Welcome to tech Stuff, a production from I Heart Radio. Hey there, and welcome to tech Stuff. I'm your host job in Strickland. I'm an executive producer with iHeart Radio and how the tech are Yet it is time for a classic episode. This episode, originally published on September seventh, two thousand fifteen, is called Alphabetizing Google. It is, of course, about the when Google created the company Alphabet to serve as an umbrella company for all of Google's various divisions that had spun off to become companies of their own. It was an interesting process because, as I recall, Google originally owned Alphabet, and then they had to do kind of a weird little switcheroo on paper to make Alphabet the official umbrella corporation. You start reading up about these things and you begin to think, you know, all of business is based off of a three card Monty game. But I'm getting ahead of myself. Let's listen to this classic episode. So on Monday August ten, two thousand fifteen, Google CEO Larry Page posted in the official Google blog that the massive company would undergo a restructuring and Google would become a subsidiary under a parent company named Alphabet. Now, obviously the tech news world went bonkers as a result of this announcement, But what does it really mean and why would Google ever want to do this. That's the purpose of this episode. So I'm going to talk about not just Google's decision, but what a parent company is, what subsidiaries are, why those things exist, so that we can actually have a better understanding. And one of the reasons I'm doing this is because, even as a tech guy with a kind of general understanding of corporate structure, I was kind of confused too, and so I thought, if I'm confused, I'm sure at least one other person out there is confused. So that's why I want to really dive into this and get a general understanding of parent companies and subsidiaries so that we understand why those exist across different companies, not just Google. So first, Alphabet is the parent company that will oversee a collection of other companies, the largest of which is Google. Larry Page will be the CEO of this new company, so trans transferring from Google to Alphabet. Sarah A. Brend will be the president of Alphabet, and Paige and Brend are of course co founders of Google. Now it might be helpful to take this moment to explain what a parent company is and how those subsidiaries work in general. So, a parent company is a company that controls other companies. The way it does that is it has to own enough voting stock or control of those companies or more. Actually, now, parent companies are not necessarily hands on with their control. Sometimes you have a parent company that has all these subsidiaries as a means of generating revenue, but they largely remain hands off with those subsidiaries. But then there are other parent companies that get really involved with what their their subsidiaries are doing. It all depends upon the specific companies, but subsidiaries have their own management levels. So while there will be the CEO of Alphabet, there will also still be a s CEO of Google. That might sound confusing, but it's it makes sense when you look at how subsidiaries have to manage themselves. So you can kind of think of subsidiaries as the children of parent companies. It's kind of stretches the analogy, but it works. So a regular subsidiary, there is such a thing, is one that is owned by a parent company, whereas a wholly owned subsidiary is I bet you're going to guess it owned by a parent company. Now, generally speaking, the most common reason for creating a parent company and subsidiary relationship is to distribute risk and liability, as well as to expand into new businesses without taking the focus away from an already existing line of business. In other words, if you have a huge company that's really good at one thing, and you want to pursue another line of business, it might make more sense to create a parent company and a subsidiary dedicated to that new business instead of lumping it under the existing company. Google has been operating under that second approach for quite some time. Google's just this massive company that has acquired other businesses, most of which are only tangentially aligned with Google's main business, and the more Google does that, the harder it is to manage everything. Going with a parent company makes that management much more clear and the lines of command are much more clear. So the parent company organizes the management teams of the subsidiaries and establishes the company by laws. This creates the governance structure for the subsidiary and makes it clear what the chain of command will be and how it relates to the parent company. So in other words, it removes some of this confusion. If you work for one of these divisions that's now a subsidiary, you should have a pretty clear chain of command all the way up to the parent company, and most of the time it's going to be independent of the other subsidiaries, so you don't necessarily have to worry about reporting to like five different bosses across different divisions because those other companies will be independent. So the structure also determines how the parent company and subsidiaries are treated as legal entities. If the parent and subsidiaries share employee benefit plans or insurance contracts, or they commingle their funds or files, or they file consolidated income tax returns, they can be seen as a single entity. So in other words, there are some tax issues that come into play. It's not all just organizational there's also tax considerations. Uh. Now, in the United States, a parent company can offset the profits and losses of subsidiaries against each other for federal tax return purposes. So if you have a big parent company and one subsidiary is doing really well and another subsidiary is doing very poorly in a given financial year, you can offset the