Alphabet is still figuring out how to be a conglomerate

https://backchannel.com/alphabet-learns-that-change-isnt-as-easy-as-abc-e24df2673639#.8ype9626i

by mirandak4 • 10 years ago

192 91 10 years ago

geodel• 10 years ago

Well, I am not sure how much change was expected in 1 year. Was it that all other projects start posting Google level revenues or profits?

profeta• 10 years ago

Summary: google is still google. It still have tons of heads and all the profit remained there (android, youtube, etc). Alphabet is just a place for the litigation-prone products, such as Nest and self driving cars.

SilasX• 10 years ago

Yes, it's still Google. Who actually calls it Alphabet in everyday speech?

zitterbewegung• 10 years ago

Everyone in finance seems to call it that but thats pretty much the only ones.

will_brown2• 10 years ago

I do...I no longer tell people Google it, I now say Alphabet it and once I feel they are sufficiently trained I simply say bet it. Try it and watch it catch on to the people around you.

patmcguire• 10 years ago

Lol'd at "(Alphabet better be careful — if things get even better, no one will work there anymore)"

dragonwriter5• 10 years ago

That's a whole lot of words to say almost nothing, and to confuse unrelated things (like market cap and revenue, as in: "Wall Street seems to appreciate the Alphabet structure. In the last year, the stock price has risen over a hundred points and reached a record high this year, at a market cap of almost $550 billion. These revenues virtually all come from the Google division, of course.")

[EDIT: The article has been edited to make the particular paragraph quoted above less nonsensical.]

damonpace• 10 years ago

That's exactly where I stopped reading.

nostromo• 10 years ago

You're taking that out of the context of the article. The author clearly knows the difference.

Alphabet is a weird company. Only one part of it makes significant profits: Google, whose revenues are humongous. [...]
Wall Street seems to appreciate the Alphabet structure. In the last year, the stock price has risen over a hundred points and reached a record high this year, at a market cap of almost $550 billion. Its revenues virtually all come from the Google division, of course.

dragonwriter5• 10 years ago

That quote is not complete nonsense, but it wasn't the text at the time I read it (which I cut and pasted in my post, you can compare.)

Its been rewritten to be somewhat less nonsensical (though the last sentence of that paragraph is now both redundant with other parts of the article and a non-sequitur in the paragraph it is included in.)

BinaryIdiot4• 10 years ago

Looks like the author wanted to write something, anything about Alphabet since today is the one year anniversary but there isn't much substance in here.

I would agree with some of the assertions that yes Google is still Google and Alphabet seems almost non-present but I don't know if they have finished their integration / breaking apart of groups or really much of anything. I still think Android and some of the other parts of Google should probably be split out but I have no idea if that's the best choice for them or not.

I would love some more information on the whole formation of Alphabet. This, unfortunately, is not that article.

Jabbles• 10 years ago

The only metric the author proposes for measuring success is the stock price, which as they point out, is up.

patrickaljord2• 10 years ago

They cannot split out Android or Youtube from Google for regulatory reasons (but not only), specially in Europe. The thing is, both Android and Youtube rely on its ads business and users need to accept the privacy policy of sharing their search history accros all platforms so that google can optimize ads for them. Splitting Android, Youtube and Google Search into different companies would make it very hard for Google to share user data between the 3. Also, it makes sense to keep them together given that they are still highly integrated, Android has great Youtube integration and Google Search integrates Youtube videos directly in results and of course Google Search is at the center of Android (Google Now etc). It would be more troubles than necessary to split them all.

BinaryIdiot4• 10 years ago

As far as regulations / laws go it would not surprise me if that makes it impossible but as far as technically? I don't buy it. I'm not sure what their current infrastructure looks like but it was conveyed to me that each group basically "consumes" the others through various types of APIs.

