It is the age of entrepreneurism, where innovative ideas can turn into million dollar businesses, and funding for startups is more accessible than ever. It is this climate, favoring Young Entrepreneurs, that has Google worried. Google has been experiencing a steady loss of top talent, with many of its former employees leaving to go create their own companies, like Twitter and Instagram. After the recent loss of Regina Dugan, Google’s former head of the Advanced Technologies and Projects group, to Facebook, Google has had enough.
In order to put a stop to the steady stream of top talent leaving the company to create their own startups or join emerging businesses, Google wants to nurture and grow the entrepreneurial spirit within its own walls. Labeled as Area 120, Google is developing the idea of an “in-house incubator” for innovators and employees. The project will be headed by Don Harrison, VP of corporate development, and Bradley Horowitz, head of the Photo and Streams group. While details are still being hashed out, the gist of the Area 120 idea would require employees to submit a business plan, which if accepted they would then be able to work full-time on their idea. After a few months of developing their ideas, Area 120 employees would be required to pitch Google for more funding to create an actual standalone company.
Historically, incubators don’t have a good track record of being successful. However, one company that has successfully implemented this concept, and that Google seems to be modeling, is Y Combinator. Twice a year Y Combinator invests money into a large number of startups. These startups then move to Silicon Valley for three months and receive help shaping and refining pitches to investors. At the end of the three months, on Demo Day, each startup presents its company to an invite only audience.
Google already has its “20 percent time tradition,” in which employees are allowed to dedicate 20 percent of their work to personal projects, as long as it is beneficial to Google. Significant advances that have resulted from this long standing tradition are Gmail, AdSense and Google News. Area 120 takes this tradition even further, dedicating an actual division to the development of young entrepreneurs. The goal of these in-house incubators is to retain top talent, while also allowing Google to get its foot in the door of budding businesses. I guess we will have to wait and see if Google’s Area 120 is successful, especially with how easy it is to acquire funding in the current Silicon Valley environment – simply put, young entrepreneurs don’t need Google’s safety net.
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