In typical Google-style, the two founders of the search giant threw an unexpected curve-ball on Monday afternoon. In a post on the Official Google blog, CEO Larry Page announced that he was relinquishing the top role at Google in order to run a new entity called Alphabet, with Google co-founder Sergey Brin as its President.
The new Alphabet entity will serve as a holding company composed of Google Inc, which will include its flagship search and YouTube properties, plus Calico, its health research project, plus other subsidiaries that will house of the company’s other research and investment projects, including Fiber. The press and everyone else is still trying to sort through the implications but, so far, it appears investors like the news.
In after hours trading as of 5:30pm ET, Google (GOOG) stock is up almost 5%. Here’s a screenshot from NASDAQ:
This comes after a ho-hum day in which Google was down around 0.25%.
The spike in the stock price likely reflects a vote of support for Google’s new CEO, Sundar Pichai, and for the implication that Google’s core operations will not be dragged down by the company’s “moonshot” projects, like Google Glass and Driverless Cars, which have tantalized tech geeks, but often frustrated investors.
To get a better idea of what this is all about, here are Page’s own words, from the intro to his blog post:
As Sergey and I wrote in the original founders letter 11 years ago, “Google is not a conventional company. We do not intend to become one.” As part of that, we also said that you could expect us to make “smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.” From the start, we’ve always strived to do more, and to do important and meaningful things with the resources we have.
We did a lot of things that seemed crazy at the time. Many of those crazy things now have over a billion users, like Google Maps, YouTube, Chrome, and Android. And we haven’t stopped there. We are still trying to do things other people think are crazy but we are super excited about.
We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes. But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.
Our company is operating well today, but we think we can make it cleaner and more accountable. So we are creating a new company, called Alphabet. I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as President.