Google's Alphabet: Creating the tech version of Warren Buffett's Berkshire
What drove Google to create a new parent company in Alphabet? Answer: founders Larry Page and Sergey Brin are attempting to create the tech equivalent of Warren Buffett’s Berkshire Hathaway - a holding company that would be greater than the sum of the parts, which too could separately rise in value as investors get to see what they are buying. Products and ideas under development and those planned for the future will be in the holding company Alphabet, and be Google’s younger siblings with their own growth and funding options. To be sure, Alphabet will be a holding company with two key differences with Buffett’s Berkshire: Buffett buys shares in good businesses and also entire businesses based on the predictability of their cash flows; Alphabet will invest in projects and companies that are all about future potential, not current cash flows. Secondly, unlike Buffett, the companies may be separately listed or funded by outside capital, though Google may not need to raise money too soon, given that the search company is throwing up lots of cash.
Google CEO Sundar Pichai will now head both Google and parent company Alphabet
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