14 ms·

Alphabet Loses $859M on 'Moonshots' in 2Q 2016

189 points by zeddie 10y ago

askafriend 10y ago
I don't see anything wrong with this approach, especially since the company can actually sustainably afford to keep placing these bets. And perhaps "bet" is the wrong word being used here. Usually with a bet in gambling terms, you either win big or you lose it all. When Alphabet tries a "moonshot", they come away learning a lot about whatever problem it is that they were trying to tackle. They build expertise in-house, and they flex the idea muscle within the company. That isn't zero-value activity. In fact it's very valuable. $1B a year is a small price to pay for what could eventually spurn a sustainable $10B per year or $40B per year business in the future (self-driving cars, for example). Now this is just me being optimistic. It could also very well be the case that the X division is horribly mismanaged and the moonshots fail for more nefarious reasons, but I'm willing to give Google the benefit of the doubt.
- arcticfox 10y ago
  In addition, it's not like these bets have been pronounced dead. They're all still in play. It will be years before we know whether any were successful or not. This is like someone betting $1000 on a game, and then calling it a $1000 loss up until the game is actually played (at which point it becomes indeed a true $1000 loss, or possibly a gain). It doesn't make any sense.
  - askafriend 10y ago
    Absolutely, it's as if the article's author only looked at these moonshots in the silo of a single financial quarter when it's clear that the moonshots are intended to be decade long investments...
  - mike_hearn 10y ago
    You could argue that Google Glass is dead.
    - eru 10y ago
      Though to be honest, it was never intended as a consumer product. (But their marketing was conflicted.) Wave is probably an even bigger disappointment: it would have done great as an enterprise product.
- resoluteteeth 10y ago
  > When Alphabet tries a "moonshot", they come away learning a lot about whatever problem it is that they were trying to tackle. They build expertise in-house, and they flex the idea muscle within the company. That isn't zero-value activity. In fact it's very valuable. This might work for "moonshots" that are closer to their core business, but in other areas there's not going to be any inherent value in building expertise if the "moonshot" itself ends up failing, because at that point they will cease needing any expertise in that area at all. Likewise, "flexing the idea muscle" would be a benefit if it was regular Google employees that were working on these projects but it's not. It's Alphabet's X lab which is it's own thing, with people working full time on these moonshots.
- Gustomaximus 10y ago
  And there are so many side benefits. Obviously Google employees are likely to be capable and smart individuals. So I wonder how much value is in having these type of employees take ideas to the company rather than planing to branch off for most companies that would scoff at letting you do a side project for a while. In a region like silicon valley the opportunity and availability to walk away for a startup is huge this could act as a retention tool also. Better to let a talent disappear for 20% of their time than lose them altogether.
- rtpg 10y ago
  I agree with the sentiment, but I don't think you're going to spend just $1B to get to $10B/year. Does Google get to that number with anything apart from Search and Youtube? Though I think even $1B for a $100M/year business is a pretty decent deal at this point...
- ipsum2 10y ago
  > And perhaps "bet" is the wrong word being used here. Usually with a bet in gambling terms, you either win big or you lose it all. Internally, they're referred to as 'bets, a pun on the company name Alphabet.
  - zaroth 10y ago
    Aww, isn't that cute.
    - eru 10y ago
      Only partially. The name 'Alphabet' in itself is a pun on 'Alpha' (in finance terms) and 'bet'.
      - zaroth 10y ago
        What is this, punception?
- frakr 10y ago
  I think that it would be reasonable to assume that many of these moonshots are generating patents that could have significant long term value.
- JonCox 10y ago
  "I have not failed. I've just found 10,000 ways that won't work."
noahmbarr 10y ago
Google's S-1 April 24, 2004 https://www.sec.gov/Archives/edgar/data/1288776/000119312504073639/ds1.htm https://www.sec.gov/Archives/edgar/data/1288776/000119312504...: RISK VS REWARD IN THE LONG RUN Our business environment changes rapidly and needs long term investment. We will not hesitate to place major bets on promising new opportunities. We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long term success, we will continue to seek them out. For example, we would fund projects that have a 10% chance of earning a billion dollars over the long term. Do not be surprised if we place smaller bets in areas that seem very speculative or even strange. As the ratio of reward to risk increases, we will accept projects further outside our normal areas, especially when the initial investment is small. We encourage our employees, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit Google. This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner. For example, AdSense for content and Google News were both prototyped in “20% time.” Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses. We may have quarter-to-quarter volatility as we realize losses on some new projects and gains on others. If we accept this, we can all maximize value in the long term. Even though we are excited about risky projects, we expect to devote the vast majority of our resources to our main businesses, especially since most people naturally gravitate toward incremental improvements.
w1ntermute 10y ago
There was an HN discussion earlier this week on Google X[0]. One important point made there, by snarf: > Google X is mainly about the PR value around its image and recruiting/locking up talent. Google would rather have smart people locked up inside the company working on projects with a high probability of going nowhere rather than having them going to a competitor, or worse, creating the next major competitor. 0: https://news.ycombinator.com/item?id=12150812 https://news.ycombinator.com/item?id=12150812
- asdfologist 10y ago
  That entire thread is filled with snark/speculation and lacks any actual facts. Is it that inconceivable that Google believes that one or more of these moonshots might actually take off?
  - hueving 10y ago
    Well I'm sure the people working on it think one might take off. But if you're taking the pessimistic view it doesn't matter if they never succeed as long as the smart people are kept busy working for them.
    - Jach 10y ago
      It's a clever argument that might convince certain purse-holders, who are optimistic or pessimistic about the success, that it's in the company's best interest either way. I don't think Google's under full control of the sociopaths yet that this sort of "locked up" argument is needed, or is felt internally by very many upper level managers. It's also just not a great strategy if you're worried about potential future competitors given that employees are free citizens, not slaves, and California has no non-compete laws. Industry (let alone tech industry, let alone Californian tech industry) is littered with successful offshoots started by individuals and teams who used to work together at one company, and quit or were fired en masse to start working on something else in the same domain, taking their experience with them and owing their former company nothing. Facebook's strategy of "buy any threat" is a lot more sound, even if it too is vulnerable when the threat refuses to be bought.
zaidf 10y ago
