Monday, August 10, 2015

Google Is Restructuring Under a New Company Called Alphabet

Larry Page, co-founder and chief executive of Google. CreditJeff Chiu/Associated Press
SAN FRANCISCO — Google is taking a leaf out of Berkshire Hathaway’s corporate structure, in a signal that the Internet company has become too sprawling and unwieldy.
Larry Page, co-founder and chief executive of Google, said in a blog post on Monday that he was creating a new company named Alphabet that he would run along withSergey Brin, the other co-founder of Google. Alphabet is to act as a parent holding company, with several other companies operating under the structure, including Google, a company focused on health efforts called Life Sciences, and a company focused on longevity called Calico.
Under this structure, Google will be run by Sundar Pichai as chief executive; Mr. Pichai has been Google’s senior vice president in charge of products.
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“For Sergey and me this is a very exciting new chapter in the life of Google — the birth of Alphabet,” wrote Mr. Page in the blog post. “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.”
The structure is reminiscent of that of Berkshire Hathaway, which is Warren Buffett’s industrial empire. Mr. Buffett has built Berkshire Hathaway into a giant conglomerate that includes railroads and Fruit of the Loom underwear.
For Mr. Page, the decision to shake up Google’s structure is driven by the desire to reinvigorate the company with an entrepreneurial culture and to give operating divisions more leeway to make their own decisions.
“We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes,” Mr. Page wrote. “But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”

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