Google’s decision to rebrand came as a shock. The world’s third most valuable brand would become cog within a larger machine, henceforth known as ‘Alphabet’. But why?
Writing in Marketing Magazine, Jim Prior waxes lyrical about the value of the Google brand, and laments Alphabet’s comparative failure to capture "the specialness of the corporation, nor its ambition, long-term view, empowerment, [or] scale". What Mr. Prior fails to realise is that this is exactly the point.
Google had begun to represent the enormous, multifarious and sometimes unfathomable visions of founders Larry Page and Sergey Brin. Alphabet is the clean and simple organiser into which we now see this bundle of ideas neatly divided. As easy as ABC. No need for EU antitrust cases here. Even if these persist, the negative PR can be contained. Google is a separate subsidiary now.
Winning over Wall Street
Investors were also questioning Google’s "narrative" and demanding greater transparency, particularly regarding the cost of ambitious new business ideas.
Under the Alphabet regime, "G is for Google", which remains in the capable hands of Sundar Pichai. Other, more speculative ventures will be run independently – each with its own chief executive, reporting separately.
SIt’s no coincidence either that Larry Page compares his business approach to that of Warren Buffet, whose Berkshire Hathaway conglomerate successfully combines numerous industrial assets and investments. Page believes he can do the same, and wants Wall Street in agreement.
It looks like the plan is working already. Google shares jumped 7% after the rebranding, and the media is awash with analysts and investors praising the new "transparent" structure.
Freeing creative minds
Meanwhile, Page and Brin are free to pursue their speculative ventures without such intense media and analyst attention – a benefit they’re not hiding.
In his blog post announcing the rebrand, Page reiterated their founding cry: "Google is not a conventional company. We do not intend to become one", adding that "Sergey and I are seriously in the business of starting new things".
What’s changed is that investors can see what’s being spent on these ventures, and a clearer route to market for the successful ones. Consumers, too, no longer see one name looming large – they see lots of exciting ideas run by independent tech leaders.
Well played, Alphabet.