Max Storto is Lead Innovation Analyst at the Xylem Innovation Labs. Xylem is one of the largest water and wastewater technology company globally and follows the simple motto: "Let's solve water"
A bit more than one year ago, I invited Sivan Zamir on this microphone to discuss the Xylem Innovation Labs, Xylem's shiny, fascinating, and intriguing move into the start-up accelerator world. That has been a well-received episode but also one that sparked quite a lot of conversations.
You know, Xylem is a listed behemoth; everybody is well aware that they have to make money! So when they mention that they will help water industry companies to 10x their customer base, that they will fund pilots with the Trial Reservoir and fund other water accelerators with, for instance, Imagine H2O, it not only raises an eyebrow but also generates a ton of questions. And usually a very logical deduction: of course, they will have a great positive impact on these companies' path, but they will also reward themselves by taking stakes and equity in these companies, hence turning a pretty straightforward positive return on investment.
Now that's where it gets even more intriguing, because, in my process of getting a better understanding of the mechanics of the Xylem Innovation Labs with its scout, Max, I actually uncovered something we had not discussed at all with Sivan last year: Xylem doesn't take any equity in its incubated partners. Zero.
And it doesn't stop there: they don't even expect these companies to be exclusive or tied to Xylem in anything beyond a simple NDA - which is merely more there to protect the start-ups than the water giant.
So, for a layman like me, it's hard to get the strategic sense of that move. Until you shift your internal software and realize that what Xylem is pursuing with its Innovation Labs is not investment, it's R&D. And a bit like in a Google versus Apple approach you would see in tech, their bet here is that adopting an open innovation strategy, is actually the most impactful and the best use of their money for the water ecosystem, yes, because I believe Patrick Decker when he tells me he wants his company to have a positive impact, but also the best path to growth for Xylem itself!
And a bit like the App or Play Stores have been great growth factors for Apple and Google, Xylem's future partnerships with the companies it strategically groomed may be significant commercial assets in a world of water challenges that are not getting easier or simpler.
You'll see that this is just one of the many gems we uncovered while opening the hood and exploring the Xylem Innovation Labs engine with Max, Max who, by the way, has been an incredible sparring partner able to cope with great openness with my sometimes annoying wittiness, I had great fun to record this one, so I'll stop ranting and let you have great fun listening to it.
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