As Sergey and I wrote in the original founders letter 11
years ago, “Google is not a conventional company. We do not intend to become
one.” As part of that, we also said that you could expect us to make “smaller
bets in areas that might seem very speculative or even strange when compared to
our current businesses.” From the start, we’ve always strived to do more, and
to do important and meaningful things with the resources we have.
We did a lot of things that seemed crazy at the time. Many
of those crazy things now have over a billion users, like Google Maps, YouTube,
Chrome, and Android. And we haven’t stopped there. We are still trying to do
things other people think are crazy but we are super excited about.
We’ve long believed that over time companies tend to get
comfortable doing the same thing, just making incremental changes. But in the
technology industry, where revolutionary ideas drive the next big growth areas,
you need to be a bit uncomfortable to stay relevant.
Our company is operating well today, but we think we can
make it cleaner and more accountable. So we are creating a new company, called Alphabet (http://abc.xyz).
I am really excited to be running Alphabet as CEO with help from my capable
partner, Sergey, as President.
What is Alphabet? Alphabet is mostly a collection of
companies. The largest of which, of course, is Google. This newer Google is a
bit slimmed down, with the companies that are pretty far afield of our main
Internet products contained in Alphabet instead. What do we mean by far afield?
Good examples are our health efforts: Life Sciences (that works on the
glucose-sensing contact lens), and Calico
(focused on longevity). Fundamentally, we believe this allows us more
management scale, as we can run things independently that aren’t very related.
Alphabet is about businesses prospering through strong leaders and
independence. In general, our model is to have a strong CEO who runs each
business, with Sergey and me in service to them as needed. We will rigorously
handle capital allocation and work to make sure each business is executing
well. We'll also make sure we have a great CEO for each business, and we’ll
determine their compensation. In addition, with this new structure we plan to
implement segment reporting for our Q4 results, where Google financials will be
provided separately than those for the rest of Alphabet businesses as a whole.
This new structure will allow us to keep tremendous focus on
the extraordinary opportunities we have inside of Google. A key part of this is
Sundar Pichai. Sundar has been saying the things I would have said (and
sometimes better!) for quite some time now, and I’ve been tremendously enjoying
our work together. He has really stepped up since October of last year, when he
took on product and engineering responsibility for our Internet businesses.
Sergey and I have been super excited about his progress and dedication to the
company. And it is clear to us and our board that it is time for Sundar to be
CEO of Google. I feel very fortunate to have someone as talented as he is to
run the slightly slimmed down Google and this frees up time for me to continue
to scale our aspirations. I have been spending quite a bit of time with Sundar,
helping him and the company in any way I can, and I will of course continue to
do that. Google itself is also making all sorts of new products, and I know
Sundar will always be focused on innovation -- continuing to stretch
boundaries. I know he deeply cares that we can continue to make big strides on
our core mission to organize the world's information. Recent launches like
Google Photos and Google Now using machine learning are amazing progress.
Google also has some services that are run with their own identity, like
YouTube. Susan is doing a great job as CEO, running a strong brand and driving
incredible growth.
Sergey and I are seriously in the business of starting new things.
Alphabet will also include our X lab, which incubates new efforts like Wing,
our drone delivery effort. We are also stoked
about growing our investment arms, Ventures and Capital, as part of this new
structure.
Alphabet Inc. will replace Google Inc. as the
publicly-traded entity and all shares of Google will automatically convert into
the same number of shares of Alphabet, with all of the same rights. Google will
become a wholly-owned subsidiary of Alphabet. Our two classes of shares will
continue to trade on Nasdaq as GOOGL and GOOG.
For Sergey and me this is a very exciting new chapter in the
life of Google -- the birth of Alphabet. 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! We
also like that it means alpha-bet (Alpha is investment return above benchmark),
which we strive for! I should add that we are not intending for this to be a
big consumer brand with related products--the whole point is that Alphabet
companies should have independence and develop their own brands.
We are excited about…
- Getting more ambitious things done.
- Taking the long-term view.
- Empowering great entrepreneurs and companies to flourish.
- Investing at the scale of the opportunities and resources we see.
- Improving the transparency and oversight of what we’re doing.
- Making Google even better through greater focus.
- And hopefully...as a result of all this, improving the lives of as many people as we can.
What could be better? No wonder we are excited to get to
work with everyone in the Alphabet family. Don’t worry, we’re still getting
used to the name too!
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