Short Bytes: Google’s restructuring announcement was greeted with widespread surprise and people are busy speculating the motives behind it. Today, we are bringing you an insightful article to tell you the real reason why Google created Alphabet and renamed itself.
oogle is now owned by a new company called Alphabet with its new CEO Larry Page and president Sergey Brin. Now Alphabet owns every company that was under the hood of old Google, while new Google has been restricted to its search business with Sundar Pichai as new CEO. This restructuring announcement was greeted with widespread surprise from all over the internet and this renaming thing resulted in a 5 percent growth inGoogle’s Alphabet’s shares.
So, did co-founders Sergey Brin and Larry Page know about this? What’s the real reason of Google’s rebranding thing when everything was going picture perfect and ads were pouring money in Google’s supersized piggy bank? Now Google is slimmed down and the companies that represent the future plans of Page and Brin are under the Alphabet’s umbrella. So, Google will be a name for the things related closely to the Internet and search business, and the moonshots will be Alphabet flavored. Just a rebranding and restructuring thing, Right?
Well, it’s all about rebranding and restructuring- and it’s a lot more than that.
Few years ago, Google started to do something that the Wall Street doesn’t consider mature. Google spent (and continues to spend) lots of money on moonshots without any concrete belief whether it will be profitable or not. It spent money that some other business could have used as an investor’s dividend, but Google co-founders have been able to chase their dreams by creating ownership structures that keep the power in their hands.
In their original founders letter, Larry Page and Sergey Brin wrote, “Google is not a conventional company. We don’t intend to become.” They also said that you could expect them to make “smaller bets in areas that might seem very speculative or even strange when compared to our current business.” By going the moonshot way, Google co-founders remind me of Bill Gates, who built Windows and became comfortable with its position as the most popular OS of the world and is now busy improving people’s health. This resulted in Microsoft’s fading power to attract the brightest engineers to Redmond’s offices.
Today, Google remains one of the favorite companies of engineers on the earth and it surely wants to remain Wall Street’s favorite too. It wants to convince its investors that it’s not wasting their money in Google X projects that have a very distant possibility of becoming something profitable and as big as Google search and Android. So, Google decided to split itself in two (or becoming a bigger one) to show the world how much it makes profit from the usual internet business apart from giving the moonshots enough importance by driving them away from the shadow of Google, the search engine.
In their founders letters, they say:
In Warren Buffett’s words, “We won’t ‘smooth’ quarterly or annual results: If earnings figures are lumpy when they reach headquarters, they will be lumpy when they reach you.”2004 Founders' IPO Letter, Larry Page and Sergey Brin
Apart from restructuring Google and providing a new name, Alphabet is a path Larry Page and Sergey Brin want to follow to realize their own dreams. They still want to attract the brightest minds to work for them along with the retaining the investors’ confidence. They don’t want to become Bill Gates, instead they aim at becoming Silicon Valley’s Warren Buffets. Now, Alphabet is a conglomerate and the co-founders want it to take over the world.
Here’s only one thing we can hope for the future. Alphabet, don’t be evil.
