Alphabet Class A: The Architects of Search

Explore the evolution of Alphabet Inc. and the unique Class A stock structure that keeps founders Page and Brin in control of a global tech empire.[INTRO]ALEX: Most people don't realize that when they buy a share of Google—now Alphabet—they aren't just buying a piece of a search engine; they are entering a corporate structure designed to ensure the founders never have to listen to them.JORDAN: Wait, what? If I buy the stock, don't I get a say in how the company is run? That’s how capitalism works, right?ALEX: Not in the 'Googleverse.' Today we’re looking at Alphabet Inc. Class A shares, ticker GOOGL, and how a research project called 'BackRub' became a trillion-dollar conglomerate that literally changed the dictionary.[CHAPTER 1 - Origin]ALEX: The story starts in 1996 at Stanford. Two Ph.D. students, Larry Page and Sergey Brin, get obsessed with how the web is organized. They notice that the existing search engines just look for keywords, which is messy and inefficient.JORDAN: So they decided to build a better filing cabinet for the internet?ALEX: Exactly. They created an algorithm called PageRank. It didn't just look at what a page said; it looked at who was linking to it. They originally called the project 'BackRub' because the system checked 'back links' to see how important a site was.JORDAN: 'BackRub' is a terrible name for a global superpower. How did we get to the name we actually use as a verb?ALEX: They pivoted to 'Google,' a play on 'googol'—the mathematical term for a 1 followed by 100 zeros. By 1998, they incorporated in a garage owned by Susan Wojcicki, who eventually became the CEO of YouTube. They were so focused on the tech that they actually tried to sell the company early on for a million dollars, but the buyer passed. It was the best 'no' in business history.[CHAPTER 2 - Core Story]ALEX: By 2004, Google is ready for its IPO, but they do it differently. They used a 'Dutch Auction' to let regular people buy in, not just the big Wall Street banks. This is where the 'Class A' stock we're talking about comes in.JORDAN: Okay, break it down for me. Why the different classes? Why can't it just be one stock?ALEX: This is the genius, or the villainy, depending on who you ask. Class A shares, ticker GOOGL, give you one vote. Class C shares, ticker GOOG, give you zero votes. And Class B shares—which are held by the founders—give them ten votes per share.JORDAN: So Larry and Sergey can own a minority of the company’s money, but still have the majority of the power? That sounds like a digital monarchy.ALEX: It essentially is. It allowed them to make massive, risky bets without fearing a shareholder revolt. In 2006, they bought a video site called YouTube for 1.6 billion dollars. People thought they were crazy for overpaying. Today, YouTube brings in more money than most media networks combined.JORDAN: But the name changed to Alphabet in 2015. Did they get bored of being Google?ALEX: They grew too big for the name. By 2015, they weren't just search; they were self-driving cars, life sciences, and high-speed internet. They restructured into Alphabet to separate the profitable core—Google Search and Ads—from what they call 'Other Bets.' These are the moonshots, like Waymo’s robotaxis or Calico’s research into curing death.JORDAN: Curing death? No wonder they wanted a stock structure that keeps the investors from complaining about the bill.[CHAPTER 3 - Why It Matters]ALEX: Today, Alphabet is an advertising fortress. About 76% of their revenue still comes from ads. When you use Gmail, Maps, or Android—which runs on 70% of the world's phones—you're feeding a data machine that sells your attention to the highest bidder.JORDAN: But the walls are starting to close in, aren't they? I keep hearing about lawsuits.ALEX: They are facing an existential threat from regulators. The EU has already fined them over 8 billion euros for anti-competitive behavior. In the U.S., the Department of Justice is trying to prove they have an illegal monopoly in search and advertising. If they lose, the company could be forced to break apart.JORDAN: And then there’s AI. Is Google still the smartest kid in the room now that ChatGPT is out?ALEX: That’s the big question. In late 2022, Google reportedly declared a 'code red' because AI chatbots could replace the need to 'google' things. They’ve pivoted everything toward their own AI, Gemini, to prove they aren't the next Blockbuster Video.[OUTRO]JORDAN: If I’m looking at my portfolio, what’s the one thing to remember about Alphabet Class A?ALEX: Remember that while you own the stock, you're a passenger on a ship entirely steered by the founders' long-term vision, for better or worse. JORDAN: That’s Wikipodia — every story, on demand. Search your next topic at wikipodia.ai