"Moonshot" is the Google term for R&D. Google's R&D budget in 2014 wasn't even in the top 5: http://www.neowin.net/images/uploaded/2014/12/screen_shot_2014-12-03_at_9.28.59_pm_story.jpg http://www.neowin.net/images/uploaded/2014/12/screen_shot_20... Problem for Google might be that Wall Street may look at a word like "moonshot" and basically associate it with wasting money whereas if you call the same things R&D, it's something companies have been showing as an "investment"(not loss) for decades.
- kmonsen 10y ago
  I don't think this is true for Google. The "Moonshots" mentioned here are pretty far from Google. It is in some sense R&D of course, but it is not R&D that will benefit Google as a company.
  - zaidf 10y ago
    How do you reach the conclusion that it is not R&D that will benefit Alphabet? They make it pretty clear it is a high risk high reward R&D, meaning if they hit pay dirt, it can be massively profitable for Alphabet.
    - tyre 10y ago
      Notice that GP said Google while you said Alphabet. If they pay off, it benefits Alphabet. Maybe Google (the search engine monetized through advertising) but possibly not.
      - zaidf 10y ago
        I assumed GP meant Alphabet since public entity is Alphabet, not Google.
    - kmonsen 10y ago
      The moonshots are in alphabet, but pretty far from Googles core with Search, ads and Android. For example robotics, health care and self driving cars. (I work for Google and have worked in another alphabet company)
mythz 10y ago
That's an interesting headline from the same company that posted a 21%/28% YoY 21.5B Revenue / 6B profit quarter.
chaostheory 10y ago
Wall Street is short sighted and regularly see things by the quarter. Its long term outlook tends to be a year give or take. Alphabet needs more forward thinking investors who can see a payout that may not happen for a decade or more. While it has cool projects, the problem with X is that it doesn't seem to have a clear mission / message like SpaceX and Tesla where you are investing for more than just a profit. I could be wrong but they have a marketing / PR problem (in addition their other pre-exisiting ones).
- hueving 10y ago
  Stock is up 4% after hours. I'm not sure which "wall street" strawman you are attacking, but it doesn't appear to be the one that actually trades stock.
  - chaostheory 10y ago
    ok, my criticism is directed towards Wall St analysts. I could be wrong but it feels like the vast majority of them see X as a money pit that's hampering Alphabet as whole. I've been hearing this for about a year now. If ad revenue wasn't up, the chorus would be louder.
    - _jtai 10y ago
      I also don't know if that's entirely true either. After the earnings came out, it looks like quite a few Wall St analysts changed their recommendation to outperform, with a target price of 900+, and in general, it seems like many analysts all have pretty high target prices assigned to Alphabet.
      - chaostheory 10y ago
        Just because they like Alphabet as a whole doesn't mean that they like X. Am I wrong?
hackaflocka 10y ago
All of humanity is going to benefit from these moonshots. Sometimes, the original intent of a research program doesn't come to fruition, but there are a lot of downstream benefits and innovations that can be traced to the so-called "failed" research program. I believe that's exactly what's going to happen with some of these so-called "failures." Even today, what Elon Musk has already done, is considered impossible for his companies to have done. (The car, and the backwards landing rocket.) Here's to more moonshots from Google and Facebook! Salute! ------------------- And here's Nassim Taleb on "inverse Turkeys" (i.e., positive Black Swans), from AntiFragile: > Harvard Business School professor, Gary Pisano, writing about the potential of biotech, made the elementary inverse-turkey mistake, not realizing that in a business with limited losses and unlimited potential (the exact opposite of banking), what you don’t see can be both significant and hidden from the past. He writes: “Despite the commercial success of several companies and the stunning growth in revenues for the industry as a whole, most biotechnology firms earn no profit.” This may be correct, but the inference from it is wrong, possibly backward, on two counts, and it helps to repeat the logic owing to the gravity of the consequences. First, “most companies” in Extremistan make no profit—the rare event dominates, and a small number of companies generate all the shekels. And whatever point he may have, in the presence of the kind of asymmetry and optionality we see in Figure 7, it is inconclusive, so it is better to write about another subject, something less harmful that may interest Harvard students, like how to make a convincing PowerPoint presentation or the difference in managerial cultures between the Japanese and the French. Again, he may be right about the pitiful potential of biotech investments, but not on the basis of the data he showed.
- wavefunction 10y ago
  The thing is, the car and reusable rocket stages exist and are far more difficult to pull off than creating and running an ad-network. I am not saying ad-networks aren't complicated and involved and require highly intelligent people, but I don't believe them to be comparable to what Musk is delivering.
lpolovets 10y ago
This is simply how moonshots work. You lose $50m 99 times in a row, then make $50b on the 100th time. (This is also very similar to how venture capital economics work.) I think it's wonderful that Google pursues moonshots and that they have the cash flow to keep Wall Street investors from freaking out. I'm confident that one (or more) of their experiments will eventually make a huge impact on people around the world.
engizeer 10y ago
That's pretty much Amazon's profits in 2Q 2016.
mfav 10y ago
Subtly dishonest journalism in my opinion. This article could just as easily be titled "Alphabet invests $859M on long-term projects". In fact, that would be a more accurate title since that is precisely Google's intent.
- dredmorbius 10y ago
  There's nothing subtle, and everything dishonest, about this.
- usrusr 10y ago
  Or maybe "Alphabet invests $859M on brand maintenance"? Some projects seem more like the Google-scale equivalent of putting the company name on the shirt of a sports team. Would we expect the Oracle boat to ever turn profitable?
- anjc 10y ago
  There's nothing dishonest about it. It's a loss because these are explicit investments which haven't produced any earnings. When they produce any sort of revenue then their financial statements (and media reports of the financial statements) will say "Other bets showed an operating profit of $Xm". It's just a media report on a fact.
  - mfav 10y ago
    There's some intentional provocation going on with the title. Sure, it's factually correct, but choice of words really pulls the truth one way or another.
  - deleted 10y ago
    [deleted]
honkhonkpants 10y ago
Why should any organization have net profits at all? "Loses" here is being used to mean "spent". You can't just keep stacking up cash forever. That would be pointless and stupid.
- sliverstorm 10y ago
  Net profits are how you pay shareholders dividends, which are often demanded, and the futurr promise of which are the root basis of how the company can attract money through IPO
  - honkhonkpants 10y ago
    That's a sort of quaint belief about the market but it's degenerated into straight up gambling. Let me put the question a different way: why should any company have positive retained earnings?
    - Axsuul 10y ago
      Because they're holding it offshore.
- dredmorbius 10y ago
