Alphabet Inc is in advanced stages in making its moonshot projects more accountable on how they spend. Moonshot projects will start to incur charges on services such as computing, recruiting, and marketing. Some of the affected projects include drone-mounted wind turbines as well as the smart contact lenses for diabetic’s project.
The latest developments marks the first step in Google’s efforts to transform itself into a conglomerate. Executives believe that by making upcoming projects more accountable they will curb unnecessary spending.
Controlled spending is not in any way expected to affect the development of the moonshots. CFO Ruth Porat maintains the push only seeks to clamp down on unnecessary spending while calling for more accountability.
“After a period of big expense build up, there was an appreciation that we needed to manage the cadence of spend,” said MS Porat.
Alphabet CEO Larry Page plans to increase spending on projects that have the potential to take the company to another level. A point of focus with the latest push includes areas around transportation, communications, and healthcare.
Creating Standalone Businesses
Under the new system, Alphabet will give leaders of the bet companies freedom to make decisions in areas pertaining to recruiting and marketing. The companies will be allowed to tap the parent company’s services but at a cost. Creating financial statements that can be audited is a requirement for the upcoming business as they operate as standalone.
Alphabet’s long-term plan is to create a family of companies that operate independently to offer efficient centralized services. Some of the companies have already achieved some form of independence from the parent company.
Nest, for example, has already put in place its own legal and marketing team. It also rents computer services from Amazon.com, Inc. (NASDAQ:AMZN) rather than its parent company. Google’s life sciences and self-driving car project have also been on a hiring spree having already set long term goals with the intention of becoming independent in the long run.