Why indeed, are Google’s founders creating a new company? According to Vox,
Page and Brin believe that these projects have become too diverse and sprawling for a single operating company to manage all of them effectively. Different projects require different types of leaders, different company cultures, and different types of resources. So they’re creating Alphabet as a holding company that will oversee all of these different ventures while allowing each to have more independence.
“We’ve long believed that over time companies tend to get comfortable doing the same thing, just making incremental changes,” Page wrote in his blog post announcing the change. “But in the technology industry, where revolutionary ideas drive the next big growth areas, you need to be a bit uncomfortable to stay relevant.”
Page hopes that giving the various parts of the Google empire more autonomy will make it easier for them to stay outside their comfort zones and push the technological envelope.
This is not so different as to what Buffett had done, who, by the way, is now betting on Chinese Tourists with Precision Castparts deal:
With the purchase of Precision Castparts Corp., Berkshire Hathaway Inc.’s Warren Buffett is wagering that increasing world travel, especially in Asia and emerging markets, will buoy the aerospace industry for years to come.
Airlines have been ordering new planes to meet growing demand for travel and replacing less efficient and less comfortable jets, pushing production backlogs to a record eight years, said Richard Aboulafia, an aerospace analyst with Teal Group, a Fairfax, Virginia-based consultant.
Although the industry goes through cycles and has periods when travel tapers off, such as recessions or following the terrorist attacks of Sept. 11, 2001, plane production has grown steadily over the last half century, Aboulafia said. Precision Castparts, which supplies components such as turbine blades for jet engines and fasteners for airplanes, gets about two-thirds of revenue from the aerospace industry.
“It’s hard to see when the good times will end,” Aboulafia said. “If you believe in continued world economic growth, continued world trade and continued world travel, then this is as close as you’ll get to a very safe investment.”
Just as Buffett used the 2010 purchase of BNSF Railway Co., the U.S.’s largest railroad by carloads, as a proxy for growth in the domestic economy, he’s banking on global economic expansion with the acquisition of 62-year-old Precision Castparts.