Alphabet is increasingly launching “moonshot” projects as standalone companies — here’s why

Alphabet’s X Moonshot Factory is changing the way it brings ambitious tech projects to market, increasingly taking them out as independent companies rather than keeping them within Alphabet’s corporate structure, X CEO Astro Teller revealed at TechCrunch Disrupt last week.

This strategy relies on a venture fund dedicated to investing in startups X, in which Alphabet is only a minority investor. “If Alphabet was the only LP, the fund would be inside Alphabet, and then when they invest in something from X, it would still be inside Alphabet,” Teller explained on stage. “So Alphabet can be a small LP, but if it’s more than a small LP, we’re falling behind the thing we’re trying to achieve.”

This box is Series X capitalwhich has raised more than $500 million and is run by Gideon Yu, the former YouTube CEO and Facebook CFO. Bloomberg was the first to report the existence of the fund last year. Unlike Alphabet’s other investment arms – GV, which invests extensively in early-stage startups; CapitalG, which supports growth-stage companies; and Gradient Ventures, which invests in AI startups – Series

This approach represents a meaningful development for X, which has historically spun off successful ventures like Waymo and Wing into independent subsidiaries of Alphabet. The lab has learned over the past decade that while some astronauts benefit from Alphabet’s resources and scale, others “could go faster and wouldn’t really benefit from being part of Alphabet because they’re so different,” Teller said.

“Having them fall outside the alphabet membrane, where we can be tough with them, get a lot of strategic co-benefits with them, but not necessarily control them, makes sense,” he said.

In Disrupt, Teller explains that the breakup strategy only worked because of X’s heavy-handed approach to intellectual honesty, including a culture that actively celebrates the killing of promising ideas.

X defines a lunar project as having three specific components: it must try to solve a big problem in the world, propose some kind of product or service that can make that problem go away, and leverage advanced technology that creates a “ray of hope” that the team inside X can solve that problem. “If someone proposes a trip to the moon and it seems plausible, the company is not interested, because that, by definition, is not going to be a trip to the moon,” Teller said decisively.

What happens to ideas that meet these criteria? Teller said that X tests them mercilessly and looks for reasons to kill them. “If you propose something and it seems very strange, and it has these three components, and it’s a testable hypothesis, for a small amount of money, we can learn something about whether or not it’s a little more Crazier than we thought, or a little less “Crazier than we thought. If it’s crazier than we thought, let’s put a bullet in his head and move on,” Tiller explained.

This approach requires disconnecting people from their thoughts, which is why Teller said he doesn’t even know who started most of the projects at “If we’re going to go explore something, and you (as the lead inventor) feel like, ‘This is my baby,’ what are the chances that I’ll get you to practice real intellectual honesty?” He told the crowd to disable.

In practice, this means that X tackles the hardest parts of projects first, and actively looks for reasons to close them. The result is a brutal 2% success rate that Teller portrays not as a failure but as an advantage. The

All that testing and failure can get expensive. The split structure solves a practical problem: While X had previously had to find outside investors willing to acquire at least 51% of the company to spin it out of Alphabet, by creating a fund that “understands us deeply” and is “legally obligated only to invest in things that come from us,” Taylor said, X can structure the split while maintaining close strategic relationships.

Despite the emphasis on detachment from ideas, X employees are very much in the game when projects get started. For those working on projects moving toward independence, the financial incentive is great. “You and the rest of your team will get a big piece of that company,” Tiller said. “It’s the same amount you would have if you were starting out of your garage at that stage of financing, but without the risk in the meantime.”

The presentation to potential X employees is clear about this trade-off as well. “Your four or five standard deviations will be larger on the outside, I guarantee you that,” Teller said at Disrupt. “But if you come to X, what you have to do is be a card counter to innovate with us, without fear or financial risk to yourself.”

X employees are paid like other Google employees, with no equity in early-stage projects, because “it’s not even a company; it’s an idea we’re trying to figure out,” Teller explained. This removes the financial pressure that prevents founders from killing their ideas. “You can say, ‘Hey, this isn’t raising our average, let’s get rid of this,'” Tiller explained. “And because you didn’t bet your kids’ college money on it, it doesn’t scare you.”

X has founded at least two companies in 2025: Taara, which develops wireless optical communications technology, and Heritable Agriculture, a biotech company that uses machine learning to speed up crop breeding. Previous startups that have raised external funding include Malta (renewable energy storage), Dandelion (geothermal heating), and iyO (AI-powered headphones).

On the eve of Disrupt, Company X announced its newest company: winds“a new AI platform to help real estate developers, architecture and construction industries, and cities solve the complexities of new construction projects,” as it describes itself. When asked on stage what makes this AI platform such a “breakthrough,” Teller pointed to the scale of the problem and the opportunity.

“The built environment accounts for about 25% of the world’s solid waste, (and) about 25% of the world’s (carbon dioxide) production. It’s literally on Maslow’s hierarchy of needs — it’s where we live, where we spend most of our time. It’s a significant portion of global GDP. So it would be difficult for it to be more important as an industry.”

You can watch our entire conversation with Tyler hereStarting at minute 6:08.