Giant General Electric Says It Needs Silicon Valley

General Electric is wooing Silicon Valley to an extraordinary degree, as it realizes the importance of software as a means of greatly expanding productivity in its business groups, and in those of its customers.

At a recent event in San Francisco GE organized a half-day conference for media and analysts on the theme of the "Industrial Internet."  

A giant GE jet engine dominated the stage as Jeff Immelt, CEO of GE debated with top venture capitalist, Marc Andreessen, about future trends, moderated by Chris Anderson the former editor of Wired magazine.

It was held at Dogpatch Studio, a symbolic location in the heart of San Francisco’s startup community.

The giant corporation has gone to great lengths over the past year to build a large local presence by establishing the headquarters of a new division, GE Global Software in San Ramon, with more than 400 software engineers and with plans to double those numbers. [I interviewed Bill Ruh, head of GE Software in early September.]

Its goal is to develop software to help its businesses groups and their customers become more efficient, productive, and lower their cost of operations. And to partner with local firms.

On stage, Mr Immelt said that GE had to come to Silicon Valley, “Because that’s where the best software engineers are.” He said that the massive scale of the Industrial Internet and its future needs, means that GE can’t do it alone and it must partner with others.

In the discussion with Mr Anderson and Mr Andreessen, Mr Immelt said that GE wants to tap into local expertise in two ways. One, is to hire engineers to work on key problems that it knows about, the other is to partner with startups that can show GE what it “doesn’t know.”

The ever present subject of big data was raised and Mr Immelt pointed to the giant jet engine on stage as an example of how massive amounts of sensor data could help make aircraft more efficient, less polluting, and help hard-pressed airlines make money.

Manufacturing is cool again…

He said that manufacturing was back, that it was cool to be a manufacturer again. But despite his praising of software and its importance to the future of GE, he couldn’t resist a dig at software startups.

As the panel discussed disruption and Mr Andreessen’s Wall Street Journal op-ed piece in August, Why Software Is Eating the World, Mr Immelt pointed out that software ventures would be disrupted too, not just traditional industries.

During a break, I spoke with Mr Immelt and asked him how can startups work with a giant like GE? “We have a whole team set up for that in San Ramon, they just need to get in touch with them,” he said.

In terms of software being disrupted, he said that a couple of people in a garage can start a software company but you can’t just become a jet engine manufacturer, you would need decades of manufacturing experience to disrupt that industry.

GE sees a future where massive numbers of sensors linked with control mechanisms, will transform manufacturing and industrial processes of all types, through new software technologies, and the application of sophisticated analytics and predictive algorithms.

Foremski’s Take
Will Silicon Valley startups be able to help GE? The Industrial Internet will require a lot of specialized domain knowledge in manufacturing and industrial operations which is not a strong suit for the majority of Silicon Valley startups, which tend to focus on consumer web services and enterprise IT applications.

There could also be some cultural issues with GE’s strong East coast roots. Vinnie Mirchandani, analyst at Deal Architect, touches upon this point here: East Coast Offense.

But the newly formed GE Software is born and bred here which is a good move, and it’s headed by Bill Ruh (below) a former senior executive at Cisco Systems, who knows the Silicon Valley culture very well.

GE should also consider a strategy employed by IBM, which has regular meetings with VCs about the type of technologies it would like to see developed. This helps the VCs decide which types of startups to fund and possibly sell to IBM at some point in the future. A couple of well publicized startup acquisitions by GE would quickly get the attention of the local VC community.
GE still has a lot of work ahead in its efforts to engage the Silicon Valley innovation engine and have it understand the types of problems it is grappling with. And it has to make it as easy as possible for startups to be able to collaborate with its key business groups.

Most young companies are very narrowly focused and it takes repeated attempts to get their attention. It might take a few more high profile visits from Mr Immelt, who has a rockstar Steve Jobs type of charisma, in order to hammer home the message that GE is here in Silicon Valley and is serious about playing a large role in its startup communities.

(All photos: Tom Foremski.)

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