Yesterday Google announced that it was changing its business, creating a new company called Alphabet Inc that would be the mother company of all of Google’s business entities.
Google co-founder Larry Page wrote on its blog:
‘Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead. What do we mean by far afield? Good examples are our health efforts: Life Sciences (that works on the glucose-sensing contact lens), and Calico (focused on longevity).
Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. 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.’
All Google is really doing is making sure each small business under Alphabet has its own CEO who will manage the business and makes sure it prospers, so the business wins as a whole.
Google’s CEO will now be Sundar Pichai, while Google co-founders Larry Page and Sergei Ying take positions as CEO and President of Alphabet, respectively.
Larry Page was quoted as saying “We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”
We couldn’t agree more. We hope this new shake up brings exciting changes with it. We know the world already nodded their heads at the move as Google shares shot up 6% in just hours after the announcement!