Google CEO Sundar Pichai speaking during a Google event in California in 2016.

Major Alphabet investor TCI sent a letter to Alphabet’s CEO Sundar Pichai on Tuesday.
The letter urged the company to cut costs in part by reducing headcount and lowering compensation.
It also called for losses to be “reduced dramatically” in Waymo, Alphabet’s self-driving car unit.

TCI Fund Management, one of Alphabet’s top investors, sent a letter to the company on Tuesday urging it to slash costs by reducing headcount, lowering worker compensation, and curbing losses in long term bets like Waymo, its self-driving car unit. 

The letter noted that “the cost base of Alphabet is too high and management needs to take aggressive action.” 

The London-based hedge fund has been a major stakeholder in Alphabet since 2017, and said its total shares in the company stack up to $6 billion. Despite the scale of its investments in Alphabet, the Wall Street Journal noted that it is “rare for big technology companies to face campaigns from activists such as TCI.”

The letter was addressed directly to Alphabet’s CEO Sundar Pichai from TCI’s managing director, Christopher Hohn, who is known in institutional investment circles for his activism. 

TCI’s Christopher Hohn.

Hohn noted that TCI was particularly concerned with how bloated Alphabet had gotten over the years. According to TCI’s calculations, which were illustrated via color-coded graphs, the company’s headcount has grown at a rate of 20% per year since 2017. 

Over that time, Alphabet’s employees have more than doubled from just above 80,000 to close to 190,000. 

“The company has too many employees and the cost per employee is too high,” Hohn advised.  

“It’s a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” Hohn added, quoting Silicon Valley investor Brad Gerstner. He also noted that TCI had held conversations with former Alphabet executives. 

TCI was not only vexed by Alphabet’s headcount, but also by the company’s above-market compensation rates. Hohn pointed out that median compensation at Apple was 153% higher than the 20 largest listed companies in the country. 

“We acknowledge that Alphabet employs some of the most talented and brightest engineers, but these represent only a fraction of the employee base. Many employees are performing general sales, marketing and administrative jobs, which should be compensated in-line with other technology companies,” Hohn wrote. 

Alphabet has announced that …read more

Source:: Business Insider


A top investor is now taking aim at Alphabet, saying it has too many employees, pays them too much, and it’s burning money on bad bets.

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