Google‘s parent company Alphabet is apparently setting up a another way to make its pie-in-the-sky “Other Bets” businesses into productive entities.
Last August, when Google (GOOG) re-composed itself as a holding company called Alphabet with several units, one motivation was to partition off its moonshot projects from its bread-and-butter search and advertising businesses. The thinking was that this would nurture them as startups working on self-driving cars and other futuristic ventures. But a somewhat contradictory rationale was to push them to succeed (or fail) on their own merits while the core Google entity, under chief executive Sundar Pichai, remained focused on Internet search, advertising, cloud computing, Chrome, Android, and YouTube.
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On Friday, Bloomberg reported that Alphabet is now pushing its “Other Bets” groups to create their own equity grants, the value of which will be based on how the individual unit performs. That way managers and employees will have incentives to make a go of the business. Some of the Other Bets groups—which include Nest, Verily (once known as Google Life Sciences), Google X, and GV (formerly Google Ventures)—are further down this road than others, according to the report citing unnamed sources.
For more, read: Google Moonshots Are Becoming a Massive Pain
Verily, according to Bloomberg, is pretty far along in the process that would call for its employees to get Verily shares, the value of which would be assessed by an independent party. After six months, the employee can sell shares to Alphabet for cash or Alphabet stock.
From the report:
The changes are designed to help Larry Page, Alphabet’s chief executive officer and a Google founder, get Other Bets companies running more like fast-moving, lean startups and less like research divisions of a highly profitable internet giant.
Other Bets executives can also opt out of using the stock system, one source told Bloomberg, although that would seem to negate the whole purpose.
For more on Google’s other bets watch:
Google’s dilemma mirrors the conundrum of research and development in general. On the one hand, purists see the need to conduct research for its own purpose—to learn things. But there is pressure at academic institutions as well as enormous for-profit corporations, like Google and Microsoft (MSFT), to make research pay its way and even contribute to profits. Alphabet has been treading that fine line for a while now.
Coins2Day reached out to Google for comment and will update this story as needed.