Ruth Porat

losing money. Yeah. And David Rubinstein had a chance to talk with Ruth poor At on the David Rubinstein Show Peer to Peer Conversations about the company, and he starts here by asking her how business has been during the pandemic. Let's listen in So during this period of time, Google has done quite well, Alphabet has done quite well. Your stock is up but more than this year, and I should say from the time you became the CFO, the stock is up about over and the market caps over

So done quite well under your leadership. But I'm curious or more people looking at doing searches now during this COVID nineteen period of time than ever before, or the people not spending as much time searching. I know people are spending a lot of time searching. We have trillions of searches every year pre COVID post COVID. It's really the nature of searches the change. And so early in the crisis, people really migrated to shifting for information about

the disease. What they needed to know is all information about COVID. You then saw people shift to Okay, how am I going to live my life in a COVID world? And so more things that more how to search is what do you do? On? How do I cook? What do I do? And meditation wellness. It was really moving there. Now you're seeing people moving back into more um commercial activities and I think one of the big surges that we saw was how can I how can I help

in my community? How can I help others? And it's always really quite inspiring to see through search how people are feeling about the world. So most of your employees are still working remotely? Is that correct? So we moved everybody to remote work from home, all d and twenty thousand of us. But as countries are opening up, we're

starting to move people back in. So, for example, in Taiwan we actually are about in places in Europe we've been bringing some people back, but fundamentally we moved everybody to work from home. When you started working remotely, did you ever worry it would be a problem because you have all these people, but you're technically very savvy. So when we started the move to work from home, it

did seem daunting. I'm responsible for our crisis response and put together a really strong governance around how do we get people to move from home with a global team and then a regional team, and we were in sync daily. That worked really well. What we were most concerned about was what would be the impact on productivity and wellness.

Our chief medical officer, very early in the crisis said that more people would be affected by mental health issues than actually the physical disease itself, So we focused on those two and I think that was really important. The other thing is Google is really about our people and the ability to to liver for users and communities because of our compute capacity. And one of the things we didn't have to worry about was our ability to to

really deal with the surgeon online activity. And that was because of all of the investments over many years and all of the testing for what could happen in a sort of crisis scenario. And I think it's an important point because you can't solve the risk management issue in the middle of a crisis. You obviously need to solve

it ahead of time, and that worked. So many companies are saying, well, now that I've learned that my people can work from home, maybe I don't need all these people either in the office or I don't need all these people. Is that your view? You don't need all the people you have, or you may not need them all in the office. We believe that when people are together that's a critical element for innovation. Collaboration helps support innovation.

It's collaboration within teams, and it's collaboration across teams. It's collaboration and its serendipity. So we do look forward to having people back in the office. What we're looking at is the productivity lift you get if people have the ability to work from home some days be in the office, in particular when the rest of their team or more broadly, teams are in the office. And if you can save

people commute time, you have better access to talent. Because you're solving what people want in their personal life, it's actually going to result in a better outcome. What that means for real estate we're still figuring out. Early on, Google was well known for, among other things, Um, you've got free food. Um, what about if you're working at home you give them free food showing up by delivery or somehow or how do they compensate for that? So

we're not doing that. But you know, a lot of people focus on food when really what we are trying to create have been trying to create is this fun, quirky, magical campus. And so it's about more than just the free food. It's the experience on campus. So what we did when we moved everybody to home is we moved a lot of these sort of connecting the community um to a virtual delivery. And so for food, as an example, you can do a one on one session with a chef,

you can do a cooking class. We took our fitness classes and moved them to virtual fitness classes and even some sort of goofy Google style ones like yoga with your dog. What have you learned about yourself during this period of time. One of the things that was actually gratifying, if I can broaden that question, is what I saw at Google and what I saw about my colleagues. And

this has obviously been an extraordinary stressful time. UM. We feel this responsibility because so many people are counting on us for quality information, for the ability to stay connected. And what I saw was people really step up in a meaningful way, and that was inspiring. It's been an extraordinary time. UM. What I learned about myself is one of the positive elements of of this has been sheltering in place and having my kids who have graduated from college.

