Alphabet Allows The Best Of Google Technology To Shine
As Sergey Brin and Larry Page wrote in Google’s original founders’ letter 11 years ago, the world would see the company take “smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.”
Once solely an Internet search project called “BackRub,” Google has over the past sixteen years ventured into new frontiers like drones, pharmaceuticals, venture capital and even space technology. Less than ten years ago it picked up YouTube, which is now a household name.
The Silicon Valley icon has chosen to reorganize under a new name: Alphabet Incorporated in order to encompass the ever growing range of industries it is disrupting. There have been changes for the company’s executives as well.
Brin and Page are to become president and CEO of the Alphabet holding company, respectively. Sundar Pichai, former vice president in charge of Android, Chrome and Google apps, becomes the CEO of Google.
The general idea is to group moneymaking businesses apart from the so-called “science” projects. This, Page implies, will let some of the more speculative companies to develop their identities. It could also allow the company to minimize regulatory risk most often aimed at Google Search.
So what remains of Google? Search engine, advertising, maps, YouTube, and the Android mobile operating system and mobile apps, according to Monday’s Securities and Exchange Commission filing.
“For Sergey and me this is a very exciting new chapter in the life of Google — the birth of Alphabet,” Page, the Google chief executive, wrote in a blog post on Monday. “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.” You can see the company’s new website at http://abc.xyz.
“We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes,” Mr. Page wrote. “But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”
Google has endured pressure from Wall Street investors to organize better its multi-faceted and universal approach to business. Page expressed to The Financial Times last year that Google’s core businesses – like Search – were not Google’s primary goal.
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“The societal goal is our primary goal,” he told FT. “We’ve always tried to say that with Google. I think we’ve not succeeded as much as we’d like.” The move allows Google to focus now on what makes money so that Alphabet can strive for human progress, according to the sentiments seemingly laid out in Page’s statement. Google’s $62 billion+ in cash and its diverse ventures place the behemoth in uncharted territory.
“We’re in a bit of uncharted territory,” Page told FT in 2014. “We’re trying to figure it out. How do we use all these resources . . . and have a much more positive impact on the world?”
Google’s most far out businesses include home automation via Android; Google X’s reported robots and elevators to space; its driverless cars; Google.org, the company’s non-profit clean energy wing; Adimab, Google’s new drug research arm; The Climate Corporation’s insurance service against damage due to climate change; as well as Recorded Future, Google’s pursuit to predict the future.
“Sergey and I are seriously in the business of starting new things,” writes Page. “Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure.”
Alphabet Inc. will take the place of Google Inc. as the publicly-traded company with Google becoming a wholly-owned subsidiary of Alphabet.
The move will allow Google to manage its risk in potentially new ways. Under the new structure, Google could enjoy incorporation in laissez-faire tax and regulatory regions, although there are no signs this is in the company’s plans.
“We also like that [the name] means alpha-bet (Alpha is investment return above benchmark), which we strive for!” Page wrote. “I should add that we are not intending for this to be a big consumer brand with related products–the whole point is that Alphabet companies should have independence and develop their own brands.”
“Don’t worry,” Page added, “we’re still getting used to the name too!”
Featured image courtesy of Shutterstock.