Ruth Porat, CFO at Alphabet and Google | Summary and Q&A

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May 21, 2019
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Stanford Graduate School of Business
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Ruth Porat, CFO at Alphabet and Google

TL;DR

Ruth Porat, CFO of Alphabet and Google, shares her personal and professional journey, including her family history, the importance of education and career, the lessons she learned from the financial crisis, and her role in shaping the future of technology.

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Key Insights

  • 🥹 Porat's parents' emphasis on education and gratitude for freedoms shaped her values and commitment to excellence and personal growth.
  • 🤗 The stock market crash taught Porat the importance of flexibility, being open to new opportunities, and the value of taking risks.
  • 🍉 Porat brings her experience from Wall Street to Silicon Valley, emphasizing the importance of long-term investment, financial rigor, and innovation.
  • 🪛 She believes in providing data-driven insights and creating a culture of accountability and transparency at Google.
  • 🍉 Porat's leadership style focuses on listening to diverse perspectives, making informed decisions, and finding the balance between short-term goals and long-term innovation.

Transcript

[MUSIC] Ruth, I am so glad to be here with you today. And as we learned from Laura's amazing introduction, Ruth grew up close to Stanford where her father was an engineer at the original SLAC, Stanford Linear Accelerator Center. And her mother was a psychologist. Ruth, thank you so much for joining us today >> Thank you all for having me. >> We're ... Read More

Questions & Answers

Q: How did Ruth Porat's family history shape her values and career choices?

Porat's father's emphasis on education and gratitude for the freedoms in the US influenced her belief in the importance of education and her commitment to being in a country where she can exercise these freedoms.

Q: How did the stock market crash in 1987 shape Porat's career and her views on flexibility and opportunity?

The crash made Porat realize the importance of being flexible and open to new opportunities. It also taught her the value of taking risks and the potential for unexpected doors to open when working with smart and supportive mentors.

Q: How did Porat balance the tradeoff between instilling financial discipline and preserving Google's innovative culture?

Porat focused on providing data-driven insights to Google's business leaders, enabling them to make informed decisions about investment priorities. She also emphasized the importance of continued investment in long-term innovation and balancing short-term and long-term goals.

Q: How did Porat handle the challenges and criticism she faced during the financial crisis and as a leader at Google?

Porat maintained a sense of calm during the financial crisis and focused on problem-solving and finding the least worst solution. At Google, she embraced feedback and was open to criticism, making sure to listen to all voices and create a space for diverse perspectives.

Summary

In this video, Ruth Porat, the CFO of Alphabet and Google, discusses her family's background, her career trajectory, and her leadership approach. She shares how her father's emphasis on education and her mother's advice to pursue a career shaped her values. Porat also talks about her experience during the financial crisis and her role in stabilizing the financial system. She touches on topics such as sponsorship, innovation, privacy, and investment for the long term.

Questions & Answers

Q: How did Ruth Porat's family history shape her values?

Ruth Porat's father, who fled Austria during World War II, highlighted the importance of education as a passport for life. He believed that having valuable skills, such as physics, would provide freedom and opportunity. Porat's mother, a psychologist, emphasized the significance of having a career and finding passion.

Q: How did Ruth Porat's experience during the stock market decline shape her career?

When Ruth Porat joined Morgan Stanley's mergers and acquisitions group just before the stock market decline in 1987, she initially thought her career was over. However, she learned to be flexible and adapt to new opportunities. By taking risks and working with smart people, Porat discovered doors that she didn't even know existed.

Q: What was the mistake Ruth Porat perceived in switching jobs and how did she rectify it?

After leaving Morgan Stanley to join another company following a sponsor, Ruth Porat realized that she had made a mistake. She missed the culture and ethics of Morgan Stanley. Porat decided to speak up and express her concerns, leading her to return to Morgan Stanley. The lesson was to be open, communicate openly, and put everything out there before making a decision.

Q: What was Ruth Porat's role during the financial crisis and what did she learn from the experience?

Ruth Porat was contacted by Hank Paulson, then U.S. Treasury Secretary, to analyze the housing crisis and the possibility of a run on the bank. She worked with a team to assess the situation and came up with solutions to stabilize Fannie Mae and Freddie Mac. Porat learned the importance of investing for the long term and having a team with instinct and experience. She also recognized that having the will and means to address crises promptly is crucial.

