Diplomacy, Technical Grasp Vaulted Sundar Pichai Up Google's Ranks

11/08/2015 7:50 AM IST | Updated 15/07/2016 8:25 AM IST
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A low-key style and an unusually firm handle on diplomacy propelled new Google chief executive Sundar Pichai to the top of the search engine giant, former colleagues said, cementing his successes such as creating the Chrome browser.

Pichai was appointed as head of a "slimmed-down" version of Google, as part of a major overhaul of its operating structure. Larry Page, who stepped down as CEO, wrote on the company's blog that Google was creating a new holding company called Alphabet. Google would be just one of many companies under Alphabet.

Pichai joined Google just before its 2004 initial public offering and several colleagues who worked with him in the years following said he never seemed annointed for the top job. Instead names that came up as potential future Google chiefs included longtime product executives Salar Kamangar, Merissa Mayer and Susan Wojcicki.

Back then, he was one of a small group of product managers, but his responsibilities escalated from working on new versions of the Google tool bar to overseeing the building of Chrome.

Chrome's rise since its 2008 launch to become the world's dominant browser made Pichai's reputation, after which he started overseeing apps like Gmail. He later became head of Android, Google's mobile-phone operating system.

A soccer fan who hails from Tamil Nadu state in southern India, Pichai holds a master's degree from Stanford University and an MBA from the University of Pennsylvania's Wharton School.

Pichai aided his ascent by never trying to steal the limelight and advancing his agenda through quiet advocacy, according to former colleague Keval Desai.

"He's a very very strong opinionated person who has clear point of views about where product and initiative might go, but he's very good at letting other peoples' opinions emerge before he gives his own," Desai, now an investor, told Reuters.

As time went on, Kamangar was replaced as head of the company's YouTube division last year by Wojcicki. Mayer left in 2012 to run technology company Yahoo .

Tony Zingale, the executive chairman of Jive Software, said Pichai was "incredibly insightful and direct", acting as "the quiet yet thoughtful outside director" when he served on the board of the collaboration software maker for several years until July 2013.

Pichai excels at managing relationships, wrote longtime Google product manager Chris Beckmann in a post last year on the question-site Quora.

"Google has politics like any other large company, and Sundar navigated those politics to make his team successful while inflicting the least possible damage on any other team," Beckmann wrote.

Such diplomacy could come in handy as Pichai continues to oversee some big challenges for Google, including navigating an often difficult relationship with partners like South Korea's Samsung Electronics, the top Android smartphone maker.

He must also contend with Apple Inc, which has made bigger inroads with its music services and in wearable devices.

Wall Street appeared to recognize Pichai's talents, with the stock heading up as much as 7 percent in after-hours trading.

"He's a very capable operator, and he has a lot of buy-in from the business side as well as from the engineering side," said Morningstar analyst Rick Summer.

Pichai's elevation marks a further withdrawal by Larry Page from the daily affairs of Google and the internet-whale's serious commitment to avenues beyond search.

It will still use the Google name for its popular Internet search engine, mapping service and related products. But CEO and co-founder Larry Page said Monday the creation of the new holding company called Alphabet will provide more independence for divisions like Nest, which makes Internet-connected home appliances, and Calico, which is researching ways to prolong human life.

Analysts said the move may also be a nod to Wall Street demands for more fiscal accountability: As part of the reorganization, Page said the company will begin reporting financial results by segments. That should give a clearer picture of how Google's core Internet business is performing, separate from other ventures, said analyst Colin Gillis of the investment firm BGC Partners.

"They promised to give us more information," Gillis said. "Now we'll get a chance to see."

Google reported more than $14 billion in profit on $66 billion in sales last year, most of it from lucrative Internet advertising, while other ventures have required large investments without showing immediate returns. The company's stock has surged in recent weeks after a new chief financial officer announced other moves to rein in corporate spending.

Page will be CEO of the new holding company, with his co-founder Sergey Brin serving as president. Google's executive chairman, Eric Schmidt, will have the same title at Alphabet.

"Sundar has been saying the things I would have said (and sometimes better!) for quite some time now," Page wrote in a blog post announcing the changes.

Pichai, who was named overall chief of Google products last fall, is viewed by many as a potential successor to Page. While the Google co-founder has not indicated any plans to retire, he has at times struggled with a condition affecting his vocal cords that interfered with his ability to speak.

With the reorganization, Page signalled that he wants to give more authority to CEOs of the companies that will be part of the new entity known as Alphabet.

"Our company is operating well today, but we think we can make it cleaner and more accountable," he wrote. "We believe this allows us more management scale, so we can run things independently that aren't very related."

Businesses that will operate separately under the Alphabet umbrella include Calico, which Google established to conduct health research in 2013; Nest, which Google acquired in 2014; Fiber, which is building high-speed broadband networks in several cities; and Google X , the research lab responsible for Google's self-driving car venture and previously developed its controversial Internet headset, known as Glass.

Alphabet will also oversee Google Ventures and Google Capital, two corporate investment entities that focus on early- and growth-stage startups.

Google's YouTube video division, however, will remain part of the core business under Pichai, although Page made a point of praising its chief, longtime ad executive Susan Wojcicki. Google historically has not reported earnings separately for the YouTube business.

"It may not be quite ready yet," said Gillis. "Maybe they're going to do a little polishing and work on profitability first."

The new structure could make it easier for Google Inc. to sell off some of its unrelated businesses, or buy new ones, analysts said. Page has suggested previously that he is following the model of financier and businessman Warren Buffett. Buffett is CEO of Berkshire Hathaway, a conglomerate that owns more than 80 subsidiary companies and lets each operate with substantial independence.

Google said its chief financial officer, Ruth Porat, will hold the same title for both Google and Alphabet. Once the reorganization is complete, the company says its two existing classes of publicly traded stock will continue to trade on the Nasdaq exchange under the ticker symbols "GOOG" and "GOOGL."

Both classes of the Mountain View, California, company's stock rose more than 6 percent in after-hours trading following the announcement Monday afternoon.

(With inputs from Reuters and AP)

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