I don’t know, but even if that’s the case it would seem like it’s working as intended?

It’s better to know if something will not succeed and you can’t easily tell without testing in the market.

The incentive alignment with equity seems like the most critical piece and it has the bonus of rewarding employees for taking on the extra risk.

This lets you spin out big ideas without spending all of your money - a little like running internal VC (one big success could make up for all of the other failures).

I think at this level capital is not really the main constraint. It's attracting talent and creating a culture/environment where success is possible, even then that's just a necessary but insufficient prerequisite for success among all of the other non-capital reasons a startup might not succeed.

I don't think it was a GoogleX project, but Chronicle was spun out from Google as an independent company. It grew well, and seemed ready to succeed on its own.

Google then re-acquired it.

Speculation, but perhaps Google was concerned about it getting acquired by a competitor as it used a lot of core Google search technology. Or, perhaps Google knew that the acquisition cost would spiral upwards if they waited much longer. Or, perhaps it just proved out the hypothesis that the product was viable, so better to bring it back in-house.

But I would call it successful by conventional metrics: it found product-market fit, had good customer traction, and was acquired at a decent (though not crazy) valuation.

These guys did pretty well for themselves:

https://en.m.wikipedia.org/wiki/Pokémon_Go

Niantic was spun off from Google.

It's my understanding is that Google X is a marketing / PR platform for Google. Google X doesn't ever need to actually produce anything or create any real-world value because their value is in the PR they generate for Google - keeping them positioned through press as a technology company vs. the largest advertising company in the world. Many of the Google X projects are acquisitions/acquihires purchased to continue the narrative. It's why they never ship products and can't get anything out the door. If this works - it'll be one of the first after billions invested. They've done an excellent job I would say.

This is the main topic in The Innovators Dilemma, it's a pretty interesting book if you like this sort of graduation of companies

It makes sense from a focus point of view. Rather than Google/Alphabet pissing away their profits on ventures outside their core competence, spin them off and leave them for investors and managers that want to focus on self driving cars or whatever. It's hard enough to do one thing well.