Google's Alpha 'Bet' On Transparency Is No Qwikster 2.0

Aug. 13, 2015 3:46 PM ETAlphabet Inc. (GOOG), GOOGL34 Comments
Kevin Berk profile picture
Kevin Berk
106 Followers

Summary

  • Alphabet provides transparency, focus, accountability and autonomy for the new CEOs.
  • Google's Alphabet corporate re-brand is no Netflix / Qwikster debacle.
  • Expect that "what gets measured, gets managed" from a finance and strategy standpoint.

Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Alphabet plan has been praised and criticized - with Mashable suggesting it may be a Qwikster-like farce.

All the way back in 2011, Netflix (NFLX) made crazy changes to their products, pricing, operations and management structure capstoned by splitting out Qwikster (the DVD-by-mail business) from Netflix (the streaming business). It was a temporary disaster because they made the change so abruptly and on the heels of big product and pricing changes. Netflix's stock tanked. Back then I wrote a blog post about it outlining what they could have done differently. Netflix eventually backtracked and abandoned the Qwikster plan.

Google's latest move to re-brand its corporate parent as Alphabet has some similarities to Netflix's changes in 2011. While Mashable's article is great clickbait, Google's change won't be disastrous. It may even be brilliant.

Similarities:

  • Designed, in part, to make managing the business more effective
  • Alphabet will encourage corporate spinoffs - like Niantic Labs
  • Oddly communicated - those quirky billionaires!
  • Sub-par PR planning

Differences:

  • Customer impact is minimal - not related to a massive price hike and product separation
  • Done from strength, not weakness
  • Separates unrelated businesses

While the name change feels strange, if executed well there's a lot to like about it. Transparency. Focus. Accountability. Autonomy for leaders. Could they have achieved those without a name change or big re-org fanfare? Perhaps. But now they are committed.

Two of the main criticisms of Google the conglomerate has been:

  1. They waste their monopoly profits from search and advertising on a bunch of wild goose chases.
  2. No one knows how much they are wasting!

These criticisms have been largely debunked with the success of Android, Google Apps and Chrome. Sure, Google-Plus is a debacle but for the most part when Google launches a new product it quickly passes good and

This article was written by

Kevin Berk profile picture
106 Followers
Kevin Berk is a strategic investor, entrepreneur and an expert in online media. He helped develop online ventures at CitySearch and Disney, and was instrumental in the merger of TicketMaster and CitySearch and the combined company's IPO. (It is now owned by IACI.) He founded Zeal.com in the online search and directory space. He then led the advertiser products team at LookSmart before co-founding online job search company YorZ and writing his blog, Berk Sure Has a Way (http://www.berksurehasaway.com/). Kevin combines an insider's understanding of online content, search and advertising with an eye for stocks and a clear writing style.You can follow him on Twitter: http://twitter.com/#!/kevinberk

Disclosure: I am/we are long GOOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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