  There are incorporated entities which don't, in terms of actual economic activity -- they're not-for-profit charities, generally. They _still_ need to have some source of income, however, generally through donations, though other sources may exist (foundations, grants, some operate revenue-generating services, direct government aid, etc.). The reason for the balance of inflow and outflow is based on how our economic system works: there are demand bidding rights which are handed out every so often (dollars, pounds, euros, yen, yuan), whose creation is limited to specific entities (national mints, central banks, and banks generally, via loans). Being able to freely create those demand rights without limite doesn't work on a few counts. The general principle is that the bids you take in have to match, over time, the ones you hand out (when you're bidding on goods or services). There are exceptions: bids can be borrowed, those debts can be dismissed, and a bunch of other stuff. But it's complicated. A company is essentially a flow box which accepts and issues those bids. And over time, the bids in have to match the ones out (or you get to the complicated situations listed above). In the case of Alphabet, it can continue to operate money-losing companies, but only by diverting bids (at the rate of about $900 million/year) from its other companies. Since one of those (Google) essentially mints cash, that's not a large concern. TL;DR: We don't live in a moneyless society yet.
aresant 10y ago
This article makes it sound like Google frittered away $1b on the "X" lab last quarter. X lab includes self driving car, Goog Glass, Project Tango (editorializing here but Tango is badass!), more crazier bets (1) Ok, some crazy stuff there - pretty pretty risky. Wow $1b last quarter for that stuff. Geez corporate responsibility grumble grumble, stupid silicon valley assholes snark snark. But wait, spend 30 seconds doing research and in reality the $859m headline is actually referring to Alphabet's line item "Other Bets" "Other Bets" includes Nest, Google Fiber, Google Ventures, and Verily among others(2) Nest = iot + Tony Fadell (pre fallout) looked like a damn good way to beat Apple to a new important consumer market. Still holding out hope. Google Fiber = fast speed is fundamental to Google's biz, heck they could probably look at this as CapEx. Please come to my 'hood! Google Ventures = bought $258m of Uber stock @ $3.6b valuation. What's that a 20x so far? Pays for entire fund's lifetime by several multiples? Lots of other follow-rounds that make sense (3) Verily = profitable healthcare division. (4) So come on NYT spend 5 mins getting the story straight instead of writing a lazy click bait headline. (1) https://www.solveforx.com/ https://www.solveforx.com/ (2) https://www.engadget.com/2016/02/01/google-alphabet-q4-2015-earnings/ https://www.engadget.com/2016/02/01/google-alphabet-q4-2015-... (3) https://techcrunch.com/2013/08/22/google-ventures-puts-258m-into-uber-its-largest-deal-ever/ https://techcrunch.com/2013/08/22/google-ventures-puts-258m-... (4) http://www.recode.net/2016/4/13/11586102/verily-alphabet-profitable http://www.recode.net/2016/4/13/11586102/verily-alphabet-pro...
- prawn 10y ago
  For anyone else not familiar with it, Tango looks to be phone-based AR that requires specific hardware: https://get.google.com/tango/ https://get.google.com/tango/
- Steko 10y ago
  > "Other Bets" includes Nest, Google Fiber, Google Ventures, and Verily among others(2) The fact that most of those things aren't huge money losers undercuts your argument though. Nest is making money. Google Ventures is $300 million a year, Fiber invested $100 million in KC in 2013, meanwhile this segment was $3.6 billion in the red last year.
tyre 10y ago
> The cost for the Mercury, Gemini and Apollo programs was more than $25 billion at the time more like $110 billion in today's world.[1] Moonshots are expensive. Doesn't mean they aren't worth it. [1]: http://news.utexas.edu/2014/07/21/anniversary-shows-us-that-nasa-and-space-exploration-are-worth-their-costs http://news.utexas.edu/2014/07/21/anniversary-shows-us-that-...
- afsina 10y ago
  Author of that article is like an apologist for excessive government spending. To me, if government did not spend that amount of money on space exploration, probably private sector would have achieved even better things faster with lower cost. Besides, about the author : "..Wallace Fowler is the director of the Texas Space Grant Consortium.".
known 10y ago
AFAIK thinking out-of-the-box is prohibited in Corporations :)
zaroth 10y ago
I don't think it's right to equate R&D spending with "losses". Google makes a profit, not a loss, so technically it does not have losses. It has expenses, and among those, investments in future technology. If all Google could do with their cash flow was pay a dividend, that would be very sad, and it would call for a much lower P/E ratio. This article completely misstates the facts. Perhaps the way they break out their financial statements is confusing to someone without an accounting degree. Just because "Other Bets" is negative, a growing negative number in this case is a good thing. This is showing Google has more free cash to invest in growth and has good ideas they believe in and want to pursue. I would be worried if instead they were stockpiling cash. You would then have to ask, why can't they put it to work effectively? Of course, everything they do that is making money is no longer an "Other Bet" by definition.
- brador 10y ago
  The question is can these moonshots pay off their expenses in the long run. Given how little Google is known to actually ship I question if they can.
  - zaroth 10y ago
    If the article was titled, 'Will Google's moonshots pay off'? With a list of the top projects and cumulative spending on each one. Some analysis on each of the markets and what their potential size could be in 2020. Who are the biggest competitors in the space? Now that would have been interesting to read!
  - bitL 10y ago
    Moonshots are called that way because they bear both immense risk of failure as well as a potential to bring in billions. So individual moonshots are almost always failures; the ones that are successful pay the other ones. Google is doing the right thing to remain alive in the future without enforcing lock down on their users (like other companies not producing moonshots do).
    - brador 10y ago
kmiroslav 10y ago
It's R&D expense. Nothing new here. It only takes one of these moon shots to be successful to bring in extraordinary revenues, and Google has always been crystal clear that following such path was in their DNA.
- RikNieu 10y ago
  I don't see it that way exactly. R&D is an investment. Hell, I'd consider calling it a pure capital investment, if not simply enhancing goodwill. If even one of those moonshots become successful those "sunk costs" will likely start streaming back.
soperj 10y ago
I wish they'd do something a long the lines of using all of their traffic data to design better lighting systems for cities. Gotta be able to do better than what is currently happening.
havetocharge 10y ago
Can't help but notice the bias in the title on HN. Sure, the company spent .8 billion on R&D. The revenue went up by 3.5 billion this quarter too, yoy.
corpus 10y ago
The people complaining about this better not be the same Thiel worshippers who constitute most of the Google hate here. Thiel criticizes Google/Alphabet for hoarding any cash at all. A true technology company re-invests all its excess profit. This "loss" corresponds to less than 7% of Google's gross profits in the same quarter.
- dredmorbius 10y ago
  I can criticise the headline (if that's what you're referring to) while hating on many things that Google do (advertising, crapification of the Web, TPP support, absolutely atrocious user support, a pathetic Android environemnt, from OS to apps to hardware/vendor dynamics. But idiotic jabs on the fact that long-run investments in R&D haven't paid off immediately are pathetically stupid. Do I contradict myself? Very well. No I don't!
