Google’s Tough Restructuring Into Alphabet

- 9 minutes -

Jessi Hempel for WIRED:

 

"The operating idea behind Alphabet has been that, as CEO and president, Page and Brin would allocate resources and act as talent scouts, ensuring each new company has the CEO it needs. Charismatic and successful CEOs, however, have proven hard to find.

As of February, there were ten Alphabet subsidiaries apart from Google, the core business. And nearly a third of them are reported to have faced significant leadership challenges."

 

I’ve never really liked Google/Alphabet, or really loved any of their products. With DuckDuckGo having replaced Google Search as my default search engine, the only real presence Google has left in my life is with YouTube, which is arguably the third best thing going for them behind Search and Android, but still a toxic mess.

The worst thing about them is the root of all this: their company culture. Behind the colourful whimsy and Google Doodles and April Fool’s jokes is a large, diverse, and incredibly intelligent group of people with no clear direction whatsoever - the fact that Google had to restructure itself into the diversified Alphabet is clear indication of this.

 

"And last week The Information published a lengthy chronicle of the troubles inside Nest, stemming from the mercurial leadership of Tony Fadell.

Fadell reportedly blamed the new Alphabet structure, in which each business must depend on Google for the capital to grow. “The fiscal discipline era has now descended upon everything.” It’s a reminder that, unlike startup CEOs, all of these guys have to lean on Google for their financing."

 

…because the only place where any real money’s coming from is, you guessed it, their ads business - Google’s revenues reached $74 billion last year according to the article.

And now, the silver lining:

 

"And now that they know exactly how much of that pot of money is going to Alphabet’s “other bets”–$3.6 billion—it’s clear Google’s margins are even better than investors thought. “From an investor perspective, this is great,” says RBC Capital analyst Mark Mahaney. When earnings were announced February 1, the company very briefly overtook Apple as the most valuable company in the stock market."

 

Honestly expected that number to be higher. (I’d argue, though, that the spike in the company’s value, assuming the correlation is causal, shows that not even investors care about Alphabet or Google’s other projects.)

Back to the bad news (emphasis mine):

 

"[Alphabet] joins a growing number of the world’s diversified conglomerates, which appear to have realized that combining dissimilar businesses under one holding company almost never works.

Meanwhile, the core company has not stopped developing its own moonshoots, some of which will invariably compete with other Alphabet projects...

In the last earnings call, Chief Financial Officer Ruth Porat said that some of Alphabet’s biggest moonshots are in Google itself, citing machine learning, cloud computing, and virtual reality platforms, among other things."

 

Either Google’s just stubborn, or they’re actually making progress with their projects. In general, there’s no telling, but other technology companies have probably done some of these things much, much better.

Remember when Google announced they were working to make self-driving cars? Well, they started testing cars five years ago - in 2011, they had legislation passed permitting them to operate autonomous vehicles in Nevada in the US, and other states since. How are things going now? They’re still testing while Tesla’s first to market with Autopilot. (The linked site says they’ve been working on the project since 2009.)

And don’t get me started with VR platforms.

However, the saddest thing about Google/Alphabet/whatever is that in spite of the chaos, they continue to thrive simply because they struck upon a well that simply won’t run dry - again, ad revenue - and haven’t the need to do anything differently or to any degree of quality because they can act without consequence, as long as their actions leave them with a few billion dollars to spare.

I’m sounding borderline propagandist here. However, I’m sure of nothing, really. I’m not the general manager of any of Google’s or Alphabet’s projects and therefore know nothing about their progress in those projects. But the fact I know almost absolutely nothing about what they’re doing in a world where tech has taken center stage - wherein others are innovating circles around them and speaking out for causes entirely divorced from “fiscal discipline” - makes it too easy to assume the worst of Google.

Today’s Google is no longer the Google we used to say cool things about in 2012 while investors and the media turned a blind eye to Apple. In fact, today’s Google isn’t even “Google” anymore.

(Via WIRED)

 

Further reading: “Why the sour tone?”, you might ask. Read this. (Via Daring Fireball)

Or just search “Google” in the Navigate page and see what else I’ve learned about them.