Google is no longer the Google we know, it has reorganised itself into a new entity known as Alphabet. The Google search division will be one of many subsidiaries and will be headed by former Android chief Sundar Pichai.
Alphabet Inc will be a conglomerate under which Google will be a subsidiary alongside Calico, Google Ventures, Google Capital, Google X, Fiber and Nest.
The CEO of Alphabet, Larry Page, announced the reorganisation yesterday and it was confirmed in an SEC filing. Sergey Brin will be president of Alphabet.
Alphabet Inc will replace Google as the publicly-traded entity. Google will become a wholly-owned subsidiary of Alphabet and all shares of Google will convert into corresponding shares of Alphabet with the same rights, and will continue to trade on Nasdaq as GOOGL and GOOG.
The name Alphabet basically is code for alpha-bet – alpha is the investment return above benchmark and bet is what Google does on new areas like mobile and video.
The reorganisation will ultimately allow the leaders of Alphabet to take a longer-term view while allowing slimmed-down divisions like Google to focus on the job at hand.
The new Google will have under its remit areas such as Search, Maps, Apps and Ads, as well as Android and YouTube — although YouTube will retain its own CEO Susan Wojcicki, who will report to Pichai.
“As Sergey and I wrote in the original founders letter 11 years ago, ‘Google is not a conventional company. We do not intend to become one’,” Google co-founder Larry Page said.
“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.”
He said that while Google is performing well today, the plan is to make it cleaner and more accountable.
“What is Alphabet? 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. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity). Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.
“Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. We will rigorously handle capital allocation and work to make sure each business is executing well. We’ll also make sure we have a great CEO for each business, and we’ll determine their compensation. In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.”
Sundar Pichai named CEO of Google
The meteoric rise of Sundar Pichai through the Google ecosystem has been mesmerising to watch and he has proven an able leader of the Android business, the operating system that sits on over 80pc of mobile phones on our planet.
Part of the reorganisation of Google is clearly to give leaders like Pichai the space they need to progress the company but also themselves.
“I feel very fortunate to have someone as talented as he is to run the slightly slimmed-down Google and this frees up time for me to continue to scale our aspirations,” Page said.
“I have been spending quite a bit of time with Sundar, helping him and the company in any way I can, and I will, of course, continue to do that. Google itself is also making all sorts of new products, and I know Sundar will always be focused on innovation—continuing to stretch boundaries. I know he deeply cares that we can continue to make big strides on our core mission to organise the world’s information.”
Did you spot the Easter Egg in the Alphabet announcement?
Eagle-eyed fans of comedy Silicon Valley were delighted with the subtle in-joke Easter Egg in Larry Page’s Alphabet announcement.
Buried deep in the announcement were the words: “Sergey and I are seriously in the business of starting new things. 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.”
The Easter Egg has since been removed but if you had clicked on the full stop after “drone delivery effort” it brought you to a page with the URL for XYZ, the fictional moonshot division of Hooli and featuring the character Head and the words “inspiration”.
Google does have a sense of humour after all.
Updated 9.58am, 11 July 2015: This story was updated to reflect that YouTube is not one of the new subsidiaries, but rather stills comes under the remit of Google