They're now back with us for at least a limited period of time, and that's been remarkable in My husband and I have thoroughly enjoyed that. So some people say that the Google's of the world, Google, Facebook, Microsoft, Apple, Amazon are too powerful. They have so much power in our economy that it's not healthy. And you've been a

congressional hearings recently where your CEO testify. UM, what is your response to the view that the technology companies are becoming so dominant in our economy that it's not healthy. We are very mindful of the fact that with the scale of these company comes scrutiny, and that it's incumbent on us to engage with regulators and help them understand what is it that we're doing that is of benefit. How how are we providing better services at lower costs?

Which is really indicative of the competitive nature of the world in which we operate. We've got intense competition within the US, intense competitors outside of the US, and uh, you know, I think this COVID experience, many companies and individuals would not have been able to operate the way they did without the support and benefit from technology. But it's it's a fair question, and we're engaged constructively here

and around the globe with regulators on it. You have more than a hundred billion dollars of cash um on your balance which a lot cash um. Why do you need all that cash? Why not just div it ended out? Or are you going to use it for investments? So at the end of the second quarter we actually had a billion, but who's counting? So you're you're right. Um. When I got to Google, there had been a longstanding view that it was helpful to have cash because of

the optionality it provided. And I think the question I post was how much is too much and how much is too little? And can we actually try and um to mention that analytically and put together you know, the data that led to a conversation about beginning a sherry purchase program. And it started small, but we've now increased it five times in the last number of years. Um. The last one we just did in the second quarter.

It's billion dollar authorization and I'm you know, so it's been a journey and we've we've been increasing the return of capital. Um. You know, I've spent a big chunk of my career covering firms like Carlisle private equity firms, so I do appreciate what an efficient capital structure looks like. And this is really trying to um get the balance. So let's talk about your background for a moment. How you came to be the CFO of Google Alphabet and

before that, Morgan Stanley. So where did you grow up? So? I was born in England, mostly grew up in Silicon Valley. My father was a Holocaust survivor Holocaust refugee. He escaped from Vienna right after Crystal Knock when when he was a teenager, he was sixteen. He had no high school education, he had no college education. Obviously. He escaped to Palestine and as soon as he could he enlisted in the

British Army fought under Montgomery. He was in the Two Battles of Alaman, and his view was that the only way to find peace in a peaceful place was to have a skill that people needed. So he decided to teach himself physics while in the army. And he used to always tell us as kids that his fellow soldiers would would tease him and say, you will die before you can ever use this physics. And his answer was always if I die, I want to die. And educated man and after the war he was one of the

lucky ones. Um. He was given a place at the University of Manchester. He got a master's degree at PhD that's where I was born um, and then was given a position at Harvard. The only two places he ever worked was Harvard and Stamford, and so we moved eventually to Silicon Valley, and that's where I grew up. So you went to Stamford undergrad I did, and did you major in finance? I majored in economics and international relations, and thought I would go off and be a lawyer,

just like you. Okay, well you were smart not to do that, but but you did go to Wharton NBA school, right, and you've got an NBA from Wharton and you went to Wall Street. Well, when I actually went from Stamford to the London School of Economics to Wharton, I assumed I would be a consultant. When I started in business school, I was convinced that what I wanted to do was

work with companies and helped them understand their problems. But then I took a fascinating course and a great teacher, and he opened my eyes to this thing called Wall Street and mergers and acquisitions, and I got excited. So I went from completely convinced I was doing one thing to completely convinced the only thing I wanted to do as mergers. When you went to Ultimate to Morgan Stanley,

was it women? Far from it um? When I started Morgan Stanley was seven, and so it was sort of the Stone Age for um for any sort of sense of what was the role of women in banking. In fact, I think that general attitude was that those of us who were there would get married, have kids and leave. We didn't have the stamina. It was just a question of time. And I loved Morgan Stanley, I think more

instantly was the best of the best. But that was sort of the Ethos on Wall Street, and in fact, a couple of years into my career, I was working on a deal and I was out with a partner and a client. I was pregnant with our first child, and the partner actually turned to the client said, Ruth may come back after the first child, but there's no way she'll come back after the second child. Unfortunately, the client liked me a lot more than he liked this

partner and basically told him he was an idiot. But that really made an impression on me, and the thing that was inspiring and helpful and critical in my career as there were so many extraordinary men who really bet on me help open doors. You know, I didn't know at the time those were sponsors, but that's what they were. You became the CFO and at some point you're one of the most important people Morgan Stanley, and the US government calls up and says, why don't you come and

