You likely remember the Google IPO, the launch of Google , and many other milestones over the years. Well, Google may have just made the biggest change of all.
In a blog post authored by co-founder Larry Page, Google announced that it will be turning the company into a subsidiary that's part of a "collection of companies." This new collection will be called Alphabet.
So, who will manage Alphabet? Page will serve as CEO, while his fellow Google co-founder Sergey Brin will be president. As for managing Google, the subsidiary, Sundar Pichai will be CEO. Pichai was formerly VP of products for the company.
"This newer Google is a bit slimmed down," writes Page, "with the companies that are pretty far afield of our main internet products contained in Alphabet instead." Those "far afield" firms include "health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity)."
As for the reasoning behind the move? Leadership believes this will allow itself more independence in the management of projects that aren't closely related -- and most would agree that human longevity and digital search would be two such examples. "Allowing new companies to rise under the conglomerate will allow for more leadership across the board and more focus on development," says Jeff Ragovin, founder of Ragovin Ventures and co-founder of Buddy Media, acquired by Salesforce in 2012. "When we look at large corporations around the world that have many sub holdings, it makes a great deal of sense. I'm sure we will see the rise of many new leaders from this change, which is always a good thing."
As a result, the publicly traded company won't be Google; it will be Alphabet, though plans are still to trade it under the symbols GOOG and GOOGL on the NASDAQ. Shares of Google will automatically be transferred into Alphabet shares.
Why this move? Why now? In short, Page and company listened to Wall Street. The company was founded on the promise of internet search and digital advertising. Now, however, it operates in many diverse fields, including venture capital, health, and even drones. These other interests, while possibly important to the future, do not make money and worry many investors. The Alphabet move seems to be responsive to those Wall Street concerns.
But will the move be confusing to consumers? Some think so. "Google has become a household name for us," says Tamar Weinberg, the prominent digital media consultant and one of the first hires at Mashable. "It's such a strange adjustment for the average tech consumer with no interest in Wall Street to wrap their heads around."
If you were surprised by the move, you aren't alone. "This move is interesting on so many levels," says Hillel Fuld, chief marketing officer at ZULA and a prominent tech blogger. "First and foremost, that they were able to pull it off with no leaks or rumors." Fuld is correct: one would be hard-pressed to find an example of a company of Google’s magnitude pulling off a surprise of this magnitude.
More on Alphabet from Page:
"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 is a drastic move, no doubt, but surely it will give Google -- sorry, Alphabet -- the ability to continue to leverage the amazing and innovative culture we've seen come from Google since as far back as I can remember, says Fuld.
Do you see the move toward Alphabet as a big deal? Are you surprised by Google’s big move?