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What is going on at the Google X moonshot factory?

The Alphabet company that’s supposed to create new Alphabet companies is struggling to get them out the door.

Dr. Astro Teller speaks during the Google: Moonshots in Reality forum during the 2015 Tribeca Film Festival at Spring Studio on April 22, 2015 in New York City.
Getty Images
Dr. Astro Teller speaks during the Google: Moonshots in Reality forum during the 2015 Tribeca Film Festival at Spring Studio on April 22, 2015 in New York City.

Google's famed corporate research lab, first launched as Google X, was a sandbox for the company founders and its band of experimental scientists. When Google became Alphabet, the lab announced a sparer name and a leaner mission: To transform those sandbox projects into real commercial operations.

On paper, that is happening. News came out on Friday that the unit had hired a seasoned online travel exec for its self-driving car team. A few days earlier, it recruited a broadband veteran to head its Project Loon internet balloon initiative.

But the reality is murkier.

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Several people who have recently left X and those close to it describe the Alphabet unit as sputtering, unable to bring projects to life. They say the issues at X aren't technical hurdles, but a combination of red tape and knotty internal politics. Rather than accelerating the "moonshot factory," sources say the Google-to-Alphabet reshuffle has clogged it up.

The Alphabet company that is meant to create new Alphabet companies is struggling to get them out the door. And I have heard repeated talk of a coming shake-up at the division.

A rep for X declined to comment.

In the past, Alphabet had budgeted more than $1 billion a year for X, according to one high-level source*. Most funds went to its car project, now seven years old, and Google Glass, the much-hyped wearable that fizzled in its first incarnation and left X last year.

But hiring slowed to a crawl when the Alphabet reorganization arrived, sources said, part of a drive to evaluate spending on the company's ambitious offshoots.

And people started leaving. The most high-profile exit was a cadre of self-driving car engineers who formed the startup Otto earlier this year, then sold it to Uber this month.

Multiple people who have left X told me that the inability to ship products was a leading reason for the departures. X set up a "rapid evaluation" unit to fix this, but people who worked there said that group has not solved the problem.

Multiple people have also told me that Astro Teller, the longtime X chief, is increasingly frustrated. Sources describe most of X's public projects — Project Loon, drones, robotics and wind energy kites — as rudderless.

X still employs many gifted roboticists, designers and engineers. Google founders Larry Page and Sergey Brin are both actively involved with the teams, sources said. They moved their Alphabet offices to the third floor of the X building, according to one source.

"It's Sergey's Batcave," said one former employee.

The Batcave has produced spinouts that stuck around, including the Google Brain research unit and its Verily life sciences arm.

Many other projects won't see daylight, but that's partly by design. Racking up failed projects is the modus operandi of X. Before the Alphabet reorg, Teller implemented a bonus system rewarding employees for nixing their own projects, designed to funnel resources to feasible efforts.

But people who have left said projects are more likely to die because of organizational inertia — not because their leaders kill them off themselves. They also complain about constant changes in direction from different project leaders. Mike Cassidy, who stepped down from Loon, ran the team "like a fire drill," a former employee said.

Some frustrations coming from X echo those across the Alphabet companies, such as connected device maker Nest.

There's no clean, simple playbook for trying to birth entirely new things, especially when extremely intelligent and passionate people are involved. (See: Google's unwieldy robotics team or any messy startup story.)

"The moonshot factory is a messy place," Teller has written and said multiple times.

And while the car project under Teller has lost several critical members and faces criticism for dawdling, it is expected to "graduate," X's parlance, soon.

X is still tinkering with moonshots. I reported that the unit phased out one virtual reality headset, but others have reported, and I can confirm, that another VR thing is in development.

I wish I could tell you more. But X remains opaque — to outsiders and insiders. Rank-and-file Googlers cannot even use their company badges to access the X offices.

Besides, the entire lab more or less shuts this coming week. Virtually all the execs go to Burning Man.

*Operating losses for the Alphabet parts outside of Google topped $3.5 billion last year.