losses of one with the revenues of another, and that can lead to huge savings in the big picture when it comes time to file federal tax return. There's also some benefit on a on a state level, depending upon what state you are in. Some states only tax the income earned within that state, and all income earned in other states remains untaxed, so there's that as well. Now, a subsidiary is a separate legal entity and has its own liability that is separate from the parent companies. That means the parent company can create a subsidiary that pursues businesses that might be risky, meaning they could have a really low return on investment, without putting the parent company itself at risk. Parent companies are not normally held liable for the debts or actions of individual subsidiaries. So if you are the head of a massive parent company, you should invite me over to dinner one day. Also, if one of your smaller subsidiaries goes on some sort of quest for world domination or something, it's not necessarily your butt that will be held accountable, unless, of course, the courts do what is called piercing the corporate veil to see if there were any goings on of the hanky and or panky variety behind the scenes at the parent and company level. If that were the case, if it turns out that this subsidiary was going on a quest for world domination and was doing so under your direction or your encouragement, you could find yourself in serious hot water. But if there's no link found, then as a parent company, you are somewhat protected from liability. The subsidiary is to blame, not the parent company. So in other words, uh, the if one branch goes bad, it doesn't poison all the other branches, so it's a means of protection. Also, a subsidiary is something that a company can sell off to other companies more easily if it chooses to do so in the future. It's much easier to sell off an entire subsidiary than it is to sell off, say a division of a company. We'll be back with more about the alphabetizing of Google after this quick break. So let's say Alphabet creates a subsidiary for a business that seems promising, but it turns out it's just not a good fit for the way Alphabet does business. It could then sell that subsidiary off to another interested party. So, like I said earlier, the largest company under the Alphabet parent company is Google. Google will be a wholly owned subsidiary of Alphabet. This is not a big surprise. Google's market cap as of August twelfth, two thousand fifteen, was four hundred sixty one point seven billion with a B dollars. That's nearly half a trillion dollars. Now, in case you're wondering, Apple is still well ahead of Google. Apple's market cap was six hundred thirty two point eight billion dollars, so, you know, nearly two hundred billion dollars more than Google. So we're still talking. You know, it's still not anywhere close to hitting a trillion before Apple does. Now. Market cap stands for market capitalization, and that's the term that describes the dollar value of the total number of shares for a publicly traded company. So you figure that out by taking the value of the traded shares at any given time and multiply that times the number of shares that are out there. That tells you the market cap for that company. According to the SEC filing, which must be made public, Google will also contain YouTube and Android under its umbrella. In addition to search, ads, maps, and apps. But lots of stuff that was previously organized under Google will now be spun off as separate subsidiaries of Alphabet. So some stuff is gonna stay Google. YouTube does not become its own individual company that will still be part of Google, but other stuff will. Like a group called Life Sciences, which is a research and development division debty caated to finding new technologies to help in the field of health. Among its projects are the glucose sensing contact lenses that are really interesting. Also, there's a division called Calico that will become its own company UH that is a company that researches aging and how to increase the length of our lifespans. There's also Google Fiber that will become its own entity. There's Nest, the intelligent thermostat that Google acquired that will be its own entity. And also the Google x Lab, which is the division that does experiments with long shot projects and big ideas, the crazy R and D stuff that leads to to things like the UH the drone delivery system that Google wants to implement, the driver list cars. That kind of stuff came out of Google x Lab. Also, Google has a couple of investment arms, once called Google Ventures and another one's called Google Capital. Those will also operate independently of Google, and they will be under the Alphabet umbrella. Now, as for the financial situation of all these companies, Google's finances will remain separate from all the other subsidiaries. Also, all shares of Google the company will convert into the same number of shares of Alphabet, So if you have shares in Google now, you're going to have shares in Alphabet. The trading symbol for Google will remain the same, so that's not changing now. I mentioned that Larry Page was transitioning from CEO of Google to be CEO of Alphabet, So that means who gets to be the CEO of Google. There's gonna be an opening there right well. The new CEO of Google will be Sundar Pachai. Sundar is from India and has a an MS degree from Stanford and Material Sciences and engineering. He joined Google back in two thousand four and he worked on projects like Google Chrome and Chrome OS and also helped develop Gmail and Google Maps. So he was one of those people rumored to be considered from Microsoft CEO position when it was open. When Balmer was leaving, so uh, someone who has been with Google quite sometime and is well known for injecting a ton of life, vitality and research into Google. In fact, Larry Page has had nothing but wonderful things to say about him and