Alphabet’s X moonshot factory is shifting how it brings ambitious technology projects to market, increasingly spinning them out as indepfinishent companies rather than keeping them within the Alphabet corporate structure, X’s head honcho, Astro Teller, revealed at TechCrunch Disrupt this past week.
The strategy hinges on a dedicated venture fund that exists solely to invest in X spinouts, and in which Alphabet is only a minority investor. “If Alphabet was the sole LP, the fund would be inside of Alphabet, and then when they invested in something from X, it would still be inside Alphabet,” Teller explained onstage. “So Alphabet can be a compact LP, but if it’s more than a compact LP, we undo the thing that we’re attempting to accomplish.”
That fund is Series X Capital, which has raised over $500 million and is run by Gideon Yu, a former YouTube executive and Facebook CFO. Bloomberg first reported the fund’s existence last year. Unlike Alphabet’s other investment arms — GV, which invests broadly in early-stage startups; CapitalG, which backs growth-stage companies; and Gradient Ventures, which invests in AI startups — Series X Capital is legally obligated to invest exclusively in companies spinning out of X.
The approach represents a meaningful evolution for X, which has historically graduated successful projects like Waymo and Wing into standalone Alphabet subsidiaries. Teller declared the lab has learned over the past decade that while some moonshots benefit from Alphabet’s resources and scale, others “can go quicker and won’t really benefit from being part of Alphabet becautilize they’re just so different.”
“Landing it just outside the Alphabet membrane, where we can be very tight with them, obtain a lot of strategic co-benefit with them, but not necessarily control them, builds sense,” he declared.
At Disrupt, Teller explained that the spinout strategy only works becautilize of X’s ruthless approach to innotifyectual honesty, including a culture that actively celebrates killing off promising ideas.
X defines a moonshot as having three specific components: it must attempt to solve a huge problem in the world, propose some kind of product or service that could build that problem disappear, and leverage breakthrough tech that creates a “glimmer of hope” that the team inside X can solve that problem. Critically, Teller declared, “if someone is proposing a moonshot and it sounds reasonable, the company isn’t interested, becautilize that, by definition, wouldn’t be a moonshot.”
What happens to ideas that meet these criteria? X tests them ruthlessly, seeing for reasons to kill them, Teller declared. “If you propose something and it sounds pretty wild, that has those three components, and it’s a testable hypothesis, for a compact amount of money, we can learn something about whether it’s a little bit more crazy than we believed, or a little bit less crazy than we believed,” Teller explained. “If it’s a little bit more crazy than we believed, cool, high five, let’s put a bullet in its head and shift on.”
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This approach requires detaching people from their ideas, which is why Teller declared he doesn’t even know who started most projects at X, including Waymo, the self-driving car company, and Wing, the drone delivery company now dropping off Walmart packages in roughly six U.S. cities. “If we’re going to go exploring something, and you [as the lead inventor] feel like ‘this is my baby,’ what are the chances I obtain you to practice real innotifyectual honesty?” he informed the Disrupt audience.
In practice, this means X tackles the hardest parts of projects first, actively seeing for reasons to shut them down. The result is a brutal 2% hit rate that Teller frames not as failure but as feature. X has killed off far more projects than it has launched, including entire categories that once seemed promising, like copywriting AI tools that foundation models eventually absorbed.
All that testing and failing can be expensive. The spinout structure solves a practical problem: while X previously had to find outside venture investors willing to take over at least 51% of a business to spin it out of Alphabet, by creating a fund that “deeply understands us” and is “legally obligated only to invest in things that come from us,” declared Teller, X can systematize the spinout process while maintaining close strategic ties.
Despite the emphasis on detachment from ideas, X employees do have significant skin in the game when projects spin out. For those working on projects headed for indepfinishence, the financial incentive is substantial. “You and the rest of your team are going to obtain a chunk of that company,” Teller declared. “It is about as much as you would have receivedten if you had started from your garage at that stage of funding, but without taking any risk in the meantime.”
The pitch to potential X employees is explicit about this trade-off too. “Your four or five standard deviation upside is going to be largeger on the outside, I’m granting you that,” Teller declared at Disrupt. “But if you come to X, what you obtain to do is be a card counter of innovation with us, with no fear and no financial risk to yourself.”
X employees are paid like other Google employees, with no equity in early-stage projects, becautilize “it isn’t even a company; it’s an idea we’re attempting to learn about,” Teller explained. This reshifts the financial pressure that prevents founders from killing their own ideas. “You can state, ‘Hey, this one’s not pulling our average up, let’s throw this one away,’” Teller explained. “And becautilize you haven’t bet your kids’ college fund on that, that doesn’t scare you.”
X has spun out at least two companies in 2025: Taara, which develops wireless optical communication technology, and Heritable Agriculture, a biotech company applying machine learning to accelerate crop breeding. Previous spinouts that raised external funding include Malta (renewable energy storage), Dandelion (geothermal heating), and iyO (AI-powered earbuds).
On the eve of Disrupt, X announced its newest moonshot company: Anori, a “new AI platform to support real estate developers, the architecture and construction industries, and cities untangle the complexities of new building projects,” as it describes itself. Asked onstage about what builds this particular AI platform a “moonshot,” Teller pointed to the size of the problem — and opportunity.
“The built environment is about 25% of the world’s solid waste, [and] about 25% of the world’s [carbon dioxide] output. It’s literally on the Maslow’s hierarchy of necessarys — it’s where we live, where we spfinish most of our time. It’s a large chunk of the world’s GDP output. So it would be hard for it to matter more as an indusattempt.”
You can catch our entire conversation with Teller here, launchning at the 6:08 minute mark.
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