It would be interesting if they explored it at least. In my opinion anyway.

elmigranto• 10 years ago

Android has great Youtube integration

Can you give some examples? I'm mostly interested in what Android has compared to iOS?

kalleboo• 10 years ago

Google Search integrates Youtube videos directly in results

It also integrates results from Dailymotion and others. YouTube would probably be the easiest property to spin out if it wasn't for the interest tracking data sharing.

simonpure• 10 years ago

Eric shared some of his thoughts shortly after announcing Alphabet at Stanford's Technology-enabled Blitzscaling class if you're interested in some of the motivation and types of problems they're trying to solve with it [0]

[0] https://youtu.be/hcRxFRgNpns?t=1h2m9s

BinaryIdiot4• 10 years ago

Thanks that was pretty interesting! Seems like a good way to do lots of things (don't think about it too much just start and figure it out as you go).

ufmace2• 10 years ago

It might make sense from an organizational point of view, but not from a business point of view. I'm pretty sure that the main reason Android exists is to ensure the dominance of Google Search, and the ads that it serves, along with all of the other Google services and their ads. Or more precisely, to make it impossible for Google services to ever be cut out of the majority of the mobile market based on the whim of another company. Even the theoretical possibility of that happening would make Google highly subservient to whatever company or companies had the power to do that.

Same with Youtube, Maps, etc. They exist to preserve the dominance of and prevent other companies from avoiding Google's key moneymaker, which is ads on searches. Thus allowing them any real independence would destroy their reason for existence.

ChuckMcM3• 10 years ago

"...operating at a level of stealth unusual even for the normally secretive firm."

I chuckled at that. When I worked there I participated in no less than a dozen "super secret" projects. Stealth was the standard operating mode. In engineering I attributed it to the somewhat interesting way in which recognition and promotions were handed out, which was to say if someone else got word of your idea/project and executed on it more quickly they could declare victory and take the glory. So keeping things secret until success was assured was the "smart" play. And it didn't hurt than when things went south you didn't have to take the blame since nobody knew you were working on it. A win-win situation as they say.

Levy makes it sound like a big deal they were being super secret but really? I suspect it was keeping things that might, or might not, happen in the future from becoming part of the questions at a TGIF meeting.

What the re-organization has done has put a spotlight on how much Alphabet is a one trick pony. It's a good trick, and a strong pony, but it doesn't translate into other markets. And several other organizations have been training their ponies hard and are taking away that specialness.

The current road Alphabet is on doesn't seem to me to end in a happy place, so I continue to watch them to see if they will find a way to turn off it.

marcofloriano• 10 years ago

"The current road Alphabet is on doesn't seem to me to end in a happy place"

I think it's a natural (good) road.

Alphabet should be a good opportunity for Google owners to invest in outside business with a lot of potencial, like Space X. When you are "just" Google, it's hard from a business view point to invest in outside business. It's more like acquisitions and fusions. But with a strong group like that, you can make more moves with investors money. And Alphabet have a lot.

If your bets isn't giving you good results, let's start put some coins outside. But it's just a teory (don't have actual facts to support).

samfisher83• 10 years ago

In finance class we learned it should be investors who make that decision not google. Therefore they could just break it into google and all its other companies so the investor can invest what they chose to. If they want to invest in risky bets they can. If they want to invest in core google assets they can.

The issue is other than ad words their other bets are not nearly as profitable.

6stringmerc3• 10 years ago

Very interesting to read your "one trick pony...strong pony" perspective, because it has always been the one constant 'red flag' about watching their growth and expansion into new and cool things. The up-and-down, perfectly natural pattern of experimenting and killing off bits here and there that don't work makes sense for any business. It's just that I don't have an easy time with, um, I guess 'aura' is the right word, of crazy-wild-future-whoa sentiment. I think they can do great things, but growing pains are real in all sorts of businesses, not just the tech sector.

ChuckMcM3• 10 years ago

What gives me pause is that if "the smartest engineers on the planet"[1] are working at Google, why aren't we reading about Alphabet Space Ventures, or The Alphabet Social Network, or the Alphabet Smartphone company, or the Alphabet Casual Hotel company, or the Alphabet Movies and TV on Demand company, or the Alphabet Electric Car Company. It goes on of course. And the pat answer is that innovation can happen anywhere. But I don't accept that. Google has tried and failed to make phones (Motorola/Android), tried and failed to make social networks (Orkut/Plus/...), tried to make a video business (Youtube Red), Etc and they have been miserable at it.

