A new era for Google

Yesterday, August 10, 2015 saw the dawn of a new era at Google. It announced a huge restructuring of the company. An umbrella holding-company called Alphabet was created to manage a portfolio of separate companies each with its own CEO. Founders Larry Page and Sergey Brin elevated themselves to be the CEO and President of Alphabet with Eric Schmidt as chairman. The board will remain the same as before. For the biggest company Google, the new CEO is Sundar Pichai, 43 years old, who has seen fast rise in the ranks over his 11 year career. The other portfolio companies will be Nest, Fiber, GoogleX, Calico, Google Capital, Sidewalk, etc.

Google Inc. will remain the dominant revenue and profit generator that includes Search, Youtube, Android, Maps, Apps, and Technical Infrastructure. The new CEO Sundar Pichai joins the rank of newly anointed Indian-American execs like Satya Nadella (Microsoft CEO), Santanu Narayen (Adobe CEO), George Kurian (NetApps CEO), and twin brother Thomas Kurian (Oracle President). Sundar’s reputation as a great product-focused management executive helped to earn this position. We congratulate Sundar, an IIT Kharagpur alumni with Masters in Science degree from Stanford and a Wharton MBA.

Some analysts are comparing the move to Warren Buffet’s company structure, a mix of independent businesses and investments. In the letter announcing Alphabet, Page said, “In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed.” The only challenge will be how to fund unprofitable units by taking money from one strong unit Google Inc. It can also be a way to force several “moonshot” projects to start surviving as independent entities with their own P&L.

Google has been an unusual company from the start. Let us hope this new structural experiment yields good results as intended.

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