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It’s been a year since Larry Page launched his new master-plan to change the world, creating a parent company called Alphabet that overhauled the structure of Google.
When Page announced Alphabet, he wrote that splitting the company into various subsidiaries would help make the divisions more financially accountable while also making it easier for each one to better tackle their big, ambitious goals.
Only the first part of that appears to be coming true.
A recent report from The Information’s Kevin McLaughlin says that Craig Barratt, the leader of the Access and Energy division, which runs Google Fiber, almost left after the restructuring because he was worried it would make it harder to get resources. The same report says that Fiber is behind on its goals and that Baratt has now been ordered to halve the team and dramatically cut costs.
Similarly, when Tony Fadell left Nest after a tumultuous year of management issues and product delays, sources told The Verge that his aversion to the increased pressure for profits played into his departure as well.
While Fiber and Nest faced growth-stalls and product pivots, the moonshot lab X has also reportedly slowed hiring and is headed towards a shake-up as it fails to get products out the door.
Meanwhile, the company’s self-driving car project still hasn’t announced any business plan and a bunch of people have left. The life sciences division Verily has been accused of peddling “slideware,” and Google just killed its ambitious build-it-yourself-phone.
There is absolutely no question that hugely ambitious projects like finding new ways to prevent disease, creating internet balloons, or dramatically increasing the country’s internet speeds are huge, hard projects.
But one year into Alphabet, it looks like putting financial pressures on those projects is a lose-lose. The 10 confirmed “Other Bets” only collectively made $185 million in revenue last quarter with $859 million in losses. Meanwhile, there have been few major launches or announcements, but plenty of issues.
Remember that $859 million in losses is still pocket-change compared to Alphabet’s overall $21.5 billion in Q3 revenue. If some Bets need more money, there doesn’t have to be a shortage as long as core Google keeps growing and innovating.
As Alphabet winds down a really tough summer, it feels like a good time for Larry Page to do a gut-check about how serious Alphabet is about each of its moonshots and either go all-in, with less financial pressure, or start spinning them off or shutting them down.
Because, right now, the parts of the company that were once the perfect marketing for luring potential talent and showing off Google as the world’s most influential tech pioneer, look more like a mess than an advertisement.
A third option: Page could start taking more of his wildest bets outside of Alphabet. Earlier this year Bloomberg reported that Page has, on his own dime, secretly invested in flying cars.
While Wall Street applauds the increased financial discipline seen so far under Alphabet, tackling bold, ambitious projects is really, really hard, but even more so when leaders fear budget cuts. Recent reports beg the question, at what point do strict goals and cut back resources for the company’s 10x bets do more harm than good?