- Posted by sanjay
- On August 11, 2015
- 1 Comments
- alphabet, google, larry page, sergey brin
Ok, no, in case you were thinking that Brilliance is in fact, Brilliance Inc. which is the umbrella of umbrellas holding Alphabet within, or it is Bezos’ answer to Alphabet, Inc., etc., those are not the cases!
Brilliance is what I feel when I see some of these entrepreneurial evolutions, such as the story of Google.
First things first though, in case anyone’s coming in late on this.
Google today announced a restructuring of their businesses, where they now have a holding company / umbrella entity called Alphabet, and within which reside the various ventures they are into, including of course, the immensely successful and profitable cash cow, Google itself.
Again for those who are not aware, besides running the search engine and the allied businesses of YouTube, Android, advertising, etc., over the years, Google has ventured into newer areas, like home thermostats (Nest), human longevity research (Google Ventures), driverless cars, and what not.
Obviously the hugely profitable search and advertising businesses have funded these new ventures, thus far, these have been reported under the one common entity of Google.
With this new structuring, I see a whole lot of benefits emerging:
- Google stands alone as a core business. It will have a clean balance sheet, and will not have to account for subsidising other ventures / investments. Sundar Pichai, in that sense, will lead a strong targeted growth, on the cash cow machine, I presume.
- The other businesses will see a sense of independence and not be subsumed by the overpowering Google effect. They will have independent CEOs, who most certainly will have their own goals that they can now pursue without ambiguity.
- These new businesses will also be able to create their own branding, independent of the (again) overpowering brand effect of Google.
- And with adequate funding and freedom, I am certain that many of these will become large entities sooner now. At this time, the Alphabet umbrella may look hugely skewed with perhaps, a 99% Google share and everything else accounting for a sum total of 1%, say. I am certain that Page and Brin don’t see this kind of a skewed pie-chart over time. And freeing these ventures up, should enable high growth on many of these.
All in all, Google has reported great earning and the shareholders have been happy, as can be seen from the nearly 25% rise in the stock price over the year. And yet, when companies experiment or invest capital into non-core businesses, investors don’t always like it. However, in case of Google (or now, Alphabet), the investors seem to approve wholeheartedly. Even this announcement was greeted with a 6.2% rise in stock prices, late on Monday!
So is my sense of brilliance only about the restructuring aspect? No, it goes beyond that. But for that, let me go back a little bit.
I do not idolise anyone or anything easily. I appreciate good work, but not idolise very quickly. And yet, I admire brilliance when I see it.
And I can say that, my addiction to podcasts over the years, has brought me “close” to brilliance, as I heard many a successful entrepreneur narrate their story, in their own words.
Several of them were top of their classes at Stanford, MIT and such places, perhaps doctorates. In short, academically supreme. And of course, there were others, who were dropouts. And I am sure we have heard many such names.
And they went on to create the Amazons and the LinkedIns, the Paypals, and the Teslas, and the Googles, and the Facebooks of the world. And many more of course, in Dropbox and Evernote and Netflix and Twitter and Instagram and Uber etc. etc. etc.
I might have momentarily harboured a thought that some of these could have been smart pieces of software that happened to be at the right place at the right time, and struck gold. But as I listen to their stories and also as I see their journeys in their successful ventures and sometimes, after that as well, at most times, I realise that these guys are exceptional, and they think and execute very differently and exceptionally, and which is why they got the success that they got!
And as is natural, I compare this to India and Indian ventures and Indian entrepreneurs. And while I appreciate the amazing success that several have found in their ventures, including the stock market listings and the wealth creation, so far, I am not convinced of the extent of brilliance that I see in some of these US (generically) venture founders.
Fundamentally, it boils down to the big hairy audacious goals they set for themselves and then they actually work to make that happen. More often, in their second and subsequent ventures, beyond the first large success.
So while I have seen successful Indian entrepreneurs becoming VCs and backing other ventures, and making their contribution in that manner, to the entrepreneurial ecosystem, also often guided by further multiplying their already immense wealth, I am not sure they’re really focused on solving some mega problems or taking on some large scale issues that impact humanity.
Like one successful Indian entrepreneur wanted to create a Google killer. Which by itself, can be thought of as a BHAG, but seriously, what problem was he attempting to solve, in the process. At best, it appears to be a commerce driven goal, or an ambition driven one, but not at core, some larger goal that will change society.
Whereas, in the west, these brilliant guys, who may have come from a software background in their first ventures, say, may want to send people to space, or may want to create the fastest and cleanest transportation system, or may want to invest in enhancing life, or may want to eradicate the world of some disease!
And such are not just pipe dreams, but they put their (naturally) brilliant minds to work on these, and sometimes they succeed. And many times they may not. But not for want of trying. And they are clearly bringing their innovative minds to work on problems that have hitherto been attempted to be solved, in more traditional manners.
It is such out-of-the-box thinking that has seen the birth of a Tesla or bitcoins or the driverless car or Square or the mission into space, etc. etc.
And here’s where we again look at India and find our successful entrepreneurs, by and large, making good commercial decisions. Invest into real estate, because it is going up. Or bet on telecom or retail or whatever, because those are sunshine sectors today. But what appears elusive thus far, is that larger goal, the game-changer for humanity. Whether it is something that we are still incapable of doing, or if our priorities at this point are more immediate, I do not know.
But meanwhile, I do remain in awe of those who can think that big, hairy and audacious way. Yes, I respect the Elon Musks and the Jeff Bezons and the Brins and Pages, more, almost to the point of idolisation!!
Cheers to the spirit of bold innovation.
And for investors, the alphabet soup will have a completely new meaning, starting now..