Alphabet Is Grounding Loon—but Won’t Call It a Failure
The interesting thing is how far Loon got before Alphabet pulled the plug. When Teller first heard the idea, he says, he gave it about a 1 or 2 percent chance of succeeding. By the time of its launch in 2013—which I traveled to New Zealand to attend, following some of its first internet-bearing balloons—it had gotten to around 10 percent. By the 2018 graduation, Teller thought it was 50–50.
But in the last six months, the odds reset, like some grim-reaper-ish version of the New York Times needle. Loon had two challenges: the technological leap to deliver internet by balloon, and making the business case that people would pay for it. While the tech side was solving problems, the commercial environment became less favorable. In the last decade, much of the underserved world became connected—internet availability rose from 75 percent of the world to 93 percent. The remaining areas are primarily populated by those who can’t afford the 4G phones that receive Loon signals, or aren’t convinced that the internet—which in some cases has little content in their own language—was worth the effort. Teller came to realize that Loon was unlikely to ever contribute to Alphabet’s profits. And so the bet was lost.
Loon does leave a legacy. Probably no one has ever spent more money and brainpower on balloon technology, and Loon constantly set records for keeping them aloft. It broke ground in using sophisticated algorithms as well as the US government’s National Oceanic and Atmospheric Administration weather data to figure out how to ride wind currents and navigate the skies at 60,000 feet. Just last month, Loon engineers had a paper in Nature describing how their technology pioneered deep learning techniques to help their balloons autonomously form networks that thrived in a challenging environment. Another Loon breakthrough—sending high-speed data via beams of light (like fiber optic without the fiber)—kicked off a separate X project, Taara.
The fall of Loon is a good occasion to take a look at X’s accomplishments. Last year, the Moonshot Factory celebrated its first decade. In that time, it’s pioneered autonomous driving, which is now the basis of the Other Bet called Waymo; another project, Google Brain now powers much of Google’s technology with deep learning; and Alphabet still has high hopes for X graduates like its medical bet Verily, and its drone delivery company, Wing. And still inside X are projects involving robots and food. But it has also populated a boneyard of costly failures, now including Loon.
But Teller won’t call it failure. Loon, he says, was “a successful experiment.” Considering that he just killed a costly high-profile enterprise, I asked him what an unsuccessful experiment might look like. “Real failure is when the data tells you what you’re doing isn’t the right thing, and you do it anyway.” Loon was a success, he says, because once it was clear that it would never become a viable business, or solve internet connectivity, he called it quits.
Crazy? That’s the X way. “We can’t get access to these really exceptional opportunities unless we’re willing to be wrong a decent amount of the time,” says Teller. His bosses are cool with that. He gets regular reviews from Alphabet CEO Sundar Pichai and CFO Ruth Porat, and says both continue to be supportive. How does Teller himself rate the performance of X? ”Eight out of 10,” he says.
Still, it’s never fun to end a project. “We wanted Loon to be a beautiful solution to a seemingly unsolvable problem,” says Teller.