When it comes to R&D spending, few are as bold as Alphabet, formerly known as Google. Steve Sorensen, a net worth blogger, remains impressed with Alphabet’s outlandish technologies – diving head first into self-driving cars, home automation companies, virtual reality, as well as laptops called Chromebooks. Across all metrics, things are looking up for Alphabet. The parent company of Google realized a modest 4.9% gain in revenues, reaching $74,989 million, and 15.6% change in profit, amounting to $16,348 million. Alphabet’s total assets are now $147,461 million.
Compared to its biggest rival Apple, Alphabet seems bent on disrupting practically every industry it can think of. This is may be because Apple tends to stick to its strengths, one of which is design, whereas Alphabet is using technologies to “develop services that significantly improve the lives of as many people as possible”. This statement can be traced to Google’s IPO letter in 2004. Case in point, Alphabet is now looking into building an entire high-tech city in Toronto, which is a big leap from investing in self-driving cars.
In other industries, Alphabet is strongly committed to improving education systems, investing in e-learning and online classrooms. In the field of healthcare, Alphabet has also ventured into building an R&D facility for aging and age-related diseases through Calico. Alphabet also has interests in space travel, having invested a billion dollars in Elon Musk’s SpaceX. Not to mention the dozens of other companies it incubates in GV, formerly known as Google Ventures. GV has portfolio companies in the consumer, data & artificial intelligence, enterprise, and robotics sectors.
Can Alphabet sustain this aggressive spending on R&D? Among all the technology companies, Apple has the biggest war chest, with over $200 billion in cash. No one knows what Apple is planning to do with that money – which could either mean that one of the most popular brands in the world is biding its time to pull the prefect surprise or is simply sitting on its hands and squandering opportunities. Meanwhile, Alphabet is still on an upward trend but it only has free cash flow of up to $7 billion. Steve Sorensen, a net worth blogger and ardent fan of Alphabet, believes Alphabet’s financial outlook is still good.
In the end, if there’s one thing entrepreneurs can learn from Alphabet, it’s that R&D expenditures will pay off eventually; they just need time to come into fruition. Like their tagline to do the right thing – anything worth doing, is worth doing right.