It's the final lap of 2019 - we are less than thirty days from beginning a new decade. While many folks may be thinking of the joys of the holidays or upcoming vacations and trying to slow down - the same is not true for tech. In fact, the tech news train just keeps on coming.
This week's spotlight - the announcement that Google's founders - Sergey Brin and Larry Page - are stepping down as the leaders of Google and Alphabet respectively. Except it's not really news. Well, at least from this columnist's perspective.
Why? Revisiting a phrase I used several blogs ago, you need to "follow the breadcrumbs." If you did, you'd see the founders starting laying the foundation to depart when they created "Alphabet."
2015 represented a pivotal year for Google as the following occurred:
Alphabet, the parent company of Google, was founded
Sundar Pichai was named the CEO of Google
The last year that Larry Page gave a public interview
So, in reality, it's taken four years to put the pieces in place for the Google founders to depart from the day to day operations (do not forget they own a majority stake in the company).
In reality (and many sources will agree), Brin and Page have not run the Google or YouTube that a majority of consumers use daily in years. Those products have been under the watchful eyes of Sundar Pichai (the heir apparent of Brin and Page) and Susan Wojcicki respectfully.
You may be wondering - what exactly have Brin and Page been doing the past four years then? Great question - the answer is - working on everything else. In case you've forgotten, Google has made a LOT of investments in the past decade with the cash from their search and advertising business -
Google Fiber
Verily
Sidewalk Labs
Calico
GV (aka Google Ventures)
CapitalG (aka Google Capital)
Jigsaw
Deepmind
Waymo
X
Side note - Business Insider put together an excellent write-up on all of the above mentioned Alphabet companies. For example, Calico is interested in elongating the human lifespan.
Brin and Page are not directing every one of these business units but they do have their fingerprints on many of them (i.e. X, Calico and Waymo).
It's important to call out that none of the above mentioned projects have contributed significantly to the bottom line of Alphabet's revenue. In fact, they continue to lose money - in the last quarter, these business units lost a combined $941 million.
Alphabet stays afloat because of Google, one of the many companies underneath Alphabet. As The Wall Street Journal reported earlier this week -
"Google, which includes search, YouTube, the Chrome web browser, hardware and much else, reported $40 billion of revenue in the past quarter alone, with a 23% margin. These areas draw in more than 99% of the parent company's staggering $155 billion in annual revenue."
Revisiting my opening statement, what I find truly interesting is not the retirement announcement of Brin and Page - it's what happens with Pichai now in the driver's seat.
If you looked at Pichai's fifteen year history with Google/Alphabet one thing becomes abundantly clear…Pichai's entire career has been spent with Google. When Pichai entered Google in 2004 it was to work on the Chrome browser. Since then, he's never spent time outside of the Google bubble. To be fair, this bubble is pretty extensive and covers the following areas:
Chrome browser
Pixel phone
Google Home
Google Play
Google Glass
Nest
FitBit
But it's an important distinction from him and the founders. He does not have strong ties to their moonshot projects and he may have to be more harsh on their lack of revenue generation or room for expansion.
An excellent example is Google Fiber which launched in 2012 with much fanfare and expanded to fifteen cities. The company sought to provide high speed internet and compete against the establishment of cable giants. In the seven years since its launch, the service has hit multiple roadblocks which included - litigation from AT&T and Comcast, layoffs and disinterest from the founders (who moved onto other projects). At this point, the direction of the company is unclear as it's not expanding to new cities. It's not shaking up the industry. It's languishing.
In the next decade, Pichai will have to decide what company Alphabet needs to become. And he may come to the conclusion that some of these moonshots are no longer needed. That's what I'm most interested to see. Will Pichai allow the company to continue working the way it has or will he start to prune back on the investments like Google Fiber and return to the core competencies?
Share your thoughts below.
