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Can Alphabet Solve Google's Hooli Problem?

The most important letters in Alphabet? C.E.O.

Fifteen months ago, Adrian Aoun looked to be on his way out the door at Google. The Mountain View monolith had scooped up his news aggregation startup, Wavii, a year prior for north of $30 million. Aoun was working on artificial intelligence efforts within Google, but had hinted at plans to exit. In fact, a report last May said he was departing.

He didn’t. Instead, according to multiple people familiar with the situation, CEO Larry Page convinced him to stay, enticing him with the chance to work on special projects within Google. A year later, the company unveiled Sidewalk Labs, a new unit with sweeping plans to apply tech solutions to cities.

Now Sidewalk Labs is an Alphabet company, part of a dramatic restructuring at Google whose daily operations are still being worked out. Why exactly did Google do this? It’s still unclear.

Yet from conversations with people inside and outside the company, one obvious impetus for Alphabet is to solve a persistent problem inside Google: Getting people like Aoun to stay at newly freed divisions within the larger entity.

This retention issue isn’t new. For years, the company has been flush with very smart, very type-A people. But, with only so many SVP and director roles to dole out as Google has grown, moving products and moving up its ranks grew more difficult.

“There are a limited number of spots to get promoted. And there are a number of talented people inside Google,” said Shan Sinha, who left Google in 2012 to start his own company, Highfive.

Google, he added, knows this and has embraced that tension as a motivating force. It has the famed 20 percent projects, side hustles meant to stir up innovation internally. It has the back bench, which lets seasoned staffers float about unassigned while they flirt with ideas.

It’s all real, but that did not stop HBO’s “Silicon Valley” show from perfectly mocking such practices at its fictional tech giant, Hooli, where rudderless employees have a rooftop paradise of Big Gulps and lawn chairs since no one is monitoring them.

Many inside Google thought it was spot on.

And now it has Alphabet, with its many more CEOs and SVPs, a structure that lets the holding company spin off initiatives, such Sidewalk Labs, or buy them outright. Bankers said that the holding company may facilitate more acquisitions of far-fetched startups, since they can more easily pass investor approval. (Which, in all fairness, wasn’t really an obstacle for Page before, of course.)

“Historically, Google has derived a great amount of their growth and talent through deals of all flavors,” said Quincy Smith, a partner with the investment bank Code Advisors. “And there’s no reason not to think that DNA won’t exist on a greater scale at Alphabet.”

Greater than we may expect. Several people familiar with the thinking of Page — who once wondered aloud why Google couldn’t have a million employees — said he is prepared to incubate many more companies, whose total could easily outnumber the letters of the alphabet. A few likely contenders are sitting in plain sight: The existing programs in Google X, like the self-driving car and drone delivery, as well as the secretive robotics division, now chaired by veteran Page lieutenant Jonathan Rosenberg (who is not a noted robotics expert).

Alphabet also works well for executives searching for autonomy married to Google’s ample resources. Nest chief Tony Fadell, who runs perhaps the largest Alphabet company (next to Google), has been adamant since his acquisition that Nest does not share data with Google; this new arrangement certainly gives him better cover, as well as much more control.

Adrian Aoun, who is now at Alphabet’s Sidewalk Labs
Adrian Aoun, who is now at Alphabet’s Sidewalk Labs

And it works for Googlers like Aoun, who sources said wants to work on moonshots. Page is one of his big supporters in incubating more Alphabet companies besides Sidewalk Labs. (Google declined to make Aoun available to comment for this article.)

But those who prefer to work on less far-out endeavors may not see a change, and some former Googlers are skeptical that the restructuring can break the bureaucratic morass of a company with more than 57,000 employees.

“There’s so much red tape internally,” said one ex-Googler who left to form a startup after attempting — futilely — to rise internally. “It’s a very political organization — in the worst way. The people that do move up are the ones that know how to kiss ass.”

True or not, the ones that do move up may now have a wider pick of places to land. (Google says the process of moving between companies is no different under Alphabet.) Although that doesn’t mean the top seats are open. To run Sidewalk Labs, Google brought in an outsider, Dan Doctoroff, the former CEO of Bloomberg LP.

In the wake of the Alphabet launch, speculation ran wild with the potential private and public companies Google could buy. “Now they can do the crazy shit,” one ex-Googler put it.

And, of course, someone will need to run each crazy one, this person continued.

Or as Hooli’s faux site puts it: “HooliXYZ is Hooli’s experimental division. The dream kitchen. The moonshot factory. The laboratory of possibility. The midwife of magic. The womb of wonders.”

This article originally appeared on Recode.net.

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