It hasn't been for lack of spending money, and it hasn't been for lack of "brand reach" or customer acquisition. It reminds me Sun's inability to make anything other than a Workstation when it needed to fight Microsoft on the engineering desktop. Sun was organizationally incapable of winning that fight, and Scott McNealy was unwilling or unable to see the changes that needed to be made to empower the company to do that. How? I think you have to look to companies that have been able to make profitable businesses out of new technologies or products that were distinctly different than their initial success. I don't see Google doing that effectively, and the people who I think were on track to make the changes that would have done that, people like Chris Urmson, leave the company (as the article points out). How is it the organization expells the very people it needs to retain in order to survive?

There is an apocryphal story of the #1 traveling circus that the author saw as a child, and when he finds it again as an adult it is bankrupt. He asks how that could be and the ringmaster tells him that the star of the show would never let any acts exist that would steal any part of the limelight or glory from his act, and then when the star died and there were no other acts and no reason for people to attend the circus.

[1] From some recruiting hyperbole that they spammed out a while ago on LinkedIn.

cmrdporcupine• 10 years ago

My wife used to work at Apple. I work at Google now. Compared to the former, secrecy at Google is nothing. Apple takes it to a whole other level.

nickpsecurity• 10 years ago

They even have a Gestapo. I said screw that and never even applied.

http://gizmodo.com/5427058/apple-gestapo-how-apple-hunts-dow...

rdtsc• 10 years ago

I think one of the underestimated functions of this kind of secrecy is to make participants feels important and better about themselves.

"This is super-secret, therefore important. I was picked to work on important stuff, so I must be important".

This goes for everyone in the chain including managers "I am managing a team working on a super-secret project, I can't tell you about". That sounds a lot better than "I am managing a team which makes Uber but for dogs".

I suspect this is partly also why governments like to classify everything, even stuff that doesn't need to be -- it provides a level of importance and adds ceremony to everything. Which, in turns makes everyone involved feel important.

nostrademons2• 10 years ago

Also, to avoid making them feel worse about themselves when what they're working on doesn't work out, or when their coworkers are skeptics.

My experience was a bit different than ChuckMcM's; I was at Google a couple years later, and my perception was that it was a lot more open internally than any other company I've seen. But when projects were secret or semi-secret, it usually seemed like it was so that the team members could take risks without fear of criticism or ridicule. It's been my observation that for each famous product Google has released, there is some famous person inside Google who tried to kill it. Secrecy is a form of corporate anti-inflammatory, where it's a way of overcoming the natural immune response against any idea that is new and different.

danbolt• 10 years ago

I once met a developer who apparently worked on "Uber but for dogs", in the sense of finding dog walkers, groomers, etc. He seemed really humble and open about his work.

guelo• 10 years ago

I wonder how many hundreds of billions of dollars all those worthless ponies like Youtube, Maps, Gmail, Android, Chrome, Docs, etc. would fetch if they were sold on the open market.

blahi• 10 years ago

Not much because none of them are profitable separated from Google.

e40• 10 years ago

I attributed it to the somewhat interesting way in which recognition and promotions were handed out, which was to say if someone else got word of your idea/project and executed on it more quickly they could declare victory and take the glory.

Wow, that sounds like a toxic environment, and I would hate to work at a place like that.

kbenson3• 10 years ago

I don't think he necessarily meant within the same company. If Apple or Amazon or some startup do it first, then your project is no longer something new, it's following what's been done already.

bane• 10 years ago

I think part of the problem was the unclear and frankly, half-assed way it distributed itself. Some of Google's subsidiaries became Alphabet holdings, but very little of Google broke up into separate companies. When it was first announced many people were thinking "oh, okay, S is for Search, Y it for Youtube, X is for X-Labs, M is for Maps, okay maybe each of those should be separate concerns".

But instead it's just Google, and a bunch of highly experimental, low return, high risk other random companies with no particular strategy. How many labs are separate Alphabet companies? Why not just 1 lab that's supported by R&D concerns from the rest of the conglomerate? What isn't L for "Labs"? Does GV really need to be a separate company? Why isn't it just part of Google? Or why isn't GV "V for Venture?" That's okay, they also have Jigsaw, Google Capital and probably a bunch of internal investment arms.

Do they really need two genomics/life sciences companies?

Why are there so many different video companies, but youtube stays part of Google?

