May 27, 2024 • 16 mins
Google’s “moonshot” factory, dubbed “X,” encouraged researchers, engineers and developers to dream big for years – no project was too ambitious or too expensive. But recently there’s been a shift. With the tech boom in the rearview mirror, tightening budgets and the rising popularity of ChatGPT, Google has turned its focus away from chasing longshot inventions to expanding its search engine business and AI operations.
In today’s episode, Bloomberg’s Julia Love tells host Sarah Holder what this means for Google and tech innovation at large.
Read more: Google’s Moonshot Factory Falls Back Down to Earth
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
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.
Speaker 1 (00:31):
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.
Speaker 2 (00:40):
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.
Speaker 1 (00:55):
Do we have any idea when there we might be
a commercialization of the Balloom project.
Speaker 2 (00:58):
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
(01:20):
rebranded Twitter. This is Alphabets X, also known as the
Moonshot Factory. X.
Speaker 1 (01:27):
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.
Speaker 2 (01:42):
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.
Speaker 1 (01:51):
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
(02:12):
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.
Speaker 2 (02:22):
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
(02:43):
has evolved from a renegade team encouraged to invent the
next Google into a glorified startup incubator. Today on the show,
how Alphabet's Moonshot Factory came hurtling down to Earth and
what it means for the future of tech innovation in
the age of AI. This is the big take from
Bloomberg News. I'm Sarah Holder, So Julia, bring us back
(03:10):
to the launch of Google's Moonshot project. What was the
lab created to do in twenty ten?
Speaker 1 (03:17):
This lab was born at a moment of really high
ambition for Google. It was twenty ten and the search
engine was already thriving pretty much ubiquitous. But the founders
had big ambitions far outside of search, and so they
were already very interested in self driving cars, and they
(03:38):
were in touch with a professor at Stanford known as
Sebastian's Run who they wanted to work with, and they
decided that they would like to create a special lab
to house that self driving car project and some other
aspirations they had that were very far from the core business.
Speaker 2 (03:55):
And this was in Google's heady don't be evil days, right.
How did X fit into that vision of the company?
Speaker 1 (04:02):
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.
Speaker 2 (04:17):
You mentioned Thrun, the head of X in its early days.
What was Thrun's priority early on?
Speaker 1 (04:25):
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
(04:46):
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.
Speaker 2 (05:01):
How did X interact with the rest of Google.
Speaker 1 (05:04):
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.
Speaker 2 (05:21):
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.
Speaker 1 (05:30):
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
(05:54):
think it was a time when tech companies were flesh
with cash and they wanted to experiment.
Speaker 2 (06:00):
Experimentation as their goal. Making a bunch of money wasn't
the number one priority for.
Speaker 1 (06:05):
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.
Speaker 2 (06:18):
Tren ended up leaving in twenty twelve. Who took over.
Speaker 1 (06:22):
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
(06:44):
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 that they could be birth new projects. He set
up a team called rapid EVL that would stress test
(07:06):
dozens and dozens of ideas to find the most promising
and along the way, it was almost kind of like
a video game where they would set goals for the
projects and if they met them, then they would unlock
more resources. And the vision was that X would be
the birthplace of new companies that, when they reached a
certain point of maturity, would graduate into the family and
(07:31):
become a letter in the alphabet.
Speaker 2 (07:33):
So what were some of the signs X's vaunted position
was starting to change? When does that pivot point start
to happen?
Speaker 1 (07:42):
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
(08:04):
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
was spending on the moonshots. So that was when the
heat started to turn up a bit. And then during
(08:28):
the pandemic, I think the lab started to fall on
some hard times. It was a moment ironically when budgets
were tightening within X, but in Silicon Valley it was
a huge venture capital boom. Vcs were looking for startups
to write chicks for and so some startups and X
(08:49):
had a feeling that they would be better funded if
they were on the outside. And then I think the
other real turning point was the launch of chat GPT,
which really just became a five alarm fire for goodle
and prompted the executives to really focus on the core
(09:13):
business and artificial intelligence.
Speaker 2 (09:18):
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
(09:44):
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?
Speaker 1 (09:56):
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
(10:18):
a real fear that people will start using chat GPT
for search and that Doodle will be left in the dust.
At the end of the day, the search advertising is
what funds everything else, and so if people stopped turning
to Doodle for search, then everything else would grind to
a halt.
Speaker 2 (10:38):
And then what does that panic mean for X?
Speaker 1 (10:42):
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.
Speaker 2 (11:05):
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.
Speaker 1 (11:28):
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
(11:50):
a project that just really became beloved by EX leadership
and the people within the lab. But as time went on,
the tone started to shift. They started encouraging her to pivot,
to look into making an exoskeleton for warehouse workers, or
(12:10):
to looked into make immersive video game controllers, and that
just wasn't what Catherine wanted to do. She and her
team were always really drawn to that original vision of
helping everyday people to move, and so Catherine started to
question whether her future was within it.
Speaker 2 (12:33):
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.
Speaker 1 (12:54):
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
(13:19):
distances itself from birthing the next doodle, and so there
is some sadness about that.
Speaker 2 (13:27):
And what does the company say about this new chapter
For X.
Speaker 1 (13:32):
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
(13:54):
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.
Speaker 2 (14:15):
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.
Speaker 1 (14:35):
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,
(14:56):
and so I think that there's more innovation happening outside
of these big companies than we once saw.
Speaker 2 (15:04):
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
(15:28):
Bloomberg News. I'm Sarah Holder. This episode was produced by
Adrianna Tapia. It was edited by Stacy Vanicksmith and Mark Million.
It was mixed by Blake Maples. It was fact checked
by Thomas lou Our senior producers are Kim Gitttleson and
Naomi Shaven. Our senior editor is Elizabeth Ponso. Nicole bimsterbor
is our executive producer. Sage Bauman is our head of podcasts.
