Larry Page and Sergey Brin, the founders of Google, announced the creation of a new company called Alphabet in a blog post. The move was unexpected but not entirely surprising, as the two have always been known to take bold steps and pursue ambitious goals.
The post, titled “G is for Google,” started by highlighting the company’s unconventional nature. As the founders wrote in their original letter 11 years ago, “Google is not a conventional company. We do not intend to become one.” From the start, they had always strived to do more, and to do important and meaningful things with the resources they have.
The post went on to explain that companies tend to get comfortable doing the same thing over time and making incremental changes. However, in the technology industry, where revolutionary ideas drive the next big growth areas, being a bit uncomfortable is necessary to stay relevant.
To that end, the founders announced the creation of Alphabet, a collection of companies, with Google being the largest among them. The new Google would be slimmed down, with the companies that are pretty far afield of their main internet products contained in Alphabet instead. Examples include their health efforts, such as Life Sciences that works on the glucose-sensing contact lens, and Calico that is focused on longevity.
The goal of creating Alphabet was to allow for more management scale, as they could run things independently that weren’t very related. The model would have a strong CEO who runs each business, with Sergey and Larry in service to them as needed. They would rigorously handle capital allocation and work to make sure each business is executing well. They would also make sure they have a great CEO for each business, and they’ll determine their compensation.
In addition, the new structure would implement segment reporting for their Q4 results, where Google financials would be provided separately from those for the rest of Alphabet businesses as a whole.
Sundar Pichai, who had taken on product and engineering responsibility for their internet businesses in October of the previous year, would be the new CEO of Google. Sergey and Larry were excited about his progress and dedication to the company and felt it was time for Sundar to take the reins.
The post also highlighted their dedication to starting new things, with Alphabet including their X lab, which incubates new efforts like Wing, their drone delivery effort. They were also excited about growing their investment arms, Ventures and Capital, as part of this new structure.
The post ended by stating that Alphabet Inc. would replace Google Inc. as the publicly-traded entity, and all shares of Google would automatically convert into the same number of shares of Alphabet, with all of the same rights. Google would become a wholly-owned subsidiary of Alphabet. Their two classes of shares would continue to trade on Nasdaq as GOOGL and GOOG.
For Sergey and Larry, this was an exciting new chapter in the life of Google, and they chose 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 they index with Google search. They also liked that it means alpha‑bet, which represents investment return above benchmark, something they were always striving for.
Takeaway
Larry Page and Sergey Brin have demonstrated their visionary leadership once again with the creation of Alphabet. This bold move not only reaffirmed their commitment to Google’s continued success but also reflected their desire to stay at the forefront of innovation and pursue even more ambitious goals.
By creating Alphabet, Page and Brin have unlocked a world of opportunities, allowing them to have greater flexibility in managing their collection of companies, while still maintaining a strong sense of oversight and support. This strategic move ensures that each business under the Alphabet umbrella can operate independently with its own CEO, focused on achieving specific goals and targets, while still benefiting from the collective resources, expertise, and shared values of the parent company.
Moreover, the creation of Alphabet has given Google’s founders the freedom to explore new frontiers in cutting-edge technologies such as artificial intelligence, machine learning, and robotics, and has opened up new doors for expansion into untapped markets. This not only secures Google’s position as the market leader but also promises to revolutionize various industries and improve people’s lives in unprecedented ways.
Overall, the decision to create Alphabet was a game-changing move that exemplifies Larry Page and Sergey Brin’s innovative mindset and willingness to take risks. Their visionary leadership has not only reshaped the tech industry but also left an indelible mark on the world at large, inspiring others to think big, dream big, and aim high.
