Google’s Moonshot Factory Falls Back to Earth

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There's a place on the Mountain View campus of Google's parent company, Alphabet, where many of its most ambitious experimental ideas have been immortalized in a kind of technology museum. Some of the projects on display are considered successes, like Waimo, Alphabet's self driving car company that's deployed driverless vehicles on the streets of San Francisco.

We have been the first company to open up in the first writing service to the public, now expanding it to the largest contiguous service area on the planet.

Others are infamous flops, like Google Glass, an attempt at high tech glasses, or Project Loon, a network of high flying balloons that were meant to soar over remote parts of the world, beaming Internet down to homes and businesses.

Do we have any idea when there we might be a commercialization of the Balloom project.

Of the project, it remains to be seen. I mean they were the last ones grounded in twenty twenty one. Other out there products have yet to be released, and all of them came out of one corner of Alphabet's business that's long been shrouded in mystery. A special projects group called X. Nope, I'm not talking about Elon Musk's rebranded Twitter. This is Alphabets X, also known as the Moonshot Factory. X.

I think captured the public imagination and it really captured my imagination too. I remember hearing about X in particular when I was a young tech reporter getting started in the Valley and it was shrouded in secrecy.

Julia Love covers Google and Alphabet for Bloomberg News, and she recently visited x's headquarters for a tour of the lobby where the X Museum is housed.

It's a really cool space. So you walk in and there is a gigantic loon balloons suspended from the cla, but then right across the way there is telecommunications terminal from Project Tara, which is an offshoot of Project Loom that is still a live business that could spin out soon. And so I think it's really a space that captures the story of X.

But Julia says it's the future of X that is the most uncertain because in the past few years, Julia's reporting found the Moonshot Factory has seen its budget shrink, its ambitions curtailed, and its free wheeling spirit reined in as Alphabet has doubled down on its core products and shifted focus to artificial intelligence. Some former employees say x has evolved from a renegade team encouraged to invent the

This lab was born at a moment of really high ambition for Google. It was twenty ten and the search

And this was in Google's heady don't be evil days, right. How did X fit into that vision of the company?

Yeah, so I think that I's really symbolized this impact that Google hoped to have in the world. They looked into things like teleportation, whoa, really nothing was off limits.

You mentioned Thrun, the head of X in its early days. What was Thrun's priority early on?

Throun is a really interesting figure. He was skeptical of corporate innovation labs, but he did ultimately agree to come on board, and before he set up, he took a look back at the other labs that had existed previously, places like Bell Labs, the famous Xerox park, and he just he tried to assess the key principles that he wanted to emulate, and that was to have very lean teams, to hire the very best people in the world, and to dole out bonuses to incentivize them.

How did X interact with the rest of Google.

At the time, X was really isolated. It was kind of viewed as the place where the cool kids in goodle sat. I think this leadership felt that in order to really achieve their mission, they had to be not only isolated from the rest of Silicon Valley, but isolated from Goodle.

How unique was this approach in the tech industry at the time, where there's this sort of side project, secret layer where all the cool stuff is made.

X really kicked off a wave of grade area ambition in Silicon Valley. There are now many corporate labs that kind of tached on ex to their name. We saw Facebook setting up an initiative like this. Amazon Goodle itself created an in house innovation lab Area one twenty. I think it was a time when tech companies were flesh with cash and they wanted to experiment.

Experimentation as their goal. Making a bunch of money wasn't the number one priority for.

X Sebastian Thrun told me he gave projects as much money as they wanted. He was not really aware of his budget, but that became very top of mind as the years wore on.

Tren ended up leaving in twenty twelve. Who took over.

The person who took over is Astro Teller. He was Threund's right hand man when the lab was being founded, and then he took the reins. He's the grandson of Edward Teller, who's the father of the hydrogen bomb, and he has really devoted his life to finding the formula for innovation within big companies. Was a little more mature when he took the reins. I think that he sought to really systematize as his approach to have an engine

So what were some of the signs X's vaunted position was starting to change? When does that pivot point start to happen?

All along, projects were being killed. From the very early days of X, it was always a place where the vast majority of ideas just wouldn't work out. But over time there was much more of a sense of the moonshots having to show a business plan Alphabet didn't want to pour money into a venture and figure out a business plan later. The lab was definitely under more scrutiny ever since the formation of Alphabet, because that gave investors a lot more visibility into just how much money Alphabet

After the break. How that five alarm fire turned up the heat at Alphabet and what it meant for the X Lab, for its employees, and for the company's vision of its future. By the mid twenty tens, X had become this moonshot factory. It survived changing leadership alphabetization, but then in twenty twenty two, something else happened that causes Google to panic. The rise of generative AI and the launch of chat GPT. How does Google react to chat gpt?

Chat GPT touches off a panic within Doodle. It's uncomfortable because they actually invented much of the technology that underpinned chat GPT, but now it seems like they're being leap fraud in this field that they helped create. And there's a real fear that people will start using chat GPT for search and that Doodle will be left in the dust.

And then what does that panic mean for X?

I think it means that the company really drills down much more on its core competencies in search, making sure that search is innovating and keeping up with the times, and also in artificial intelligence. And so it means that F's is just less top of mind for alphabet leadership.

This was an important turning point for X. Sources told Julia that X has become less willing to bet on expensive out there ideas. The lab's budget has shrunk this year, and projects that originated within X are increasingly being spun out as standalone startups. Julia spoke with one former ex employee who's experienced this transition firsthand, Catherine Zealand.

Catherine Zealand came up with a really interesting project. She was inspired by her grandmother who was struggling with mobility, and so Catherine wanted to create a product that could help her grandmother and others move about the world. And so she started tinkering with an exoskeleton, and it was a project that just really became beloved by EX leadership and the people within the lab. But as time went on,

Eventually, Catherine decided to leave X and spin out her exoskeleton project into a startup called Skip Innovations Incorporated. Her salary is lower and the office is less cushy, but she can control how the technology is developed and marketed. But inside Alphabet, current employees are also grappling with the effects of X's shift.

I think that feelings are mixed. I've heard from sources that some people are excited about the freedom that they will have under this new structure, but it is a big change for employees. I think there are some people who feel like this changes the purpose of that it distances itself from birthing the next doodle, and so there is some sadness about that.

And what does the company say about this new chapter For X.

They are really framing this as just an organic evolution of their mission. They see it as something that will really amplify their impact in the world by helping these companies go to market faster, and so now is really formalizing that path. They're putting in place a team that is helping startups meet with investors, helping them learn how to pitch, and they seem to be gearing enough to bring many more of these startups into the world.

This broader pullback of some of these ambitious projects is happening at other companies too. We've seen Apple abandoning its Apple Car project, Meta walking back some of its hardware efforts. What is this story at X tell us about how big Silicon Valley is willing to dream these days.

So it's an interesting moment for innovation because I think that you see big tech companies still innovating, but in a very focused way. Brutal, for example, is all in on AI. Amazon and Microsoft are also pouring resources into that, and so I think that there's more innovation happening outside of these big companies than we once saw.

Love says, in some ways, the story of Alphabet's Moonshot lab is also a story of a wildly successful company settling into middle age, focusing its energies and resources. Moving forward, Love expects to see x hone its focus around projects that involve AI and to bring some of its moonshot ideas back to Earth. This is the big take from Bloomberg News. I'm Sarah Holder. This episode was produced by Adrianna Tapia. It was edited by Stacy Vanicksmith and Mark Million.