Google’s parent company could slash more money-losing moonshot projects
Over seven years since Alphabet Inc. came to be, it has invested in a variety of businesses that could show promise, aptly named Alphabet’s other bets. Google’s search, advertising, hardware, and service businesses remain Alphabet’s alpha bet, but the conglomerate is now revising its interests and investments in its other bets like self-driving taxis, drone delivery systems, and drug discovery amid the company’s shift towards health-related research.
Investing in offbeat technology because a brand believes in its potential can quickly turn expensive. In a comprehensive report,The Informationreveals the eleven currently active other bets cost Alphabet around $30 billion in operating losses so far, of which a $4.5 billion loss was recorded in the first nine months of 2022.
However, the search titan has also acknowledged an economic slowdown with afreeze on hiring, and itsrecent quarterly reportalso reveals plans for fewer-than-usual moonshots. A similar effect is now seen at Alphabet’s other bets and X — the absurd idea incubator which harbored Waymo for a while. All this points to growing pressure from senior management and investors to shift the other bets’ focus towards causes that could turn better profits.
Healthcare-related research seems to be the newfound area of interest, starting with Calico, a biotech firm researching ways to combat aging and prevent age-related ailments. The company attracted 20% more staffers and investors through 2021, although founding senior management quit for various reasons. The company has two cancer drugs and one ALS-preventing formulation in various stages of clinical trials. Alphabet’s other moonshot, Verily, also struck deals related to COVID-19 screening and monitoring the performance of Pfizer’s COVID-19 vaccine. These activities show that the new area of primary interest shouldn’t be a challenging change for Alphabet, but what about its employees?
The other employees for Alphabet’s bets make up around 4% of its headcount, with many business unit heads reporting to X’s chief Astro Teller. However, recent changes at Alphabet, indicative of its pivoting interests, have more than halved Teller’s direct reports in the last 18 months. X continues to employ around 700 people, while Waymo’s 2,500-person team is the largest among the other bets.
Alphabet is no stranger toshuttering projects like the Loon balloons, and we could see the firm shut the lights off for a few other bets in the days to come. The brand could also spin-off projects as separate companies like it did with Waymo, fueling hope that we see some good coming out of these changes within the organization. It will be interesting to watch the company’s strategy for larger bets like Verily, DeepMind, and Google Fiber.
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