Alphabet (Google)

Alphabet's 2015 restructuring promised moonshots at scale—autonomous vehicles, longevity research, delivery drones. Google would become a holding company, each 'Other Bet' operating like an independent startup with its own CEO, P&L, and strategic freedom. Ten years later, the experiment produces mixed results. Other Bets lost $1.43 billion in Q3 2025 alone, yet Waymo—the star performer—now facilitates 450,000 weekly paid rides (up from 150,000 in late 2024) and served 14 million trips in 2025. The company is raising $15 billion at a $110 billion valuation, demonstrating that some moonshots do reach orbit.

The Isolation Paradox persists. Ventures operating in automotive, healthcare, or aviation need those industries' expertise to succeed. But Alphabet kept Other Bets geographically co-located, sharing talent pools, using Google infrastructure, and importing Google culture. Waymo hired primarily ex-Google engineers who brought software development practices—but self-driving cars require automotive manufacturing, regulatory navigation, and supply chain management that Google doesn't have. Access to Google's resources prevented the specialization that would make Other Bets competitive in their target industries. Yet Waymo's success shows the strategy can work when the venture achieves sufficient scale and geographic isolation (operating in San Francisco, Phoenix, Los Angeles, and expanding to 12 new cities in 2026 including London).

The structure does enable countercurrent architecture: Search profits (35% margins) fund moonshots losing $5B+ annually while maintaining 20%+ overall margins. This biological temperature regulation—cool zones funding hot zones—provides option value on different futures. Wing partnered with Walmart for drone delivery across Metro Atlanta, transitioning from demo to real retail service. But Ruth Porat's 2024 transition from CFO to President overseeing Other Bets signals tighter capital discipline. Bloomberg reported Alphabet decoupling Verily from Google infrastructure to prepare for sale or spin-off. The lesson: you can't have both resource leverage and genuine differentiation simultaneously. Spin-outs need isolation to evolve unique capabilities, but isolation eliminates the synergies that justify keeping them inside. Waymo proves the exception—achieving escape velocity despite the paradox.