Alphabet Soup

So yesterday, out of the blue with no leaks no speculation & no anticipation, Google goes and reinvents itself.

How does the most important company in the world (note I did not say most valuable), do that?

I have always had a tremendous amount of respect for Larry Page and Sergey Brin and the senior team they surround themselves with. When it really matters, they do things right and get things right.

The way I see it, Google is the cash cow that finances all the big bets Larry and Sergey are making inside Alphabet. The public markets get the transparency of seeing how the cash cow is performing and how the entire holding company is performing.

Think about it this way. For $445bn, you get $70bn of cash, Google, which does $70bn of revenue and produces $20bn of operating cash flow (probably more now that is it not going to burdened by all of these other investments), and all of these big bets, including Google Ventures and Google Capital, which are about the biggest investors in the VC sector right now.

That’s what you got when you bought Google last month, but now it is a lot clearer what you are getting.

You could easily make the argument that buying Google at $445bn gets you all of these big bets for free because the cash cow is almost certainly worth the $375mm of enterprise value that the market is putting on it.

Makes me think seriously about going out and buying our family some of that alphabet soup. I think its going to be good.