In a groundbreaking move that will ultimately have very little impact on anyone outside of the company, Google has announced it will undergo a significant restructuring. The announcement says they are creating a new parent company called Alphabet, Inc., which will serve as a holding company for all of Google's individual subsidiaries.
9 Quick Facts
Many are asking questions like: Why? How will it work? What impact will it have on the tech industry and consumer marketplace? Well, let's get to the bottom of the issue and provide some of the quick facts about the recent decision.
Ultimately, nobody outside of Google will really notice any changes at all. The search engine giant will remain the same, the logo isn't going anywhere, and the stock tickers GOOG and GOOGL are staying put. All of the change is happening outside of the Google company.
In his August 10 release, Larry Page was quick to mention that nothing is wrong. "Our company is operating well today, but we think we can make it cleaner and more accountable," he wrote. "So we are creating a new company, called Alphabet." While conspiracy theorists aren't so quick to buy in, most levelheaded business experts agree that it's nothing more than a decision to simplify.
Most importantly, co-founders Larry Page and Sergey Brin will remain in charge. They'll officially head up Alphabet, meaning all companies under that umbrella will ultimately still answer to Page and Brin. All execs will retain their positions, simply replacing the name Google with Alphabet: CEO Larry Page, President Sergey Brin, CFO Ruth Porat, Executive Chairman Eric Schmidt, and Chief Counsel David Drummond.
The biggest and most noticeable change comes with the announcement that Sundar Pichai is Google's new CEO. Born in Tamil Nadu, India, Pichai completed his undergraduate degree in metallurgical engineering at the Indian Institute of Technology. He then studied at Stanford University before launching his career at Google in 2004.
Pichai, 43, is the proud inventor of the now defunct Google toolbar and former leader of Google Chrome. He ultimately became vice president and then senior vice president after adding Android to the company's portfolio. Over the past few months, Pichai has been charged with overseeing all Google software products, including Google Wallet, Google+, Google Apps, and Android Pay. As CEO, Pichai will add some additional responsibilities, including overseeing Chrome, YouTube, Google Maps, and other important products.
Those who know Pichai personally believe he's more than capable of handling the promotion and are excited to see where he leads Google in the coming months.
As mentioned, Alphabet is nothing more than an umbrella company for all of Google's subsidiaries. Underneath Alphabet, there will be seven individual companies, each with its own CEO and leadership. These seven companies are Calico, Nest, Google Ventures, Google, Google X, Google Capital, and Fiber.
“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,” Page writes in his announcement. What Alphabet will do is oversee the individual companies and manage the distribution of funds.
If you're attempting to quickly understand Alphabet, know this: The purpose of the new umbrella company is to simplify things. From an accounting perspective, Google had become a bit of a nightmare. There were a handful of different departments with dozens of different products, yet they were all labeled under the heading of Google. This got a little confusing when many products were in completely different industries.
This new conglomerate structure--similar to Warren Buffet's Berkshire Hathaway -adds clarity, focus, and organization to the company. It lets Google focus on what it does best, without limiting other ventures like drones, self-driving cars, anti-aging research, and smart home products.
Even though Google is one of the most powerful companies in the world, it still doesn't pass the eye test. With colorful, goofy looking letters many see Google as too playful for is own good. The new Alphabet logo adds a level of maturity to the organization.
"With this new branding the age is moving from adolescence into young adulthood," says design critic Steven Heller. "Its not as corporate as IBM or Westinghouse, but it is simple and to the point." Page and Brin are basically saying, 'We still want Google to be seen as creative and progressive, but we'd rather the overall organization be seen in a more sophisticated, corporate light.'
"Sergey and I are seriously in the business of starting new things," Page writes. Alphabet will further this mission of starting new ventures by allowing them to give companies independence and freedom to take more risks without harming or compromising the overall Google name. This freedom to create will likely benefit each individual Alphabet company going forward.
One interesting thing to keep an eye on his how Google's selection to use the name Alphabet will go over in the marketplace. As Jack Ewing and Quentin Hardy of the New York Times point out, there's already a lot of competition regarding the name. The internet domain Alphabet.com--as well as the trademark Alphabet--already has ownership. They belong to BMW, who isn't very keen on the idea of giving up their rights.
It's not just BMW, though. Some other U.S. based companies with a Wall Street presence include Alphabet Funds, Alphabet Energy, Alphabet Record Company, and Alphabet Plumbing. While some businesses are laughing it off as a minor issue, others are worried the search engine giant could seriously compromise their SEO efforts.
If Alphabet.com is taken, then what is Alphabet's new URL? Abc.xyz--of course.
In the end, Page and Brin are thrilled with the potential of the restructuring. In his blog post announcement, Page claimed the organization as a whole is excited about six major things:
In other words, there's no need to worry about anything. If Google's excited, everyone else should be, too.
No Need to Fear
The announcement, while it may have come as a bit of a surprise to many, is really nothing to fear. Page and Brin have done a sufficient job of clearly explaining the shift and dispelling irrational worries. Everything as you know it will remain the same.
However, Page did mention that he still feels a little uncomfortable when it comes to one aspect of Alphabet. "Don't worry, we're still getting used to the name too!"