Eight years ago, Google’s founders split the company up into separate entities and named the collection Alphabet. The idea was to separate the core business — the company’s giant advertising machine that made it one of the most powerful corporations in the world — from the side projects that needed time to develop but could one day become Google’s next big moneymaker.
But that next big moneymaker hasn’t materialized. Revenue still comes overwhelmingly from advertising. Google has shuttered most of its so-called “moonshots” — from internet-delivering balloons to glucose-measuring contact lenses.
And even the most advanced of its side projects — self-driving car lab Waymo and health-care tech start-up Verily — are now confined by the limits of regular businesses. On Wednesday, Waymo laid off 8 percent of its workforce, adding to a previous round of cuts in January.
The Waymo layoffs are just the latest example of a new reality that has settled over Big Tech: The age of the moonshots is over.
As the decade-long bull market came stuttering to an end and tech stock prices fell throughout last year, pressure to cut costs from Wall Street built and in the past few months a deluge of layoffs and cost-cutting has flooded Silicon Valley. The big-idea side projects that were supposed to become the revenue-drivers of the future have been particularly hard hit, with some of them being completely dismantled, and others facing deep cuts.
“They’ve assumed that everything that they touch is going to work. And in reality, it’s not,” said Roger McNamee, a veteran venture capitalist who was an early investor in Facebook before becoming a high-profile critic of social media’s impact on society.
Higher interest rates means the investment needed to keep spending on money-losing projects is getting harder to find, he said. Big Tech is “retrenching to protect their core business. And so I think you’re going to see them offloading one thing after another.”
Google and Meta did not have immediate comment.
Giving up the moonshot dream marks another stage in the companies’ march into middle age. Google, Facebook and Amazon all grew rapidly from start-ups to tech giants through the first two decades of the millennium by upsetting the balance forged by companies that came before them.
The ethos of “move fast and break things” and billions in venture capital funding from Silicon Valley investors helped them become goliaths in their own right. But for founders who began their businesses in dorm rooms and garages, the threat of the next nimble start-up coming to disrupt them too was ever-present.
Making a space for risky, bizarre and overly ambitious ideas was their solution to avoid the stasis that had hit bigger companies from previous generations.
When Google went public in 2004, its founders Larry Page and Sergey Brin wrote a letter to potential investors, warning them not to expect the quarter-by-quarter financial focus that most public companies are forced to heed. They set up Google X, a research lab focused on only the weirdest and riskiest ideas, and told their employees they should spend part of their time on projects completely unrelated to their day jobs.
“Google is not a conventional company. We do not intend to become one,” they wrote. Page repeated the line in the 2015 announcement about the creation of the Alphabet holding company.
The biggest tech companies have indeed managed to stave off disrupters. But it wasn’t always through reinventing themselves with internally created big ideas. Apple, Amazon, Google and Facebook made hundreds of acquisitions over the past two decades, buying both sizable up-and-coming competitors and tiny start-ups. Google’s Android operating system, Facebook’s mobile advertising business and Amazon’s audiobooks empire all initially came through acquisition. (Amazon founder Jeff Bezos owns The Washington Post.)
In October, a month before announcing widespread layoffs, Amazon began winding down its explorat
