from Hacker News

Google management shuffle points to retreat from Alphabet experiment

by ilyaeck on 12/7/19, 10:10 AM with 208 comments

  • by dzdt on 12/7/19, 12:50 PM

    As usual, I like Matt Levine's take. [1]

    Page and Brin ran Alphabet as a highly funded system of moonshot programs with near-infinite runway to make profits, which is unusual or unique. Basically it only worked that way because Page and Brin were idealistic visionary gazillionaires who were bored of thinking about the somewhat dirty business of selling targetted ads. With a more standard corporate governance under a common CEO with the google ad business, the expectation is a more standard corporate focus on making profits from its ventures in some defined timeline.

    But read Levine's version; it has detail and humor and insight I can't convey in a summary!

    [1] https://www.bloomberg.com/opinion/articles/2019-12-04/alphab...

  • by melling on 12/7/19, 12:51 PM

    Google’s attempt to be a modern day Bell Labs was the one thing that set them apart.

    Make a lot of money in advertising and spend some of it to invent the future.

    Without the second part, the entire company changes.

    We need another company to take the mantle:

    https://www.nytimes.com/2012/02/26/opinion/sunday/innovation...

  • by tim333 on 12/7/19, 1:30 PM

    >Placing the head of Google, which contributes more than 99% of Alphabet’s sales, at the helm of it could call into question the entire purpose of Alphabet

    I think this gives a false impression of the value of the non Google bits of Alphabet

    Currently the market cap of Alphabet is $924bn and "Waymo is worth about $105 billion" (https://www.bloomberg.com/news/articles/2019-09-27/waymo-val...) which would make that 11% of the valuation and probably other bits of other bets are worth something too.

  • by jfoster on 12/7/19, 12:58 PM

    Any investor in Alphabet for the long term would hope this isn't the case. It also doesn't make sense at a time when some of their moonshots are looking as though they could pay off. (Eg. Waymo)

    That said, it makes sense from the Page/Brin perspective, perhaps. It's a lot more difficult to 10x a company that's already worth $Y billion. Perhaps better to start the ventures separately in a way that is more exciting to investors.

  • by tyingq on 12/7/19, 11:45 AM

    If you're having trouble reading it: https://outline.com/pGLZ6U

  • by summerlight on 12/7/19, 9:23 PM

    Larry and Sergey still holds more than 51% of voting stocks. IMO, this is the only thing that matters unless they delegate all the decisions to Sundar. Although I expect "other bets" to be forced to evolve into more realistic businesses but no radical structural changes.

    And another thing to consider is that a significant portion of Alphabet's value already comes from potential growth of "other bets" (e.g. Waymo). The major driver of digital ads' growth has been cannibalization of traditional media ads budget. This is no way sustainable over the next decade so the growth will be eventually saturated. Unless Google can find another strong driver (Maybe Cloud?), it's pretty natural to keep investing "other bets".

  • by crazygringo on 12/7/19, 4:58 PM

    It has always seemed strange to me that Google become part of Alphabet, instead of vice-versa.

    It seems like a much more honest approach would always have been for Google to be one company... for Alphabet to be a separate one... and for, say, Google to own 33% of Alphabet, for Larry and Sergei personally to own another 33%, and outside investors to own the rest and be the ones principally determining its own, separate valuation.

  • by giancarlostoro on 12/7/19, 2:14 PM

    If they had assigned a new CEO for Google it could of not looked this way. However this looks bad especially when you hear "We the People" talk about how some of these tech giants need to be broken up. This is not going to help them. I wonder who the next Bell will be.[0]

    [0]: https://en.m.wikipedia.org/wiki/Breakup_of_the_Bell_System

  • by sys_64738 on 12/7/19, 8:45 PM

    Google is simply an ad company with a search engine that monetizes all your data. They exist to serve ads. The rest is window dressing.

  • by neonate on 12/7/19, 8:03 PM

  • by partingshots on 12/7/19, 11:29 PM

    This is why without a technological background or acumen, you’ll never be able to find the investments that succeed based on innovation.

    Because there’s no financials to analyze, the companies that succeed this way basically go from making nothing / losing money for many years before all of a sudden becoming exponentially profitable. The signal doesn’t exist on the financial side, which is why so many people in Wall Street often fail so badly when valuing hard technology companies.

    It’s why a company like Waymo will in 10 years be valued more than the entirety of Google, yet many in finance won’t even have an inkling of this in the present day.

    Also, by the way, this is why I believe the venture capital industry in Silicon Valley was able to uniquely succeed in the beginning due to a heavy concentration in extremely technical investors compared to the rest of the United States and the world in general (i.e. the VC capital of the world is in Silicon Valley and not New York for a reason).

  • by HSO on 12/8/19, 9:21 AM

    That Google pretty much remains a one-trick pony after billions of dollars thrown against the wall speaks volumes about the glorification of "success" (or misattribution thereof) and the value of all the hagiographies in its wake.

  • by m23khan on 12/7/19, 3:21 PM

    I wonder if Google’s project Sidewalk Labs in Toronto would be affected as well.

  • by buboard on 12/7/19, 1:07 PM

    sounds like a good time for a "traitorous 8" group from google's vast AI teams to jump out of advertising and start monetizing their plans.

  • by sunstone on 12/7/19, 5:17 PM

    Alternatively it could be seen as retreating from the Larry and Sergey experiment.

  • by irrational on 12/7/19, 1:35 PM

    The fact that you linked to an amp version of the page, instead of the real link, is deeply disturbing to me.

    https://www.bloomberg.com/opinion/articles/2019-12-04/alphab...

  • by varjag on 12/7/19, 11:28 AM

    First the Reader, now the Alphabet.