To be fair, not everybody is interested in running a company, and doing all the "other stuff" that it entails beyond writing code. Also, Google provide great resources and infrastructure, which it would be hard to replicate (assuming the hypothetical project in question required Google scale infrastructure).
I can see where that would be true for some people, but I doubt it's universally true. And it may even be that it just makes more sense to do the idea inside Google than doing it independently anyway. Again, look at the resources and infrastructure Google already have assembled.
And some people may have just bought into the Google mission / vision / whatever, and / or just feel a sense of loyalty to GOOG.
Anyway, I don't mean to suggest that it never makes sense to quit and do your own thing. I mean, hell, I probably would, as far as that goes. I'm just saying that there are some legitimate reasons why some people might prefer to just work within Google than quit and run off to start a new business of their own.
- Many 20% projects are not things that would not be easily monetizable: open source work, non-technical things, improvements to infrastructure.
- If the idea is very speculative, exploring it while still getting paid a handsome salary is a much easier step than quitting your job.
- Some things are easier to do if you have all the Google infrastructure to build on: for example the Transit Maps thing below is a lot easier if you can plug into Maps! (But some things would be easier to launch externally.)
- Part of the attraction, like for open source projects, is that it's something different from your main job, so you learn and stay fresh. If you turn it into your main job you lose that.
The theory is that if you do work on a new product and it works well, eventually it will be staffed full-time and you'll be rewarded. Apparently that did happen with Google Now. I doubt it happens every time, but then not every worthwhile startup succeeds.