his contributions over the last few years. You also have other executives who will be taking on new roles. Ruth poor At, who is the current Chief Financial Officer of Google, will still be CFO of Google, but also will become the senior vice president and chief financial officer of Alphabet, so she will serve as the CFO for both Alphabet and Google at the same time. All the other subsidiaries will have their own CEO. Suh, they haven't all been announced yet. Page and Brent's job will be to make sure that each subsidiary receives the resources and attention they need for success. And the actual process for this transformation is bizarre. You know, I said Google is going to create a parent company called Alphabet. Google will become a wholly owned subsidiary of Alphabet, and these other companies will also be wholly owned subsidiaries of Alphabet. That's this simplification for the process that's actually going to happen, and I'm going to explain to you what the process is based upon the SEC filing. And this really demonstrates how bizarre corporate maneuvers have to be in order for them to take effect. It is truly strange. So first Google will create a direct wholly owned subsidiary called Alphabet, So, in other words, Google will be a parent company to the subsidiary Alphabet instead of the other way around. Now this sounds bizarre because it's literally the opposite of what I said was going to happen earlier, where Alphabet was going to be the parent company. But just hold on because it gets weirder from here. Alright, So at this phase, Google is a parent company and Alphabet is its wholly owned subsidiary. Alphabet then will form its own wholly owned subsidiary called merger Sub. Really catchy name for a company. Right, This is all in the SEC filings. So merger Sub has one purpose only. Merger Sub is an indirect wholly owned subsidiary of Google, or if you like it, if you think of it in family terms, Google is is the parent, Alphabet is the kid, and merger Sub is the grand kid. Now, the next phase has Google undergoing a corporate merger with Merger Sub. So, in other words, Grandpa Google and grandkid merger Sub merged together to become one entity. So Google will emerge with its own indirect, wholly owned subsidiary. But because merger Sub is a subsidiary of Alphabet, that makes Google a direct, wholly owned subsidiary of Alphabet. So now Google is Alphabet's kid, not the other way around. If this sounds at all like the novelty song I'm My Own Grandpa, it totally is. And if you don't know what that is, you should listen to that song. First of all, I apologize. It is an old joke song that involves a convoluted series of marriages where the singer becomes his own grandfather. That's pretty much what we're looking at here, alright. So to sum up what I just said, Google creates a subsidiary called Alphabet. Alphabet in turn creates its subsidiary called Merger Sub. Google merges with Merger Sub and assumes the role of subsidiary to Alphabet. And that's how we get to the the world where Alphabet is the parent company. If you were to ask me why does it work that way? I would stare at you dumbfounded and say, there's got to be someone out there who understands this better than I do. There has to be otherwise it wouldn't exist. But I am not that person. We've got a bit more to say about Google forming its parent company, Alphabet after this commercial break some other information. Google is conducting this in the state of Delaware. Now that's pretty common here in the United States. You see a lot of companies incorporating in Delaware. Doing so means the company can restructure without first holding a shareholder vote. That's a big deal. So by conducting this business in Delaware, specifically, Google does not have to ask permission from shareholders. Google can just go ahead and do this. But you might wonder why so many companies in the United States incorporate in Delaware. Even if you you know, imagine like they're their actual operating headquarters maybe in totally different states, they still incorporate in Delaware. Here are the reasons why companies incorporate in Delaware. Uh, first, I should give you some quick facts. If you're not familiar with the United States and you're not familiar with Delaware, you may wonder why this is a big deal. In the first place. Well, Delaware is a tiny state, both in geography and population. The population for the entire state back in two thousand ten, when the last US census was conducted, was just eight hundred seven thousand, nine thirty four, so less than a million people. And yet more than sevent of all new initial pub offerings in the United States are done by companies incorporated in Delaware. More than six of all Fortune five hundred companies are incorporated in Delaware. So what is going on, Well, Delaware leads the way when it comes to corporate law, and that's a big, big reason you want if you're going to incorporate, you want to be in a state that is up to date on that law, that is defining that law, because then you have a very clear set of rules of what you can and cannot do. It makes it well defined, and it makes it easy for companies to operate within the boundaries of law, or if your cynical, it makes it easier for companies to see how much they can get away with. Now there's a great deal of case history established in Delaware, which again makes it easy to know what is and isn't within the rules. Plus it makes litigation move more quickly due to the amount of previous decisions that are likely to cover the same territory. No one wants to get into litigation. No one wants to get into lawsuits, corporate lawsuits. But if you're gonna have it happen, you want it to be over with as quickly as possible so you can get back to business. Now, Delaware has a special court, and I love the name of this court. It's called the Court of Chancery, and that oversees corporate law disputes without the need for juries, which