Alphabet Inc.’s advanced technology laboratory, known as X, is reducing its workforce and turning to external investors to support its initiatives. In recent months, X has engaged in discussions with venture capitalists and other investors to secure funding for its projects. The lab is implementing a new structure that allows its projects to transition more seamlessly into independent startups with backing from both Alphabet and external supporters.
Astro Teller, the leader of the lab, conveyed in an email to staff, “We’re expanding our approach to focus on spinning out more projects as independent companies funded through market-based capital.” This involves collaborating with a broader range of industry and financial partners while maintaining lean teams and capital efficiency.
As part of the restructuring, X is laying off numerous employees, primarily in support roles. The restructuring aims to address the pressure on X to demonstrate the profitability of its speculative projects, aligning with Alphabet’s broader cost-cutting efforts.
Google, under Alphabet, recently eliminated hundreds of jobs in areas such as hardware and engineering, signaling a renewed focus on artificial intelligence. Ruth Porat, Alphabet’s CFO, is transitioning to a new role as president and chief investment officer, overseeing divisions including X.
X, originally launched by Google co-founders Larry Page and Sergey Brin, has pursued ambitious projects, from self-driving cars to internet-connecting balloons. However, it has faced challenges in translating these endeavors into profitable businesses, prompting the need for cost-cutting measures.
Since Google’s 2015 reorganization into Alphabet, X’s moonshot projects sought to become independent ventures under the “Other Bets” category. However, limited capacity for Other Bets within Alphabet created challenges for X ventures looking to progress. This bottleneck led to the current move to secure external funding for X projects.
Despite previous concerns from Alphabet leadership about external funding, X is now exploring options with venture capitalists, family offices, sovereign wealth funds, private equity firms, and strategic investors aligned with the moonshots’ target industries.
In Silicon Valley, innovation labs have faced threats amid industry-wide layoffs and budget cuts. X’s shift in approach aims to allow greater focus on inventing groundbreaking technologies to address global challenges.
