New Alphabet CEO Sundar Pichai hints at greater discipline and outside investors for long-term bets

Key Points
  • Alphabet CEO Sundar Pichai said the company will continue focusing on "Other Bets" and seek outside investors.
  • Pichai said he expects more of Alphabet's experimental businesses to follow the model of its life sciences arm Verily.
Google CEO Sundar Pichai speaks during the Google I/O keynote session at Shoreline Amphitheatre in Mountain View, California on May 7, 2019.
Josh Edelson | AFP | Getty Images

Alphabet CEO Sundar Pichai hinted at imposing more discipline on the company's "Other Bets," possibly selling stakes in some of them to outside investors as it's done with health tech company Verily, according to an interview with Fortune.

"I think with the 'Other Bets' we are definitely at a phase where, while we take a long-term view, we also want to marry that with the discipline of making sure they are doing well," he said.

"The question is, how do you assess the value of the entity you're creating and how do your other partners and other stakeholders?" he responded. "It's a direction we had already gotten underway. But you will see me focused on that more and emphasize that more."

He gave an example of the life sciences company Verily, which has received outside investments from Silver Lake and Temasek, and has its own board of directors, which includes Alphabet CFO Ruth Porat. "We expect most of the 'Other Bet' companies to follow a process like that over time," he explained.

Alphabet came into being in 2015, when the company split core Google businesses including search, advertising and Android — which account for substantially all its revenue and profits — from long-term and speculative businesses, which it deemed "Other Bets." Some of those businesses include GV and CapitalG, which make venture investments in privately held tech companies; Waymo, which is building self-driving cars; Wing, which is building delivery drones, and Sidewalk, which is building "smart city" technology and has a major test project underway in Toronto.

Since the beginning of 2017, the Other Bets have showed operating losses of more than $8 billion on revenues of just over $1.5 billion.

Pichai had been Google's CEO since the Alphabet reorg. But he took the top spot from Alphabet CEO Larry Page in a surprise move in December 2019, when Page and his Google co-founder Sergey Brin retired from active management at the company. The co-founders remain on the board and retain voting control of Alphabet's stock, however.

Pichai's interview comes shortly after Alphabet became the fourth U.S. company to reach a trillion-dollar market capitalization. The company is scheduled to report Q4 2019 earnings on Feb. 3.

Read the full interview in Fortune.

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