What Google’s Reinvention Means Is Far From Clear

NYT BitsWednesday, August 12, 2015

 

Nest, which used to be an independent company, has always been a little different from the other parts of Google.

It makes Internet-connect devices like smoke alarms and a thermostat. It is based in Palo Alto, Calif., just up the road from Google’s main campus in Mountain View. More interestingly, it has always been run like an independent unit: Employees have kept their Nest email addresses, Google’s famous perks are not quite so easy to find around the office, and departments like marketing and legal report to Nest’s boss, Tony Fadell.
In Nest, we have a model for what Google’s many pieces could look like when the company turns into a conglomerate called Alphabet: a quasi-independent group with its own boss, its own culture and, to a certain extent, its own destiny.

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Or not. Google has not yet explained what Alphabet will look like or how financial resources will be shared. It is assumed that the part that is still called Google will continue to generate the vast majority of revenue and profit. But it is unclear how exactly that money will be funneled into Google’s needier Alphabet siblings, like the Google X incubator for innovations like self-driving cars (assumed to be a project more than a few years from going mainstream) and Calico, which does biotechnology research focused on aging.
It could be years before we see how the various parts of this new company work or do not work together. Will it be more like Berkshire Hathaway, General Electric or one of the Internet “keiretsu” that came and went with the dot-com boom? Wall Street is bullish so far: Google’s share price rose more than 4 percent in trading on Tuesday.

 

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