The David Rubenstein Show: Alphabet CFO Ruth Porat

[Music] [Applause] this is uh my kitchen table and also my filing system over much of the past three decades i've been an investor the highest calling of mankind i've often thought was private equity and then i started interviewing while i watch your interview post i know how to do some interviews i've learned in doing my interviews how leaders make it to the top i asked him how much he wanted he said 250 i said fine i didn't negotiate with him i did no due diligence do i have something i'd like to sell and how they stay there how does it feel to get up in the morning and know that 330 million americans want to know the state of your health that day one of the most powerful women in the business world today is ruth peratt she started as a investment banker at morgan stanley rose up to be the cfo of morgan stanley and then was recruited away to be the cfo of google now the cfo of alphabet in that role she has enormous influence at that company and has done a terrific job of making certain that their balance sheet works well and that they really are much better organized in the financial sense i have no doubt that she's going to be a powered alphabet for quite some time unless the next president united states says i really would like her to be secretary of the treasury she'd be a terrific candidate for that position [Music] so during this period of time google has done quite well alphabet's done quite well your stock is up but more than 20 this year and i should say from the time you became the cfo the stock is up about over 200 percent and the market cap's up over 200 so done quite well under your leadership but i'm curious uh are more people looking at doing searches now during this covet 19 period of time than ever before or are the people not spending as much time searching no people are spending a lot of time searching we have trillions of searches every year pre-covered post-coven it's really the nature of searches that 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 covered world and so more things like more how-to searches what do you do on how do i cook what do i do in meditation wellness that was really moving there now you're seeing people moving back into more 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 120 000 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 70 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 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 deliver 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 surge in 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 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 it's 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 you've got free food what about if you're working at home you give them free food showing up by delivery 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 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 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 my husband and i have thoroughly enjoyed that so some people say that the googles 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 there's been congressional hearings recently where your ceo testified 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 u.s intense competitors outside of the u.s and you know i think this covet 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 sheet which is a lot of cash um why do you need all that cash why not just dividend it out or are you going to use it for investments so at the end of the second quarter we actually had 120 billion but who's counting so you're right when i got to google there had been a long-standing view that it was helpful to have cash because of the optionality it provided and i think the the question i posed was how much is too much and how much is too little and can we actually try and dimension that analytically and put together you know the the data that led to a conversation about beginning a share repurchase program and it started small but we've now increased it five times in the last number of years the last one we just did in the second quarter it's 28 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 firm so i do appreciate what an efficient capital structure looks like and this is really trying to get the balance was it harder to break into the technology world as a woman or is it harder to break into the financial world as a woman i think that they're actually pretty similar the difference right is there's it's a more collaborative environment in tech i would say at wall street can be pretty pretty rough so let's talk about your background for a moment how you became 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 a holocaust refugee he escaped from uh vienna right after kristallnacht when when he was a teenager he was 16 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 val aleman 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 his 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 an educated man and after the war he was one of the lucky ones he was given a place at the university of manchester he got a master's degree a phd that's where i was born and then was given a position at harvard the only two places he ever worked was harvard and stanford and so we moved eventually to silicon valley and that's where i grew up so you went to stanford 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 mba school right you got an mba from wharton right and you went to wall street well when i i actually went from stanford 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 help 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 convince the only thing i wanted to do was mergers when you went to ultimate morgan stanley was it 50 women far from it um when i started morgan center was 1987 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 morgan stanley was the best of the best but um that was sort of the ethos on wall street and in fact a couple 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 is 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 treasury department a very senior position did you seriously consider doing that well one of the most meaningful parts of my career was in 08 when 2008 crisis when secretary paulson asked me to lead a team to help him with the housing the booming housing crisis and um uh spent the you know the entire period working on fannie mae and freddie mac and then that evolved into work on aig and i thought it was extraordinary to be able to use skills i developed over decades at morgan stanley for something so important for the country so that to me remains one of the most meaningful as a employee i was i was 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 mitsubishi would show up with that money that was a terrifying period of time the the 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 aig and asked me to get back down to the federal reserve that sunday evening they said aig 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 well 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 uh 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 sergey 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 my comment tim 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 as 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 he said 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 um 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 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 want you to be the cfo so i had known him i worked on the google ipo 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 uh was it harder to break into the technology world as a woman or is it harder to 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 than when you're coming in as somebody who's credentialed but if the question more broadly is which world is tougher wall street or tech both have evolved meaningfully since those days of the boys club on wall street that were so painful and i think there's a much greater awareness that it's not just the right thing to do to have diversity in senior ranks throughout an organization but it leads to better outcomes and so i think that they're actually pretty similar the difference right is there's it's a more collaborative environment um in tech i would say wall 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 morgan stanley you're very precise and so forth google is probably a less precise place when you get there right it's they're making so much money don't have to worry about every little dollar i guess so did you say we got to change things and the 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 in what is the issue and what's the proper path forward and one of the extraordinary things at google as we have very smart and very inquisitive people so as i laid out whatever issue it is anchored in data it engaged the conversation 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 let us understand what and why um and it's you know it's been a journey you seem to have it all so what's the secret to having it all to me the most important thing is to find a mix in life that works for you so alphabet 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 you're number three in that business but catching up to i guess the number one is uh amazon number two is microsoft but is that important growth engine as well you think it's a very important one it's a sizable market we think in very very early innings 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 ai that's what we're able to do working with with customers and you've really seen the important migration to to the cloud so we're investing meaningfully in it we do see it as a sizable opportunity and one of your areas of focus at google and alphabet is healthcare and health related why is that such an important focus of the founders and you uh in terms of healthcare why is that so important to you well healthcare we have the opportunity with technology to make a fundamental difference in healthcare and in particular with ai in a host of areas for me personally i 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 sloan kettering i had the best care and here i am healthy as healthy as i've ever been not everybody gets that that break and about a year or two ago i remember when our ai engineers had a breakthrough in early stage detection of metastatic breast cancer with a.i which struck me as precisely the kind of thing that is transformative and there's 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 oncologist 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 health care without a.i so we look at this as this opportunity to democratize health care 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 a man or a woman says all right she's a leader 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 in data it's the way you can build support for the ideas it's the way you can know where to double down on great opportunities for the long term where you should be pulling back it starts with data analytics i think the other is integrity in building a culture that makes it really clear that you expect the highest quality performance and integrity at all times from your people 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 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 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 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 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 and 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 going to 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 you

Channel: David Rubenstein

Views: 65,491

Rating: 4.9297686 out of 5

Keywords: Bloomberg

Id: EUlTyu_wYi0

Length: 24min 6sec (1446 seconds)

Published: Thu Sep 17 2020

Reddit Comments

[u/MotorHat]

Wow. She is insanely articulate and intelligent.

[u/HexaTechnical]

Really enjoy Rubenstein’s interviews

[u/failed_singingcareer]

Nice. Rubenstein is the man when it comes to interviews.

Didn’t even know he was coming out with new interviews due to covid! Tysm for posting.

[u/[deleted]]

Serious question; does Google's current management suck (relatively, in tech terms), or are they just flying under the radar?

They have not had a big hit for years now, and seem to be sitting on an absolute treasure trove of assets. But maybe that isn't so bad in this age of tech backlash?