What We Know About Google's Alphabet Soup. And What We Don't.

The world’s most dominant Internet company — its most ambitious and, yes, often its most feared — is now just three engineers, a lawyer and a financier. And, so far, no public-facing executive investors can reach to hold the company to account.

That’s the entirety of Alphabet, the new holding company Google created yesterday to grease the wheels of the search engine’s entrance into a bevy of industries. Google heralded the move as a way to bring “transparency and oversight” to its business. And Wall Street raved. Investors sent its stock up and analysts nearly unanimously lauded the decision.

For them, it solved two central problems for the $GOOG ticker: 1) How to preserve aggressive research and acquisitions without denting the profitable search ads business, and 2) how to retain talent. Google has lost a flood of smart people. Giving its internal CEOs that title and freedom, plus a startup sheen, could help keep execs from fleeing. The real lure here is the promise that the portfolio executives will have domain over their companies, and the equity with it. Also, Page may have passed over his biggest headache, the pending European Union antitrust investigation, to new Google CEO Sundar Pichai as well. (Google’s deadline for an official response to the charges is Monday.) Still, we don’t know for sure.

In essence, this keeps Google, now 57,000 or so people, from becoming Bell Labs or Microsoft — growing too large and unwieldy to do anything but deflate.

“[T]he GOOG story is just starting to hit its stride, there is significant upside from current levels and we want to be there for the whole ride,” Deutsche Bank analyst Remy Martin wrote on Tuesday morning. “Buy.”

And yet, when we unpack what little we know of Alphabet now, it’s hard to see what “the whole ride” is. So here, the morning after, is what we can say with some assurance about Google’s new face:

• New name, same stock: The main leadership and stock structure remain unchanged. Alphabet, née Google, is controlled by the longtime triumvirate — Larry Page, Sergey Brin and Eric Schmidt — plus legal chief David Drummond and CFO Ruth Porat. Page passed the baton at Google to Pichai, who now supervises several division heads, but the Alphabet quintet still controls all the preferred stock in the same management structure that has infuriated many lesser shareholders.
• This is not new: A running joke within Google for the past year is to ask who does not report up to Pichai. The punchline is that few don’t. Page has gradually been removing himself from the business of running an ads business, preferring to work on budding projects. Now it’s official. Alphabet formalized a leadership and nebulous organizational structure that emerged since Page returned as CEO in 2011.
• Breakdown: Alphabet is a conglomeration of Google’s own moonshot companies (Google X, Fiber) and the futuristic ones it acquired or birthed (Nest, Life Sciences, Calico). The largest part of Alphabet is Google Inc., which is now search, YouTube and ads, plus Pichai’s prior domain of Android, Chrome and apps. Google’s business is now run by three executives. Its current chief, Omid Kordestani, wrote on Google+ that he “decided it was time to eliminate my own job,” and, from the sound of it, step away from full-time work.
• Sundar’s world: Pichai’s new domain also includes Google’s expensive data centers and nascent cloud business. Urs Hölzle, the chief of both, reports to Pichai. So do the sales heads replacing Kordestani. Also reporting to Pichai: YouTube boss Susan Wojcicki, general counsel Kent Walker and corporate development and M&A lead Don Harrison.
• Comms, or lack thereof: Jessica Powell, the global communications director, reports to Pichai too. Alphabet does not have a communications director.
• Board: Alphabet’s board will, in due time, be the same as Google’s.
• Finances: Starting in the fourth quarter, the new entity will report in two segments: One for Pichai’s Google and one for Page’s Alphabet. This could be very significant. While it’s uncertain, it’s likely that the new reporting structure will present capital allocation for several units for the first time — numbers that will shine light on its investments and make the high-margin search business look even nicer. Still, analysts hoping for the long sought-after metrics should temper expectations. Some much-desired line items from Google Inc. — like YouTube revenues or mobile paid clicks — will not be broken out, a Google spokesperson confirmed.