Animats 10y ago
We need more detail in financial statements. "Operating loss of $859 million in Other Bets" is not enough disclosure for a public company. It's not research that spends that kind of money. It's attempts to buy market share by selling at a loss that do. Or existing businesses with a high burn rate that aren't profitable. That number includes Nest and Google Fiber, both of which are in production but perhaps not doing too well. Does it include Android? Google's various attempts to build and sell phones? Motorola?
- jeffwilcox 10y ago
  Or it's just the cost of 3,000 engineers doing R&D work in this day and age...
eric-hu 10y ago
This article highlights the myopia of public investment. Other comments have mentioned the self driving car. That's a work still in progress, and likely has been a net loss quarter over quarter. Highlighting the research arm's quarterly losses is like setting an FM radio to 10 Mhz* and then declaring there's nothing on air. * FM Radio bands start around 80 Mhz in the modern world.
jakozaur 10y ago
s/loses/invests
unfortunateface 10y ago
I am encouraged by this advertising companies attempts at designing cars. The moonshot program seems to me to be either Google cementing it's position forever in the knowledge economy or a desperate scrabble for another hit. If the latter is true, then I have hope for the future. It means that the giants - Google (+ Youtube), Amazon, Facebook - can fall. They are not on as strong a footing as it seems. All it takes is... - One generation of kids to decide to eschew Facebook (or any product it buys) - Ad revenue declining or another viable internet business model to rise up and replace it - More efficient / free marketplaces
- duckmysick 10y ago
  How is Amazon being mentioned in the same line as Google and Facebook? They don't rely as much on the ad revenue as the other two.
  - unfortunateface 10y ago
    Each line of those bulletpoints was for a different company facebook, google then amazon
sriram_sun 10y ago
That is almost 20% investment on R&D - twice as good as other good companies. That is why I would love to work for Google!
sudhirj 10y ago
A lot of times I feel like the instinctive reaction to the word losses is an image of Google stacking up a millions of dollars and burning it. That's not what happened - it went to people who used it to build things that would not have been built otherwise, in the hope that some of them might shape the future. Not really a loss to humanity.
mite-mitreski 10y ago
Better to have `Moonshots losses` than some CEO/Board rip off stock buyback scheme.
323454 10y ago
"NASA loses $25.4B on 'Moonshots'" - New York Times headline from July 29 1973
zamalek 10y ago
> The money that Google spent on areas that have little to do with internet search and advertising used to frustrate investors who wanted to see bigger profits. "Dear Hen, the process of laying eggs is too expensive and should be eliminated. Furthermore, we're expecting a 5% increase in golden eggs by the end of the year."
redthrowaway 10y ago
Google seems to be actively attempting to avoid the trap that Apple, Microsoft, Facebook, etc have fallen into. When you completely dominate a market, it can be tempting to optimize and be the best at serving that market. But the nature of tech is such that markets have a short lifespan. New innovations are constantly overturning old monopolies--just ask Microsoft. By investing heavily in high-risk, high-reward prospects, Google is insulating itself against future disruption. If the display ad market collapsed 5 years from now, Google's investment in AI, self-driving cars, AR, robotics, etc. might be the difference between continued dominance and irrelevance. Tech companies rest on their laurels at their own peril.
philippeback 10y ago
Google operating costs are more than $5 billion a quarter. $859M is not that big.
havefunwiththat 10y ago
For that kind of money, you could build a new moon. I don't see anything positive about this kind of loss. If anything, it sounds like questionable accounting to reduce the cost of other profits.
- qqg3 10y ago
  It's not a loss though, they just invested some profits in R+D...
jlebrech 10y ago
would it be legal to announce R&D as losses then buy back your own shares at a reduced cost?
pmyjavec 10y ago
People are still starving in the USA on a daily basis, it's a mad world
joeyspn 10y ago
Quoting Edison here: "I have not failed. I've just found 10,000 ways that won't work."
graycat 10y ago
For the project for real, actual moonshots, we knew in quite good terms right at the beginning that the project was doable. Same for the Manhattan project. Same for GPS. Same for the SR-71. So, right, there is a methodology. Get very far from that methodology and tend to get failed projects. Sure, on some par 3 hole, there are a lot of hole in one shots, and only a small fraction are made by expert golfers with the rest from luck. Still, if picking someone to make a hole in one, pick an expert! Sure, with luck, might get another successful mobile, social, local, sharing app, but luck is not very reliable!
perseusprime11 10y ago
How much did Microsoft spend on their R&D?
Taylor_OD 10y ago
Good. Isnt that the idea? That's what Moonshots are. Plus its hard to see returns on a moonshot in a year. This is a long term investment.
TheOneTrueKyle 10y ago
Is there a way to incentivize smaller companies to take these risks (relative to the scale of the company and assuming you have the manpower)?
ElijahLynn 10y ago
This is why nobody plays the long game, because of crap like this spread around. Articles like this force people to play the 'quarterly' short game and we don't get as much long term research as we need as a species.
rainhacker 10y ago
I fear if such a view is prevalent, eventually focus might shift from 'solving problems that matter on scale' to 'how much money can I make out of this'. Hope research and innovation do not succumb to desire/pressure to grow revenue. I don't believe such projects cannot have any (indirect) monetary accountability. However, Investors should have a softer take on the outcome of these projects.
ChuckMcM 10y ago
Interesting take on it, I would probably write the headline "Alphabet spends nearly $1B trying to find new businesses". Using the New York times logic nearly $15.3B was lost last quarter by startups[1] :-) But setting aside that Google's spending as much as 6% of the existing startup ecosystem, they are still not spending a material amount of their free cash flow of nearly $7B last quarter. And I wonder Why not? [1] http://nvca.org/pressreleases/15-3-billion-venture-capital-deployed-startup-ecosystem-second-quarter-according-moneytree-report/ http://nvca.org/pressreleases/15-3-billion-venture-capital-d...
nickhalfasleep 10y ago
I had to look up [1] the etymology of "moonshot" and thought it was interesting. moon shot, n.2 One might think, “1961, moon shot;” this word relates to the space program as this is the year that President Kennedy set out the great challenge to go to moon by the decade’s end, but it doesn’t, at least not directly. The space term dates to 1949. This moon shot is baseball jargon for a ball hit to a great height. But it’s still 1961, so the baseball usage could be a figurative use of the space term, but the type of hit was made famous by L. A. Dodger Wally Moon. Undoubtedly the coinage is something of a double entendre, combining Moon’s name with the astronautic term, but it shows that in etymology the obvious answer isn’t always the right one. [1] http://www.wordorigins.org/index.php/site/comments/1961_words/ http://www.wordorigins.org/index.php/site/comments/1961_word...
shaunrussell 10y ago
Alphabet INVESTS $859M on 'Moonshots' in 2Q 2016
dschiptsov 10y ago
Has Peter Norvig retired?

