- From:
- Larry Page, CEO
- Date:
- August 10, 2015
As Sergey and I wrote in the original founders letter 11 years ago, “Google is not a conventional company. We do not intend to become one.” As part of that, we also said that you could expect us to make “smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.”1 (Editorial note 1)Editorial · 1Known at the timePage opens by citing the 2004 IPO letter, so the restructuring reads as keeping an old promise rather than changing course. The move is to turn a promise about effort into a legal and reporting structure. What it gives up is the cover that a single Google gave those bets: once they sit apart, their costs have a line of their own.
[ … ] Not shown: Past bets that now have a billion users; staying uncomfortable.
Our company is operating well today, but we think we can make it cleaner and more accountable.2 (Editorial note 2)Editorial · 2Known at the timeThe word “accountable” is the post’s central promise, but it never says to whom. The rest of the text answers in two ways: business CEOs answer to Page and Brin, who will pick them and set their pay, and shareholders get separate numbers. The founders who judge every business are not themselves made more accountable by anything the post describes. So we are creating a new company, called Alphabet (http://abc.xyz). I am really excited to be running Alphabet as CEO with help from my capable partner, Sergey, as President.
What is Alphabet? Alphabet is mostly a collection of companies. The largest of which, of course, is Google. This newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead.3 (Fact note 3)Fact · 3With hindsightThe boundary moved. Alphabet’s 10-K for 2018 says: “In Q1 2018, Nest joined Google’s hardware team.” From then Nest’s results were reported in the Google segment, and prior periods were recast to match.SourceAlphabet, Form 10-K (Internet Archive copy of abc.xyz)Form 10-K for the fiscal year ended December 31, 2018Feb 2019
[ … ] Not shown: Two health efforts as examples of far afield.
Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. Alphabet is about businesses prospering through strong leaders and independence. In general, our model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed. 4 (Fact note 4)Fact · 4With hindsightAlphabet’s 10-K for 2025 says: “Other Bets operate as independent companies and some of them have their own boards with independent members and outside investors.”SourceAlphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026We will rigorously handle capital allocation and work to make sure each business is executing well.5 (Fact note 5)Fact · 5With hindsightTwo later decisions show the allocator at work. On 25 April 2024 Alphabet’s board approved the initiation of a cash dividend programme, declaring $0.20 a share. In February 2026 Waymo announced a $16.0 billion investment round, “the significant majority of which was funded by Alphabet.”SourcesAlphabet investor relations (Internet Archive copy)Alphabet Announces First Quarter 2024 Results25 Apr 2024Alphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026
[ … ] Not shown: Choosing each business’s CEO and setting their pay.
In addition, with this new structure we plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.6 (Fact note 6)Fact · 6With hindsightThe separate numbers show losses in every year we checked. Other Bets lost $2,741 million in 2016, $2,734 million in 2017 and $3,358 million in 2018, as recast in the 10-K for 2018; $4,824 million in 2019 and $4,476 million in 2020, in the results release for 2020; and $4,095 million in 2023 and $4,444 million in 2024, in the 10-K for 2025. Each filing restates earlier years, so the figures are not one consistent series.SourcesAlphabet, Form 10-K (Internet Archive copy of abc.xyz)Form 10-K for the fiscal year ended December 31, 2018Feb 2019Alphabet investor relations (Internet Archive copy)Alphabet Announces Fourth Quarter and Fiscal Year 2020 Results2 Feb 2021Alphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026
This new structure will allow us to keep tremendous focus on the extraordinary opportunities we have inside of Google. A key part of this is Sundar Pichai.
[ … ] Not shown: Pichai’s record since October 2014.
And it is clear to us and our board that it is time for Sundar to be CEO of Google.7 (Fact note 7)Fact · 7With hindsightThe split of roles did not last. Alphabet’s 10-K for 2025 refers to “Alphabet and Google CEO, Sundar Pichai”. Our page on the 2004 IPO letter dates the founders’ step back from management.SourceAlphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026
[ … ] Not shown: Google’s products, X, investment arms, share conversion and the name.
We also like that it means alpha-bet (Alpha is investment return above benchmark), which we strive for!8 (Editorial note 8)Editorial · 8Known at the timeThe pun sets a test the post never defines. Return above a benchmark needs a benchmark and a time frame, and the post names neither for the bets. Without a hurdle, rigorous capital allocation has nothing outsiders can measure it against.
[ … ] Not shown: Alphabet is not meant to be a consumer brand.
We are excited about…
[ … ] Not shown: Ambition, the long term, entrepreneurs and investing at scale.
