Silicon Valley and the landscape of modern technology has just changed in a major way, seemingly overnight. On Monday, Sundar Pichai was appointed CEO of Google, but with all due respect, even that announcement pales in comparison to the one it proceeded. Google founders Larry Page and Sergey Brin have set the course for a new chapter in the company’s relatively short, rapidly progressing history by announcing a reorganization via the creation of a brand new company called Alphabet; Google is now its largest subsidiary.
“We are still trying to do things other people think are crazy but we are super excited about.”
What is Alphabet and what exactly does this mean for the Google brand? Over the past eleven years, there have been a number of innovations as a result of Google’s acquisitions and own private development. Some of these, such as Google Maps are blatantly branded as Google products and/or services. Others, such as Boston Dynamics or even YouTube, aren’t quite as obvious. Many of these “Google projects” are now companies under Alphabet with their own CEOs, etc. Think of it this way, Android is to Google as Google is to Alphabet. Page describes the new Google as “slimmed down” in an open letter published on the landing page of Alphabet’s official website. Google Fiber (a high-speed internet service), Google’s self-driving car, and Nest are a few examples of brands and projects that the traditional Google will see off into the sunset.
“Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related.”
The idea is that by shedding ever-expanding projects like Android, Google (and every other Alphabet holding) will be able to continue to grow and innovate on their own. In other words, more attention can be given to carefully developing each brand and watching it take on its own identity. Those out of the Google[x] research lab could potentially benefit most, such as Project Loon, Google’s dreamy project of delivering Wi-Fi to remote locations via a network of large balloons, or Life Sciences (the folks developing a glucose level-reading eye contact lens).
Another way to look at it is from an economic standpoint. The publicly-traded “Google, Inc.” is being replaced by Alphabet, Inc. and all Google shares will automatically turn over to Alphabet shares. Perhaps in an effort to make things less confusing for investors, stock will still be traded as GOOGL and GOOG on the market. Whether keeping the namesake in this fashion will actually prove to be more confusing is difficult to predict. Certainly, there are a lot of questions as a result of the announcement, and hopefully lots of exciting new developments/products. As Page and Brin’s founders letter emphatically states, “Google is not a conventional company. We do not intend to become one.”