Pioneer Square Labs is taking its startup factory model to the next level, teaming up with industrial giant Fortive for a “joint innovation studio” to help the publicly-traded company build new products and launch companies. The organizations are already developing a secretive new workplace safety concept sparked by the COVID-19 pandemic.
The unique partnership is an evolution for PSL, the Seattle-based firm that established its own “startup studio” model back in 2016. PSL rapidly tests potential new businesses with an in-house team and then recruits executives to run spinout companies. It has helped create more than 20 startups and also operates a separate venture capital arm, PSL Ventures, that is funded by Jeff Bezos’ investment firm, Expedia and Zillow founder Rich Barton, and others.
Now PSL is applying its model to the corporate world, helping Fortive create companies that will end up as standalone venture-backed businesses or be acquired by Fortive itself.
Fortive is lesser known than other Seattle-area tech stalwarts but is one of the region’s leading publicly-traded companies. Based in Everett, Wash., it spun out of D.C.-based conglomerate Danaher in 2016 and builds various industrial products across medical, transportation, repair, and other markets. Fortive owns companies such as Tektronix and Fluke. It employs more than 25,000 people across 50-plus countries and reported $1.7 billion in revenue last quarter.
Fortive already touts a culture of “continuous improvement” that it says provides a startup-like feel inside a giant corporation. But it became intrigued about partnering with PSL as a way to learn more about technology innovation while also developing new company concepts.
“This is a one-of-a-kind opportunity to not only build businesses that drive organic growth, but to help us learn and change our culture,” said Fortive Vice President Kirsten Paust.
There are similar corporate innovation models, such as Techstars accelerators or in-house incubators. The Fortive-PSL studio provides a more targeted and focused approach to innovation, said Greg Gottesman, managing director at PSL.
“It’s an incredibly powerful combination,” he said. “We think we can build some great companies between the combination of resources and talent.”
Fortive and PSL will both have employees working out of PSL’s office in downtown Seattle (or virtually for now). The joint studio is building a new company around monitoring workplace health and safety, a key issue as people return to work amid the COVID-19 pandemic.
“Innovation doesn’t stop because of COVID-19 — it’s maybe more important now than it ever has been,” Gottesman said. “Fortive’s incredible expertise and our ability to build software is giving us a unique ability to make an impact.”
Pumped about this. From my experience running the MSFT Garage back in the day, it's tough to nail the right "distance from the core business" in corporate innovation.
Fortive is an innovative company in the industrial tech sector, and I'm excited to launch new ideas with them! https://t.co/1frIErdlbn
— Ben Gilbert (@gilbert) May 14, 2020
The Fortive-PSL link-up comes as many startups pull back on hiring to cut costs during an economic crisis. Some companies are still hiring, though, and many are building solutions to combat COVID-19.
Gottesman and Paust are both long-time Seattleites and see their new partnership as a value-add for the local innovation ecosystem.
“Fortive is another great treasure of the Pacific Northwest,” Gottesman said. “It plays in a different space than Amazon and Microsoft, but it has an opportunity to create a lot of exciting new companies that can be world-changing and based here in the Seattle area.”
Other Seattle-area startup studios include Madrona Venture Labs, which Gottesman helped launch while he was at Madrona Venture Group, and Kernel Labs.
