Matt O’Brien writes: Google wants to convince investors that it’s not throwing their money away on long shots that are really no shots. By splitting itself in two, Google can show people how much its search business is making versus how much its other businesses are spending. That alone should give investors an idea what Google’s value would be if it stuck to search, which should help keep its actual value closer to that. It’s a way to push the stock price up without cutting all the side businesses down.
But more than rebranding Google, this is about rebranding Larry Page and Sergey Brin. The two haven’t exactly endeared themselves to Wall Street with the way they’ve semi-haphazardly thrown money at anything that seemed cool—remember Google Glass?—without much regard for its business prospects. So now they’re trying to present themselves not as Silicon Valley nerds, but rather as Silicon Valley Warren Buffetts. Indeed, Page has invoked Buffett’s Berkshire Hathaway as the kind of well-run conglomerate — yes, they exist — that Google aspires to be. And that’s why the two emphasized that, in their new roles running Alphabet, they will “rigorously handle capital allocation and work to make sure each business is executing well.” In other words, the checks are about to get even less blank. The most promising projects will get money, and the rest will get put out to pasture. [Continue reading…]
For those who are spellbound by the fabulous universality of the new brand, Alphabet, the idea of a company embracing everything from A-Z might be less significant than the fact that Google apparently doesn’t value the name enough to buy the domain — alphabet.com belongs to BMW and BMW has no intention of selling it.
The lesson from Google Glass might not have been that it was a worthless experiment but rather that Google doesn’t want its name so firmly attached to its failures.