And here are the known unknowns:

• Finances: So, what then is reported for Alphabet? Does it have a full profit and loss statement? What does that look like?
• Investment: Google has frequently cited, including on its last earnings goal, the investment philosophy of 70/20/10: Seventy percent allocated to support the core business, a fifth on “adjacent areas” and the remaining 10 percent on the long-term visionary projects. Most of Google’s R&D budget — at $2.3 billion last quarter — goes toward data center upkeep and engineering, two groups that still predominately belong to Pichai. Is that investment philosophy now out the window? Does Pichai’s Google still follow this? Does Alphabet?
• M&A: We can report that Drummond, a long-time Google exec, has a slightly different role. He’s SVP of Corporate Development for Alphabet, teaming with Page and Brin on managing investment in the portfolio. A Google spokeswoman confirmed the change. Yet, how does Alphabet report acquisitions? Is the cash it nets from Ventures and Capital, the two investment arms whose finances have been kept secret, its only source?
• Spinoffs or new business divisions: One of the Alphabet attributes that’s exciting investors is the newfound ability to set disparate companies aside, or at least report them as separate businesses. Amazon did this with its Web services division AWS, and its earnings leapt. When does Alphabet decide to spin off projects, like the self-driving car (already its own LLC), into standalone portfolio companies? Or who decides when these standalone companies (let’s say, Glass was one) burn through enough investor cash to be let go? And how? In addition to the few Google has already parceled out into separate businesses, there’s also virtual reality. Right now that field consists of a smattering of apps engineers working on Cardboard, plus some inside Advanced Technology and Projects (ATAP)– the research wing within Android that builds stuff like wearable fabrics — and YouTube. But ambitions are far grander. Should the VR unit scale up, it’s not hard to imagine it spinning off from Google to form its own subsidiary. That could make Google’s VR more limber and competitive; it could also leave Google Inc. short innovative apps engineers.
• Kinda, sorta, not exactly like Berkshire Hathaway: Warren Buffett — whose holding company Berkshire Hathaway was in many ways the inspiration for Alphabet — loves his holdco structure. But Buffett is not launching balloons into space. The other thing to note about Buffett is that one of the key advantages to Berkshire’s structure is it can reap all the profits from its portfolio companies and use that money to buy more companies. Berkshire, it should further be noted, doesn’t pay out dividends to shareholders. So if Google really wants to take a page out of Buffett’s playbook, it’ll have to consider whether it should pursue a dividend.
• Politics: Another theory behind Alphabet: The holding company splinters Google into many pieces, something that will help it fend off claims of monopoly abuse. Maybe that’s why Alphabet arrived now? Theories aside, who handles Google’s regulatory response? It’s currently facing charges in Europe around search and commerce, but what happens if it gets into policy muck with self-driving cars? Or Nest? Does Drummond — who remains on the board of Uber, mind you — handle all of this alone? Does Google, now among the nation’s largest lobbyists, lobby under the name Alphabet?
• Out-there projects: Page has noted some of the moonshots that will sit under Alphabet. Plenty of initiatives are still in gray turf. What of DeepMind, the flashy A.I. startup that works with the search team (so, Google-y) but is also its own autonomous entity in London (therefore, Alphabet-y)? And ATAP, the wow-factor research lab? Waze, the moderately independent mapping shop? Magic Leap???

Step out from the weeds and there’s a larger, burning question. It’s one that Page and Pichai may not be able to address for some time. What if Google, in trying spur growth for the many Googles to be, ends up numbing the one we know?

If Alphabet is where all the fun is, why stay at Google?

“Perhaps a downside is deciding what should be fitted into the moonshots,” Jeffrey Sonnenfield, a management professor at Yale, said about yesterday’s restructuring. “Are you pre-ordinating stagnation at Google?”

It’s a critical question for Google, whatever its name.

We sent that one, along with all of these outstanding questions, to Google. Google declined to comment. As for Alphabet, does anyone know how to reach them?

This article originally appeared on Recode.net.

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