speeds things up considerably. And it's its own line of courts, so corporate cases have their own court. They aren't required to wait in line behind other cases, and they are decided upon by judges who specialize in corporate law. So that that's why this is all taking place in Delaware. Now. A couple of other details about Alphabet and Google. The u r L for Alphabet isn't alphabet dot com because Google doesn't own alphabet dot com. Instead, the u r L is ABC dot X yse E if you go there. There's very little as of the recording of this podcast that's there right now. It's just a kind of almost like a land holding page that links to the Google blog that has the announcement. And you might wonder if there are already any companies that have the name alphabet, and as a matter of fact, there are. There are lots of them, and the word has even been trademarked by BMW, although Scott Benjamin, as he was leaving the studio earlier, told me that BMW really shouldn't have a strong claim on trademark for the alphabet because they only use three of the letters. Scott makes the same sort of jokes I do. Obviously, so other alphabet companies that already exist. There's so many. They're just tons like Alphabet Funds, Alphabet Energy, Alphabet Plumbing, Alphabet Record Company. There are tons that are just called alphabet. So there's been a question will these companies in up suing Google to prevent it from assuming the name alphabet, And for most of them, the answer already sounds like it's going to be no, because Google is enormous, so going in against Google would be a very expensive and probably futile activity. Also, if you try to Google how to sue Google, it just comes back saying don't do it. That's a joke. So that is why Google is really looking at splitting this out. The big reason being that now Google can organize so that each division being its own company, can focus on what it needs to do to achieve success and it doesn't have to be tied directly back to Google. That was one of those things that people were asking all the time. Google was known as a search company and by extension and ad company, so people would say, well, why are you getting into autonomous cars or you know, why are we were why are you getting to uh smart thermostats? Why are you getting into this company that's looking into how to stop aging or or to prolonged long, prolonged lifespans indefinitely, what's the purpose of this? How does that relate back to your main business? And by creating this parent company, Google no longer has to answer those questions because Google, the company can continue to focus on things like Gmail and search and apps and Android and YouTube. Meanwhile, the company Calico can focus on longevity, and the company Life Sciences can focus on creating technology that benefits the medical field. So each company can do what it needs to do independent of Google and have a better chance of success. This also really does clear things up from a management and reporting status. I don't know how many of you out there have been have worked for a very large company, but for but if you work for a big company that has acquired other companies, there usually is a long process to figure out where those lines of communication need to be drawn, where where is that chain of command and how is it formed? And it can take years for those questions to be answered, and even when they're answered, they may not be the best answer to the question. And you might have relationships that on paper made sense but in reality don't make any sense at all. So I think that's really the main reason some people were getting very cynical about the purposes of Google, like thinking that this might be some means of escaping taxes, and it's certainly there are issues about you know, there are there are ways that that apparent company can leverage having subsidiaries to pay less tax and I have no doubt that Google will or Alphabet rather that Alphabet will pursue those But I really do think the main reason here was to get a better handle on what Google is all about and what these other companies are all about, so that they can focus on what they do without worrying about all the other elements within the giant, sprawling company that is Google. So I hope that answers all your questions about Alphabet. Obviously, this is just the tip of the iceberg. We don't know that much yet because it's only just been announced, but I'm sure a lot more information will come out, especially things like will they be able to actually use the name alphabet or is that going to change? Uh? Does seem a little premature to announce it before it actually is legal, but you know, it's Google. They've got a lot of weight to throw around. I hope you enjoyed that classic episode of tech Stuff and the bit about Google creating its parent company. Often these days, I still find myself referring to the overall company as Google rather than Alphabet. But you know, obviously, if you want to be really accurate, you want to talk about Alphabet as the company that owns all these other spinoffs, and or at least as the company that's over all these other spinoffs, and Google is just one of many. But yeah, old habits die hard. Same thing is happening with meta slash Facebook. I always have to say meta slash Facebook because I want to just say Facebook, anyway, that's neither here nor there. If you have suggestions for topics I should cover in future episodes of tech Stuff, reach out to me. You can do that through the I Heart Radio app. It's free to download. You can just navigate over to tech Stuff and use a little microphone icon to leave a message up to thirty seconds in link, or you can reach out on Twitter. The handle we use for the show is text stuff H s W and I'll talk to you again really soon. Tex Stuff is an I Heart Radio production. For more podcasts from my Heart Radio, visit the i Heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows. Th

