Google rebrands to ‘Alphabet Inc’ in a shake up to make it ‘clean’ and ‘accountable’
From the start, Larry Page and Sergey Brin put it clear that Google was not a conventional company and that they did not intend to be one. In their own words, the two said “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.”
Well, the very statement has come to play 11 years later with the newly launched ‘Alphabet’, a new Google. Alphabet Inc will operate as the parent company for a number of smaller companies including Google, which will remain focused on internet products whereas Android, YouTube, search and ads continue to be part of Google Inc.
According to the two founders, companies tend to get comfortable doing the same thing just making incremental changes. However, in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant. This is why Google is today taking a step further to making the company cleaner and more accountable.
The new Google
This newer Google is a bit slimmed down, with the companies that are pretty far afield of the companies main Internet products contained in Alphabet instead. What do they mean by far afield? Good examples are their 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.” said the company’s blog post
Alphabet will also include X lab, which incubates new efforts like Wing, their drone delivery effort. Also,Alphabet Inc. will replace Google Inc. as the publicly-traded entity and all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. Google will become a wholly-owned subsidiary of Alphabet. Our two classes of shares will continue to trade on Nasdaq as GOOGL and GOOG.
Larry page is the acting CEO of Alphabet with his partner Sergey Brin who is running the company as President.