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From Google to Alphabet, Larry & Sergey's 3 Principles of Sustained Entrepreneurship

Google astonished the tech world on August 10, 2015 by announcing the creation of Alphabet and the implied restructuring of the entire enterprise. On September 1, Google even added a new surprise in the form of a new logo. It's not easy to predict how the change will affect Google's future as one of the most innovative companies in the world, but outlets like the Wall Street are already voicing their approval while the tech community still appears to be building consensus opinion. It’s strange for Larry and Sergey to be letting Sundar Pichai take over their precious Google, but it does leave the rest of us founders with three major lessons for running a business in the long term.

First, let’s point out the difference between entrepreneurs and business owners.

While business owners concentrate their efforts on keeping their businesses alive and profitable, entrepreneurs focus on how to make the biggest impact on society through their grand and uncommon ideas. Business owners take fewer risks and try to build a sustainable business.

On the other hand, entrepreneurs continuously try everything to create disruptive solutions to problems that people may not even be aware of. Larry Page and Sergey Brin can be called entrepreneurs without doubt. Learning from them and applying these takeaways can keep entrepreneurs in later-stage startups on their track of innovation:

Employ People Better Than You

The key factor determining the future of Google's future within Alphabet is naming Sundar Pichai as the new CEO. In recent years, Sundar has been gaining more and more responsibility for Google's core products including Android, Chrome, Google Drive, Gmail and Google Maps and has proved his eligibility for the position of CEO. In fact, Google employees even mentioned that Sundar Pichai might be a better CEO than Larry Page in running the daily business of Google.

With Google's experiments in Google [x], it’s clear Larry Page wasn’t focusing his attention entirely on Google's original business of digital advertising through the power of information anymore. Instead, he wanted to dive into areas that he considered important to improving the lives of as many people as possible. Managing the cash flow of the second most valuable company in the world only half-heartedly is not possible.

Google's core business demands someone who is good in dedicating all efforts into running it. On that note, this is not the first time the founders of Google gave the title of CEO to someone else. In the past, Eric Schmidt was the one that built the foundations of Google's success. Larry Page and Sergey Brin are great inventors, creators and entrepreneurs but not necessarily the most suitable operational candidates to run the company.

What does this tell entrepreneurs about the people they hire? They should look for candidates that are better in doing what they are hired for than the entrepreneur herself. A CTO should hire a technical design thinker who is better in designing, developing and managing the product. A CMO should hire an IT-affine growth hacker that is able to plan and implement a marketing strategy that is beyond the skillset of the CMO. A CSO should hire a seasoned sales guru that scales sales incredibly fast and more way more efficiently than believed to be possible. And an entrepreneur should in time find a CEO that is better in running the business.

Leave Running Your Business to Your Executives

The principle of gathering competent people that assist in complex management tasks is described by Napoleon Hill as creating a Mastermind Group. By doing so, the head of the company does not need to be good in all business areas, but delegates the tasks to the most suitable partners. Running the business means spending more and more time managing human resources and cash flows instead of doing operational work. By finding people to whom the entrepreneur can entrust business areas, she will be able to focus more on the task of allocating resources and juggling with people's competences in order to create the maximum value for the company.

With the creation of Alphabet and the assignment of Sundar Pichai as Google's CEO, Larry Page has found a way to withdraw from his task of running the day to day work of managing Google for the sake of focusing on new projects. The important point is the timing of this decision. First, Sundar Pichai has been gaining in responsibility and renown. Secondly, Google's CFO Ruth Porat has cut down costs increasing Google's financial strength and stability. And finally, it was time to respond to growing shareholder concerns about Google's ongoing profitability considering the multiple loss-heavy new business areas including moonshots.

Sundar and Ruth, among other executives, enabled the creation of Alphabet because they built the foundation of a solid and promising future for Google even without the direct work of Larry Page and Sergey Brin. At the same time, it was Larry's trust in Sundar Pichai and the general public's approval that made it possible. The timing for an entrepreneur's possible withdrawal as the CEO can therefore be described as the moment when:

  1. The founder has fostered a new candidate for her position as the head of the business,

  2. The founder trusts the new CEO in running the business successfully with only limited further help and,

  3. The shareholders believe in a sustainable profitable business that does not need the help of the founders anymore.

Keep on Being Entrepreneurial After Your Success

Despite the appropriate timing, Larry stepping down as CEO is still quite surprising. Usually, most founders would be happy enough to have founded and run a multi-billion company. Then again, Larry Page and Sergey Brin are not usual. The final lesson from Google's change to Alphabet is letting go of the own highly successful company in order to pursue personal dreams once again.

By definition, an entrepreneur is not a one-time founder and steady business owner but someone who takes risks and continues her pursuit for an impact that matters again and again. This being said, what differs an entrepreneur from a serial entrepreneur? Nothing except for the boastfulness of its expression. An entrepreneur is someone who continues innovating. Entrepreneurs do not settle down but want to explore new areas and try themselves at new challenges. This does not necessarily mean founding multiple companies. An entrepreneurial mindset also expresses itself in R&D departments, in venture capital companies, in a business angel´s attempt to play a role in the creation of new startups and in all those ideas that are judged as stupid and impossible by the majority of society.

 

​Self-driving cars? Balloon-distributed Internet? Drone-based delivery services? These ideas sound unbelievable and impossible by their nature. But until tried, they're not provenly impossible impossible. It is the strong drive of entrepreneurs not to give up innovating that provides us with today´s greatest conveniences and opportunities.

I've got nothing but gratitude for Google for still pursuing moonshots no matter what media, shareholders and internal managers might say, and Larry Page and Sergey Brin for setting a sign that a real entrepreneur will go after her dreams even beyond their own success. This internal drive to do more than what is already done is what makes entrepreneurs inspiring. Today's entrepreneurs now have a shining example to not just strive for success, but following Google's example, to stay innovative until their endless ideas run out.

Comments

I like that mastermind of executives approach. Let the domain experts run their domains.

Reply 1

Hi Patrick, thank you. You should have a look at Napoleon Hill's book "Think and grow rich" where he describes several principles that will lead to success for entrepreneurial minds. The book was written in another time and not all assumptions are transferable but it is interesting nevertheless. Also, In Ben Horowitz's "The hard thing about hard things" there is a chapter where he writes about how to executives / domain experts that are better in their field than you are. Highly recommended read :)

Reply 0

Absolutely agreed, Minh! I'm in a few masterminds now for different crafts I'd like to master, from writing to shipping projects more consistently. Above all, this group gives you accountability as well as support. I wouldn't be half as effective without them, and I've heard the same from other entrepreneurs.

Ultimately, building a company can be a lonely journey. Your friends and peers are other entrepreneurs.

And loved your book recommendations, too!

Reply 1

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