Improving the transparency and oversight of what we’re doing.9 (Fact note 9)Fact · 9With hindsightReporting got finer, but the unallocated line grew. From the fourth quarter of 2020 Alphabet reported Google Cloud as its own segment; it lost $5,607 million that year and had operating income of $13,910 million in 2025. But from the second quarter of 2024 AI model teams from Google Research joined Google DeepMind, reported within Alphabet-level activities, a line that lost $16,760 million in 2025, more than Other Bets’ $7,515 million, and “primarily reflect expenses related to our shared AI research and development.”SourcesAlphabet investor relations (Internet Archive copy)Alphabet Announces Fourth Quarter and Fiscal Year 2020 Results2 Feb 2021Alphabet investor relations (Internet Archive copy)Alphabet Announces First Quarter 2024 Results25 Apr 2024Alphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026
Making Google even better through greater focus.
[ … ] Not shown: Improving lives, and getting used to the name.
All 9 notes and their sources
As part of that, we also said that you could expect us to make “smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.”
Editorial · 1Known at the timePage opens by citing the 2004 IPO letter, so the restructuring reads as keeping an old promise rather than changing course. The move is to turn a promise about effort into a legal and reporting structure. What it gives up is the cover that a single Google gave those bets: once they sit apart, their costs have a line of their own.Back to the passagewe think we can make it cleaner and more accountable.
Editorial · 2Known at the timeThe word “accountable” is the post’s central promise, but it never says to whom. The rest of the text answers in two ways: business CEOs answer to Page and Brin, who will pick them and set their pay, and shareholders get separate numbers. The founders who judge every business are not themselves made more accountable by anything the post describes.Back to the passageThis newer Google is a bit slimmed down, with the companies that are pretty far afield of our main Internet products contained in Alphabet instead.
Fact · 3With hindsightThe boundary moved. Alphabet’s 10-K for 2018 says: “In Q1 2018, Nest joined Google’s hardware team.” From then Nest’s results were reported in the Google segment, and prior periods were recast to match.SourceAlphabet, Form 10-K (Internet Archive copy of abc.xyz)Form 10-K for the fiscal year ended December 31, 2018Feb 2019Back to the passageour model is to have a strong CEO who runs each business, with Sergey and me in service to them as needed.
Fact · 4With hindsightAlphabet’s 10-K for 2025 says: “Other Bets operate as independent companies and some of them have their own boards with independent members and outside investors.”SourceAlphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026Back to the passageWe will rigorously handle capital allocation and work to make sure each business is executing well.
Fact · 5With hindsightTwo later decisions show the allocator at work. On 25 April 2024 Alphabet’s board approved the initiation of a cash dividend programme, declaring $0.20 a share. In February 2026 Waymo announced a $16.0 billion investment round, “the significant majority of which was funded by Alphabet.”SourcesAlphabet investor relations (Internet Archive copy)Alphabet Announces First Quarter 2024 Results25 Apr 2024Alphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026Back to the passagewe plan to implement segment reporting for our Q4 results, where Google financials will be provided separately than those for the rest of Alphabet businesses as a whole.
Fact · 6With hindsightThe separate numbers show losses in every year we checked. Other Bets lost $2,741 million in 2016, $2,734 million in 2017 and $3,358 million in 2018, as recast in the 10-K for 2018; $4,824 million in 2019 and $4,476 million in 2020, in the results release for 2020; and $4,095 million in 2023 and $4,444 million in 2024, in the 10-K for 2025. Each filing restates earlier years, so the figures are not one consistent series.SourcesAlphabet, Form 10-K (Internet Archive copy of abc.xyz)Form 10-K for the fiscal year ended December 31, 2018Feb 2019Alphabet investor relations (Internet Archive copy)Alphabet Announces Fourth Quarter and Fiscal Year 2020 Results2 Feb 2021Alphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026Back to the passageAnd it is clear to us and our board that it is time for Sundar to be CEO of Google.
Fact · 7With hindsightThe split of roles did not last. Alphabet’s 10-K for 2025 refers to “Alphabet and Google CEO, Sundar Pichai”. Our page on the 2004 IPO letter dates the founders’ step back from management.SourceAlphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026Back to the passagealpha-bet (Alpha is investment return above benchmark), which we strive for!
Editorial · 8Known at the timeThe pun sets a test the post never defines. Return above a benchmark needs a benchmark and a time frame, and the post names neither for the bets. Without a hurdle, rigorous capital allocation has nothing outsiders can measure it against.Back to the passageImproving the transparency and oversight of what we’re doing.
Fact · 9With hindsightReporting got finer, but the unallocated line grew. From the fourth quarter of 2020 Alphabet reported Google Cloud as its own segment; it lost $5,607 million that year and had operating income of $13,910 million in 2025. But from the second quarter of 2024 AI model teams from Google Research joined Google DeepMind, reported within Alphabet-level activities, a line that lost $16,760 million in 2025, more than Other Bets’ $7,515 million, and “primarily reflect expenses related to our shared AI research and development.”SourcesAlphabet investor relations (Internet Archive copy)Alphabet Announces Fourth Quarter and Fiscal Year 2020 Results2 Feb 2021Alphabet investor relations (Internet Archive copy)Alphabet Announces First Quarter 2024 Results25 Apr 2024Alphabet, Form 10-K (investor relations copy)Form 10-K for the fiscal year ended December 31, 2025Feb 2026Back to the passage
