Google's Alphabet

August 25, 2015

What is Alphabet? Alphabet is primarily a collection of companies that Google believes will allow them to focus on the tremendous opportunities that exist internally while fostering innovation outside of its core internet businesses. The largest company, of course, is a new Google. The new Google will be a bit slimmed down, while the other companies will be pretty far afield of their main Internet products and services. What do we mean by far afield? Good examples are their health efforts with Life Sciences which will focus on glucose sensing as well as Calico which will be focused on longevity.

 

Fundamentally, Google believes this new structure allows them to scale management while running businesses independently that aren’t very related. In general, Google’s model is to have a strong CEO to runs each business, with Alphabet in service to each of these business as needed. Alphabet’s role will be to rigorously manage capital allocation and work to make sure each business is executing well. In addition, with this new structure Google plans to implement segment reporting, where Google’s financials will be provided separately from those of the rest of Alphabet's businesses as a whole.

 

Finally, we are told that the name “Alphabet”, was chosen because it means a collection of letters that represent language, one of humanity's most important innovations, and is at the core of Google search!

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