Google Should Spin Off Its Robot-Car Division And Give The Engineers A Piece Of The Action

Google CarWow, cool! Can I invest!

Some readers took my post about why Google shouldn’t be developing robot-cars as being “anti-innovation.” It wasn’t. I am extremely pro-innovation. I am also excited about the prospects for robot-cars. I just don’t think that Google should be developing them inside the company.

Instead, I think Google should spin off its robot-car division into a separate company, hire a CEO, and give the engineers a piece of the action.


Two reasons.

First, because Google has many other things closer to its core business that would make better investments than robot-cars. And maintaining a laser-sharp focus on this core business (and ancillary investments) would almost certainly be better for Google success over the long haul than funding pet projects that have nothing to do with its core business.

Second, and more important, because there’s now a much better way to fuel successful innovation than having rich companies fund pet projects: Namely, the (relatively new) Silicon Valley startup way.  This way takes advantage of Silicon Valley’s awesome startup/entrepreneur/seed-capital ecosystem, aligns incentives, and gives everyone a piece of the action.  And it has created countless amazing companies and fuelled awesome innovation over the years.

50 years ago, most innovation was conducted within the “R&D” arms of massive corporations. (Think Xerox, Bell Labs, etc.). The reason Silicon Valley has emerged as such a force in the global economy in recent decades, however, is that it has evolved into a far more effective way to innovate.

It turns out that when you align the incentives of engineers, entrepreneurs, and investors–as Silicon Valley and other startup ecosystems do with dozens of new companies every week–you can drive far more rapid and efficient innovation than you can by allocating dollars to an R&D budget within a massive company.  You can also reward the engineers who drive successful innovation far more directly (and enormously) than they could be rewarded within a big company.

(Let’s say that, in 10 years, Google’s robot cars are a huge hit. Will the engineers who developed them reap as much of that reward as they should? No way. Why not? Because there’s no way Google can compensate them as directly for this success as a startup would without throwing its entire compensation system out of whack.)

There’s a reason that Silicon Valley’s startup ecosystem has evolved and is now being copied in every corner of the globe: Because it’s a better way to innovate.  Better for engineers and innovators.  Better for executives. Better for consumers.  Better for economies.  And better for innovation.

Google and Larry Page should be applauded for their ongoing desire to think big and change the world. But they shouldn’t fund pet projects like this internally. They should spin them out and give the engineers a piece of the action.

(And it’s worth noting that if Google did this, and the robot-car company was successful, Google shareholders would benefit greatly. Because they would own a huge piece of the company.)

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