Google wants staffers to follow their startup dreams — without leaving Google
This article written by Gina Hall, first appeared in the Upstart Business Journal on April 25, 2016.
SILICON VALLEY—Google, which last year separated itself from its "moonshot" projects when it reorganized as Alphabet, is now building a startup incubator called “Area 120” to foster ideas from in-house talent.
It will apparently be part of the core business that is now known as Google and is named “Area 120,” a reference to Google’s “20 percent” policy which allows employees to use one-fifth of their work time on interesting side projects.
The incubator will be located in one of Google’s new San Francisco-based buildings, according to The Information. The goal is to keep staffers at the company instead of watching them exit Google to follow their startup dreams.
The company will place Google executives Don Harrison and Bradley Horowitz in charge of the operation. Harrison has worked on Google’s corporate development team, while Horowitz oversaw Google+ and has recently been running products such as “Photos and Streams.”
Teams within Google can submit a business plan as an application to join Area 120. If the company likes an idea, the team can work on the project full time for a short period. The teams will then be able to pitch for additional funding to build a Google-funded company. Google has Google Ventures and Google Capital, but it is unknown if the funds will work with Area 120, which will be funded out of Google's corporate development budget, per the report.
The incubator comes at a time when Google is pulling back on hiring and spending, according to the Wall Street Journal. Last July, the company started conducting an internal audit, taking a hard look at costs, revenue and accounting. Employees reportedly noticed expenditures for travel, supplies and events required more justification, adding more friction to the approval process.
Some investors are also concerned that the company is spreading itself too thin and spending too much on “moonshot” projects at the expense of Google’s core businesses. The company is looking into such ventures as Internet access from high-altitude balloons, delivering its own wireless service and self-driving cars.
The incubator is one way Google can retain innovative employees who may be concerned that fiscal frugality could limit their potential. When Google debuted Alphabet in 2015, part of its mission statement was to empower “great entrepreneurs and companies to flourish” and invest “at the scale of the opportunities and resources we see.”