- In 2011, core members of Google’s self-driving car project threatened to leave and launch their own startup.
- To get them to stay and to motivate them, Google designed a compensation package that gave them regular salaries, and tied their bonuses to how much value they created.
- That setup made most of the team’s core members into millionaires, but failed to keep them at Google in the longterm.
- Many left to start their own self-driving efforts that now compete with their former employer.
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In 2011, Google had a problem. Two years earlier, it had hired a team of about a dozen engineers to create a self-driving car. The team members of what was then called Project Chauffeur (and is now Waymo, a standalone company under the Alphabet umbrella), had made amazing progress.
In their first 18 months of work, the young roboticists had watched their fleet of sensor-covered Toyota Prius hybrids cover more than 100,000 miles on California’s highways. More impressively, they had conquered the “Larry 1K” — a challenge crafted by Google co-founder Larry Page, which demanded the cars navigate a series of 100-mile routes that included some of the trickiest roads in the state. After decades of middling results from the country’s best defense contractors and universities, the Google team had built something that looked like a proper self-driving car.
That success netted the teammates — many of whom became leaders in the field, including Anthony Levandowski, Aurora CEO Chris Urmson, Nuro founders Dave Ferguson and Jiajun Zhu, Kodiak Robotics CEO Don Burnette, and Waymo CTO Dmitri Dolgov — nice bonuses and a blowout party at the Palo Alto home of their leader, Sebastian Thrun. It marked the start of more focused efforts to figure out how to commercialize autonomous tech.
And it made the young engineers realize they had created something that could be worth an incredible amount of money. (Indeed, Intel has predicted the market for self-driving-tech will be worth $7 trillion a year by 2050.)
It was Google, though, that owned the results of their work. It was a nice place to work, sure. Especially for a team largely made up of former academics, unaccustomed to perks like free food and effectively limitless funding. But some team members thought that they deserved to be more than mere salaried employees.
“We realized we were something special,” one engineer said in an interview, speaking on the condition of anonymity. He and others, including Levandowski, wanted to reap the benefits that came with owning a revolutionary transportation technology.
So, led by Levandowski, some of the engineers indicated to Page and other Google higher-ups that they were willing to walk. They would find independent venture capitalist funding and start their work over, no big deal for a team that had done so much so quickly. “It was like collective bargaining,” Levandowski said in an interview.
Google, of course, wanted to keep the effort in-house. And it so happened that the would-be rebellion came at a time when the company was looking for new ways to encourage the entrepreneurial spirit that had made it a behemoth to begin with. As Charles Duhigg wrote in “The New Yorker” in 2018, Page “often complained that the company had become bloated, and had lost the hacker mentality that had fueled its initial success.”
So Page authorized the creation of a new kind of compensation at Google. The idea was to motivate the team with the sort of incentives they would enjoy at their own startup. Chauffeur’s members would remain employees, with regular salaries. The real money came in their bonuses. Every four years, Google would determine the value of the project and pay each teammate a given percentage of the sum, based on their role. Anyone who left before the four-year mark would get nothing.
Most of those included got .5%, some got 2% or 3%. Levandowski got a whopping 10%, his reward for selling to Google two companies he had founded, which provided hardware for Chauffeur’s cars. (In August, Levandowski, often accused of shady business dealings, was sentenced to 18 months in prison after pleading guilty to trade secret theft.)
“We were focused on getting a start-up-like compensation system,” Page said in a 2017 deposition, as part of the Waymo v. Uber case. “And start-ups pay people a lot of money if they do something significant — if the start-up does something significant.”
Duly motivated, the team over the next four years created a self-driving juggernaut, racking up millions of miles, scaring major automakers into starting their own research programs, and convincing then-Uber CEO Travis Kalanick that he had to pour billions into his own self-driving program to ensure his company’s future. Nearly everyone in the scheme stayed put, even as petty rivalries undermined a once-cohesive group.
At the end of 2015, Google valued Project Chauffeur at $4.5 billion. Those who’d stuck around — just about everybody — became millionaires. Levandowski’s payout came to $120 million. “I’m sure many people would argue those numbers are too big,” Page said in his deposition, “but that system seems to work pretty well.”
Except that in the long run, the system failed. After Google opened its checkbook, it watched many of its top-flight engineers leave, one by one. Levandowski, Urmson, Burnette, Ferguson, Zhu, and others quit the team, most of them to launch the kind of rivals that Google had successfully nixed in 2011.
A few factors led to the exodus. For all its progress, Google was years from delivering a commercial service, and some thought they could do better. Not everyone liked John Krafcik, the auto exec who Page had hired to be Chauffeur’s CEO (and who now leads Waymo).
But it was the bonuses that made it easy to leave, especially since it would be another four years before the next ones rolled around — an eternity in Silicon Valley years. Multiple team members called it “f-you money,” Bloomberg reported in 2017. When you’ve got millions of dollars in your checking account, it becomes a whole lot easier to give up your steady job to try something new. Something competitive.