work at the Treasure Department, a very senior position. Did

you seriously consider doing that? Well? One of the most meaningful parts of my career was in O eight when two crisis, when UM Secretary Paulson asked me to lead a team to help him with um the housing the booming housing crisis, and um UH spent the entire period working on Fannie Mae and Freddie mac and then that evolved into work on a I G. And I thought it was extraordinary to be able to use skills I developed over decades that Morgan Stanley for something so important

for the country, So that to me remains one of the most meaning you're doing that as a employee of as doing that. Okay, But Morgan Stanley also went through a crisis during that period of time. I'm sure you remember it, where Morgan Stanley was close to maybe not being able to survive, and then a Japanese investor said, we'll put in some money. It turned out that money was at three times the stock price that you were trading at, and people weren't sure whether the Japanese company

Mitsubishi would show up. Were you ever in doubt that Mistsubishi would show up with that money. That was a terrifying period of time. This series of events was there was the Lehman Brothers famous weekend, followed by a call I got from the Federal Reserve saying we had worked on we collectively had worked on the wrong thing. We needed to focus on A I G. And asked me to get back down to the Federal Reserve that Sunday evening. Um they said A I G would be out of

money by Wednesday. In fact, it was Tuesday when they were out of money. And that's the point at which Morgan Stanley was running into its own very severe liquidity crisis. Morgan Stanley obviously prospered through the period of time. They survived, and you did quite well. And then someday somebody called you up. I don't know who it was. Was it a headhunter? Was it somebody from Google saying we'd like

you to be considered to be the CFO. UM. Were you surprised at that offer because you were a Wall Street person, you weren't a technology person. So actually it was a very different path to the question. I was on the Stanford board and had the opportunity to spend some time with Bill Campbell, who was an iconic coach to so many people, to Larry to Sergeate, to Eric Schmidt,

to Steve Jobs. And I left the board meeting and went to his home and sat down with him to talk about life generally, and he started probing kind of what next, what would I want to do? And um my comment and was I didn't know. At some point I would want another chapter. But one thing I knew for certain is I would not leave Morgan Stanley at CFO to be a CFO anywhere else. And for two hours he kept kind of coming back to that strong assertion, and at the end of two hours he said, okay,

so you wouldn't leave to be a CFO anywhere else? Correct? And I'm adamant correct, And he said that I have the perfect job. You should be the CFO of Google. And of course the two of us burst into laughter, and I said, well, that one I would do. And and I didn't believe it. I left his home and didn't actually believe it was real or that it would happen. And within a couple of hours he called and said, go over to Larry Page's house and spend some time

with him, see if this works. Right. She went over to see Larry Page, and he said, guess what I just heard about you? And I wanted you to be the CFO. So I had known him. I worked on the Google ipeo and had had different interactions through the Stanford board. We spent two hours. It was this broad conversation fascinating, as Larry Page always is. I left again not actually believing that it would happen, and quickly everything

came together. So you took the position. But now you're going to be breaking into another world where women are not that prominent. Was it harder break into the technology world as a woman or as a harder break into the financial world as a woman? Well, when I broke into the financial world, I was junior, and I think it's harder when you're junior then when you're coming in as somebody who's credentialed. But if the question were broadly's

which world is tougher, Wall Street or um Tech? You both have evolved meaningfully since those days of the boys Club on Wall Street that UM we're so painful, and I think there's a much greater awareness that it's not just the right thing to do to have diversity and senior ranks throughout an organization, but it leads to better outcomes UM and so I think that they're actually pretty similar. The difference is there's it's a more collaborative environment um UM.