189 points by zeddie 10y ago

I don't see anything wrong with this approach, especially since the company can actually sustainably afford to keep placing these bets. And perhaps "bet" is the wrong word being used here. Usually with a bet in gambling terms, you either win big or you lose it all. When Alphabet tries a "moonshot", they come away learning a lot about whatever problem it is that they were trying to tackle. They build expertise in-house, and they flex the idea muscle within the company. That isn't zero-value activity. In fact it's very valuable. $1B a year is a small price to pay for what could eventually spurn a sustainable $10B per year or $40B per year business in the future (self-driving cars, for example). Now this is just me being optimistic. It could also very well be the case that the X division is horribly mismanaged and the moonshots fail for more nefarious reasons, but I'm willing to give Google the benefit of the doubt.

arcticfox 10y ago
In addition, it's not like these bets have been pronounced dead. They're all still in play. It will be years before we know whether any were successful or not. This is like someone betting $1000 on a game, and then calling it a $1000 loss up until the game is actually played (at which point it becomes indeed a true $1000 loss, or possibly a gain). It doesn't make any sense.
- askafriend 10y ago
  Absolutely, it's as if the article's author only looked at these moonshots in the silo of a single financial quarter when it's clear that the moonshots are intended to be decade long investments...
- mike_hearn 10y ago
  You could argue that Google Glass is dead.
  - eru 10y ago
    Though to be honest, it was never intended as a consumer product. (But their marketing was conflicted.) Wave is probably an even bigger disappointment: it would have done great as an enterprise product.
resoluteteeth 10y ago
> When Alphabet tries a "moonshot", they come away learning a lot about whatever problem it is that they were trying to tackle. They build expertise in-house, and they flex the idea muscle within the company. That isn't zero-value activity. In fact it's very valuable. This might work for "moonshots" that are closer to their core business, but in other areas there's not going to be any inherent value in building expertise if the "moonshot" itself ends up failing, because at that point they will cease needing any expertise in that area at all. Likewise, "flexing the idea muscle" would be a benefit if it was regular Google employees that were working on these projects but it's not. It's Alphabet's X lab which is it's own thing, with people working full time on these moonshots.
Gustomaximus 10y ago
And there are so many side benefits. Obviously Google employees are likely to be capable and smart individuals. So I wonder how much value is in having these type of employees take ideas to the company rather than planing to branch off for most companies that would scoff at letting you do a side project for a while. In a region like silicon valley the opportunity and availability to walk away for a startup is huge this could act as a retention tool also. Better to let a talent disappear for 20% of their time than lose them altogether.
rtpg 10y ago
I agree with the sentiment, but I don't think you're going to spend just $1B to get to $10B/year. Does Google get to that number with anything apart from Search and Youtube? Though I think even $1B for a $100M/year business is a pretty decent deal at this point...
ipsum2 10y ago
> And perhaps "bet" is the wrong word being used here. Usually with a bet in gambling terms, you either win big or you lose it all. Internally, they're referred to as 'bets, a pun on the company name Alphabet.
- zaroth 10y ago
  Aww, isn't that cute.
  - eru 10y ago
    Only partially. The name 'Alphabet' in itself is a pun on 'Alpha' (in finance terms) and 'bet'.
    - zaroth 10y ago
      What is this, punception?
frakr 10y ago
I think that it would be reasonable to assume that many of these moonshots are generating patents that could have significant long term value.
JonCox 10y ago
"I have not failed. I've just found 10,000 ways that won't work."

noahmbarr 10y ago

Google's S-1 April 24, 2004 https://www.sec.gov/Archives/edgar/data/1288776/000119312504073639/ds1.htm https://www.sec.gov/Archives/edgar/data/1288776/000119312504...: RISK VS REWARD IN THE LONG RUN Our business environment changes rapidly and needs long term investment. We will not hesitate to place major bets on promising new opportunities. We will not shy away from high-risk, high-reward projects because of short term earnings pressure. Some of our past bets have gone extraordinarily well, and others have not. Because we recognize the pursuit of such projects as the key to our long term success, we will continue to seek them out. For example, we would fund projects that have a 10% chance of earning a billion dollars over the long term. Do not be surprised if we place smaller bets in areas that seem very speculative or even strange. As the ratio of reward to risk increases, we will accept projects further outside our normal areas, especially when the initial investment is small. We encourage our employees, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit Google. This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner. For example, AdSense for content and Google News were both prototyped in “20% time.” Most risky projects fizzle, often teaching us something. Others succeed and become attractive businesses. We may have quarter-to-quarter volatility as we realize losses on some new projects and gains on others. If we accept this, we can all maximize value in the long term. Even though we are excited about risky projects, we expect to devote the vast majority of our resources to our main businesses, especially since most people naturally gravitate toward incremental improvements.

w1ntermute 10y ago

There was an HN discussion earlier this week on Google X[0]. One important point made there, by snarf: > Google X is mainly about the PR value around its image and recruiting/locking up talent. Google would rather have smart people locked up inside the company working on projects with a high probability of going nowhere rather than having them going to a competitor, or worse, creating the next major competitor. 0: https://news.ycombinator.com/item?id=12150812 https://news.ycombinator.com/item?id=12150812

asdfologist 10y ago
That entire thread is filled with snark/speculation and lacks any actual facts. Is it that inconceivable that Google believes that one or more of these moonshots might actually take off?
- hueving 10y ago
  Well I'm sure the people working on it think one might take off. But if you're taking the pessimistic view it doesn't matter if they never succeed as long as the smart people are kept busy working for them.
  - Jach 10y ago
    It's a clever argument that might convince certain purse-holders, who are optimistic or pessimistic about the success, that it's in the company's best interest either way. I don't think Google's under full control of the sociopaths yet that this sort of "locked up" argument is needed, or is felt internally by very many upper level managers. It's also just not a great strategy if you're worried about potential future competitors given that employees are free citizens, not slaves, and California has no non-compete laws. Industry (let alone tech industry, let alone Californian tech industry) is littered with successful offshoots started by individuals and teams who used to work together at one company, and quit or were fired en masse to start working on something else in the same domain, taking their experience with them and owing their former company nothing. Facebook's strategy of "buy any threat" is a lot more sound, even if it too is vulnerable when the threat refuses to be bought.

zaidf 10y ago

"Moonshot" is the Google term for R&D. Google's R&D budget in 2014 wasn't even in the top 5: http://www.neowin.net/images/uploaded/2014/12/screen_shot_2014-12-03_at_9.28.59_pm_story.jpg http://www.neowin.net/images/uploaded/2014/12/screen_shot_20... Problem for Google might be that Wall Street may look at a word like "moonshot" and basically associate it with wasting money whereas if you call the same things R&D, it's something companies have been showing as an "investment"(not loss) for decades.

