On Monday, Google broke the internet when it announced that it was reorganizing itself into a holding company structure called Alphabet.
That means that Google, Inc. will now become a subsidiary, along with many other companies, of Alphabet Inc. and all shares of Google will automatically convert into the same number of shares in Alphabet.
This is huge, but also something that was likely inevitable given the passions of the founders. Apparently Larry Page has been thinking about this move for years.
As it stands pre-Alphabet, Google (with its main internet products) is basically a cash cow funding all of Google’s other experiments. But this muddied the waters and made it difficult for investors to clearly see how much the main internet products were making and how much the founders were spending on self-driving cars, delivery drones (Project Wing), and other new ideas.
Now everything will be separate.
But what’s really exciting about the reorganization is that it sets the stage for Alphabet/Google – which is arguably already one of the most important companies in the world – to become even more impactful in a wide variety of industries and disciplines, some/many not traditionally associated with tech. Each wholly owned subsidiary will have their own CEO and the founders rightly believe, I think, that this overall structure will afford them more “management scale.”