Alphabet’s Sidewalk Labs plans to spin out some of its smart city ideas into separate companies, CEO Daniel Doctoroff said today at Collision from Home conference. Doctoroff listed three potential companies: mass timber construction, affordable electrification sans fossil fuels, and planning tools optimized with machine learning and computation design.
Last month, Sidewalk Labs killed its Toronto smart city project, which envisioned raincoats designed for buildings, heated pavement, and object-classifying cameras. Privacy advocates celebrated that the Google sister company would not be getting invasive power to surveil residents. But as I argued in my column that week, the story was far from over. Sidewalk Labs was using the COVID-19 pandemic as a scapegoat for the Toronto project, but the company wouldn’t stay idle.
Now we’re learning a little more about the plan for the urban innovation company, as Doctoroff prefers to describe it:
There’s two different avenues that our work can take, leading out of the work we did in Toronto. The first is the creation of companies based on a lot of those ideas. As an example, we are huge believers in the potential of mass timber. Lower construction costs, lower construction times, both of which could have a big role in helping to address the affordability issue. There are also massive sustainability benefits and aesthetic benefits as well. We are in the process of creating a company to in effect commercialize the construction of mass timber. Out of our efforts in Toronto we’ve developed a very different approach to dramatically reducing carbon emissions. One of those pieces of that approach is what we call affordable electrification, which is basically to use all electricity, in whether it’s a building or in a district, without using fossil fuels. We think that there is a very important company that potentially could be created out of that. The planning tools that we developed, which we think can help to optimize using machine learning and computational design — we think that’d be a separate company.
Separately, we will also be engaging with developers using some of those innovations that were described in our plan for Toronto, some of which we ourselves will be building into companies that help developers achieve these sorts of quality of life improvements. In some cases, we will be a capital partner as well. So we expect to play a role in the building out of the places, and just do it in a more diversified way then would have been in Toronto. We were always going to employ that strategy, this just accelerates it in some way.
There is some precedent here. Sidewalk Labs participated in a funding round for Umbrella, a community marketplace for boomers, in July 2019. Sidewalk Labs went further in September 2019 when it spun out Replica to help city planners create “virtual populations” with big data.
Sidewalk Labs is a Google sister company under the Alphabet umbrella. Other Alphabet companies include Calico, CapitalG, DeepMind, GV, Google Fiber, Jigsaw, Loon, Makani, Verily, Waymo, Wing, and X. Because none are profitable, these moonshots are lumped together in Alphabet earnings under a line item called “Other Bets.” In Alphabet’s most recent Q1 2020 earnings, Other Bets revenue was down 21% to $135 million, while losses were up 29% to $1.1 billion. That means last quarter, Other Bets burned eight times more cash than they generated.
In December, when Google’s CEO also became Alphabet’s CEO, I explained that we knew what to expect: Alphabet companies will either become more focused or get folded into Google (like Nest in February 2018 and Chronicle in June 2019). In his new role this year, Sundar Pichai is under pressure to start justifying Other Bets. It’s still not clear whether Sidewalk Labs is expecting to be folded back into Google. What is clear is the company wants to ensure its smart city ideas live on.