Moonshots

Google’s Parent Company Turns Up the Heat on Its Moonshots: Make Money or Else

The tech giant is scaling back some of its more ambitious endeavors.
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Amid a cooling funding environment in Silicon Valley, even Google is entering a new age of “fiscal discipline,” putting pressure on some of its more enterprising projects. The latest sign of belt-tightening at the $511 billion company is illustrated in a new report from The Information, published this week, which reveals a number of complications at Nest, the smart-home company Google purchased in 2014 for $3.2 billion.

“The fiscal discipline era has now descended upon everything,” Nest founder and C.E.O. Tony Fadell told The Information. The message from Alphabet, Google’s parent company, to its more enterprising “bets” is clear: “show us your business plan for the year. We’re going to hold you to those numbers,” Fadell said. According to the report, Alphabet has put heat on Nest to release a new smart-home security system this year, as the company struggles with management troubles and shortcomings with its products.

Google seems to be scaling back its more ambitious endeavors, too. Last week, Google decided to part ways with Boston Dynamics, the robotics company it bought three years ago. The company is now up for sale, Bloomberg reported, and Amazon and Toyota are potential buyers. Boston Dynamics was initially overseen by Andy Rubin as part of Google’s robotics division, until he and Google parted ways in 2014. Then, Boston Dynamics and its parent company, Replicant, were folded into Google X—the section of Google responsible for its “moonshot” projects. The robotics division languished without a leader.

Ultimately, Google and Alphabet decided only to invest resources and time on practical projects that would generate returns and get products to market. According to Bloomberg, Google X chief Astro Teller told Replicant employees that if what they were working on wasn’t a practical solution, they’d be reassigned to another division within the company. The penny-pinching, as Business Insider points out, may have something to do with Google’s recently appointed C.F.O. Ruth Porat, an ex–Wall Streeter whose focus is one of financial prudence.

Google announced the creation last year of Alphabet, which would become Google’s parent company, in part to create more transparency for investors seeking to differentiate between the company’s lucrative core businesses and its moonshots. Alphabet houses the more experimental branches of the company, like Nest, Google’s self-driving-car project, and Google Fiber, Google’s high-speed Internet endeavor. Google oversees Android, Google search, and YouTube. The Google projects, for the most part, have clear revenue paths; the Alphabet projects require more time and patience. Most of them are still not publicly released.