Google’s Unusual Compensation May Have Stunted Its Self-Driving Car Project

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One factor that led to Google’s self-driving car project bleeding so much talent over just a few years may have been its “unusual” compensation system and it’s excessively high payouts to some employees (“Fu** you money”), according to a new article published by Bloomberg.

The spectacle of Google’s self-driving car effort (now known as Waymo) losing so many top employees over the past few years has been hard to figure out (excepting the fact that Apple’s car project seemed to be having even more problems). This is especially the case when one considers that the company’s program had seemingly been making good progress and was/is something of a leader in the field.

The explanation put forward in the recent Bloomberg article seems to do a good job of explaining the situation, though — Google simply put too much money on the table, and utilized a compensation system that was (seemingly) not well thought out.

Here are some of the most interesting parts of the article:

“Early staffers had an unusual compensation system that awarded supersized payouts based on the project’s value. By late 2015, the numbers were so big that several veteran members didn’t need the job security anymore, making them more open to other opportunities, according to people familiar with the situation. Two people called it ‘F-you money.’ … 

“The unorthodox system started in 2010, soon after Google unveiled its first self-driving vehicle. It was constructed to tie employees’ fortunes to the performance of the project, rather than Google’s advertising money machine. In addition to cash salaries, some staffers were given bonuses and equity in the business and these awards were set aside in a special entity. After several years, Google applied a multiplier to the value of the awards and paid some or all of it out. The multiplier was based on periodic valuations of the division, the people said.

“The precise metrics that the division was measured by — and caused the bonuses to balloon — are not known. But by 2015, the Google car project had come a long way: Google’s vehicles had logged more than one million autonomous miles; car companies including Toyota Motor Corporation and Tesla Inc announced their own plans to develop autonomous systems; and analysts predicted the technology would transform the auto industry.

“A large multiplier was applied to the compensation packages in late 2015, resulting in multi-million dollar payments in some cases, according to the people familiar with the situation. One member of the team had a multiplier of 16 applied to bonuses and equity amassed over 4 years, one of the people said. They asked not to be identified talking about private matters.”

“Part of the problem was that payouts snowballed after key milestones were reached, even though the ultimate goal of the project — fully autonomous vehicles provided to the public through commercial services — remained years away.”

While exact figures aren’t publicly available, the Chief Financial Officer for Alphabet, Ruth Porat, did note during an earnings call in early 2016 that operating expenses during Quarter 4 2015 increased 14%, to $6.6 billion. This increase was apparently “primarily driven by R&D expense, particularly affected by expenses resulting from project milestones in Other Bets established several years ago.”

That is apparently a reference to the self-driving car project, as confirmed by unnamed sources who spoke to the authors of the new article.

As you may recall, some notable leaders in the self-driving car project left in 2016, with reports claiming a mixture of reasons — desire to do their own thing as well as unhappiness with the new division leadership.

“The big payouts exacerbated the situation because team members had less financial incentive to stay, the people familiar with the situation said.”

Examples of these departures include: Chris Urmson (behind the new startup Aurora Innovation); the people behind the self-driving semi-truck startup Otto; and Bryan Salesky (one of the founders of Argo AI).

Notably, the writers of the Bloomberg article weren’t able to get a comment on the matter from Sebastian Thrun — the initiator of the firm’s car project, and one of those who apparently designed the pay system.


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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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