May 23, 2024
Alphabet's X lab revamps structure, embraces external funding amid layoffs

Alphabet’s X, a division of the company known for its groundbreaking technology projects, is undergoing significant changes, including staff layoffs and a shift toward external funding. According to a Bloomberg report, the lab, which has been at the forefront of tackling global challenges like climate change and connectivity, is now engaging with venture capitalists and investors to support its ventures.

X is adopting a new structure to facilitate the transition of its projects into independent startups. This move, spearheaded by Astro Teller, who leads the lab, aims to collaborate with a broader base of industry and financial partners. The focus is on lean teams and capital efficiency, as stated in an email to staff obtained by Bloomberg.

Additionally, X is laying off dozens of employees, primarily in support roles. As part of the restructuring, this decision aligns with Alphabet’s broader cost-cutting campaign and increased pressure to turn speculative bets into profitable businesses. Alphabet’s CFO Ruth Porat, known for her financial discipline, is taking on a new role overseeing a division that includes X, signaling a potential intensification of efforts to drive success in the lab’s ventures.

Since Google restructured as Alphabet in 2015, X’s moonshots have aimed to graduate as Other Bets under Alphabet. However, the limited capacity for accommodating these ventures created a bottleneck. The new approach of seeking external funding and spinning out projects as independent companies is a strategic shift to overcome these challenges.

Impact on Silicon Valley’s innovation labs

X’s restructuring reflects broader trends in Silicon Valley, where innovation labs face threats amid layoffs and budget cuts. Last year, Google reduced most jobs at its in-house startup incubator, Area 120. X’s latest move is a step in adapting to the current economic climate.

Despite the challenges, Teller’s note to staff emphasizes X’s commitment to inventing breakthrough technologies. The lab’s focus remains on solving pressing global issues, with the belief that the world needs moonshots now more than ever. The restructuring and new funding approach are crucial steps in ensuring X continues to drive innovation and impact in the technology sector.

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