Alphabet’s moonshot
The strategy is based on a dedicated enterprise fund that exists solely to speculate in spin-out X companies, in which Alphabet is a minority investor. “If Alphabet was the only LP, the fund would be in Alphabet, and when they invested in something from X, it would still be in Alphabet,” Teller explained on stage. “So Alphabet may be a small LP, but if it is anything more than a small LP, we will defeat the purpose that we were trying to achieve.”
This is a fund Series X Kapitalwhich has raised over $500 million and is led by Gideon Yu, former YouTube executive and Facebook CFO. Bloomberg was the first to report the fund’s existence last yr. Unlike Alphabet’s other investment arm, GV, which invests extensively in early-stage startups; CapitalG, which supports companies at the growth stage; and Gradient Ventures, which invests in AI startups – Series X Capital is legally obliged to speculate only in X-derived companies.
The approach represents a significant evolution from Company X, which has in the past turned successful projects such as Waymo and Wing into standalone Alphabet subsidiaries. Teller said the lab has learned over the past decade that while some lunar images profit from Alphabet’s resources and scale, others “can run faster and won’t really benefit from being part of Alphabet because they’re just so different.”
“It makes sense to land just outside the Alphabet membrane where we can work closely with them and get a lot of strategic ancillary benefits with them, but not necessarily control them,” he said.
In Disrupt, Teller explained that the spinout strategy only works because of X’s ruthless approach to mental honesty, including a culture that actively celebrates the killing of promising ideas.
X defines a moonshot as having three specific elements: it must try to solve a huge problem in the world, propose some product or service that may make that problem go away, and use breakthrough technology that creates a “glimmer of hope” that the team inside X can solve the problem. Critically, Teller stated, “if someone proposes a moonshot and it sounds reasonable, the company isn’t interested because by definition it wouldn’t be a moonshot.”
What happens to ideas that meet these criteria? X tests them mercilessly, looking for reasons to kill them, Teller said. “If you propose something and it sounds pretty crazy that has those three elements, and it’s a hypothesis that can be tested, for a small amount of money we can learn something about whether it’s a little crazy than we thought or a little crazy than we thought,” Teller explained. “If he’s a little crazier than we thought, cool, let’s give him a high five, put a bullet in his head and move on.”
Techcrunch event
San Francisco
|
October 13-15, 2026
This approach requires disconnecting people from their ideas, which is why Teller said he doesn’t even know who began most of the projects at “If we’re going to investigate something, you too [as the lead inventor] you feel like “this is my baby.” What are the possibilities that I can get you to practice true mental honesty?” he told the Disrupt audience.
In practice, because of this X tackles the most difficult parts of projects first, actively looking for reasons to shut them. The result is a brutal 2% hit rate, which Teller sees not as a failure, but as a feature. X has killed many more projects than it began, including entire categories that once seemed promising, like AI copywriting tools, that eventually absorbed the core models.
All this testing and failure may be costly. The spinout structure solves a practical problem: While X previously had to search out outside enterprise capitalists willing to accumulate at least 51% of the company in order to spin it off from Alphabet, creating a fund that “understands us deeply” and is “legally obligated to only invest in things that come from us,” Teller said, X can structure the spinout process while maintaining close strategic ties.
Despite the emphasis on breaking away from ideas, X employees actually engage in the game when projects get going. For those working on projects toward independence, the financial incentive is significant. “You and the rest of your team will get a piece of this company,” Teller said. “That’s about what you would get if you started in a garage at this stage of financing but didn’t take any risks in the meantime.”
The offer to potential employees of X also clearly mentions this compromise. “Your standard deviation advantage of four or five will be bigger outdoors, I assure you,” Teller told Disrupt. “But if you get to X, you can become an innovation counter with us, without fear or financial risk.”
X employees are paid the same as 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 learn about,” Teller explained. This eliminates the financial pressure that forestalls founders from killing their ideas. “You can say, ‘Hey, this one isn’t raising our average, let’s throw it out,'” Teller explained. “And since you haven’t staked your kids’ college fund on it, it doesn’t scare you.”
In 2025, X created at least two companies: Taara, which develops wireless optical communication technology, and Heritable Agriculture, a biotechnology company using machine learning to speed up plant breeding. Previous spin-outs that have raised external financing include Malta (renewable energy storage), Dandelion (geothermal heating) and iyO (AI-powered earphones).
On the eve of Disrupt, X announced its newest moonshot company: Wind“a new artificial intelligence platform designed to help developers, the architecture and construction industry, and cities unravel the complexities of new construction projects,” as it describes itself. Asked on stage about what makes this particular AI platform a “moonshot,” Teller pointed to the scale of the problem – and the opportunity.
“The built environment accounts for approximately 25% of the world’s solid waste, [and] about 25% of the world [carbon dioxide] Exit. It is literally in Maslow’s hierarchy of needs – it is where we live and where we spend most of our time. This is a large part of global GDP. So it would be difficult to be more relevant as an industry.”