There’s no such thing as “a startup within a big company”

Being a startup in a large corp works if you are the "famous" manager inside the corp and get your personal playing ground (skunk works?) project and are building something new.

It works less, when you are being acquired and want to keep your independence. When acquiring the acquirer will look close at you to align the acquired product with the corporate interests.

The CEO (or other CxO) picks from a multitude of projects that already exist in different forms of completion - both internal and external.

For every conceivable project in a large company, there are already 5 different unofficial versions of the project - two spreadsheets on an analysts desk, one knocked up by a senior lead who needed a solution and 2 being hawked around by a MD who had some spare cash and let someone run with a side hustle. On top of which there are 3 SaaS options and Oracle probably has one to sell you, and McKinsey will do a demo next Thursday.

I will lay good money that when they bought Waze there are two projects in Google already that did the whole 'tell us what is on the road ahead' thing.

But the CEO picked an external buy - and those projects went the way of the Dodo.

By time you have big co sign off to do a 'internal' start up, you have basically hit Seed / series A level. Someone with money believes in you. You are past the major points of startup failure (I don't know what the stats are for failed before raising A and after but I bets its waaay lower)

I have been in both sides - the small scrappy start up, the funded start up and the getting something off the ground unofficially in a bigco.

And they all feel the same until you get 'blessed from above'

The Series A slowdown - this is point where all the crazy starts to slow - you actually have lawyers to read things, etc etc, someone starts to consider holiday pay and HR stuff. In a bigCo this hits all at once - all compliance needs to come in. People look over your shoulder. But its not that different to the Board suddenly asking new questions.

So, yes entrepreneur startups are different to 'intrapreneur' startups, but not that much. Its a fight to get anything off the ground, usually in spare time, and internal politics looks a lot like marketing plus who you know in the real world.

Finally - yes if google is giving out equity for free, then yes incentives are misaligned. This seems to be a google problem (one exacerbated by the fact that most previous tech giants had smaller tech giants after their lunch within a decade or two - we don't seem to see that in FAANG.)

That does partially answer what is not in the blue box.

Why waste time letting one of your clearly risk averse in-house employees (hence why they work at Google in the first place), fumble around for 5-10 years trying to build something? While your competitors might be doing the same thing and will actually succeed? And while the rest of your employees start complaining, "why can't we also play startup for 5-10 years on the Google gravy train like John?"

Google can just sit back and let the real startup ecosystem do its thing. Then buy whatever they see that has shown success in areas of strategic value to Google. No PR or legal risk while the startup does necessary but shady things to force itself into being. This is a much better model, hence why innovation is most often acquired, not incubated.