Alphabet's X LAB

Shooting for the Moon

Obi Felten at X labs by Winni Wintermeyer
Obi Felten is a fan of fail fast at X labs.
  • Why it matters

    Why it matters

    The goal of Alphabet’s X lab is to incubate ambitious, unconventional solutions to technology problems and spawn new profitable companies.

  • Facts

    Facts

    • X lab has successfully developed driverless cars, balloons that bring the Internet to remote regions and kites that act as wind turbines.
    • Obi Felten is a German-born manager and marketing expert who studied psychology and philosophy at Oxford University.
    • The “Other Bets” section in Google’s financial statement, thought to include X lab, last year reported a loss of $3.6 billion.
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At Alphabet’s secretive X laboratory people are paid to dream big – and fail.

Since 2010, the lab has been turning science fiction into reality, from driverless cars to balloons that bring Internet to remote regions and kites that act as wind turbines.

The goal is to solve the world’s technology problems by reaching for a “moonshot,” an idea that expands the frontiers of what’s considered possible – like U.S. President John F. Kennedy’s 1961 call to land a man on the moon. Or “shooting the moon” in the card game Hearts.

But X lab doesn’t just pursue any crazy idea. Like those who plotted the moon mission, the dreamers at X must have both a vision and a concrete plan to achieve it.

Ideas first go through a period of “rapid evaluation” in which teams conduct initial research and in the best case scenario receive a budget.

“If you don't explain the technology in terms of a real user benefit – why would this be good for me, or my country or my community – people's instant reaction might be to reject it.”

Obi Felten, Director of X Lab's Foundry

If an idea survives this initial stage, then it ends up in the Foundry where teams under the leadership of chief strategist Obi Felten have a year to develop a business plan for the prototype technology.

“Some people think of us as this crazy technology lab where we are making technology for technology’s sake,” Ms. Felten told Handelsblatt. “And that’s definitely not true.”

“The ultimate goal is to create new companies that could be as big as Google itself,” she said.

Ms. Felten isn’t your stereotypical Google employee. She’s not an engineer or a programmer. The German-born manager and marketing expert studied psychology and philosophy at Oxford University.

“My role in the beginning at X was much more about getting people to start thinking about what happens when a new project hits the real world,” Ms. Felten said.

“If you don’t explain the technology in terms of a real user benefit – why would this be good for me, or my country or my community – people’s instant reaction might be to reject it,” she said.

But playing with risk can be an expensive endeavor. Google’s parent company Alphabet Inc. lists X lab in the “Other Bets” section of its financial statements, and their latest earnings report on Thursday showed significant losses for the second quarter. Other Bets had an operational loss of $859 million (€774 million), spiking from a $660-million loss in the same period last year.

Alphabet Inc. doesn’t go into details, but X lab is believed to account for the majority of these losses, which reached a total of $3.6 billion last year, and could be as much as $4 billion this year.

 

Inside the top secret X lab, a man works on the Loon balloon, a project that aims to bring Internet coverage to remote regions. Credit: Brooks Kraft LLC/Corbis via Getty Images

 

That means budgetary concerns have changed things a bit at the X lab. In the early days, engineers faced fewer budget restrictions and often didn’t fully consider how a new technology would be received by the market, Ms. Felten said.

“It was much more experimental. People started projects without much rigor because it was an interesting idea,” she added.

As a result, the amount invested in some projects, such as Google Glass, grew faster than the development of the actual technology.

Google Glass, a computer display worn like a pair of glasses, was initially released in a beta program to great media fanfare but was later rejected by the public.

“Those were pretty tough lessons,” Ms. Felten said. “We are now much more rigorous about how we do allocation internally.”

Now, X lab teams first analyze the biggest risks facing a project. If the risks prove too great, then the project is killed as quickly as possible.

In fact, the X lab’s inventors are rewarded with bonuses and recognition for doing this. It’s an approach that encourages creativity but also saves time and resources for the best ideas.

“We have ‘fail fast’ as a maxim,” Ms. Felten said.

 

Britta Weddeling lives in Silicon Valley and reports on the Internet and technology industry. Astrid Dörner covers finance and U.S. corporations in New York. To contact the authors: weddeling@handelsblatt.comadoerner@handelsblatt.com

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