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Google is opening a startup incubator. But what type of Googlers will sign up?

Look out for ad tech and AI.

Google Hosts Its Annual I/O Developers Conference Justin Sullivan / Getty

It's official: Google is launching an internal incubator to birth companies. It's called Area 120, a nod to its famous latitude for "20 percent" employee side projects.

CEO Sundar Pichai confirmed it to Forbes following earlier reports from The Information. Then Bradley Horowitz, Google's VP for photos and streams, confirmed in a tweet earlier reporting that he's involved.

Details are still scarce, but the project is probably designed to spur new products while also helping the company retain entrepreneurial employees, which is a problem for Google. Similar ideas have percolated there for some time — the associate manager program that trained inexperienced new hires, Google X, the whole Alphabet thing.

Several venture capitalists and former Googlers I spoke to when Area 120 first surfaced believed Google has better odds than earlier efforts. For example, Yahoo tried (then failed) with its own incubator, Brickhouse, which Horowitz helped run nearly a decade ago.

But they were skeptical that the new endeavor would breed really innovative companies.

"Startups need a certain amount of risk," said one former Googler. "If you can fall back on your vesting or job at Google, I'm not sure that cuts it."

That said, here are a couple areas where building a startup inside Google instead of outside might make sense.

  • Advertising tech: It's hard to find funding for that now, but Google needs the tech.
  • Artificial intelligence: Google clearly loves this (as do venture capitalists), but finding and keeping capable engineers with expertise is hard for startups. Not so for Google, which has loads of data with which machine learning experts can play.

This is just a guess, not something coming from Google directly. Enterprise and cloud concepts might do well inside Area 120 too, although those types of startups haven't lacked for funding beyond Google's walls.

The Information also reported that Google M&A boss Don Harrison is involved with Area 120. Alex Gawley, a veteran product management director, is also working on it, according to multiple sources.

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