In a recent stunning announcement, Google announced that the company known as Google will be splitting and its components will be headed by a new holding company they call Alphabet. Google itself will become one of Alphabet’s subsidiaries. Alphabet is a symbolic and somewhat catchy piece of nomenclature that Microsoft has yet to learn.
“We liked the name Alphabet because it means a collection of letters that represent language, one of humanity’s most important innovations, and is the core of how we index with Google Search!”
Google has been under fire lately for its seeming lack of focus on its projects as well as its core competencies like search (to which it lost Apple to Microsoft’s Bing) so the company gave the world a stunning and solid retort, by creating companies out of its major divisions, giving them more control while being lightly orchestrated by Sergei Brin and Larry Page at Alphabet. Is renewed focus just the reason for the name change or is there something else?
Google is one ginormous company. Its name, derived from the term for a number 1 followed by a hundred zeroes relates really well to the search and advertising giant. But the company may have become too big for its own good and has earned criticism of losing its focus due to several failed projects like Google Glass, Google Talk and the struggling Google Plus. But creative founders Larry Page and Sergei Brin continue to approve and think up new products and ventures for what used to be just a search and advertising company.
“Google is not a conventional company. We do not intend to become one. As part of that, we also said that you could expect us to make smaller bets in areas that might seem very speculative or even strange when compared to our current businesses. From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have.”
And they have. In fact, Alphabet may actually be a play on words. It’s an Alpha bet. A major change for the company. While creative and competent enough to create and implement their projects, Google has trouble maintaining and managing them. Focus and personnel turn to new projects and sidetracks existing ones. Rumors of restructuring had been floating around for some time but not to the extent of what Google let out of the bag. So here’s the ingredients of Google’s soup. Not all the letters will be there but no bowl of alphabet soup is always complete.
- Alphabet – is now the name of Google’s parent company. It’s also the parent company of Google’s many former divisions which have become companies of their own, each with a new CEO, putting emphasis on renewed focus.
“…Alphabet is mostly a collection of companies… The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main internet products contained in Alphabet instead…”
- Brin, Sergei – Google co-founder will become President of the new holding company.
- Calico – a biotech research company focused on combating aging, will be one of the companies under Alphabet. C is also for Capital, Google’s late stage growth venture capital fund whose purpose is to generate profit through its investments. Sister company Ventures meanwhile is for early stage investments.
- Fiber – is Google’s fiber-optic internet and cable service provider which will also become one of Alphabet’s subsidiaries.
- Google – the original company becomes a subsidiary under Alphabet. It will be the company’s largest arm and will continue to fund Alphabet and the rest of the subsidiaries. The symbols GOOG and GOOGL will remain in use for trading in Nasdaq.
- Larry Page – Google co-founder will head Alphabet as its CEO.
- Nest Labs – producer of self-learning, sensor-driven, Wi-Fi-enabled thermostats, smoke detectors, and other security systems, was acquired by Google last January 2014. It’s known for the successful Nest learning thermostat. Nest Labs will also become one of Alphabet’s subsidiaries.
- Pichai, Sundar – is the new Google CEO. Google itself becomes a subsidiary of Alphabet and as mentioned, every other subsidiary will have its own CEO. It’s been a rumor for some time that he would be the chosen one for both Google and Microsoft. For those not familiar Mr. Pichai was senior vice president of Android, Chrome and Apps.
“…Sundar has been saying the things I would have said (and sometimes better!) for quite some time now, and I’ve been tremendously enjoying our work together. He has really stepped up since October of last year, when he took on product and engineering responsibility for our internet businesses. Sergey and I have been super excited about his progress and dedication to the company. And it is clear to us and our board that it is time for Sundar to be CEO of Google”
- Susan Wojcicki – will be the new CEO of YouTube, which is still a subsidiary of Google but may become an Alphabet subsidiary.
- Ventures – or Alphabet Ventures was formerly known as Google Ventures. It handles Google’s corporate venture capital and investments. Ventures provides seed and growth funding for other technology companies.
- X-Labs – is the division in charge of Google’s hardware tech projects such as Google Glass, Google Wing (same as Amazon’s drone project), Loon (the company’s project to provide internet access through weather balloons), glucose-sensing contact lenses and driverless cars. X-Labs is now a separate company under Alphabet.
- YouTube – the world’s most popular video sharing website, for now remains a part of Google but may also become a separate company.
Now that Google’s former projects have their own CEOs, Google itself can be more focused on its original missions. The web, advertising and search. Everyone else would be too without much interference from the top brass. However, Pichai would still have to worry about funding everyone else. To do so, profitable areas such as Android and YouTube will remain with Google.
Larry Page sums up the restructuring with the following:
- Getting more ambitious things done.
- Taking the long-term view.
- Empowering great entrepreneurs and companies to flourish.
- Investing at the scale of the opportunities and resources we see.
- Improving the transparency and oversight of what we’re doing.
- Making Google even better through greater focus.
- And hopefully… as a result of all this, improving the lives of as many people as we can.
So is the restructuring some sort of corporate move to ease on taxes as some may speculate? Perhaps, but it’s hard not to dismiss their real need to restructure. Alphabet is not likely to stop expanding and acquiring other profitable ventures and for that, any organization must be organized.