Ever since Larry Page announced the elevation of Chennai-born Sundar Pichai as the new CEO of a more lean and mean or ‘slimmed down’ Google, a big spotlight has been shone on the man whom western media describes as ‘soft-spoken’ and ‘well-liked’ right hand man of Page. News and speculation behind why co founders of Google, Larry Page and Sergey Brinn formed the holding company Alphabet have been abounding in media. The move to elevate Pichai has been widely appreciated.
With an impeccable professional record, Pichai has achieved commendable landmarks in his career at Google, right from helping developing Google Chrome and Google Toolbar, to eventually taking charge of Google’s core products and engineering responsibilities. Also, several media reports have surfaced post Pichai’s appointment, stating that Twitter had made an offer to Pichai to be its CEO, some even suggesting that Microsoft too had its eye on Pichai after the resignation of Steve Ballmer.
There is a theory doing rounds in several circles that making him CEO was Google’s attempt to retain him as being CEO of Twitter may have been a tempting offer.
But the rearrangement also brings to light the operations of the holding company Alphabet and this begs the question what will Page and Brinn do with Alphabet?
Larry Page is famous for his inclination for ‘moonshot’ ventures. Google has made it abundantly clear that it is interested in ideas that change the world and has taken remarkable strides in putting those ideas in motion. Page has said, “Google is not a conventional company and we don’t intent to become one.”
Moonshot projects are those that no one is really working on and require ‘zero million dollars’ to actualise, crazy ideas that are at the cusp of innovation and technology. In an interview to Wired magazine, Page had said that “…we always have these debates: We have all this money, we have all these people, why aren’t we doing more stuff? You may say that Apple only does a very, very small number of things, and that’s working pretty well for them. But I find that unsatisfying. I feel like there are all these opportunities in the world to use technology to make people’s lives better.”
The creation of Alphabet, Google’s holding company, has freed up Page’s time to pursue moonshot ventures, knowing that while they (Page and Brinn) have envisioned technology changing humankind for the better, Pichai is well placed to maintain and grow Google and execute and achieve tangible results and profits.
Richard Waters who interviewed Page for Financial Times in 2014 quotes Page:
“When breakthroughs of the type he has in mind are pursued, it is “not really being driven by any fundamental technical advance. It’s just being driven by people working on it and being ambitious,” he says. Not enough institutions – particularly governments – are thinking expansively enough about these issues: “We’re probably underinvested as a world in that.”
To the question of whether a private company, rather than governments, should be throwing its weight behind some of the world’s most long-range and ambitious science projects, he retorts: “Well, somebody’s got to do it.”
Alphabet is home to many projects that are touted as technological breakthroughs, some of which are Google Glass, self-driving cars, drone delivery system Project Wing, Google Contact Lenses that tracks diabetes, Project Loon which delivers high speed internet in emerging countries through balloons, disease identifying nanoparticles, anti-aging research business called Calico Labs, home automation company Nest Labs, urban planning project Sidewalk Labs, high speed broadband and TV services Fiber, Google Capital and Google Ventures.
These are not profitable projects and come with no success guarantee and the core funding will still come from Google’s profitability.
There is a lot of speculation in corporate, media and tech circles as to why the Google co-founders separated Google and its non search businesses.
One reason could be that investors were in need of more transparency and this move enables that. Alphabet ventures are mostly non-profit while Google is profitable. Separating the two creates more tidiness. Google and Alphabet financial results will be filed separately.
Earlier Google’s non profitable ventures were included in its financial results which made investors less attracted, some even wary of indulging in Page and Brinn’s moonshot fantasies. Now it will be as clear as day as to how much profit does Google and its advertising business makes.