Every reorganization has winners and losers, even when it’s Google.
Google shook the tech industry this week when it announced it was reorganizing into Alphabet, an umbrella company for all of co-founders Larry Page and Sergey Brin’s crazy moonshot ideas. Google is now Alphabet’s biggest division, with longtime exec Sundar Pichai taking over as CEO.
When the reorganization is complete, there will be several people with shiny new CEO titles and others who have to go through another layer of management. The Alphabet reorganization is also a hint to Page and Brin’s ambitions and the industries they hope to disrupt next.
Now that we’ve all had time to process Google/Alphabet’s big move, it’s time to assess who the winners and losers of this week’s massive reorganization are.
Winner: Sundar Pichai. Let’s start with the biggest winner: Googles new CEO. Alphabet CEO Larry Page has been grooming Pichai for the CEO role for years, but it wasn’t clear when or how the Google co-founder would depart the top slot. Now, with Alphabet’s new structure, Pichai has complete control over the world’s largest search engine and online advertising engine. It’s also a win for Page and Google, which get to keep a star talent on board for the foreseeable future.
Winner: Tony Fadell and Nest. The one organization that stuck out like a sore thumb in the Google hierarchy was Nest, the smart thermostat company founded by Apple legend Tony Fadell. As part of the original acquisition agreement, Larry Page had to promise Fadell total autonomy, which made Nest a unique kingdom within Google. Now with Alphabet, Nest really does have the breathing room it needs to build more hardware products without having to deal with Google’s bureaucracy. Nest will blossom under the new structure.
Losers: Comcast and Time Warner. Alphabet is ready to hit the cable companies hard. It’s notable that one of Alphabet’s separate subsidiaries is Google Fiber, the search giant’s attempt to wire the USA (and beyond) with high-speed Internet. If anybody has the resources to break up the monopoly that Comcast and Time Warner have over cable, it’s Alphabet/Google.
Winners: Craig Barratt, Dan Doctoroff, Astro Teller, Arthur Levinson, and Andrew Conrad. What do all these men have in common? They all now have CEO-level control over their respective organizations — Fiber, Sidewalk Labs, X Lab, Calico, and Life Sciences.
Loser: Female execs. Notice something about the heads of Alphabet’s new divisions? All of them are men. This is a major problem for a company that has struggled with diversity for years. Only Ruth Porat, Google and Alphabet’s CFO, breaks up the boy’s club at the top. It’s not enough.
Winner: Wall Street. It’s no fluke that Google’s share price jumped 7% after the Alphabet announcement. Why? Well, for one thing, it provides more transparency around what revenue and expenses belong to Google and which ones belong to everything else — Calico, Ventures, Life Sciences, etc. The reorg also emphasizes that Google/Alphabet is ready to grow new businesses under its massive umbrella. No wonder shareholders are happy!
Loser: BMW. Guess who owns Alphabet.com? Not Google! It’s actually BMW’s fleet management service. The search giant clearly blindsided BMW with the announcement, but the car giant is clearly taking the name change in stride. With that said, brand confusion is inevitable as people try to go Alphabet.com instead of abc.xyz
Winner: .XYZ Speaking of domains, the .xyz extension is clearly a winner in the Alphabet reorg. By choosing .xyz, Google has unintentionally legitimized the extension, so much so that thousands of people are registering .xyz domains. It’s not a bad time to be Daniel Negari, the CEO of .xyz
Winners: Larry Page and Sergey Brin. No longer are the founders tied to the less-than-exciting of managing a multi-billion dollar advertising business. Now they can focus their time and energy on what they love: building crazy things like rocket ships or cures for cancer. This move will re-energize the founders.
Unknown: Omid Kordestani. Google’s Chief Business Officer is back on the bench. The popular exec is now an advisor to Google and Alphabet, giving up the management responsibilities he only recently received. Perhaps Larry Page is preparing Kordestani to take over a new Alphabet division, in which case he’s a winner. But it’s a loss for everyone if he stays on the bench for too long.