The approach is entirely disorganized and without any seeming strategy.

dragonwriter5• 10 years ago

Do they really need two genomics/life sciences companies?

Presumably this is a reference to Verily vs. Calico. AFAICT, yes; or at least the two have distinct enough missions that it makes sense for them to be separate efforts. Calico is a very long payoff window effort starting with basic research aimed at lifespan enhancements, Verily is a shorter payoff timeline (but still fairly long window, given medical device, etc., commercialization timelines) medical device and treatment development effort.

swyman• 10 years ago

I thought Fadell leaving was universally viewed as a positive...

adamb_• 10 years ago

I wonder if breaking up a monolithic company like Google has similarities to breaking up a monolithic legacy Java EE app :P

SmellTheGlove• 10 years ago

I'm not really sure what the intent is here. Alphabet is a holding company and you rarely hear anything about them. Outside of the annual shareholders meeting, is anyone really writing about what Berkshire Hathaway is doing in Omaha day to day? No, they write about their businesses. There's really not much to add to the conversation regarding the holding company itself, since it's really a top level entity meant to compartmentalize business units, often for risk purposes.

dimino• 10 years ago

I don't understand why there's so much hay being made over Alphabet's reliance on Google to fund its other ventures. Wasn't that the whole fucking point, to provide a way to separate the moonshots from Google, to ensure Google's profitability gets reported accurately, and not hit by the losses from the other projects?

Furthermore, aren't these project designed and expected to not be profitable in the medium term, with the hope/prayer of huge, life altering payoffs for humanity "eventually"?

linkregister2• 10 years ago

Yes, the extent to which Alphabet is pursuing this is rare among other large companies. I love this R&D-heavy model. And so do many GOOG shareholders.

aresant• 10 years ago

Interesting that the first supporting paragraph on the "turmoil" this is causing is Tony Fadell & Bill Maris leaving.

IMO Those are red herrings:

1) Fadell was extremely unpopular at the time of his departure after several missteps and lack of product releases. He was going to be shown the door regardless.

2) Bill Maris explanation is straight forward - he's super rich, just started a family, is sick of being on airplanes and phone calls 24/7 and literally CRUSHED IT as a VC on the weight of his Uber investment alone.

ocdtrekkie3• 10 years ago

There's a lot of others though.

- Verily, formerly Google Life Sciences, is having similar CEO problems as NEST. Word has it Verily has a whole lot of nothing to show for all the money they've blown so far.

- Chris Urmson just left the Self-Driving Car program. From my understanding, of whatever the Self-Driving Car program allegedly managed to do (debatable), Urmson was pretty key in them doing it.

- Google Fiber just backed out of plans to dig fiber for a whole bunch of cities they said they would, and are now looking at some cheaper wireless broadcast option.

Also, I am almost certain that Tony Fadell was actually "fired". Being fired is always phrased as "resigning" when you're that rich. But yeah, NEST has been a paperweight since Google bought it. The only thing they've done is rebranded Dropcam. And apparently ruined the Dropcam team while doing it.

kctess5• 10 years ago

They spelled "Verily" wrong in the 3rd paragraph (they wrote "Verity"). That's where I stopped reading.

Animats• 10 years ago

Self-driving cars are a great concept and will make money, but reality is starting to set in at Alphabet. Their destiny is not to disrupt the auto industry. Their destiny is to be an auto parts supplier in Novi, MI. Google is going to be selling a set of components to auto manufacturers for about $1000-$3000 to make a car self-driving. Self-driving will be an option the customer orders at the dealership, along with other infotainment options.

This is kind of a letdown for Google's people. Less going to TED and SXSW, more going to the Automotive Parts Suppliers Conference at the Marriott in Troy, Michigan. This may explain some of the turnover.

ghaff• 10 years ago

And basically assistive driving systems for the next decade or so with any sort of "disruptive" self-driving most likely further out. And this is something that all the major auto manufacturers are working on to greater or lesser degrees.

petra• 10 years ago

Not necessarily. If the end goal is a self driving service , Google can set up a revenue sharing deal between themselves , the car companies and the service company - or any other creative deal.

They did something similar in Android btw.

Alphabet is still figuring out how to be a conglomerate

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