Welcome to tech Stuff, a production from I Heart Radio. Hey there, and welcome to tech Stuff. I'm your host job in Strickland. I'm an executive producer with iHeart Radio and how the tech are Yet it is time for a classic episode. This episode, originally published on September seventh, two thousand fifteen, is called Alphabetizing Google. It is, of course, about the when Google created the company Alphabet to serve as an umbrella company for all of Google's various divisions that had spun off to become companies of their own. It was an interesting process because, as I recall, Google originally owned Alphabet, and then they had to do kind of a weird little switcheroo on paper to make Alphabet the official umbrella corporation. You start reading up about these things and you begin to think, you know, all of business is based off of a three card Monty game. But I'm getting ahead of myself. Let's listen to this classic episode. So on Monday August ten, two thousand fifteen, Google CEO Larry Page posted in the official Google blog that the massive company would undergo a restructuring and Google would become a subsidiary under a parent company named Alphabet. Now, obviously the tech news world went bonkers as a result of this announcement, But what does it really mean and why would Google ever want to do this. That's the purpose of this episode. So I'm going to talk about not just Google's decision, but what a parent company is, what subsidiaries are, why those things exist, so that we can actually have a better understanding. And one of the reasons I'm doing this is because, even as a tech guy with a kind of general understanding of corporate structure, I was kind of confused too, and so I thought, if I'm confused, I'm sure at least one other person out there is confused. So that's why I want to really dive into this and get a general understanding of parent companies and subsidiaries so that we understand why those exist across different companies, not just Google. So first, Alphabet is the parent company that will oversee a collection of other companies, the largest of which is Google. Larry Page will be the CEO of this new company, so trans transferring from Google to Alphabet. Sarah A. Brend will be the president of Alphabet, and Paige and Brend are of course co founders of Google. Now it might be helpful to take this moment to explain what a parent company is and how those subsidiaries work in general. So, a parent company is a company that controls other companies. The way it does that is it has to own enough voting stock or control of those companies or more. Actually, now, parent companies are not necessarily hands on with their control. Sometimes you have a parent company that has all these subsidiaries as a means of generating revenue, but they largely remain hands off with those subsidiaries. But then there are other parent companies that get really involved with what their their subsidiaries are doing. It all depends upon the specific companies, but subsidiaries have their own management levels. So while there will be the CEO of Alphabet, there will also still be a s CEO of Google. That might sound confusing, but it's it makes sense when you look at how subsidiaries have to manage themselves. So you can kind of think of subsidiaries as the children of parent companies. It's kind of stretches the analogy, but it works. So a regular subsidiary, there is such a thing, is one that is owned by a parent company, whereas a wholly owned subsidiary is I bet you're going to guess it owned by a parent company. Now, generally speaking, the most common reason for creating a parent company and subsidiary relationship is to distribute risk and liability, as well as to expand into new businesses without taking the focus away from an already existing line of business. In other words, if you have a huge company that's really good at one thing, and you want to pursue another line of business, it might make more sense to create a parent company and a subsidiary dedicated to that new business instead of lumping it under the existing company. Google has been operating under that second approach for quite some time. Google's just this massive company that has acquired other businesses, most of which are only tangentially aligned with Google's main business, and the more Google does that, the harder it is to manage everything. Going with a parent company makes that management much more clear and the lines of command are much more clear. So the parent company organizes the management teams of the subsidiaries and establishes the company by laws. This creates the governance structure for the subsidiary and makes it clear what the chain of command will be and how it relates to the parent company. So in other words, it removes some of this confusion. If you work for one of these divisions that's now a subsidiary, you should have a pretty clear chain of command all the way up to the parent company, and most of the time it's going to be independent of the other subsidiaries, so you don't necessarily have to worry about reporting to like five different bosses across different divisions because those other companies will be independent. So the structure also determines how the parent company and subsidiaries are treated as legal entities. If the parent and subsidiaries share employee benefit plans or insurance contracts, or they commingle their funds or files, or they file consolidated income tax returns, they can be seen as a single entity. So in other words, there are some tax issues that come into play. It's not all just organizational there's also tax considerations. Uh. Now, in the United States, a parent company can offset the profits and losses of subsidiaries against each other for federal tax return purposes. So if you have a big parent company and one subsidiary is doing really well and another subsidiary is doing very poorly in a given financial year, you can offset the