Sundar Pichai, Google Senior Vice President of Android, Chrome and Google Apps, is now officially the new CEO at the search company, which itself has now become a subsidiary of a bigger company called Alphabet, Inc.
Yeah, a lot has happened since you were away from your desk! According to a bombshell press release published on Google’s Investor website and sent out to media Monday morning, Google is undergoing a massive overhaul of its business structure.
With Pichai now taking the CEO reigns at Google, former Google CEO and company co-founder Larry Page will assume the CEO role at Alphabet. The other co-founder, Sergey Brin, is Alphabet’s President.
The Google brand will undergo some changes, too, and will focus on popular web properties such as Search, Gmail, Maps and Advertising. Other ambitious Google projects that have failed to gain traction will be broken out of the Google brand.
Alphabet Inc. will replace Google Inc. as the publicly-traded company.
All shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights. The $GOOG and $GOOGL stock symbols will remain unchanged.
“Google will become a wholly-owned subsidiary of Alphabet,” reads the media release.
What is Alphabet?
According to Google, Alphabet is “mostly” a collection of companies, the largest of which is Google. Google as an Alphabet subsidiary is described as “a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead.”
So, for example, health efforts like Google’s glucose-sensing contact lens or Calico, a project focused on longevity, will be broken out of Google. “Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.”
But why the ‘Alphabet’ name?
According to Larry Page, the whole point of Alphabet companies is that they “should have independence and develop their own brands” so Alphabet, Inc. won’t be becoming a household name anytime soon.
“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! We also like that it means alpha‑bet (Alpha is investment return above benchmark), which we strive for,” he wrote.
In other words, rather than market Alphabet, Inc. as a big consumer brand, they’ve opted to continue leveraging the main Google brand for the most essential of products like Search, Gmail and Android.
Hooli Easter Egg
Jokers as they are, Google buried a nice little Easter egg in its media release which references the fake Hooli website in its announcement of Alphabet. First visit abc.xyz, the new website which currently has only the official Google announcement posted. Search for the phrase “drone delivery effort” and click the period after the phrase.
You’ll be instantly redirected to the fake, HBO-operated Hooli website. For those who have not been following HBO’s awesome show about the Silicon Valley culture, its investors and startups, Hooli is a fictional Internet company where the show’s main protagonist named Richard Hendricks (played by Thomas Middleditch) works.
How Google properties are getting reshuffled under Alphabet
Looking beyond the press release, Google’s SEC filing provides an in-dept overview of how its many different properties will be reorganized under Alphabet, Inc. and the new corporate structure.
- YouTube—YouTube used to be run as a subsidiary of Google with its own CEO, Susan Wojcicki. YouTube will remain part of the Google brand for the time being.
- Gmail—Gmail will stay within the main Google brand.
- Search—Google’s search related products, its bread and butter, will stay within the main Google brand.
- Advertising—Google’s advertising platforms, its main source of income, will stay within the main Google brand.
- Maps—Google Maps, another highly acclaimed Google property, will stay within the main Google brand.
- Google+—Google Plus, the company’s failed social network which now encompasses Streams, Photos and Sharing initiatives, will stay within the main Google brand.
- Android—Android, the world’s most widely used mobile operating system, will remain an important part of the main Google brand.
- Google X—The fat of Google X is unknown at this stage. Google X, for those not in the know, is the company’s secret lab for coming up with moonshot projects such as self-driving vehicles and Google Glass.
- Fiber—Google’s ultra-fast Internet access service available in select U.S. cities will essentially become an independent Internet service provider operating under Alphabet, Inc.
- Calico—Google’s longevity project will be spun out into a separate company.
- Nest—A home devices company which makes the popular smoke detector and smart thermostat, will be run as an independent company.
- Life Sciences—Google’s life sciences division of Google X, best known for its glucose-sensing contact lens project, will be spun out into its own company.
- Calico—Google’s longevity project will be spun out into a separate company.
- Google Ventures—Google’s investment arm will be run as a separate company and will continue to leverage the Google brand.
The full announcement
The full text of Google’s announcement follows below.
Google Announces Plans for New Operating Structure
August 10, 2015
G is for Google.
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.” 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.
We did a lot of things that seemed crazy at the time. Many of those crazy things now have over a billion users, like Google Maps, YouTube, Chrome, and Android. And we haven’t stopped there. We are still trying to do things other people think are crazy but we are super excited about.
We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.
Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company, called Alphabet. I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as President.
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.
This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google. A key part of this is Sundar Pichai. 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. 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. 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 organize the world’s information. Recent launches like Google Photos and Google Now using machine learning are amazing progress. Google also has some services that are run with their own identity, like YouTube. Susan is doing a great job as CEO, running a strong brand and driving incredible growth.
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.
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.
For Sergey and me this is a very exciting new chapter in the life of Google—the birth of Alphabet. 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! We also like that it means alpha‑bet (Alpha is investment return above benchmark), which we strive for! 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.
We are excited about…
- 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.
What could be better? No wonder we are excited to get to work with everyone in the Alphabet family. Don’t worry, we’re still getting used to the name too!
So, what do you guys make of this?