From Google to Alphabet: Eric Schmidt’s Take on Growing Up

Startup Bell
Oct 13, 2024
2 min read

Eric Schmidt, former CEO of Google, shares how the tech giant navigated its transformation into Alphabet. He reflects on the shift from a small, scrappy company to a corporation with over 50,000 employees. According to Schmidt, Larry Page (Google’s co-founder) believed that Google’s mission and structure had become too diverse. Inspired by Warren Buffett’s Berkshire Hathaway, Page spearheaded the restructuring that led to the creation of Alphabet. Google would become a subsidiary, allowing for new ventures to flourish independently.

Photo: Getty Images

Embracing Change at Scale

The shift to Alphabet was a bold move, echoing the philosophy that big companies should take risks and operate with the same agility as startups. Schmidt noted that many large corporations fall into a trap: they want to innovate like private companies but fear the risks involved. Alphabet's restructuring wasn’t just cosmetic—it was a cultural shift, giving each subsidiary its own financial incentives, leadership, and room to succeed or fail.

Learning from the Best

Larry Page studied Berkshire Hathaway's decentralized model extensively, looking up to Warren Buffett’s ability to run diverse businesses under one umbrella. By emulating this, Alphabet could avoid becoming bloated and inefficient, which is common for large companies. Alphabet’s success in this transition allowed for the growth of many of its ventures like Waymo, Verily, and Google itself to continue flourishing.

Driving Success Through Autonomy

One key lesson from the Alphabet structure is the importance of giving each part of the company autonomy. Alphabet's subsidiaries aren’t micromanaged by Google. Instead, they have their own goals, leadership, and financial planning. This freedom drives innovation by allowing each subsidiary to operate like an independent startup, while still benefiting from the resources and expertise of the larger Alphabet organization.

Staying True to Startup Roots

For entrepreneurs, Alphabet’s story shows how large companies can maintain their startup DNA by empowering smaller teams to lead their own projects. It’s not just about scaling—it’s about building a structure that encourages innovation and agility, even as a company grows.

Listen to Eric Schmidt: