Meet Google's New Parent Company

Google to reorganize all its operations under a single “Alphabet” umbrella

In a blogpost on Monday, Larry Page, the former Google CEO announced that Google is reorganizing its entire digital and physical businesses under a single umbrella structure called ‘Alphabet. He would now be the CEO of Alphabet, the new “collection of companies” that includes Google, Life Sciences and Calico.

Sergey Brin, Page’s co-founder of Google, will become President of Alphabet and Eric Schmidt will be its Executive Chairman. Meanwhile, Sundar Pichai, Google’s former Senior Vice President of products will now become the CEO of Google under Alphabet.

Even as it’s reorganized into Alphabet, Google will retain its core businesses like Search, Maps, Android, YouTube and Google’s cash cow, the ad business.

Making way for the new corporation, Google will be reduced down slightly in areas mainly to do with new advancements that are recognizably different from the company’s internet-based offerings. But “moonshot” projects such as the X Lab, Life Sciences and the Calico life extension project will somewhat operate as separate entities.

“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,” Page wrote.

“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,” Page said.

The change should allow Alphabet to better manage and scale products in fields that are not directly connected.

Alphabet would replace Google as a publicly traded entity. Page wrote that “all shares of Google will automatically convert into the same number of shares of Alphabet, with all of the same rights.” However, the company will continue to trade on the Nasdaq under the labels GOOGL and GOOG ticker symbols.

And, why the name 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,” Page wrote. “We also like that it means alpha-bet (Alpha is investment return above benchmark), which we strive for!”

He also added, “Don’t worry, we’re still getting used to the name too!”

Soon after the announcement, Google stock jumped about 5 percent in after-hours trading. In the mean time, starting Q4 of this year, Google financials will be provided separately from the rest of the Alphabet business.

So, get ready to say goodbye to Google and say hello to Alphabet.

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