Google cuts internal startup incubator

Google cuts internal startup incubator

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Google scaled back support for an in-house startup incubator designed to boost product development as Chief Executive Sundar Pichai looks for areas to cut costs following a slowdown in ad sales growth.

The unit known as Area 120, started by Pichai in 2016, told about half of its more than 100 employees this week that they would no longer receive support for their projects and would have to find work elsewhere in the company, two said. people with knowledge of the decision.

The incubator oversaw 14 projects before the cuts this week, the people said, including Qaya, a team that works on building online storefronts for creators.

The Area 120 cuts will permanently reduce the size of the unit, the people said.

“Area 120 is finalizing several projects to make way for new work,” a Google spokesperson said in a statement, adding that the unit will shift its focus to artificial intelligence. “As a result, Impacted team members will receive dedicated support as they explore new projects and opportunities at Google.”

Bloomberg previously reported on the cuts.

Google is navigating a weakening online advertising market that has tripped up many big tech companies in recent months.

In July, Pichai said Google would cut hiring for the rest of the year and urged employees to be “more entrepreneurial.” Pichai told a conference last week that he wanted the company to be 20% more productive, without elaborating on how he would measure the improvement.

Area 120 is among Google’s efforts to encourage entrepreneurship at the company, which has at times battled a reputation for striving to develop great new products. The unit’s name is a reference to a long-standing policy that allows Google employees to spend 20% of their time working on side projects.

Employees apply to Area 120 and receive initial funding from Google to work on their projects for six months. The program was designed in part to retain Google employees who might otherwise leave to create new companies.

Several Area 120 projects have become Google products. Last year, Google said a team working on interactive spreadsheets would start developing the product for cloud computing customers.

Others have struggled to find traction within the company. Tangi, a short-form video app, closed last year after members of its team joined Google’s search division to continue work on the project.

Some Area 120 projects include disclaimers on their websites warning that they are “inherently subject to more change, including discontinuation, than other, more mature Google products.”

Elias Roman, managing partner of Area 120, told employees that this week’s cuts would allow the incubator to focus on projects that use artificial intelligence, the people said. Mr. Pichai has made AI one of Google’s top priorities since he took over as CEO.

Area 120 previously reported to Google’s head of corporate development, Don Harrison, before moving last year to a new organization focused on experimental efforts that is run by longtime product executive Clay Bavor.

write to Miles Kruppa at miles.kruppa@wsj.com

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It appeared in the September 15, 2022 print edition as ‘Google Slashes Startup Incubator by Half’.

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