kmonsen 10y ago
I don't think this is true for Google. The "Moonshots" mentioned here are pretty far from Google. It is in some sense R&D of course, but it is not R&D that will benefit Google as a company.
- zaidf 10y ago
  How do you reach the conclusion that it is not R&D that will benefit Alphabet? They make it pretty clear it is a high risk high reward R&D, meaning if they hit pay dirt, it can be massively profitable for Alphabet.
  - tyre 10y ago
    Notice that GP said Google while you said Alphabet. If they pay off, it benefits Alphabet. Maybe Google (the search engine monetized through advertising) but possibly not.
    - zaidf 10y ago
      I assumed GP meant Alphabet since public entity is Alphabet, not Google.
  - kmonsen 10y ago
    The moonshots are in alphabet, but pretty far from Googles core with Search, ads and Android. For example robotics, health care and self driving cars. (I work for Google and have worked in another alphabet company)

mythz 10y ago

That's an interesting headline from the same company that posted a 21%/28% YoY 21.5B Revenue / 6B profit quarter.

chaostheory 10y ago

Wall Street is short sighted and regularly see things by the quarter. Its long term outlook tends to be a year give or take. Alphabet needs more forward thinking investors who can see a payout that may not happen for a decade or more. While it has cool projects, the problem with X is that it doesn't seem to have a clear mission / message like SpaceX and Tesla where you are investing for more than just a profit. I could be wrong but they have a marketing / PR problem (in addition their other pre-exisiting ones).

hueving 10y ago
Stock is up 4% after hours. I'm not sure which "wall street" strawman you are attacking, but it doesn't appear to be the one that actually trades stock.
- chaostheory 10y ago
  ok, my criticism is directed towards Wall St analysts. I could be wrong but it feels like the vast majority of them see X as a money pit that's hampering Alphabet as whole. I've been hearing this for about a year now. If ad revenue wasn't up, the chorus would be louder.
  - _jtai 10y ago
    I also don't know if that's entirely true either. After the earnings came out, it looks like quite a few Wall St analysts changed their recommendation to outperform, with a target price of 900+, and in general, it seems like many analysts all have pretty high target prices assigned to Alphabet.
    - chaostheory 10y ago
      Just because they like Alphabet as a whole doesn't mean that they like X. Am I wrong?

hackaflocka 10y ago

All of humanity is going to benefit from these moonshots. Sometimes, the original intent of a research program doesn't come to fruition, but there are a lot of downstream benefits and innovations that can be traced to the so-called "failed" research program. I believe that's exactly what's going to happen with some of these so-called "failures." Even today, what Elon Musk has already done, is considered impossible for his companies to have done. (The car, and the backwards landing rocket.) Here's to more moonshots from Google and Facebook! Salute! ------------------- And here's Nassim Taleb on "inverse Turkeys" (i.e., positive Black Swans), from AntiFragile: > Harvard Business School professor, Gary Pisano, writing about the potential of biotech, made the elementary inverse-turkey mistake, not realizing that in a business with limited losses and unlimited potential (the exact opposite of banking), what you don’t see can be both significant and hidden from the past. He writes: “Despite the commercial success of several companies and the stunning growth in revenues for the industry as a whole, most biotechnology firms earn no profit.” This may be correct, but the inference from it is wrong, possibly backward, on two counts, and it helps to repeat the logic owing to the gravity of the consequences. First, “most companies” in Extremistan make no profit—the rare event dominates, and a small number of companies generate all the shekels. And whatever point he may have, in the presence of the kind of asymmetry and optionality we see in Figure 7, it is inconclusive, so it is better to write about another subject, something less harmful that may interest Harvard students, like how to make a convincing PowerPoint presentation or the difference in managerial cultures between the Japanese and the French. Again, he may be right about the pitiful potential of biotech investments, but not on the basis of the data he showed.

wavefunction 10y ago
The thing is, the car and reusable rocket stages exist and are far more difficult to pull off than creating and running an ad-network. I am not saying ad-networks aren't complicated and involved and require highly intelligent people, but I don't believe them to be comparable to what Musk is delivering.

lpolovets 10y ago

This is simply how moonshots work. You lose $50m 99 times in a row, then make $50b on the 100th time. (This is also very similar to how venture capital economics work.) I think it's wonderful that Google pursues moonshots and that they have the cash flow to keep Wall Street investors from freaking out. I'm confident that one (or more) of their experiments will eventually make a huge impact on people around the world.

engizeer 10y ago

That's pretty much Amazon's profits in 2Q 2016.

mfav 10y ago

Subtly dishonest journalism in my opinion. This article could just as easily be titled "Alphabet invests $859M on long-term projects". In fact, that would be a more accurate title since that is precisely Google's intent.

dredmorbius 10y ago
There's nothing subtle, and everything dishonest, about this.
usrusr 10y ago
Or maybe "Alphabet invests $859M on brand maintenance"? Some projects seem more like the Google-scale equivalent of putting the company name on the shirt of a sports team. Would we expect the Oracle boat to ever turn profitable?
anjc 10y ago
There's nothing dishonest about it. It's a loss because these are explicit investments which haven't produced any earnings. When they produce any sort of revenue then their financial statements (and media reports of the financial statements) will say "Other bets showed an operating profit of $Xm". It's just a media report on a fact.
- mfav 10y ago
  There's some intentional provocation going on with the title. Sure, it's factually correct, but choice of words really pulls the truth one way or another.
- deleted 10y ago
  [deleted]

honkhonkpants 10y ago

Why should any organization have net profits at all? "Loses" here is being used to mean "spent". You can't just keep stacking up cash forever. That would be pointless and stupid.

sliverstorm 10y ago
Net profits are how you pay shareholders dividends, which are often demanded, and the futurr promise of which are the root basis of how the company can attract money through IPO
- honkhonkpants 10y ago
  That's a sort of quaint belief about the market but it's degenerated into straight up gambling. Let me put the question a different way: why should any company have positive retained earnings?
  - Axsuul 10y ago
    Because they're holding it offshore.
dredmorbius 10y ago
There are incorporated entities which don't, in terms of actual economic activity -- they're not-for-profit charities, generally. They _still_ need to have some source of income, however, generally through donations, though other sources may exist (foundations, grants, some operate revenue-generating services, direct government aid, etc.). The reason for the balance of inflow and outflow is based on how our economic system works: there are demand bidding rights which are handed out every so often (dollars, pounds, euros, yen, yuan), whose creation is limited to specific entities (national mints, central banks, and banks generally, via loans). Being able to freely create those demand rights without limite doesn't work on a few counts. The general principle is that the bids you take in have to match, over time, the ones you hand out (when you're bidding on goods or services). There are exceptions: bids can be borrowed, those debts can be dismissed, and a bunch of other stuff. But it's complicated. A company is essentially a flow box which accepts and issues those bids. And over time, the bids in have to match the ones out (or you get to the complicated situations listed above). In the case of Alphabet, it can continue to operate money-losing companies, but only by diverting bids (at the rate of about $900 million/year) from its other companies. Since one of those (Google) essentially mints cash, that's not a large concern. TL;DR: We don't live in a moneyless society yet.