losses of one with the revenues of another, and that can lead to huge savings in the big picture when it comes time to file federal tax return. There's also some benefit on a on a state level, depending upon what state you are in. Some states only tax the income earned within that state, and all income earned in other states remains untaxed, so there's that as well. Now, a subsidiary is a separate legal entity and has its own liability that is separate from the parent companies. That means the parent company can create a subsidiary that pursues businesses that might be risky, meaning they could have a really low return on investment, without putting the parent company itself at risk. Parent companies are not normally held liable for the debts or actions of individual subsidiaries. So if you are the head of a massive parent company, you should invite me over to dinner one day. Also, if one of your smaller subsidiaries goes on some sort of quest for world domination or something, it's not necessarily your butt that will be held accountable, unless, of course, the courts do what is called piercing the corporate veil to see if there were any goings on of the hanky and or panky variety behind the scenes at the parent and company level. If that were the case, if it turns out that this subsidiary was going on a quest for world domination and was doing so under your direction or your encouragement, you could find yourself in serious hot water. But if there's no link found, then as a parent company, you are somewhat protected from liability. The subsidiary is to blame, not the parent company. So in other words, uh, the if one branch goes bad, it doesn't poison all the other branches, so it's a means of protection. Also, a subsidiary is something that a company can sell off to other companies more easily if it chooses to do so in the future. It's much easier to sell off an entire subsidiary than it is to sell off, say a division of a company. We'll be back with more about the alphabetizing of Google after this quick break. So let's say Alphabet creates a subsidiary for a business that seems promising, but it turns out it's just not a good fit for the way Alphabet does business. It could then sell that subsidiary off to another interested party. So, like I said earlier, the largest company under the Alphabet parent company is Google. Google will be a wholly owned subsidiary of Alphabet. This is not a big surprise. Google's market cap as of August twelfth, two thousand fifteen, was four hundred sixty one point seven billion with a B dollars. That's nearly half a trillion dollars. Now, in case you're wondering, Apple is still well ahead of Google. Apple's market cap was six hundred thirty two point eight billion dollars, so, you know, nearly two hundred billion dollars more than Google. So we're still talking. You know, it's still not anywhere close to hitting a trillion before Apple does. Now. Market cap stands for market capitalization, and that's the term that describes the dollar value of the total number of shares for a publicly traded company. So you figure that out by taking the value of the traded shares at any given time and multiply that times the number of shares that are out there. That tells you the market cap for that company. According to the SEC filing, which must be made public, Google will also contain YouTube and Android under its umbrella. In addition to search, ads, maps, and apps. But lots of stuff that was previously organized under Google will now be spun off as separate subsidiaries of Alphabet. So some stuff is gonna stay Google. YouTube does not become its own individual company that will still be part of Google, but other stuff will. Like a group called Life Sciences, which is a research and development division debty caated to finding new technologies to help in the field of health. Among its projects are the glucose sensing contact lenses that are really interesting. Also, there's a division called Calico that will become its own company UH that is a company that researches aging and how to increase the length of our lifespans. There's also Google Fiber that will become its own entity. There's Nest, the intelligent thermostat that Google acquired that will be its own entity. And also the Google x Lab, which is the division that does experiments with long shot projects and big ideas, the crazy R and D stuff that leads to to things like the UH the drone delivery system that Google wants to implement, the driver list cars. That kind of stuff came out of Google x Lab. Also, Google has a couple of investment arms, once called Google Ventures and another one's called Google Capital. Those will also operate independently of Google, and they will be under the Alphabet umbrella. Now, as for the financial situation of all these companies, Google's finances will remain separate from all the other subsidiaries. Also, all shares of Google the company will convert into the same number of shares of Alphabet, So if you have shares in Google now, you're going to have shares in Alphabet. The trading symbol for Google will remain the same, so that's not changing now. I mentioned that Larry Page was transitioning from CEO of Google to be CEO of Alphabet, So that means who gets to be the CEO of Google. There's gonna be an opening there right well. The new CEO of Google will be Sundar Pachai. Sundar is from India and has a an MS degree from Stanford and Material Sciences and engineering. He joined Google back in two thousand four and he worked on projects like Google Chrome and Chrome OS and also helped develop Gmail and Google Maps. So he was one of those people rumored to be considered from Microsoft CEO position when it was open. When Balmer was leaving, so uh, someone who has been with Google quite sometime and is well known for injecting a ton of life, vitality and research into Google. In fact, Larry Page has had nothing but wonderful things to say about him and