(15:51):
Thanks so much for listening. Please follow and review The
Big Take wherever you get your podcasts. It helps new
listeners find the show. We'll be back tomorrow.
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
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.
Speaker 1 (00:31):
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.
Speaker 2 (00:40):
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.
Speaker 1 (00:55):
Do we have any idea when there we might be
a commercialization of the Balloom project.
Speaker 2 (00:58):
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
(01:20):
rebranded Twitter. This is Alphabets X, also known as the
Moonshot Factory. X.
Speaker 1 (01:27):
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.
Speaker 2 (01:42):
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.
Speaker 1 (01:51):
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
(02:12):
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.
Speaker 2 (02:22):
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
(02:43):
has evolved from a renegade team encouraged to invent the
next Google into a glorified startup incubator. Today on the show,
how Alphabet's Moonshot Factory came hurtling down to Earth and
what it means for the future of tech innovation in
the age of AI. This is the big take from
Bloomberg News. I'm Sarah Holder, So Julia, bring us back
(03:10):
to the launch of Google's Moonshot project. What was the
lab created to do in twenty ten?
Speaker 1 (03:17):
This lab was born at a moment of really high
ambition for Google. It was twenty ten and the search
engine was already thriving pretty much ubiquitous. But the founders
had big ambitions far outside of search, and so they
were already very interested in self driving cars, and they
(03:38):
were in touch with a professor at Stanford known as
Sebastian's Run who they wanted to work with, and they
decided that they would like to create a special lab
to house that self driving car project and some other
aspirations they had that were very far from the core business.
Speaker 2 (03:55):
And this was in Google's heady don't be evil days, right.
How did X fit into that vision of the company?
Speaker 1 (04:02):
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.
Speaker 2 (04:17):
You mentioned Thrun, the head of X in its early days.
What was Thrun's priority early on?
Speaker 1 (04:25):
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
(04:46):
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.
Speaker 2 (05:01):
How did X interact with the rest of Google.
Speaker 1 (05:04):
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.
Speaker 2 (05:21):
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.
Speaker 1 (05:30):
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
(05:54):
think it was a time when tech companies were flesh
with cash and they wanted to experiment.
Speaker 2 (06:00):
Experimentation as their goal. Making a bunch of money wasn't
the number one priority for.
Speaker 1 (06:05):
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.
Speaker 2 (06:18):
Tren ended up leaving in twenty twelve. Who took over.
Speaker 1 (06:22):
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
(06:44):
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 that they could be birth new projects. He set
up a team called rapid EVL that would stress test
(07:06):
dozens and dozens of ideas to find the most promising
and along the way, it was almost kind of like
a video game where they would set goals for the
projects and if they met them, then they would unlock
more resources. And the vision was that X would be
the birthplace of new companies that, when they reached a
certain point of maturity, would graduate into the family and
(07:31):
become a letter in the alphabet.
Speaker 2 (07:33):
So what were some of the signs X's vaunted position
was starting to change? When does that pivot point start
to happen?
Speaker 1 (07:42):
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
(08:04):
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
was spending on the moonshots. So that was when the
heat started to turn up a bit. And then during
(08:28):
the pandemic, I think the lab started to fall on
some hard times. It was a moment ironically when budgets
were tightening within X, but in Silicon Valley it was
a huge venture capital boom. Vcs were looking for startups
to write chicks for and so some startups and X
(08:49):
had a feeling that they would be better funded if
they were on the outside. And then I think the
other real turning point was the launch of chat GPT,
which really just became a five alarm fire for goodle
and prompted the executives to really focus on the core
(09:13):
business and artificial intelligence.
Speaker 2 (09:18):
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
(09:44):
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?
Speaker 1 (09:56):
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
(10:18):
a real fear that people will start using chat GPT
for search and that Doodle will be left in the dust.
At the end of the day, the search advertising is
what funds everything else, and so if people stopped turning
to Doodle for search, then everything else would grind to
a halt.
Speaker 2 (10:38):
And then what does that panic mean for X?
Speaker 1 (10:42):
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.
Speaker 2 (11:05):
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.
Speaker 1 (11:28):
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
(11:50):
a project that just really became beloved by EX leadership
and the people within the lab. But as time went on,
the tone started to shift. They started encouraging her to pivot,
to look into making an exoskeleton for warehouse workers, or
(12:10):
to looked into make immersive video game controllers, and that
just wasn't what Catherine wanted to do. She and her
team were always really drawn to that original vision of
helping everyday people to move, and so Catherine started to
question whether her future was within it.
Speaker 2 (12:33):
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.
Speaker 1 (12:54):
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
(13:19):
distances itself from birthing the next doodle, and so there
is some sadness about that.
Speaker 2 (13:27):
And what does the company say about this new chapter
For X.
Speaker 1 (13:32):
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
(13:54):
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.
Speaker 2 (14:15):
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.
Speaker 1 (14:35):
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,
(14:56):
and so I think that there's more innovation happening outside
of these big companies than we once saw.
Speaker 2 (15:04):
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
(15:28):
Bloomberg News. I'm Sarah Holder. This episode was produced by
Adrianna Tapia. It was edited by Stacy Vanicksmith and Mark Million.
It was mixed by Blake Maples. It was fact checked
by Thomas lou Our senior producers are Kim Gitttleson and
Naomi Shaven. Our senior editor is Elizabeth Ponso. Nicole bimsterbor
is our executive producer. Sage Bauman is our head of podcasts.
(15:51):
Thanks so much for listening. Please follow and review The
Big Take wherever you get your podcasts. It helps new
listeners find the show. We'll be back tomorrow.
Hosts And Creators
Sarah Holder
Saleha Mohsin
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