aresant 10y ago

This article makes it sound like Google frittered away $1b on the "X" lab last quarter. X lab includes self driving car, Goog Glass, Project Tango (editorializing here but Tango is badass!), more crazier bets (1) Ok, some crazy stuff there - pretty pretty risky. Wow $1b last quarter for that stuff. Geez corporate responsibility grumble grumble, stupid silicon valley assholes snark snark. But wait, spend 30 seconds doing research and in reality the $859m headline is actually referring to Alphabet's line item "Other Bets" "Other Bets" includes Nest, Google Fiber, Google Ventures, and Verily among others(2) Nest = iot + Tony Fadell (pre fallout) looked like a damn good way to beat Apple to a new important consumer market. Still holding out hope. Google Fiber = fast speed is fundamental to Google's biz, heck they could probably look at this as CapEx. Please come to my 'hood! Google Ventures = bought $258m of Uber stock @ $3.6b valuation. What's that a 20x so far? Pays for entire fund's lifetime by several multiples? Lots of other follow-rounds that make sense (3) Verily = profitable healthcare division. (4) So come on NYT spend 5 mins getting the story straight instead of writing a lazy click bait headline. (1) https://www.solveforx.com/ https://www.solveforx.com/ (2) https://www.engadget.com/2016/02/01/google-alphabet-q4-2015-earnings/ https://www.engadget.com/2016/02/01/google-alphabet-q4-2015-... (3) https://techcrunch.com/2013/08/22/google-ventures-puts-258m-into-uber-its-largest-deal-ever/ https://techcrunch.com/2013/08/22/google-ventures-puts-258m-... (4) http://www.recode.net/2016/4/13/11586102/verily-alphabet-profitable http://www.recode.net/2016/4/13/11586102/verily-alphabet-pro...

prawn 10y ago
For anyone else not familiar with it, Tango looks to be phone-based AR that requires specific hardware: https://get.google.com/tango/ https://get.google.com/tango/
Steko 10y ago
> "Other Bets" includes Nest, Google Fiber, Google Ventures, and Verily among others(2) The fact that most of those things aren't huge money losers undercuts your argument though. Nest is making money. Google Ventures is $300 million a year, Fiber invested $100 million in KC in 2013, meanwhile this segment was $3.6 billion in the red last year.

tyre 10y ago

> The cost for the Mercury, Gemini and Apollo programs was more than $25 billion at the time more like $110 billion in today's world.[1] Moonshots are expensive. Doesn't mean they aren't worth it. [1]: http://news.utexas.edu/2014/07/21/anniversary-shows-us-that-nasa-and-space-exploration-are-worth-their-costs http://news.utexas.edu/2014/07/21/anniversary-shows-us-that-...

afsina 10y ago
Author of that article is like an apologist for excessive government spending. To me, if government did not spend that amount of money on space exploration, probably private sector would have achieved even better things faster with lower cost. Besides, about the author : "..Wallace Fowler is the director of the Texas Space Grant Consortium.".

known 10y ago

AFAIK thinking out-of-the-box is prohibited in Corporations :)

zaroth 10y ago

I don't think it's right to equate R&D spending with "losses". Google makes a profit, not a loss, so technically it does not have losses. It has expenses, and among those, investments in future technology. If all Google could do with their cash flow was pay a dividend, that would be very sad, and it would call for a much lower P/E ratio. This article completely misstates the facts. Perhaps the way they break out their financial statements is confusing to someone without an accounting degree. Just because "Other Bets" is negative, a growing negative number in this case is a good thing. This is showing Google has more free cash to invest in growth and has good ideas they believe in and want to pursue. I would be worried if instead they were stockpiling cash. You would then have to ask, why can't they put it to work effectively? Of course, everything they do that is making money is no longer an "Other Bet" by definition.

brador 10y ago
The question is can these moonshots pay off their expenses in the long run. Given how little Google is known to actually ship I question if they can.
- zaroth 10y ago
  If the article was titled, 'Will Google's moonshots pay off'? With a list of the top projects and cumulative spending on each one. Some analysis on each of the markets and what their potential size could be in 2020. Who are the biggest competitors in the space? Now that would have been interesting to read!
- bitL 10y ago
  Moonshots are called that way because they bear both immense risk of failure as well as a potential to bring in billions. So individual moonshots are almost always failures; the ones that are successful pay the other ones. Google is doing the right thing to remain alive in the future without enforcing lock down on their users (like other companies not producing moonshots do).
  - brador 10y ago

kmiroslav 10y ago

It's R&D expense. Nothing new here. It only takes one of these moon shots to be successful to bring in extraordinary revenues, and Google has always been crystal clear that following such path was in their DNA.

RikNieu 10y ago
I don't see it that way exactly. R&D is an investment. Hell, I'd consider calling it a pure capital investment, if not simply enhancing goodwill. If even one of those moonshots become successful those "sunk costs" will likely start streaming back.

soperj 10y ago

I wish they'd do something a long the lines of using all of their traffic data to design better lighting systems for cities. Gotta be able to do better than what is currently happening.

havetocharge 10y ago

Can't help but notice the bias in the title on HN. Sure, the company spent .8 billion on R&D. The revenue went up by 3.5 billion this quarter too, yoy.

corpus 10y ago

The people complaining about this better not be the same Thiel worshippers who constitute most of the Google hate here. Thiel criticizes Google/Alphabet for hoarding any cash at all. A true technology company re-invests all its excess profit. This "loss" corresponds to less than 7% of Google's gross profits in the same quarter.

dredmorbius 10y ago
I can criticise the headline (if that's what you're referring to) while hating on many things that Google do (advertising, crapification of the Web, TPP support, absolutely atrocious user support, a pathetic Android environemnt, from OS to apps to hardware/vendor dynamics. But idiotic jabs on the fact that long-run investments in R&D haven't paid off immediately are pathetically stupid. Do I contradict myself? Very well. No I don't!

