In a bombshell of an announcement that we can assure you is not a poorly timed April Fools joke, Google today announced that it will be restructuring the entire organization under a new parent company called Alphabet Inc.
News of the surprising revelation was relayed via a press release sent out late on Monday afternoon by Google CEO Larry Page. Under the corporate restructuring, Google will become a wholly-owned subsidiary of Alphabet and will be overseen by Sundar Pichai who will become Google CEO. Naturally, Larry Page will become the CEO of Alphabet and Sergey Brin will take on the role as President.
The underlying goal of the restructuring is to have more delineated divides between the company's core business units (search, YouTube, Android) and some of the company's more ambitious endeavors, such as Google X and the company's Life Sciences division.
Though the announcement caught most everyone by surprise, the initial reaction to the news has been, somewhat surprisingly, rather positive and enthusiastic. Some on Twitter have even speculated that this will help boost corporate-wide recruitment efforts.
As Page wrote to investors today, 'As Sergey and I wrote in the original founders letter 11 years ago, “Google is not a conventional company. We do not intend to become one.'"
Truer words have never been spoken.
As for the name Alphabet Inc., well that's intended to convey the company's vast interests. Which is to say, the 'G' stands for Google, leaving 25 other letters left to be occupied, albeit symbolically, by other subsidiaries. So you might say that the name is ambitious in nature. Page also added that Alphabet is meaningful because, as a collection of letters, it not only represents language (an important societal innovation), but is also the foundation of Google's search index.
Google's press release reads in part:
What is Alphabet? 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.
This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google. A key part of this is Sundar Pichai. Sundar has been saying the things I would have said (and sometimes better!) for quite some time now, and I’ve been tremendously enjoying our work together. He has really stepped up since October of last year, when he took on product and engineering responsibility for our internet businesses. Sergey and I have been super excited about his progress and dedication to the company. And it is clear to us and our board that it is time for Sundar to be CEO of Google. I feel very fortunate to have someone as talented as he is to run the slightly slimmed down Google and this frees up time for me to continue to scale our aspirations. I have been spending quite a bit of time with Sundar, helping him and the company in any way I can, and I will of course continue to do that. Google itself is also making all sorts of new products, and I know Sundar will always be focused on innovation—continuing to stretch boundaries. I know he deeply cares that we can continue to make big strides on our core mission to organize the world's information. Recent launches like Google Photos and Google Now using machine learning are amazing progress. Google also has some services that are run with their own identity, like YouTube. Susan is doing a great job as CEO, running a strong brand and driving incredible growth.
Sergey and I are seriously in the business of starting new things. Alphabet will also include our X lab, which incubates new efforts like Wing, our drone delivery effort. We are also stoked about growing our investment arms, Ventures and Capital, as part of this new structure.