Google Founders give up being Technology Buffets
The resignation of Google’s founders ends a multi-year project to transform the company into a Berkshire Hathaway of technology, with the adoption of Warren Buffett’s non-interference management style.
On Tuesday, Google’s founders completely dismantled this structure by appointing Pichai as CEO of Google and Alphabet. Larry Page and Sergey Brin created the Alphabet Inc. holding company in 2015 to give themselves more time to invest in new tech businesses and handed responsibility for Google to Sundar Pichai was already busy running Google’s massive digital advertising business and responding to investigations by competition regulators, politician attacks, and employee protests. Autonomous cars, health care projects, digital cities, delivery drones, and Internet provider balloons are now Pichai’s problems as well.
For many in the company, Alphabet’s purpose and structure has never really been clear. Putting Google’s president, who accounts for more than 99% of Alphabet’s revenues, ahead of the holding company could question Alphabet’s entire purpose, a former Google senior employee said. Another former Google executive said the move should put even more pressure on Pichai. The two executives declined to be identified.
From a financial standpoint, it was a win for Alphabet as it showed investors that the company was not spending too much on ambitious exploratory projects, highlighting Google’s enormous profitability.
But operationally, the structure is often tumultuous, with difficulties in building a business remotely close to Google in size and scope. Collectively, the company’s “other bets”, including Waymo’s standalone car unit and healthcare technology Verily, lost $ 3.4 billion in 2018 and nearly $ 1 billion last quarter.