime minister David Cameron.
âThis is an early example of something that will become commonplace at some pointâentrepreneurs trying to disrupt within an industry rather than disrupt an industry from the outside,â Keywell told Fortune.
Of course, disrupting GEâs $1 billion head start in data analytics (which includes a massive software center the company has built in the Bay Area) wonât be easy. CEO Jeff Immelt has made it clear that the so-called âindustrial Internetâ will bring about the next wave of (much-needed) growth for his company, and the company has been hard at work developing applications based on its Predix platform and lining up customers like United Airlines and BP.
Uptake, located in the former Montgomery Ward building in Chicago (where many of Keywellâs other startups are also headquartered) has about 100 employees, including a handful of data scientists from nearby universities. It is a speck compared to GE, the 27th largest company in the world. But itâs ability to snag Caterpillar as both an investor and a customer wonât go unnoticed: Not everyone, especially competitors, will want to buy software from GE.
Caterpillar isnât disclosing how much money it is putting into Uptake, but the two companies have already been working closely for several months (Keywellâs venture capital fund, Lightbank, has also invested in the startup). The ROI for Caterpillar could be far-reaching. While it takes three to five years to design and build a new bulldozer, Uptakeâs product development is measured in days and weeks. In an industry that will increasingly have to rely on software services for growth, incorporating some of the startup worldâs DNAâspeed and agilityâis a smart bet for Caterpillar.
Originally posted via “Caterpillar digs in to data analyticsâinvesting in hot startup Uptake”