his contributions over the last few years. You also have other executives who will be taking on new roles. Ruth poor At, who is the current Chief Financial Officer of Google, will still be CFO of Google, but also will become the senior vice president and chief financial officer of Alphabet, so she will serve as the CFO for both Alphabet and Google at the same time. All the other subsidiaries will have their own CEO. Suh, they haven't all been announced yet. Page and Brent's job will be to make sure that each subsidiary receives the resources and attention they need for success. And the actual process for this transformation is bizarre. You know, I said Google is going to create a parent company called Alphabet. Google will become a wholly owned subsidiary of Alphabet, and these other companies will also be wholly owned subsidiaries of Alphabet. That's this simplification for the process that's actually going to happen, and I'm going to explain to you what the process is based upon the SEC filing. And this really demonstrates how bizarre corporate maneuvers have to be in order for them to take effect. It is truly strange. So first Google will create a direct wholly owned subsidiary called Alphabet, So, in other words, Google will be a parent company to the subsidiary Alphabet instead of the other way around. Now this sounds bizarre because it's literally the opposite of what I said was going to happen earlier, where Alphabet was going to be the parent company. But just hold on because it gets weirder from here. Alright, So at this phase, Google is a parent company and Alphabet is its wholly owned subsidiary. Alphabet then will form its own wholly owned subsidiary called merger Sub. Really catchy name for a company. Right, This is all in the SEC filings. So merger Sub has one purpose only. Merger Sub is an indirect wholly owned subsidiary of Google, or if you like it, if you think of it in family terms, Google is is the parent, Alphabet is the kid, and merger Sub is the grand kid. Now, the next phase has Google undergoing a corporate merger with Merger Sub. So, in other words, Grandpa Google and grandkid merger Sub merged together to become one entity. So Google will emerge with its own indirect, wholly owned subsidiary. But because merger Sub is a subsidiary of Alphabet, that makes Google a direct, wholly owned subsidiary of Alphabet. So now Google is Alphabet's kid, not the other way around. If this sounds at all like the novelty song I'm My Own Grandpa, it totally is. And if you don't know what that is, you should listen to that song. First of all, I apologize. It is an old joke song that involves a convoluted series of marriages where the singer becomes his own grandfather. That's pretty much what we're looking at here, alright. So to sum up what I just said, Google creates a subsidiary called Alphabet. Alphabet in turn creates its subsidiary called Merger Sub. Google merges with Merger Sub and assumes the role of subsidiary to Alphabet. And that's how we get to the the world where Alphabet is the parent company. If you were to ask me why does it work that way? I would stare at you dumbfounded and say, there's got to be someone out there who understands this better than I do. There has to be otherwise it wouldn't exist. But I am not that person. We've got a bit more to say about Google forming its parent company, Alphabet after this commercial break some other information. Google is conducting this in the state of Delaware. Now that's pretty common here in the United States. You see a lot of companies incorporating in Delaware. Doing so means the company can restructure without first holding a shareholder vote. That's a big deal. So by conducting this business in Delaware, specifically, Google does not have to ask permission from shareholders. Google can just go ahead and do this. But you might wonder why so many companies in the United States incorporate in Delaware. Even if you you know, imagine like they're their actual operating headquarters maybe in totally different states, they still incorporate in Delaware. Here are the reasons why companies incorporate in Delaware. Uh, first, I should give you some quick facts. If you're not familiar with the United States and you're not familiar with Delaware, you may wonder why this is a big deal. In the first place. Well, Delaware is a tiny state, both in geography and population. The population for the entire state back in two thousand ten, when the last US census was conducted, was just eight hundred seven thousand, nine thirty four, so less than a million people. And yet more than sevent of all new initial pub offerings in the United States are done by companies incorporated in Delaware. More than six of all Fortune five hundred companies are incorporated in Delaware. So what is going on, Well, Delaware leads the way when it comes to corporate law, and that's a big, big reason you want if you're going to incorporate, you want to be in a state that is up to date on that law, that is defining that law, because then you have a very clear set of rules of what you can and cannot do. It makes it well defined, and it makes it easy for companies to operate within the boundaries of law, or if your cynical, it makes it easier for companies to see how much they can get away with. Now there's a great deal of case history established in Delaware, which again makes it easy to know what is and isn't within the rules. Plus it makes litigation move more quickly due to the amount of previous decisions that are likely to cover the same territory. No one wants to get into litigation. No one wants to get into lawsuits, corporate lawsuits. But if you're gonna have it happen, you want it to be over with as quickly as possible so you can get back to business. Now, Delaware has a special court, and I love the name of this court. It's called the Court of Chancery, and that oversees corporate law disputes without the need for juries, which