Google has a new division called 'Area 120' where employees can build their own startups

Re/code, Asa Mathat

Google is creating an in-house startup incubator to help keep its entrepreneurial talent closer to home, according to The Information.

The incubator is called “Area 120” and will be headed up by Google executives Don Harrison and Bradley Horowitz, sources told The Information.

Here’s how Area 120 will work:

• First, teams within Google will submit a business plan and apply to join Area 120.
• If successful, the teams will get to work full-time on their idea for a few months.
• They’ll then have the opportunity to pitch Google for additional funding and create a new company (which Google will invest in).

The name “Area 120” is a reference to Google’s famous “20% time.” Here’s a description of 20% time that Larry Page and Sergey Brin included in their 2004 IPO letter:

"We encourage our employees, in addition to their regular projects, to spend 20% of their time working on what they think will most benefit Google," they wrote. "This empowers them to be more creative and innovative. Many of our significant advances have happened in this manner."

Big 20% successes have included the development of Google News, Gmail, and AdSense. But there have been questions for years as to whether 20% time actually exists at Google at all anymore.

Area 120 seems to be a bid to encourage more of that entrepreneurial spirit to stay within Google, which was also part of the rationale behind the creation of Alphabet, the larger parent company Google is now a part of.

When Google debuted Alphabet last year, Larry Page wrote that one of its goals was “empowering great entrepreneurs and companies to flourish,” some of whom might not want to build their companies within Google proper.

Area 120 will be located inside one of Google’s San Francisco office buildings.

Read the whole story over at The Information.

Additional reporting by Jillian D'Onfro.