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Google bonuses made some engineers rich and resulted in layoffs

Andrej Sokolow / Picture Alliance via Getty Images

In 2011, Google suddenly had a problem. Two years earlier, the company had hired a team of engineers to develop an autonomously driving car. The team members of what was then the Chauffeur Project (now Waymo, an independent company under the umbrella of Alphabet Inc.) had made amazing progress. In its first 18 months, their fleet of Toyota-Prius hybrids had driven more than 100,000 miles on California’s freeways.

What’s more, they had conquered the “Larry 1k” – a challenge designed by Google co-founder Larry Page. On this tour, the cars had to tackle a series of 100-mile routes, peppered with some of the most difficult roads in the sunny state. While the best defense companies and universities in the country had only mediocre results for decades, the Google team seemed to have built a truly autonomous vehicle.

This success brought nice bonuses and a great party at their boss Sebastian’s house to teammates, many of whom became leaders in their field – including Anthony Levandowski, today’s Aurora CEO Chris Urmson and Nuro founders Dave Ferguson and Jiajun Zhu Thrun. People began to think about how the technologies for autonomous driving could be commercialized. And it made it clear to the young engineers that their development could be worth a lot of money. (In fact, Intel has predicted that the self-driving technology market will be worth $ 7 trillion annually by 2050).

“It was like a collective bargaining”

However, the results of their work belonged to Google. And, of course, the tech giant was a good place to work – especially for a team of mostly young academics who weren’t used to the many amenities like free food and virtually unlimited financial resources.

But some team members felt they could do more than just be well-paid employees. “We noticed that we are something special,” said one of the engineers in an anonymous interview. He and others, including Anthony Levandowski, wanted to take advantage of the benefits that came from owning revolutionary transportation technology.

Under Levandowski’s direction, some of the engineers indicated to Google co-founder Larry Page and other managers that they were ready to leave the company. They would start over with the help of independent venture capital funding – no big deal for a team that had accomplished so much so quickly.

“It was like a collective bargaining,” said Levandowski in an interview. Of course, Google wanted to keep their project. Additionally, this rebellion came at a time when the company was looking for new ways to foster the entrepreneurial spirit that made Google’s rise to tech giant in the first place. As Charles Duhigg wrote in The New Yorker in 2018, Larry Page “complained often that the company has lost the hacker mentality that fueled its initial success.”

Start-up-like participation in the value of the project

So Page approved a new type of compensation on Google. The idea was to motivate the team with start-up-like incentives. The members of Chauffeur would remain employees with regular salaries. However, according to this plan, they earned the real money through their bonuses. Every four years, Google would determine the value of the project and pay each team member a certain percentage of the sum, depending on their role. If someone dropped out before that four-year mark, they’d get nothing. The majority of those involved received 0.5 percent, some even 2 or 3 percent.

Levandowski received a whopping 10 percent – a reward for selling two companies he founded that supplied hardware for chauffeur’s cars to Google. (In August 2020, Levandowski, who was often accused of dodgy business, was sentenced to 18 months in prison after pleading guilty of stealing trade secrets.) “We wanted to develop a start-up-like compensation system,” Larry Page said in 2017 an affidavit in the context of the case Waymo vs. Uber. “And startups pay people a lot of money when they do something meaningful – when the start-up does something meaningful.”

The team was motivated accordingly and over the next four years created a self-driving prototype that covered millions of kilometers and encouraged major automakers to quickly launch their own research programs. The then Uber CEO was convinced that he would have to invest billions in his own autonomous driving program in order to secure the future of his company. Almost all those involved in the chauffeur stayed with the Google project, even when minor rivalries undermined the team spirit.

Pretty much everyone became millionaires

At the end of 2015, Google valued Project Chauffeur at $ 4.5 billion. Those who stayed – almost everyone – became millionaires. Levandowski’s payout was $ 120 million. “I’m sure a lot of people would argue that these numbers are too big,” Larry Page said in his testimony, “but this system seems to work pretty well.” With the caveat that the system failed in the long run. Because after Google opened its checkbook, it watched as many of its high-profile engineers left the company one by one – Levandowski, Urmson, Burnette, Ferguson, Zhu and others. Most of them started the kind of competitor that Google had prevented with the compensation plan in 2011.

Several factors led to this exodus. Despite all the progress, Google was still years away from delivering a commercially usable service and some believed they could do better. Not everyone liked John Krafcik, the auto expert Page hired (and who now runs Waymo) to serve as chauffeur CEO. But above all the bonuses made the exit easier, especially because it would be another four years before the next one – an eternity in the Silicon Valley calendar. Several team members called it “f-you money,” Bloomberg reported in 2017. Because when you have millions of dollars in your account, it becomes much easier to quit your regular job and try something new. Something competitive.

This article was translated from English by Steffen Bosse. You can find the original here.

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