Animats 10y ago

We need more detail in financial statements. "Operating loss of $859 million in Other Bets" is not enough disclosure for a public company. It's not research that spends that kind of money. It's attempts to buy market share by selling at a loss that do. Or existing businesses with a high burn rate that aren't profitable. That number includes Nest and Google Fiber, both of which are in production but perhaps not doing too well. Does it include Android? Google's various attempts to build and sell phones? Motorola?

jeffwilcox 10y ago
Or it's just the cost of 3,000 engineers doing R&D work in this day and age...

eric-hu 10y ago

This article highlights the myopia of public investment. Other comments have mentioned the self driving car. That's a work still in progress, and likely has been a net loss quarter over quarter. Highlighting the research arm's quarterly losses is like setting an FM radio to 10 Mhz* and then declaring there's nothing on air. * FM Radio bands start around 80 Mhz in the modern world.

jakozaur 10y ago

s/loses/invests

unfortunateface 10y ago

I am encouraged by this advertising companies attempts at designing cars. The moonshot program seems to me to be either Google cementing it's position forever in the knowledge economy or a desperate scrabble for another hit. If the latter is true, then I have hope for the future. It means that the giants - Google (+ Youtube), Amazon, Facebook - can fall. They are not on as strong a footing as it seems. All it takes is... - One generation of kids to decide to eschew Facebook (or any product it buys) - Ad revenue declining or another viable internet business model to rise up and replace it - More efficient / free marketplaces

duckmysick 10y ago
How is Amazon being mentioned in the same line as Google and Facebook? They don't rely as much on the ad revenue as the other two.
- unfortunateface 10y ago
  Each line of those bulletpoints was for a different company facebook, google then amazon

sriram_sun 10y ago

That is almost 20% investment on R&D - twice as good as other good companies. That is why I would love to work for Google!

sudhirj 10y ago

A lot of times I feel like the instinctive reaction to the word losses is an image of Google stacking up a millions of dollars and burning it. That's not what happened - it went to people who used it to build things that would not have been built otherwise, in the hope that some of them might shape the future. Not really a loss to humanity.

mite-mitreski 10y ago

Better to have `Moonshots losses` than some CEO/Board rip off stock buyback scheme.

323454 10y ago

"NASA loses $25.4B on 'Moonshots'" - New York Times headline from July 29 1973

zamalek 10y ago

> The money that Google spent on areas that have little to do with internet search and advertising used to frustrate investors who wanted to see bigger profits. "Dear Hen, the process of laying eggs is too expensive and should be eliminated. Furthermore, we're expecting a 5% increase in golden eggs by the end of the year."

redthrowaway 10y ago

Google seems to be actively attempting to avoid the trap that Apple, Microsoft, Facebook, etc have fallen into. When you completely dominate a market, it can be tempting to optimize and be the best at serving that market. But the nature of tech is such that markets have a short lifespan. New innovations are constantly overturning old monopolies--just ask Microsoft. By investing heavily in high-risk, high-reward prospects, Google is insulating itself against future disruption. If the display ad market collapsed 5 years from now, Google's investment in AI, self-driving cars, AR, robotics, etc. might be the difference between continued dominance and irrelevance. Tech companies rest on their laurels at their own peril.

philippeback 10y ago

Google operating costs are more than $5 billion a quarter. $859M is not that big.

havefunwiththat 10y ago

For that kind of money, you could build a new moon. I don't see anything positive about this kind of loss. If anything, it sounds like questionable accounting to reduce the cost of other profits.

qqg3 10y ago
It's not a loss though, they just invested some profits in R+D...

jlebrech 10y ago

would it be legal to announce R&D as losses then buy back your own shares at a reduced cost?

pmyjavec 10y ago

People are still starving in the USA on a daily basis, it's a mad world

joeyspn 10y ago

Quoting Edison here: "I have not failed. I've just found 10,000 ways that won't work."

graycat 10y ago

For the project for real, actual moonshots, we knew in quite good terms right at the beginning that the project was doable. Same for the Manhattan project. Same for GPS. Same for the SR-71. So, right, there is a methodology. Get very far from that methodology and tend to get failed projects. Sure, on some par 3 hole, there are a lot of hole in one shots, and only a small fraction are made by expert golfers with the rest from luck. Still, if picking someone to make a hole in one, pick an expert! Sure, with luck, might get another successful mobile, social, local, sharing app, but luck is not very reliable!

perseusprime11 10y ago

How much did Microsoft spend on their R&D?

Taylor_OD 10y ago

Good. Isnt that the idea? That's what Moonshots are. Plus its hard to see returns on a moonshot in a year. This is a long term investment.

TheOneTrueKyle 10y ago

Is there a way to incentivize smaller companies to take these risks (relative to the scale of the company and assuming you have the manpower)?

ElijahLynn 10y ago

This is why nobody plays the long game, because of crap like this spread around. Articles like this force people to play the 'quarterly' short game and we don't get as much long term research as we need as a species.

rainhacker 10y ago

I fear if such a view is prevalent, eventually focus might shift from 'solving problems that matter on scale' to 'how much money can I make out of this'. Hope research and innovation do not succumb to desire/pressure to grow revenue. I don't believe such projects cannot have any (indirect) monetary accountability. However, Investors should have a softer take on the outcome of these projects.

ChuckMcM 10y ago

Interesting take on it, I would probably write the headline "Alphabet spends nearly $1B trying to find new businesses". Using the New York times logic nearly $15.3B was lost last quarter by startups[1] :-) But setting aside that Google's spending as much as 6% of the existing startup ecosystem, they are still not spending a material amount of their free cash flow of nearly $7B last quarter. And I wonder Why not? [1] http://nvca.org/pressreleases/15-3-billion-venture-capital-deployed-startup-ecosystem-second-quarter-according-moneytree-report/ http://nvca.org/pressreleases/15-3-billion-venture-capital-d...

nickhalfasleep 10y ago

I had to look up [1] the etymology of "moonshot" and thought it was interesting. moon shot, n.2 One might think, “1961, moon shot;” this word relates to the space program as this is the year that President Kennedy set out the great challenge to go to moon by the decade’s end, but it doesn’t, at least not directly. The space term dates to 1949. This moon shot is baseball jargon for a ball hit to a great height. But it’s still 1961, so the baseball usage could be a figurative use of the space term, but the type of hit was made famous by L. A. Dodger Wally Moon. Undoubtedly the coinage is something of a double entendre, combining Moon’s name with the astronautic term, but it shows that in etymology the obvious answer isn’t always the right one. [1] http://www.wordorigins.org/index.php/site/comments/1961_words/ http://www.wordorigins.org/index.php/site/comments/1961_word...

shaunrussell 10y ago

Alphabet INVESTS $859M on 'Moonshots' in 2Q 2016

dschiptsov 10y ago

Has Peter Norvig retired?