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Google Restructures, Announces New Parent Company "Alphabet"

Alphabet will be the umbrella to Google, Life Sciences and Calico.

In a blog post, former Google CEO and Co-Founder Larry Page announced that the company is introducing a new structure in which “Alphabet” will become Google’s new parent company. Page is now CEO of “Alphabet,” which also oversees Life Sciences and Calico. Additionally, Sergey Brin, Page’s co-founder of Google, will take on the role of president for Alphabet, while Eric Schmidt will become its executive chairman. Meanwhile, Sundar Pichai, former senior vice president of products, will be promoted to the role of CEO for Google. According to Larry Page, “[Pichai] 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.”

While Google is folding into Alphabet Inc., it will retain all of its functions including Search, Maps, Android, YouTube and ad businesses. However, investors should know that Alphabet Inc. will replace Google on the stock market, and according to Page, “all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights.” The ultimate aim of this restructure is to allow the company to refocus on Google’s plenitude of opportunities, improving transparency and oversight, and taking a longer-term view to be more ambitious. Read the entire blog post here.

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.

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.

Author: Helena Yeung