Years ago; Internet giant Google announced a massive corporate restructuring on Monday, creating a new holding company called Alphabet. The new holding company will operate as the parent company for a number of smaller companies, including Google, which will continue to focus on internet products and services. Alphabet will house a “collection of companies”, with Google as the largest subsidiary.
Android, apps, Google maps, online advertising, search, and Youtube will remain part of “core” Google Inc. Other Google’s divisions like Life Sciences (glucose-measuring contact lenses), Google X Lab (drone delivery, Google Glass, driverless cars), Calico (longevity exploration), Google Fiber (hi-speed internet connection), Google Capital (investment arm), Google Ventures (startup funding), and the company’s robotic division will now be managed separately from Google.
The massive corporate shake-up is more than in company name only, the massive changes reach into the ranks of who is running what businesses or departments. Larry Page (Google Co-founder) will become Alphabet’s CEO, along with Eric Schmidt as its executive chairman. Sergey Brin (Google Co-founder) will become the new holding company’s president. Sundar Pichai, Google’s current senior vice president of products, will become the CEO of the new “core” Google Inc.
In addition, the Alphabet companies will retain their current leadership, Nest will be run by Tony Fadell, Calico by Arthur Levinson, and Sidewalk Labs by Dan Doctoroff. Sergey Brin will continue to run Google X Lab in addition to his role as president of the new holding company Alphabet.
According to Larry Page (Google Co-founder and Alphabet CEO), Alphabet Inc. will replace Google as the public-traded entity, all shares of Google will automatically convert into the same number of shares of the new holding company Alphabet, with all of the same rights. Alphabet will also continue to trade on NASDAQ under the GOOGL and GOOG ticker symbols.
Alphabet CEO Larry Page posted on Alphabet’s website:
“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.”
Over the past few years, the competition for talents has intensified, tech giants like Facebook and Microsoft are growing fast to become research institutions. Unicorn companies ( startup companies with $1 billion valuations ) offer leadership opportunities and greater financial upside. The result has been devastating for Google, its losing the talent war to rivals. The company has been struggling hard to hire the best talents and forced to pay retention bonuses just to keep them. Alphabet could be a smart move for Google, because it creates more rooms for Google’s rising stars to grow and rule. Rather than being a project manager or a head of a department, now they be made senior vice president or even CEO.
Alphabet could be Silicon Valley’s first ever high-tech conglomerate, an umbrella company that houses a number of small companies.