Why Google is eating itself

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On Monday, Google CEO Larry Page announced on his official blog that the company will reorganize and create a new holding company called Alphabet. In the future, Alphabet will become Google's parent company, and Google will become its wholly-owned subsidiary. Google's original business units such as Google X and Google Ventures will become subsidiaries of Alphabet alongside Google.

Google, the world's largest Internet company, "ate" itself. Why?

Slimming down Google

In an open letter, Larry Page stated the original intention of establishing Alphabet: "Making the company cleaner and more accountable." In other words, Google is becoming more and more bloated, and office politics and other factors have caused poor command and coordination. The reorganization is to make Google more transparent and accountable.

Google's reorganized structure, from CNNMoney

Judging from the organizational structure of Google after its reorganization, the businesses of each subsidiary are more distinct, the levels are clearer, and the data will be more transparent. As Kai-Fu Lee said, this is also a response to Wall Street's criticism of the company's data opacity.

The new company will separately report the financial data of the Google business unit in its Q4 financial report, and the rest of the company will be released in one financial report. In addition, Alphabet will continue to separate new business units into new subsidiaries.

Interestingly, among the reorganized subsidiaries, except for the outstanding profitability of various businesses under the new subsidiary Google, others such as Google X (mysterious laboratory), Calico (researching how to achieve immortality), Life Sciences (life science project), etc. are all burning money, and very heavily.

No wonder some netizens joked that in the future Google will be mainly responsible for making money to support the family, while other letters will be responsible for being beautiful.

Provide opportunities for outstanding talents to be promoted

I still remember when Google China closed down, domestic Internet companies rushed to compete for talent with high salaries and important positions. The scene was lively and tragic.

Google is now also facing the problem of talent loss. When career opportunities are limited, many talents choose to resign and start their own businesses or switch to startups such as Uber and Airbnb. After the reorganization, there are more subsidiaries and corresponding executive positions will also increase. In fact, many talents have been promoted in this reorganization.

Sundar Pichai, former head of Android, will serve as CEO of the new Google;

Arthur Levinson, former chairman of Genetech, will serve as Calico's CEO;

It turns out that Google's CFO will serve as CFO of both subsidiary Google and parent company Alphabet;

Omid Kordestani, formerly Google's chief business officer, will serve as an advisor to Alphabet and its subsidiary Google.

The person who made the biggest adjustment here was Sundar Pichai. It is rumored that one of the important purposes of this reorganization is to retain him.

This Indian genius is recognized as a world-class master in the technology industry, and Chrome is his masterpiece. Pichai has been in charge of Google's core business since October last year. It is said that in 2011, Pichai tried to switch to Twitter, and Google gave him a bonus of 50 million US dollars to retain him.

Page was full of praise for Pichai in his open letter:

Sundar Pichai is a key figure for us. I love working with Sundar, and he can say things that I would say better. … So we and the board knew it was time for Sundar to become CEO of Google. I feel very fortunate to have such a talented person take over at a time when Google is slightly declining, and this change also allows me to have the energy to set even greater ambitions.

Rebuilding brand and culture

In 2007, Apple Computer Inc. was renamed Apple Inc. because Apple was far more than just a computer company at that time. It already had new businesses such as iPod, home entertainment equipment and iTunes. The name change was to establish a new brand image.

Today, Google is more than just a search engine company, and even more than just an Internet company, because it has also entered many cutting-edge technology fields such as life sciences and space exploration. However, when people mention Google, they still associate it with search engines, because its influence in the field of Internet search is so profound that the well-known Merriam-Webster Dictionary and Oxford Dictionary have included Google as a verb, meaning to search.

After the reorganization, a new brand, Alphabet, was formed, and other brands were separated to gain higher recognition. Regardless of whether Alphabet is as catchy as Google, at least you will know that Alphabet is more than just search.

Betting on a future

Bet means gambling. I think Google is actually betting on the future.

In the open letter, the sentence "But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant." shows that Google is actually very aware of the risks.

Although Google has developed very well in recent years and its stock price has been soaring, it has also ignored and allowed the rise of Facebook, and its own social networking has never taken off. Google is actually making a bet that one of the businesses of these subsidiaries will become the next hot spot, another giant.

Finally, looking at Google’s open letter “G is for Google” and Alphabet’s official website domain name abc.xyz, I can’t help but think that Alpha means the alphabet, the official website domain name is from abc to xyz, and G is for Google, so, by analogy, we can imagine A is for Apple, M is for Microsoft, U is for Uber…

Google's ambition for the alphabet is really terrifying when you think about it!