Alphabet’s X moonshot factory is changing its strategy for launching ambitious tech ventures, increasingly spinning them off as separate entities instead of housing them within Alphabet, as revealed by Astro Teller, head of X, at TechCrunch Disrupt last week.
The strategy depends on a specific venture fund dedicated to investing in X spinouts, where Alphabet holds only a minority stake. “If Alphabet were the only LP, the fund would be within Alphabet, so when it invested in an X project, it’d remain inside Alphabet,” Teller stated. “Alphabet can be a small LP, but going beyond that defeats our purpose.”
That fund is Series X Capital, which has secured over $500 million and is led by Gideon Yu, previously an executive at YouTube and CFO of Facebook. Bloomberg initially reported on the fund last year. Unlike Alphabet’s other investment divisions — GV, which invests broadly in early-stage startups; CapitalG, which supports growth-stage companies; and Gradient Ventures, focused on AI startups — Series X Capital is legally bound to invest solely in companies spun out from X.
This approach signifies a notable shift for X, which has previously transitioned successful ventures like Waymo and Wing into independent Alphabet subsidiaries. Teller mentioned that the lab has realized over the past decade that while certain moonshots gain from Alphabet’s resources and reach, others “can progress more quickly and wouldn’t truly benefit from being part of Alphabet due to their distinct nature.”
“Positioning it just outside Alphabet, allowing close collaboration and strategic benefits without necessarily controlling it, makes sense,” he noted.
Teller explained at Disrupt that this spinout strategy is effective due to X’s commitment to honest evaluation, including a culture that embraces discarding promising ideas.
X defines a moonshot by three elements: it must tackle a major global issue, propose a product or service to eliminate that issue, and utilize breakthrough tech providing a “glimmer of hope” that the X team can solve it. Teller emphasized that “if a moonshot proposal sounds reasonable, the company isn’t interested, as it wouldn’t be a moonshot by definition.”
What becomes of ideas meeting these criteria? X rigorously tests them, seeking reasons to reject them, Teller explained. “If your proposal seems quite wild, meets the three criteria, and presents a testable hypothesis, we can invest a small sum to determine if it’s even more or less crazy than we initially thought,” Teller said. “If it’s more crazy, we celebrate, then discontinue the project.”
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This strategy necessitates detaching individuals from their ideas, which is why Teller doesn’t recall who initiated most X projects, including Waymo and Wing, which now delivers Walmart packages in about six U.S. cities. “If we’re exploring something, and you feel it’s ‘your baby,’ how likely are you to practice genuine intellectual honesty?” he posed to the Disrupt attendees.
Practically, X addresses the most challenging aspects of projects first, actively seeking reasons to terminate them. This results in a 2% success rate, which Teller views as a feature, not a flaw. X has discontinued significantly more projects than it has launched, including entire sectors that once appeared promising, such as AI copywriting tools that were eventually integrated into foundation models.
Extensive testing and failures can be costly. The spinout structure provides a solution: X no longer needs to find external venture investors willing to assume at least 51% of a business to spin it out of Alphabet. By creating a fund that “understands us deeply” and is “legally required to invest solely in our projects,” X can standardize the spinout process while maintaining strong strategic connections, Teller stated.
Despite emphasizing detachment from ideas, X employees gain substantially when projects spin out. For those involved in projects going independent, the financial rewards are considerable. “You and your team will receive a portion of that company,” Teller said. “It’s comparable to what you’d gain starting from scratch at that funding stage, but without the prior risk.”
The appeal to prospective X employees highlights this trade-off. “Your significant upside might be greater outside, I concede,” Teller mentioned at Disrupt. “But at X, you can be an innovation card counter with us, without personal fear or financial risk.”
X employees are compensated similarly to other Google employees, without equity in early-stage projects, because “it’s merely an idea we’re exploring,” Teller clarified. This eliminates the financial pressure that prevents founders from abandoning their own ideas. “You can decide to discard a project that isn’t improving our average,” Teller explained, “and since you haven’t risked your children’s education fund on it, you won’t be afraid to do so.”
X has spun out at least two companies in 2025: Taara, focused on wireless optical communication, and Heritable Agriculture, a biotech firm employing machine learning to expedite crop breeding. Past spinouts securing external funding include Malta (renewable energy storage), Dandelion (geothermal heating), and iyO (AI-driven earbuds).
On the eve of Disrupt, X unveiled its latest moonshot company: Anori, an “AI platform designed to assist real estate developers, architects, construction firms, and cities in navigating the complexities of new building ventures,” according to its description. When questioned about what distinguishes this AI platform as a “moonshot,” Teller emphasized the scale of the challenge — and the potential.
“The built environment accounts for approximately 25% of global solid waste and about 25% of global carbon dioxide emissions. It’s a fundamental need—it’s where we reside and spend most of our time. It constitutes a large portion of global GDP. It would be hard to find a more impactful industry.”
You can view our full conversation with Teller here, starting at 6:08.
