Ask anybody who has followed Google, now Alphabet, for any length of time, and they will tell you that creativity and risk-taking have long been the company’s area of expertise. Google stuffed its coffers with insane amounts of revenue from advertising and search, and used that money to fund wild experiments, some of which took off, and some of which didn’t. That’s how we got self-driving cars, Project Loon, and even Android. The Google of old flung money at anything they thought it would stick to, and that approach worked for them for a while. When the ad dollar growth began to dry up and things leveled out, however, is coincidentally right about when antitrust regulators from every corner of the globe, including Google’s home turf, came knocking. The solution to all of those issues was to create Alphabet. The core businesses that created most of the profits were contained within Google, while all of the “other bets” were, at long last, analyzed in the stark light of profit projection.
It didn’t take very long for some of the people that the change affected to show their displeasure with the new way of doing things once changes made it to their neck of the woods. Alphabet-owned health tech firm Verily, for instance, formerly Google Life Sciences, saw employees receiving part of their paycheck as Verily stock. Many, at that point, figured out that what they had originally signed up for was gone, and this was the new way of doing things. Many people who had come to Google to work on crazy projects with no worries, or, like Nest, had been bought up for that purpose, were suddenly under scrutiny from investors, market analysts, and Alphabet’s CFO, Ruth Porat. The culture of accountability ran counter to the experimental nature of things beforehand, and made many a project lead push things back a bit and get realistic. Some projects were scrapped for underperforming. Some were changed around to make a profit. Others, like Project Loon, who would have made a profit in due time were pushed to commercialize as quickly as possible. To say it was chaos at first would be an understatement, and to say that things are much more controlled now would be an even bigger one.
Ever since the switch was flipped, things have been much better financially for everybody involved. With startups inside the company and moonshots all held accountable for their numbers, the sheer volume of crazy side projects has been dramatically reduced, and the laser focus has been put on projects that show a concrete business plan. Alphabet’s stock has since skyrocketed, and they’ve managed to knock Apple off of the throne of the world’s most valuable company more than a few times. Google’s pockets are deeper than ever, and it looks as though they’ll be staying that way because the mothership is essentially no longer responsible for financially supporting failing projects, and the projects that don’t fail outright are now held responsible and show a clear focus on chasing down cash. While this pattern may stifle some of the more outlandish innovations that Google would have otherwise cranked out, it provides a much bigger cushion and bank account for projects like Fiber and Loon that need funding to make positive change. No matter how noble your intentions are, sometimes you need cold, hard cash to make magic happen, and that’s exactly the spirit behind Google’s move to Alphabet and the subsequent shift in company culture that has happened across all ventures throughout Alphabet’s wheelhouse. If this pattern continues, Google’s ability to be a world-changing company could grow incredibly.