Wednesday, November 25, 2015

Google Parent Company Alphabet Making Moonshot Projects Pay For Themselves

You know Google's Moonshot projects that have become so famous lately? Well, they are about to become a lot more financially responsible here soon. Alphabet, which is the new parent company over Google, has plans to make some of the most ambitious (or unrealistic) divisions more fiscally responsible. How you might ask? Well by requiring them to front the bill for things like recruiting, finance, marketing and other "backoffice" corporate necessities instead of letting their mommy pay for them.

Alphabet has a wide range of standalone moonshot companies that include Google X and Google Life Sciences. Google X is a super secret evil lair lab that developed projects like self-driving cars and Google Glass back in the day. Google Life Sciences was a very ambitious health care research branch. Naturally the overlords at Google are keeping tight-lipped about all of this and refusing to comment on the subject.

However, this arrangement keeps in line with what Google has been trying to do over the past couple months, trying to show Wall Street that it has the ability to corral some of its high costs for areas outside of its core online advertising business while also offering a more sustainable goal for innovation in the future.

In the beginning of the year, former Morgan Stanley CFO Ruth Porat was hired as Google's new CFO in order to help the company improve its relationship with its investors on Wall Street. Porat has been touting the need for "ongoing expense discipline" for a while now, which could sound boring to Google users but is basically the sweetest thing an investor can hear.

During her time at Google, the company has surpassed Wall Street estimates for profits twice in a row after being on a losing streak for six straight quarters. In addition to that, Google has also decided to push forward with its long-awaited plan to create its own holding company (Alphabet) which is expected to provide the company more transparency for the financials of Google's cornucopia of investments.

What people need to understand is that this new decision isn't one that was made to cripple the most ambitious projects at Google but is, in fact, designed to ensure that each one of these projects is self-sufficient and able to stand alone as its own business while surviving independently. This could also mean that each of these Moonshot businesses could be spun off at a later date.

There is definitely a lot of interesting things happening over in the Google camp, but they all seem to be pretty positive. Hopefully, this move by Google appeases investors and allows the company to really start innovating and creating even more things for the future.

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