Alphabet restructuring X to allow for outside funding, results in layoffs

This latest round of Google layoffs are also impacting Alphabet’s X with a restructuring that sees the Moonshot Factory move to a new funding model.

According to Bloomberg, X is undergoing a “restructuring” that sees dozens of layoffs centered around “support staff.” 

The big change is a new structure meant to let projects “more easily spin out of X as independent startups with support from Alphabet and outside backers.” This means Alphabet won’t be solely funding these efforts. For example, Waymo in 2020 raised $3.25 billion in its first external investment round.

External sources might include venture capital, “family offices, sovereign wealth funds, private equity firms and strategic investors, or companies operating in the same industries that the moonshots are targeting.” Notably, Alphabet was previously hesitant about these projects raising outside capital. 

Under the previous model, which dates back to the inception of Alphabet, projects ready to graduate were limited by how the parent company “could only accommodate so many Other Bets,” which today includes Access/Fiber, Calico, CapitalG, GV, Verily, Waymo, and X.

Bloomberg reports how “startups within X often faced a choice between waiting for a spot to open up or striking out on their own.”

During the January 2023 layoffs, X was said to be prioritizing projects with “more immediate revenue-generating potential.” This led to projects being killed earlier than usual, with a focus on AI bets over hardware.