Larry Page Glosses Over Setbacks, Eyes 'Amazing Opportunities'

Business leaders tend to do a lot of explaining when things are messy or they're backed into a corner. When things are going well, they often let results speak for themselves

Larry Page.
Photo: © Depositphotos.com/grinvalds
Larry Page.

By that measure, Facebook and Alphabet are a study in contrasts.

In February, Facebook CEO Mark Zuckerberg penned a rambling, 5,700-word manifesto where he grappled with his company's place in the world. It was a tacit acknowledgement that while Facebook may have succeeded in its mission of "making the world more open and connected," the results were hardly all good. Facebook, for example, had a hand in the spread of fake news that influenced the election, its platform was being used by do-gooders and racists alike, and terrorists groups like ISIS were using it to spread propaganda and to recruit. Collectively, these and other problems threatened Facebook very core -- not to mention its image of itself.

On Thursday, Alphabet CEO Larry Page put out his own state of the union, or rather, state of the company called Alphabet. It came in at a succinct 750 words, and not surprisingly, the annual "Founder's Letter" suggested that everything is pretty much hunk-dory.

Hard to believe we are about a quarter short of two years of announcing Alphabet. It’s been busy! I certainly feel Alphabet is working well, and as intended (see the original “G is for Google” announcement). At the time, I wrote that “Alphabet is about businesses prospering through strong leaders and independence.” The new structure has helped entrepreneurs build and run companies with the autonomy and speed they need.

Whether this is spin or a genuine perspective from a CEO who is taking the long view is debatable. Certainly, Google, the company that accounts for almost all of Alphabet's revenue, and more than 100% of its profit, is doing quite well, under the leadership of CEO Sundar Pichai. As a result, Alphabet, which reports first quarter results later on Thursday, saw its shares rise more about 23% in the past year. "Sundar is doing great as Google CEO," Page wrote. "It’s certainly a big job and we are very lucky to have him."

Much of the rest of Alphabet has been a bit of a mess for much of the past year. Waymo, the self-driving car unit, has been plagued by departures of key engineers, and its once considerable lead over rivals seems to have shrunk significantly, if not disappeared altogether. Verily, Alphabet's life-sciences unit, faced a series of setbacks and appeared to scale back its ambition, before it secured some $800 million in outside funding. Nest, the smart-home device maker, lost its founding CEO and has been criticized for being unable to launch new products. And Google Access, the unit that is deploying fiber connections in various cities, also lost its CEO and halted its rollout in new cities.

It was enough for pundits and press to question whether the Alphabet endeavor had gone off the rails.

In his letter, Page glossed over the setbacks and painted pretty much everything in a good light. Waymo has a new CEO, a partnership with Fiat Chrysler and is getting closer to launch. Verily has new financing and plans to expand in Asia. Nest has a new CEO and "has been doing great against their plan," Page wrote. And Fiber has a new CEO too (seems like something of a theme), and while it has already brought gigabit internet to lots of customers, Page said he's "excited about our opportunities to do it better."

Overall, Alphabet "has helped entrepreneurs build and run companies with the autonomy and speed they need," Page wrote.

Amid the decidedly upbeat pronouncements, there are signs that Page realizes Alphabet has made mistakes.

With the change to Alphabet, oversight has been easier because of increased visibility. We have streamlined efforts where it made sense and in other areas we have seen places to double down. I also think we have learned a lot about how to set up new companies with a structure for success.

It's not exactly self-criticism, but it suggests execution has not been flawless -- and Page knows that.

The upshot of all this, of course, is that for now only one thing matters: Google must continue to perform. And under Pichai, who made a massive and somewhat risky bet on artificial intelligence, it has performed quite well. AI has invigorated and improved many of Google's services, and is spreading its tentacles into Google's ambitious push into cloud computing. As long as Google continues to deliver, success at other Alphabet units can wait.

And that's why Page's "Founder's Letter" -- unlike Zuckerberg's manifesto -- reads like it was penned by a CEO who sleeps well at night.

Below is Page's full letter:

A is for Alphabet

Hard to believe we are about a quarter short of two years of announcing Alphabet. It’s been busy! I certainly feel Alphabet is working well, and as intended (see the original “G is for Google” announcement). At the time, I wrote that “Alphabet is about businesses prospering through strong leaders and independence.” The new structure has helped entrepreneurs build and run companies with the autonomy and speed they need.

Sergey and I are working well together on the overall Alphabet direction and providing guidance to the companies. Sundar is doing great as Google CEO. It’s certainly a big job and we are very lucky to have him. He’ll probably write this letter again in the future as he has in the past, so I won’t speak too much for him on the Google related topics in this one. But, I’m excited about how he is leading the company with a focus on machine learning and AI. We took a big step in that direction with Google Assistant, and built it into a new family of hardware devices like the Pixel and Google Home. There’s a lot more to come.

We’ve had a number of significant things happen on the Alphabet side since I last wrote. A number of our projects became companies, with more autonomy and dedicated leadership.

Waymo is the new self-driving car company formed from Project Chauffeur at X. John Krafcik is the new CEO and brings significant auto industry experience. I love the name and I love even more the excitement you can see when you visit with them! They also formed a partnership with Fiat Chrysler around their new plug-in hybrid Pacifica minivan which I see driving around the Waymo offices with lots of sensors on it. I can’t wait until Waymo launches.

Verily Life Sciences launched in December 2015 with Andy Conrad as founding CEO, also coming out of X. They have launched myriad efforts and raised $800M from Temasek, who joined their board and will help with Asian expansion. I’m very fond of their Debug project, which aims to stop mosquitoes in their tracks. It has been running for a while, showing some good foresight because it was started before Zika became a big concern.

In June 2016, Marwan Fawaz became CEO of Nest. He has been doing great against their plan, and we have really been enjoying working with him! I recommend you buy all their excellent products including indoor and outdoor cameras, learning thermostats, and smoke alarms.

Very recently Greg McCray started as CEO of Google Fiber. I’ve been enjoying working with him and his team and he has rapidly been getting up to speed. He visited all of our Fiber cities so quickly that I think he was still a bit out of breath when he got back to Mountain View! We have made significant investments in bringing gigabit fiber internet to lots of happy customers and I’m excited about our opportunities to do it better.

We have many other efforts within Alphabet. Calico CEO Art Levinson, former CEO of Genentech, is building an amazing research and development company focused on aging. We also have newly branded investment arms, GV (formerly Google Ventures), and CapitalG (formerly Google Capital) which are doing well. Sergey is continuing to spend time working with the X moonshot factory. They have a number of efforts like Wing, which is doing drone delivery. I also can’t wait for them to launch!

With the change to Alphabet, oversight has been easier because of increased visibility. We have streamlined efforts where it made sense and in other areas we have seen places to double down. I also think we have learned a lot about how to set up new companies with a structure for success. Our recent launch of Waymo was a great example of our learnings. In general we are taking a patient approach to investing our capital, especially significant uses. We’re not going to invest if we don’t see great opportunities and we feel like our track record for picking some important efforts long before others is pretty good. Machine learning and all the efforts around Google Brain and Deep Mind are good examples. Google Cloud led by Diane Greene is doing a fabulous job of getting our machine learning hardware and software out to everyone. We were early in machine learning and are already seeing significant dividends coming out. Many of the Alphabet companies are already using this technology and are planning to use it even more.

So in conclusion, Sergey and I are having a good time looking for new opportunities and managing and scaling our existing efforts. I still see amazing opportunities that just aren’t quite fully developed yet—and helping making them real is what I get excited about.

Larry Page, CEO, Alphabet

Miguel Helft is the San Francisco Bureau Chief for Forbes

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