Q: How did Ruth Porat's view on financial rigor and innovation affect Google's culture?

Ruth Porat introduced financial rigor to Google by implementing more structured processes, such as setting business milestones and factoring in the cost of employee stock options into budgets. This emphasis on return-adjusted innovation earned her nicknames like "Ruthless." However, Porat believes that focusing on long-term investment and making data-driven decisions helps guide the best decision-making without stifling innovation.

Q: How does Ruth Porat balance discipline and innovation at Google?

Ruth Porat believes that having financial rigor and discipline is crucial for long-term success. However, she also recognizes the importance of giving teams the data and tools they need to make choices and prioritize projects. By providing clarity and enabling informed decision-making, Google can balance discipline and innovation without stifling creativity.

Q: Why did Ruth Porat walk out with her team during the employee walkout at Google?

Ruth Porat walked out with her team during the employee walkout because she firmly believes in diversity, inclusion, and maintaining the highest ethical standards. She wanted to show solidarity with the employees and reinforce the message that they are all in it together.

Q: How does Ruth Porat apply lessons learned from Wall Street to Silicon Valley?

Ruth Porat believes that lessons learned from Wall Street, such as the importance of raising the bar on oneself and investing for the long term, are applicable to Silicon Valley. She emphasizes the need for technology companies to continue innovating and investing in the future, as those who fail to do so risk becoming obsolete.

Q: Is Ruth Porat concerned about the size of big tech companies like Google?

Ruth Porat believes that technology companies like Google have benefited consumers by providing lower prices, more access to products, and constant innovation. While policy makers debate whether tech giants are monopolies, Porat sees the vibrant ecosystem and vast funding in technology as evidence that competition is alive and well.

Q: What is Google's greatest source of vulnerability according to Ruth Porat?

Ruth Porat believes that Google's greatest vulnerability lies in not continuing to invest for the long term and focus on innovation. She refers to the changing landscape of technology companies and the need to remain at the forefront to avoid becoming outdated.

Q: How does Alphabet's vision compare to its initial restructuring in 2015?

The core vision of Alphabet, as outlined by Larry Page, has remained consistent since the restructuring in 2015. The goal was to allow Google to focus on its challenges and opportunities while Larry and Sergey delve deeper into other bets and innovative technologies. This vision has guided Alphabet throughout the years.

Q: What does Ruth Porat think of the Uber IPO?

Ruth Porat thinks that Uber is an extraordinary product that has changed people's lives. While it is early days post-pricing, she acknowledges the impact that Uber has had on the industry and the potential for future growth.

Q: How does Ruth Porat remain calm during times of crisis and make decisions with clarity of thought?

Ruth Porat believes that remaining calm during crises is crucial. The ability to think clearly and seek out all perspectives before formulating a response is vital. She also emphasizes the importance of having open and honest conversations and seeking out the truth, even if it involves receiving bad news.

Q: What traits enable Ruth Porat to be successful in both Wall Street and Silicon Valley?

Ruth Porat attributes her success in both Wall Street and Silicon Valley to clarity of thought, the ability to analyze and articulate ideas, and using her voice to communicate effectively. She also emphasizes the importance of finding sponsors who can open doors and take risks on your behalf, as well as creating an environment where all voices are heard and diverse perspectives are valued.

Q: If Donald Trump asked Ruth Porat to be his Treasury Secretary, what would she say?

Ruth Porat states that such a call has not come, and she is currently focused on her role at Alphabet. She does not entertain the hypothetical scenario.

Summary & Key Takeaways

  • Ruth Porat discusses the influence her parents had on her values, emphasizing the importance of education and gratitude for the freedoms available in the US.

  • She shares her experience of joining Morgan Stanley just before the stock market crash in 1987 and how it shaped her career and taught her the importance of flexibility and being open to new opportunities.

  • Porat talks about her decision to join Google as CFO and the challenges she faced in instilling financial rigor and discipline while maintaining the innovative spirit of the company.

  • She also discusses her role during the financial crisis, her focus on long-term investment and innovation, and the importance of privacy and data protection.

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