Last year, the landmark deal in tech was Facebook agreeing to buy Instagram for $1 billion. This year, it might be Monsanto’s $1 billion acquisition of the Climate Corporation.
The agribusiness giant, much reviled for its approach to genetic modification, picked up the startup formerly known as WeatherBill for $930 million in cash, which will be paid out to the new employees over time.
The Climate Corporation, which was founded by ex-Googler David Friedberg, specializes in big data analytics related to climate, such as historic rainfall and soil quality, to help predict outcomes in agriculture and other fields. Monsanto plans to use the Climate Corporation to go to “the next level of agriculture,” according to the New York Times.
What’s significant about this deal, however, is not just the price tag. It is that the acquisition is one of the most emphatic demonstrations that at least some of the best minds of today’s Internet industry are now, contra Jeff Hammerbacher, beginning to move away from “thinking about how to make people click ads.”
It also shows that the “software is eating the world” thesis is not just empty rhetoric, although the aphorism might be better paraphrased into “the world is turning into 1s and 0s.” Monsanto is a behemoth mainstream corporation that, outside of biotech, is not known for Internet credentials. This acquisition is not a case of one tech company buying another tech company. It is not a Facebook-Instagram kind of deal, or a Yahoo-Tumblr set-up. It is an acknowledgement that today’s Internet startups are busting out of a modem-and-router microcosm and onto our dinner plates. Just as tellingly, it was built on government data.
Climate Corp uses and analyses that data to help farmers predict how climate variability crops through a self-serve Web tool, and then sells insurance products on the back of it. That’s more complex than it sounds. The platform processes weather measurements from 2.5 million locations and forecasts, along with 150 billion soil observations, to generate 10 trillion weather simulation data points, requiring it to manage 50 terabytes of live data at any given time.
It’s exactly the sort of Big Data approach that we’re going to see more and more organizations, from industrial corporations to government agencies, take an interest in, and it might just help Silicon Valley shake off the criticisms that it is these days too obsessed with photo-sharing apps and social networks to register any “real” tech successes. Internet companies are helping to make the world more measurable and understandable.
GE is similarly investing in Big Data, having poured $1 billion into a new Global Software Center that draws on analytics talent from Oracle, SAP, and Symantec. GE has also taken stakes in Pivotal and Ayasdi, the latter of which surfaces findings from immense data sets without even requiring that anyone ask questions of those sets.
Other corporate giants will be watching Monsanto and GE and will certainly take their lead.
We’re still at the beginning of the Big Data era, but the Climate Corp acquisition will serve as a prominent early marking post. There will be more to come as we accelerate into an age of, as Jeff Immelt called it, the “industrial Internet,” covering any field that the world previously thought volatile or unpredictable. Agriculture is an obvious use case, but it extends to health, education, finance, and whatever else you can get a university degree in. Larry Page and Arthur Levinson are hoping it might even help cure old age.
Software is, indeed, eating the world. It seems appropriate, for many reasons, that the point should be proven by Monsanto, a company responsible for so many meals, regardless of whether or not you like the taste of them.