The fifth feature is the only one that X does not control: financial and operational autonomy from corporate headquarters. That leads to an inevitable question: How long will Alphabet support X if X fails to build the next Google?
The co-founders of Google, Brin and Larry Page, clearly have a deep fondness for X. Page once said that one of his childhood heroes was Nikola Tesla, the polymath Serbian American whose experiments paved the way for air-conditioning and remote controls. “He was one of the greatest inventors, but it’s a sad, sad story,” Page said in a 2008 interview. “He couldn’t commercialize anything, he could barely fund his own research. You’d want to be more like Edison … You’ve got to actually get [your invention] into the world; you’ve got to produce, make money doing it.”
Nine years later, this story seems like an ominous critique of X, whose dearth of revenue makes it more like Tesla’s laboratory than Edison’s factory. Indeed, the most common critique of X that I heard from entrepreneurs and academics in the Valley is that the company’s prodigious investment has yet to produce a blockbuster.
Several X experiments have been profitably incorporated into Google already. X’s research into artificial intelligence, nicknamed Brain, is now powering some Google products, like its search and translation software. And an imminent blockbuster may be hiding in plain sight: In May, Morgan Stanley analysts told investors that Waymo, the self-driving-car company that incubated at X for seven years, is worth $70 billion, more than the market cap of Ford or GM. The future of self-driving cars—how they will work, and who exactly will own them—is uncertain. But the global car market generates more than $1 trillion in sales each year, and Waymo’s is perhaps the most advanced autonomous-vehicle technology in the world.
What’s more, X may benefit its parent company in ways that have nothing to do with X’s own profits or losses. Despite its cuddly and inspirational appeal, Google is a mature firm whose 2017 revenue will likely surpass $100 billion. Growing Google’s core business requires salespeople and marketers who perform ordinary tasks, such as selling search terms to insurance companies. There is nothing wrong with these jobs, but they highlight a gap—perhaps widening—between Silicon Valley’s world-changing rhetoric and what most people and companies actually do there.
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X sends a corporate signal, both internally and externally, that Page and Brin are still nurturing the idealism with which they founded what is now basically an advertising company. Several business scholars have argued that Google’s domination of the market for search advertising is so complete that it should be treated as a monopoly. In June, the European Union slapped Google with a $2.7 billion antitrust fine for promoting its own shopping sites at the expense of competitors. Alphabet might use the projects at X to argue that it is a benevolent giant willing to spend its surplus on inventions that enrich humanity, much like AT&T did with Bell Labs.
All of that said, X’s soft benefits and theoretical valuations can go only so far; at some point, Alphabet must determine whether X’s theories of failure, experimentation, and invention work in practice. After several days marinating in the company’s idealism, I still wondered whether X’s insistence on moonshots might lead it to miss the modest innovations that typically produce the most-valuable products. I asked Astro Teller a mischievous question: Imagine you are participating in a Rapid Eval session in the mid-1990s, and somebody says she wants to rank every internet page by influence. Would he champion the idea? Teller saw right through me: I was referring to PageRank, the software that grew into Google. He said, “I would like to believe that we would at least go down the path” of exploring a technology like PageRank. But “we might have said no.”
I then asked him to imagine that the year was 2003, and an X employee proposed digitizing college yearbooks. I was referring to Facebook, now Google’s fiercest rival for digital-advertising revenue. Teller said he would be even more likely to reject that pitch. “We don’t go down paths where the hard stuff is marketing, or understanding how people get dates.” He paused. “Obviously there are hard things about what Facebook is doing. But digitizing a yearbook was an observation about connecting people, not a technically hard challenge.”
X has a dual mandate to solve huge problems and to build the next Google, two goals that Teller considers closely aligned. And yet Facebook grew to rival Google, as a platform for advertising and in financial value, by first achieving a quotidian goal. It was not a moonshot but rather the opposite—a small step, followed by another step, and another.
Insisting on quick products and profits is the modern attitude of innovation that X continues to quietly resist. For better and worse, it is imbued with an appreciation for the long gestation period of new technology.
Technology is a tall tree, John Fernald told me. But planting the seeds of invention and harvesting the fruit of commercial innovation are entirely distinct skills, often mastered by different organizations and separated by many years. “I don’t think of X as a planter or a harvester, actually,” Fernald said. “I think of X as building taller ladders. They reach where others cannot.” Several weeks later, I repeated the line to several X employees. “That’s perfect,” they said. “That’s so perfect.” Nobody knows for sure what, if anything, the employees at X are going to find up on those ladders. But they’re reaching. At least someone is.
Source : https://www.theatlantic.com/magazine/archive/2017/11/x-google-moonshot-factory/540648/?silverid=MzEwMTkwMjQ4MTUyS0