Happy birthday, Alphabet. You’re one year old, and no less confounding to the outside world.
One year later, Alphabet is a tale of two Googles
The highlights and lowlights from a year of the weirdest corporate structure ever invented.
Today marks the one year anniversary of the day Google co-founders Larry Page and Sergey Brin picked a new name and an audacious corporate structure in an attempt to spawn gigantic tech businesses in industries way beyond web search.
So far, the year has been great for Google. Unshackled from the unprofitable moonshots, its balance sheet and steady ads business growth has reassured investors.
It’s been bumpier for “Other Bets,” the hodgepodge, ever-evolving group of companies outside of Google that Page and Brin desperately want to behave like lean, world-changing startups.
This process, which includes imposing financial milestones and structures on several units that never had them before, is very much a work in progress.
Here are some highlights and lowlights from the first year:
- The business soars: Revenues topped 21 percent growth last quarter and operating margins keep getting fatter.
- More focus: One senior exec at Google recently explained a key change from the Alphabet reorg: Before, meetings cluttered with discussion of extraneous projects — the self-driving cars, medical doodads and internet balloons. Now, Google meetings are spent on Google alone.
- Porat appeases Wall Street: Not too long ago, investors were making fretful phone calls about Google’s abundant spending. Not anymore. Thank Ruth Porat, the former Morgan Stanley CFO who helped orchestrate the Alphabet reshuffle. “Implementing a competitive culture in what was becoming a behemoth — that’s critical,” said Colin Gillis, an analyst with BGC Partners. “Ruth Porat has been priced into the stock.”
- About that stock: It has climbed nearly 24 percent since August 10th of last year.
- The cloud cometh: Google CEO Sundar Pichai somehow convinced Diane Greene, a big name in the enterprise world, to come from Google’s board to run its new cloud unit. That unit seems, slowly but surely, to be becoming business hit number two after search ads.
- Taking on Oculus: Earlier this year, Google launched a virtual reality division, which is set to compete with Facebook to own both the devices and, perhaps more critically, the software behind the newfangled media.
- Hardware cohesion: Google finally brought together its disparate hardware parts under one roof. Now it has to ship its most significant product: A rival to Amazon’s surprise hit, Echo. And perhaps give us answers about the long awaited follow-up to Google Glass. The company has not provided any clarity into its strategy.
Other Bets
- Losses added: Alphabet poured $859 million into these units last quarter, nearly $300 million more than the same quarter last year.
- New equity: Employees at the non-Google company may soon have to get used to new stock packages — ones that aren’t tied to that soaring Google.
- Fiber breaks out of its shell: The high-speed internet initiative made some significant advances against the cable incumbents this year. More importantly, it revealed its potential ace-in-the-hole plans: Less fiber, more wireless.
- Nest hits a wall: One of the messier parts of the Alphabet had a difficult year, driven, in part, by some of the changes with the Alphabet structure. It now has a new CEO and its fate is remains unclear
- Verily cuts deals: The medical research, drug discovery and whatever-else arm spun out of Google X and cut some major partnership deals.
- Verily hits some snags: But it also faced some considerable damning scrutiny.
- Robot exit: After Page failed to find a chief for Google’s scattershot robotics team, it was moved into the X research lab. But a big part of it, Boston Dynamics — makers of the creepy-cool humanoid robots — went on the chopping block.
- The car stalls: Google’s self-driving car program has delivered some impressive tech milestones this year. What it has not delivered: Much of a business plan. The unit inked one deal with a carmaker, but has nothing more. Last week, its CTO and former director departed.
- Wealth: Page and Brin, the Alphabet chiefs and paramount shareholders, are richer than they were a year ago.
This article originally appeared on Recode.net.
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