From Shampoo To Startups: J&J joins Tech Frenzy



When Saeed Amidi started Plug and Play Tech Center eight years ago, his aim was to provide affordable co-working space for small Silicon Valley startups. He never imagined his real estate venture would become such an innovation hub that massive multinational corporations would be knocking on the door to join.

Panasonic, Volkswagen, State Farm and Bosch are among the brands that have partnered with Plug and Play to tap the burgeoning tech scene and make sure they’re not missing out on products that could potentially transform their industry. Now, Johnson & Johnson is joining the fold as part of Plug and Play’s new Internet of Things (IoT) accelerator.

Why does a developer of pharmaceuticals, health-care supplies and diagnostics products care about startups focused on connected devices? It’s partly the emergence of web-based health monitoring and fitness products from Fitbit, Jawbone and Pebble. The bigger story is that all companies, large and small, are being driven by tech, so having a recognized presence in Silicon Valley has become an essential link to emerging entrepreneurs and wild science projects.

“J&J wants to lead in this wave of innovation to lower stakeholder costs and improve health outcomes,” said Ken Drazan, head of Johnson & Johnson Innovation, California. “This novel approach to collaboration is part of our overall strategy to engage with entrepreneurs, venture firms and emerging companies to identify and advance the most promising science and technology in areas of significant medical need.”

Johnson & Johnson, through its innovation group, is the third strategic corporate sponsor of the IoT accelerator, joining State Farm and Bosch’s venture arm, which announced their partnerships in July. The program brings about 20 startups into Plug and Play’s headquarters for a three-month entrepreneurial boot camp of sorts.

They get introductions to potential partners, customers and investors while refining their product and sales pitch. The first batch started in September and ends next month.

Plug and Play has launched similar accelerators for retail, with partners such as Kohl’s and Toshiba, as well as programs for media and financial technology. Each has a core set of sponsors that provide their time, executive level expertise and some capital to help the program run. For that, they get direct access to startups in and around their space.

“In the past, they would wait until companies got bigger and then buy it because of the technology and put it into their marketing machine,” said Amidi, who immigrated to the U.S. from Iran in the 1970s. “Now they’re going to come sooner and participate in the early stages of the company.”

Co-working spaces and tech incubators have popped up across the country (and world) in recent years with names like Atlanta Tech Village, The Brandery in Cincinnati, 1871 in Chicago (named after the year of the Great Chicago Fire) and Arkansas Regional Innovation Hub. Silicon Valley’s Y Combinator remains the best known, thanks to helping launch startups like Dropbox, Airbnb and Stripe.

Plug and Play needs to attract the top entrepreneurs, because its success and reputation will be determined by the fortunes of its participants. Companies that have been housed at Plug and Play in the past include online lender LendingClub and Zong, a payments startup acquired by PayPal.

In addition to its history in Silicon Valley and connections to all the major regional institutions, Plug and Play has global reach, with operations in Europe, the Middle East and Latin America.

Amidi still makes money from renting desk space to startups that call Plug and Play home, but he’s also becoming a bigger part of the investing game with select companies.

Kohl’s, a 52-year-old retailer based in Menomonee Falls, Wisconsin, is about the farthest thing from an agile Silicon Valley startup. Like Johnson & Johnson, Kohl’s is elbowing its way into the tech community, seeking an edge in a brutally competitive market that’s evident when driving by any American strip mall.

In May, Kohl’s joined Plug and Play’s retail accelerator. That led to a deal with Augmented Pixels, a startup in the program that’s focused on augmented and virtual reality.

There’s not much Augmented Pixels can do for actual products from Kohl’s. A shirt is a shirt, couch is a couch. But the buying experience is a different matter. What if you could take a spin through the Kohl’s online catalog using an iPad, find a recliner that you like and see almost exactly how it would look in your living room, or if blue would go better than green? If you don’t like it by the coffee table, slide it over by the fire place.

Vitaliy Goncharuk, the Ukrainian founder of Augmented Pixels, allows exactly that. His company, which has raised less than $1 million in private capital, would have struggled to connect with Kohl’s on its own. Starting in early 2015, Kohl’s customers will see and virtually touch Goncharuk’s technology because of Plug and Play.

“They bring clients to me,” said Goncharuk. “You meet with high level, C-level people. It’s very efficient for startups.”

Here’s what State Farm, the 92-year-old insurer, said in an e-mailed statement: “Our relationship with Plug and Play helps us in a number of ways, including providing early awareness and access to startups, opportunities to collaborate with other non-competing corporate entities, and a forum for discussions with the Silicon Valley venture capital and educational communities.”

State Farm, based in Bloomington, Illinois, is already working with connected devices to help lower insurance costs. By using in-car technology like OnStar and Sync, consumers can let State Farm track their driving habits, which—assuming they’re safe—can result in discounts.

Boian Spassov was building his startup, Locbit, in San Diego before joining the IoT accelerator. He was quietly working on technology that would enable hotels, breweries and supermarkets to hook up dozens, hundreds or thousands of appliances to the Web. His idea was that all stores should be able to remotely control the temperature of every refrigerator, track which products are close to selling out and automate and control lighting, all with sensors and software.

Spassov knew this was the direction the world was headed. And the more he studied the market, the more he understood that Google, Microsoft and a host of smaller companies saw the same opportunity.

Locbit, an unproven entrant in the space, needed a marquee brand to help sell the product. That’s what Spassov found in Panasonic, a sponsor of the retail accelerator. The two companies started working together on a relatively small project involving connected refrigerators.

After joining the IoT accelerator, Locbit got a meeting with Panasonic’s North American CEO Joe Taylor. Now, they’re preparing full-scale deployments together, such as retrofitting major hotels.

For Spassov, hooking up with Plug and Play has all been about one thing: connections. “It opens a lot of relationships and you decide what to do with them,” he said.

Reprinted by permission.

Image credit: CC by loic darbon

About the author: Ari Levy

Ari Levy is a senior tech reporter for CNBC.

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