In tech, I would say a Well Street can be pretty pretty rough, but the more testosterone filled place is Wall Street or Silicon Valley. Um, there's a lot of testosterone. There's enough to go around. So when you get there, you're a fairly buttoned down CFO of Morganstown. That you're very precise and so forth. Google is probably a less precise place when you get there, right. That's they're making so much money and not have to worry about every

little dollar. I guess, so, did you say we've got to change things, and that people say we don't want to change, we're doing well, or that people say, yes, we want to change. So throughout my career my view has been if you actually anchor your points in data, it becomes very easy to engage people and what is the issue and what's the proper path forward. And one of the extraordinary things at Google is we have very smart and very inquisitive people. So as I laid out

whatever issue it is anchored in data, it engaged the conversation. UM. And so I actually didn't find it to be discordant. In fact, I was really impressed with the view of yes, throw in the new idea, well, let us understand what and why? Um, And it's you know, it's been a journey. So Alphabet, it is the parent company. You're the CFO of that. You're also the CFO of of Google. Google is the search engine, and that is still massively profitable

by anybody's standard. I assume, I don't know if you like the word massive, but but it's profitable, right, it's doing all right. What about cloud computing? Your number three in that business but catching up to I guess the number one is Amazon, number two is Microsoft. But is that important growth engine as well? You think it's a

very important one. It's a sizeable market. We think, in very very early innings, UM, the opportunity for businesses to migrate to the cloud provides them with extraordinary added capabilities and they're looking to us, whether it's for security or data analytics or a I that's what we're able to do working with with customers. And you've really seen the important migration to the cloud. So we're investing meaningfully in it.

We do see it as a sizeable opportunity. And one of your areas of focus at Google and Alphabet is healthcare and health related UM, why is that such an important focus, uh of the founders and you UH? In terms of healthcare? Why is that so important to you healthcare. We have the opportunity with technology to make a fundamental difference in healthcare, in particular with AI, in a host of areas. For me personally, I'm a breast cancer survivor.

I've had breast cancer twice. I've had gone through chemo twice, radiation, more surgery than than one could imagine. And I view myself as one of the really lucky ones. I was here in New York City when I was first diagnosed. I was treated at Memorial slum Cattering. I had the best care, and here I am healthy, as healthy as I've ever been. Not everybody gets that, that break and

that a year two ago. Um I remember when our AI engineers had a breakthrough in early stage detection of metastatic breast cancer with AI, which struck me as precisely the kind of thing that is transformative. And there is so much debate in the world about whether AI is a positive or not, and I wanted to make sure

I got an objective, non tech view of this. So I called my oncologists to ask whether I was reading this the right way, and it really had the impact I expected, And his answer was, you cannot democratize healthcare without AI. So we look at this as this opportunity to democratize healthcare, to provide service, to identify diseases earlier, to do things like telehealth that enables everybody to get the kind of care that I was able to have.

That's why I'm passionate about it. Now, somebody's watching this man or a woman says, all right, she's a leader. Um, she must have some qualities that I would like to know about more. What are the qualities that you think are important to be a leader. So I think one of them is it's very important to be able to make clear decisions anchored and data. It's the way you can build support for the ideas. Is the way you can know where to double down on great opportunities for

the long term where you should be pulling back. So it starts with data analytics. I think the other is integrity and building a culture that makes it really clear that you expect the highest quality, performance and integrity at all times from your people. UM. I would say that that the other is making it really clear that you want diverse views, that you build a diverse team, and that you're open to UM not only open, really expect

diverse views and debate. Uh you know. To me, I've often been asked how do I think about rising stars? And my answer is I want someone who's in my face. I want somebody who challenges me. And I think creating an environment where there's that open to discussion is really um is really important. So some people say it's very difficult for women to have it all, but you seem to have it all. So what's the secret to having it all? And is it is harder than people would

think or is it easier than people would think. I think it depends on how you define having it all. I've often been asked about work life balance. I think that is a horrible term and everybody should banish it from their vocabulary because getting balance, just the physics of it are hard. To me, the most important thing is to find a mix in life that works for you. And so for me, it's been an incredible career. I get a lot of joy and energy out of what

I'm doing, and then I have an amazing family. I've been married to an extraordinary man for ever. We have three wonderful kids. And for some people it may not be kids, but it's got to be something other than work, and it's finding a mix. So sometimes you may be more heavily focused on work, other times more heavily focused on family. In that mix changes throughout your life. To me,

that's been the most important element of it. And I would say I get very concerned when I hear women have a plan, a plan on when you're gonna sequence each step along the way. And I would say, in particular, when I had cancer and didn't actually know what was going to come, I was able to look back on my life and say I have no regrets. And you've been listening to Ruth poor atte cfo at Alphabet on the David Rubinstein Show Peer to Peer Conversations