This morning, Alphabet announced that it is launching an infrastructure holding company called Sidewalk Infrastructure Partners that will be focused on tech-enabled infrastructure for energy, mobility and water. This is simply the latest signal among many that now is an exciting time to be investing in technology for infrastructure industries, as the exit aperture expands to include acquirers outside the industry’s traditional players.
It’s something my partners and I have been discussing for some time. This trend began to emerge a few years ago as we saw Nest acquired by Google in 2014, and Oracle’s acquisition of Opower in 2016. Corporate giants across numerous sectors have realized that the digitization of infrastructure is likely to be one of the most significant business opportunities of the next few decades. As we all know, the internet has enabled the rise of many of today’s largest and most important companies such as Google, Amazon, etc. These businesses are so successful in large part due to the explosion of data that allows for the attribution and measurement of behavior.
To date, these features have been limited to the online world – that of bits, not atoms. But many companies are undergoing an awakening. The way we use our most important infrastructure services like electricity and water offers a very strong proxy for our behavior in the physical world. The same technologies that will enable the grid to become more efficient, sustainable and resilient (see my partner Kevin Stevens’ recent post on grid modernization) are those that will enable organizations to better understand and predict our actions offline as well.
I recall a conversation from earlier this year with someone that works at X, Alphabet’s “moonshot” division, where he explained that they like to play in the spaces where they can leverage Google’s core competencies – namely computational power and cutting edge analysis / transformation of robust data sets. Based on that conversation, SIP’s work to help cities and nations modernize infrastructure fits squarely in the middle of that strategy.
I’ll go out on a limb and predict that this is just the latest in what will be a wave of similar announcements in the next few months / years. While the involvement of companies like Alphabet will spark legitimate concerns about data usage and privacy, these innovative organizations still have much to offer as we work to modernize our aging infrastructure.