Google's Got an Idea Incubator. Should You?By Mike Elgan Print
Google is launching 'Area 120' to accelerate employee startups. Every firm needs something like it to address employee retention, nimbleness and competitiveness.
Google is creating its own private Silicon Valley. More specifically, according to an exclusive on The Information, Google is building an incubator for its employees.
The organization is called "Area 120," and it's run out of a San Francisco Google office by Don Harrison, Google's vice president of corporate development, and Bradley Horowitz, vice president of streams, photos and sharing.
As far as I can tell, the Area 120 initiative is a big improvement on the "20 percent time" policy of yesteryear, which encouraged Google employees to spend 20 percent of their time working on pet projects. Occasionally, those projects resulted in big hits like Gmail and AdSense.
Employees with a startup idea need to pitch it—with a business plan—to the Area 120 honchos. If the pitch is accepted, the employees will be allowed to drop what they had been working on and devote all their time to the startup project for a few months.
The idea for Area 120 has been in the works for at least six years. The New York Times reported sources in 2010 that said "Google is considering opening a startup incubator inside the company."
The concept of an in-house accelerator is nothing new, especially among major Silicon Valley and other tech companies. There's the AT&T Aspire Accelerator, Citrix Startup Accelerator, Cisco Entrepreneurs in Residence, Intel Education Accelerator, Microsoft Ventures Accelerators, Qualcomm Robotics Accelerator, Samsung Accelerator and many others.
Such accelerators are created as an alternative to innovative and creative employees leaving the company, launching startups externally or, in a worst-case scenario, taking business away from the company they left. In other words, it's a practical solution to the real problem of employees who leave in order to do startups. By enabling employees to launch startups without leaving, the thinking goes, the company keeps the employee as well as the startup.
Conditions for Successful In-House Incubators
In-house incubators do not guarantee success. They work only if certain conditions are present. Those conditions include the following:
1. Smart employees: If your employees come up with bad ideas (most startup ideas are terrible), then you'll achieve the opposite of what you set out to accomplish. You'll retain the employees who had bad ideas, and those employees may take the rejection as another reason to feel disgruntled.
2. The ability to compete against yourself: Your employees probably specialize in the business of your company, so their ideas are likely to offer improvements on how your business is conducted. If you smother those ideas to protect the company cash cows, as most businesses would do, then some other firm is likely to make you obsolete.
3. The willingness to go into far-flung businesses: The opposite of competing against yourself with a better approach to your existing business is to enter an entirely new market in which you have zero expertise. It's this willingness that resulted in some of the most successful products and services in history, including the Apple iPhone, Twitter and Android, which were made respectively by a computer company, a podcasting company and a search engine company.
4. The ability to know a good idea when it's presented to you: When Steve Wozniak brought the Apple I personal computer to HP and offered to let the company develop it, HP turned it down because management believed that nobody wanted a PC. Xerox PARC famously invented nearly all the elements of the networked personal computer—from the graphical user interface to Ethernet and more—but Xerox never succeeded with these inventions because it didn't recognize their value.
5. The venture capital mindset: The truth is that only a 1-digit percentage of funded startup ideas result in a functioning company. In the V.C. mindset, you accept the fact that most of your money will be pumped into losing ideas. There is a long list of reasons why startups fail. Most of them have something to do with market size or timing or intellectual property constraints. To have the venture capital mindset, you must be aiming for the rare mega-hits, and you have to be willing to accept massive failure in the quest for the next Facebook or Google.
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