Some Alphabet's “Other Bets” divisions like Verily are creating new types of stock tied to division performance to compensate and motivate employees
Plan removes ‘safety blanket’ from employees of growth units — Some staff try to return to Google to avoid riskier stock
Context & Ripple Effects
Alphabet is re-pricing what it means to work on a moonshot: divisions like Verily are issuing stock tied to their own performance instead of the Google core, and the description is blunt about the consequence — the 'safety blanket' is gone, with some staff already trying to transfer back to Google. This lands months into a broader squeeze on the bets, after Alphabet's spending tightening under CFO Ruth Porat left Other Bets employees frustrated.
The compensation change is the cultural half of a structural project. A year later, Alphabet formalized the split by creating XXVI Holdings to separate Other Bets like Waymo and Verily from Google — and by 2024 it was telling the X lab it would not convert promising projects into subsidiaries at all, suggesting the accountability regime only hardened.
First-order effects
- Verily and other Other Bets staff now hold equity whose value depends on their division's performance rather than Google's, and per the report some are already seeking returns to Google to avoid the risk.
- Each division's leadership gains a compensation lever that ties employee incentives directly to unit-level outcomes, at the cost of competing for talent against Google's safer stock.
Second-order effects
- Talent allocation inside Alphabet tilts toward the core: if riskier equity pushes staff back to Google, the bets must either pay a larger risk premium or accept a thinner bench, compounding the cost discipline Porat had already imposed.
- Division-tied stock gives Alphabet a cleaner read on which bets can retain people on their own economics — a signal that feeds decisions about which units get spun out, funded, or wound down.
Third-order effects
- The pattern points to Alphabet running Other Bets as financially accountable subsidiaries rather than core-funded labs — a trajectory the XXVI Holdings separation formalized and the 2024 X-lab decision extended by freezing new conversions.
- If moonshot equity stays division-tied, the long-run structure is a holding company where each bet survives on its own capital and talent markets, with Google as the refuge rather than the guarantor.
The trend: Alphabet is progressively decoupling its moonshot divisions from Google's economics — first through performance-tied compensation, then through a formal holding-company split, then by stopping new subsidiary conversions altogether.