Alphabet Will Soup Up Google

Yesterday Google announced it's transformation to become a subsidiary of a new holding company called Alphabet.  Today's papers and broadcasts have had extensive coverage of this new corporate structure with an emphasis on the new transparency for Google.  While that is true and Google "proper" generates the bulk of the revenue and cash flow, I believe Alphabet will energize the entire entity for the future.  Google is one of the largest tech companies in the United States and many tech driven engineers would like to have Google on their resume.  However, with a market cap of $465 billion, are their stock options that attractive to really ambitious computer science jocks or jockets? Sure, the old Google was an exciting place to work but was there as much economic upside as a startup or a smaller tech entity like Tesla, or many emerging big data and healthcare companies?

I would argue no.  Alphabet brings new excitement into the Google workforce and its recruiting department.  Of course, this is just speculation on my part. There are probably 40 to 50 companies that exist within Alphabet that won't be part of Google.  The new structure will allow each unit to have it's own stock like a startup and recruiting can now consist of offering equity in each of these units or emerging companies.  If one is interested in working for Nest, they can now have Nest stock or if Drones is your thing, there is a startup for you.  Each new entity can attract the best talent, some of which may come from Google, but also from Apple or Facebook or other emerging tech companies.  The talent pool has just expanded to include any rising star in tech because the opportunities within Alphabet are endless.  Perhaps Google Ventures will now seed a bunch of new startups within Alphabet or will there be a new Alphabet Incubator created to compete with Y Combinator?

Many commentators can't understand why Google's stock is up dramatically today as nothing has changed except transparency.  I think time will  make it apparent that Google and Alphabet are different.  Yes, the Google entity has the same value but the optionality for the Big Ideas has just added tons of value to the whole entity.