speeds things up considerably. And it's its own line of courts, so corporate cases have their own court. They aren't required to wait in line behind other cases, and they are decided upon by judges who specialize in corporate law. So that that's why this is all taking place in Delaware. Now. A couple of other details about Alphabet and Google. The u r L for Alphabet isn't alphabet dot com because Google doesn't own alphabet dot com. Instead, the u r L is ABC dot X yse E if you go there. There's very little as of the recording of this podcast that's there right now. It's just a kind of almost like a land holding page that links to the Google blog that has the announcement. And you might wonder if there are already any companies that have the name alphabet, and as a matter of fact, there are. There are lots of them, and the word has even been trademarked by BMW, although Scott Benjamin, as he was leaving the studio earlier, told me that BMW really shouldn't have a strong claim on trademark for the alphabet because they only use three of the letters. Scott makes the same sort of jokes I do. Obviously, so other alphabet companies that already exist. There's so many. They're just tons like Alphabet Funds, Alphabet Energy, Alphabet Plumbing, Alphabet Record Company. There are tons that are just called alphabet. So there's been a question will these companies in up suing Google to prevent it from assuming the name alphabet, And for most of them, the answer already sounds like it's going to be no, because Google is enormous, so going in against Google would be a very expensive and probably futile activity. Also, if you try to Google how to sue Google, it just comes back saying don't do it. That's a joke. So that is why Google is really looking at splitting this out. The big reason being that now Google can organize so that each division being its own company, can focus on what it needs to do to achieve success and it doesn't have to be tied directly back to Google. That was one of those things that people were asking all the time. Google was known as a search company and by extension and ad company, so people would say, well, why are you getting into autonomous cars or you know, why are we were why are you getting to uh smart thermostats? Why are you getting into this company that's looking into how to stop aging or or to prolonged long, prolonged lifespans indefinitely, what's the purpose of this? How does that relate back to your main business? And by creating this parent company, Google no longer has to answer those questions because Google, the company can continue to focus on things like Gmail and search and apps and Android and YouTube. Meanwhile, the company Calico can focus on longevity, and the company Life Sciences can focus on creating technology that benefits the medical field. So each company can do what it needs to do independent of Google and have a better chance of success. This also really does clear things up from a management and reporting status. I don't know how many of you out there have been have worked for a very large company, but for but if you work for a big company that has acquired other companies, there usually is a long process to figure out where those lines of communication need to be drawn, where where is that chain of command and how is it formed? And it can take years for those questions to be answered, and even when they're answered, they may not be the best answer to the question. And you might have relationships that on paper made sense but in reality don't make any sense at all. So I think that's really the main reason some people were getting very cynical about the purposes of Google, like thinking that this might be some means of escaping taxes, and it's certainly there are issues about you know, there are there are ways that that apparent company can leverage having subsidiaries to pay less tax and I have no doubt that Google will or Alphabet rather that Alphabet will pursue those But I really do think the main reason here was to get a better handle on what Google is all about and what these other companies are all about, so that they can focus on what they do without worrying about all the other elements within the giant, sprawling company that is Google. So I hope that answers all your questions about Alphabet. Obviously, this is just the tip of the iceberg. We don't know that much yet because it's only just been announced, but I'm sure a lot more information will come out, especially things like will they be able to actually use the name alphabet or is that going to change? Uh? Does seem a little premature to announce it before it actually is legal, but you know, it's Google. They've got a lot of weight to throw around. I hope you enjoyed that classic episode of tech Stuff and the bit about Google creating its parent company. Often these days, I still find myself referring to the overall company as Google rather than Alphabet. But you know, obviously, if you want to be really accurate, you want to talk about Alphabet as the company that owns all these other spinoffs, and or at least as the company that's over all these other spinoffs, and Google is just one of many. But yeah, old habits die hard. Same thing is happening with meta slash Facebook. I always have to say meta slash Facebook because I want to just say Facebook, anyway, that's neither here nor there. If you have suggestions for topics I should cover in future episodes of tech Stuff, reach out to me. You can do that through the I Heart Radio app. It's free to download. You can just navigate over to tech Stuff and use a little microphone icon to leave a message up to thirty seconds in link, or you can reach out on Twitter. The handle we use for the show is text stuff H s W and I'll talk to you again really soon. Tex Stuff is an I Heart Radio production. For more podcasts from my Heart Radio, visit the i Heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows. Th