Alphabet\u2019s X moonshot factory is shifting how it brings ambitious technology projects to market, increasingly spinning them out as independent companies rather than keeping them within the Alphabet corporate structure, X\u2019s head honcho, Astro Teller, revealed at TechCrunch Disrupt 2025 this past week.<\/p>\n
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. \u201cIf 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,\u201d Teller explained onstage. \u201cSo Alphabet can be a small LP, but if it\u2019s more than a small LP, we undo the thing that we\u2019re trying to accomplish.\u201d<\/p>\n
That fund is Series X Capital<\/a>, which has raised over $500 million and is run by Gideon Yu, a former YouTube executive and Facebook CFO. Bloomberg first reported the fund\u2019s existence last year<\/a>. Unlike Alphabet\u2019s other investment arms \u2014 GV, which invests broadly in early-stage startups; CapitalG, which backs growth-stage companies; and Gradient Ventures, which invests in AI startups \u2014 Series X Capital is legally obligated to invest exclusively in companies spinning out of X.<\/p>\n The approach represents a meaningful evolution for X, which has historically graduated successful projects like Waymo and Wing into stand-alone Alphabet subsidiaries. Teller said the lab has learned over the past decade that while some moonshots benefit from Alphabet\u2019s resources and scale, others \u201ccan go faster and won\u2019t really benefit from being part of Alphabet because they\u2019re just so different.\u201d<\/p>\n \u201cLanding it just outside the Alphabet membrane, where we can be very tight with them, get a lot of strategic co-benefit with them, but not necessarily control them, makes sense,\u201d he said.<\/p>\n At Disrupt, Teller explained that the spinout strategy only works because of X\u2019s approach to intellectual honesty, including a culture that actively celebrates killing off promising ideas.<\/p>\n 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 make that problem disappear, and leverage breakthrough tech that creates a \u201cglimmer of hope\u201d that the team inside X can solve that problem. Critically, Teller said, \u201cif someone is proposing a moonshot and it sounds reasonable, the company isn\u2019t interested, because that, by definition, wouldn\u2019t be a moonshot.\u201d<\/p>\n What happens to ideas that meet these criteria? X tests them ruthlessly, looking for reasons to kill them, Teller said. \u201cIf you propose something and it sounds pretty wild, that has those three components, and it\u2019s a testable hypothesis, for a small amount of money, we can learn something about whether it\u2019s a little bit more crazy than we thought, or a little bit less crazy than we thought,\u201d Teller explained. \u201cIf it\u2019s a little bit more crazy than we thought, cool, high five, let\u2019s put a bullet in its head and move on.\u201d<\/p>\n Techcrunch event<\/p>\n \n\t\t\t\t\t\t\t\t\tSan Francisco This approach requires detaching people from their ideas, which is why Teller said he doesn\u2019t 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. \u201cIf we\u2019re going to go exploring something, and you [as the lead inventor] feel like \u2018this is my baby,\u2019 what are the chances I get you to practice real intellectual honesty?\u201d he told the Disrupt audience.<\/p>\n In practice, this means X tackles the hardest parts of projects first, actively looking for reasons to shut them down. The result is a brutal 2% hit rate that Teller frames not as failure but as feature. In fact, X has killed off entire categories that once seemed promising, like copywriting AI tools that foundation models eventually absorbed.<\/p>\n 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 \u201cdeeply understands us,\u201d said Teller, X can systematize the spinout process while maintaining close strategic ties.<\/p>\n Despite the emphasis on detachment from ideas, X employees do have significant skin in the game when projects spin out. \u201cYou and the rest of your team are going to get a chunk of that company,\u201d Teller said. \u201cIt is about as much as you would have gotten if you had started from your garage at that stage of funding, but without taking any risk in the meantime.\u201d<\/p>\n The pitch to potential X employees is explicit about this trade-off, too. \u201cYour four or five standard deviation upside is going to be bigger on the outside, I\u2019m granting you that,\u201d Teller said at Disrupt. \u201cBut if you come to X, what you get to do is be a card counter of innovation with us, with no fear and no financial risk to yourself.\u201d<\/p>\n X employees are paid like other Google employees, with no equity in early-stage projects, because \u201cit isn\u2019t even a company; it\u2019s an idea we\u2019re trying to learn about,\u201d Teller explained. This removes the financial pressure that prevents founders from killing their own ideas. \u201cYou can say, \u2018Hey, this one\u2019s not pulling our average up, let\u2019s throw this one away,\u2019\u201d Teller explained. \u201cAnd because you haven\u2019t bet your kids\u2019 college fund on that, that doesn\u2019t scare you.\u201d<\/p>\n X has spun out at least two companies in 2025: Taara, which develops wireless optical communication technology, and Heritable Agriculture, a biotech company using 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).<\/p>\n
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\n\t\t\t\t\t\t\t\t\t\t\t\t\tOctober 13-15, 2026\n\t\t\t\t\t\t\t<\/p>\n