Google Founders Create New Parent Company — Alphabet

As Google's mission has evolved from a search engine to a social network, self-driving cars, drone delivery, a mobile operating system, its co-founders decided it was time for a new company to accurately reflect their focus.

As Google’s mission has evolved from a search engine to a social network, self-driving cars, drone delivery, a mobile operating system (and much more) its co-founders decided it was time for a new company to accurately reflect their focus.

Alphabet, announced Monday, is a collection of companies, the largest of which is Google.

But what will Alphabet do? (Hold your Alphabet+ jokes.)

CEO Larry Page explained the mission in a blog post:

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.

Page also explained how he and co-founder Sergey Brin came to the name Alphabet:

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.

Readers: What do you think of this move?

Image courtesy of Asif Islam / Shutterstock.com.

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