For a hundred years, Berkshire Hathaway was a simple Nebraskan textile company known as the Valley Falls Company. Today, it’s a multinational conglomerate that owns everything from major insurance companies to apparel brands to airlines and fast-food chains.
Alphabet began as a simple search engine called Google (NASDAQ: GOOG) in 1998. It branched out into advertising, video media, mobile operating systems, navigation systems, application development environments, smart home hardware, and fiber optic communications, to name just a few.
At least, that’s how the story is going to be told in the future.
This week, Google CEO Larry Page announced that his company is restructuring so that it can better handle the diverse portfolio of initiatives currently housed under the Google brand.
Under a new parent company called Alphabet, Google will get to stick to its Internet-focused business model, while Nest Labs will focus on the smart home and the Internet of Things. All of the dozens of Google-owned properties will be part of the new Alphabet holding company.
This change to Google’s structure will be executed as a merger, and it will mean two tremendous changes…
Firstly, the entire Google executive staff is essentially leaving Google to become the executive staff of Alphabet. This means Sundar Pichai, who has served as the Senior Vice President of Products at Google since 2004, will become CEO of Google, while Larry Page will assume the role of CEO of Alphabet.
Secondly, GOOG and GOOGL are going away.
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According to the company’s 8-K with the SEC, each share of each class of Google stock will automatically convert into an equivalent corresponding share of Alphabet stock. It’s becoming a wholly owned subsidiary of Alphabet.
Like Berkshire Hathaway, Alphabet is not going to be a consumer brand. Instead, it will be a corporate identity that is a home to consumer brands. This turns “Google” into a conglomerate without turning Google.com into a conglomerate.
This represents one of the single-biggest changes to the upper echelon of tech investing. Be ready for it.
Good Investing,
Tim Conneally
For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.
