tv The David Rubenstein Show Peer to Peer Conversations Bloomberg September 19, 2020 1:00pm-1:30pm EDT
david: this is my kitchen table and also my filing system. over much of the past three decades, i have been an investor. the highest calling of mankind i have often thought is private equity. then i started interviewing. >> i watched your interviews, so i know how to do interviewing. david: i have learned 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. david: 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?
david: one of the most powerful women in the business world today is ruth porat. she rose to be the cfo of google and now alphabet. in that role she has enormous influence at that company and has done a terrific job in making certain that the balance sheet works well and that they really are much better organized. i have no doubt she will be a power at alphabet for a long time unless the next president says i would like her to be secretary of the treasury. she would be a terrific candidate for that position. during this period of time, google and alphabet have done quite well. your stock is up more than 20% this year and from the time you became the cfo, the stock is up over 200%, so it's done quite well under your leadership. i'm curious, are more people looking at doing searches now during this covid-19 period of time than ever before, or are
people not spending as much time searching? ruth: no, people are spending a lot of time searching. we have trillions of searches every year, precode, post covid. -- pre-covid, post covid. it's really the nature of searches that changed. early in the crisis, people really migrated to shifting to information about the disease, what they need to know, all the information about covid. you then some people shifting to, how do i live my life during covid-19? it was more how to searches. how do i cook? what do i do on meditation and wellness? now you are seeing people moving back into more commercial activities. i think one of the big surges that we saw was, how can i help in my community? how can i help others? it's always quite inspiring to see through search how people move through search.
some employees are still working remotely, correct? ruth: we moved everybody to remote work at home, all 120,000 of us, but as companies are opening up, we're starting to move back in. and places in europe been bringing some people back, but fundamentally we moved everyone to working from home. david: when you started working remotely, did you worry it would be a problem because you have all these people, but you are technically savvy. ruth: at first it did seem daunting. we put together strong governance around how do we get people to move from home. we had a global and regional team and we were in sync. that worked really well. what we were most concerned about what would be the impact on productivity and wellness. our chief medical officer said more would be affected by mental health issues than the disease itself. we focused on those two and 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
capacity. one of the things we didn't have to worry about was our ability to really deal with the surge in online activity. that was because all the investments over the years and all the testing for what could happen in a crisis scenario. i think it is an important point, because you cannot solve the risk management issue in the middle of a crisis. you obviously need to solve it ahead of time. david: many companies are saying now that i've learned mike -- learned that my people can work from home maybe i don't need all these people in the office, or i don't need all the people. is that your view, you may not need all the people that you have or you may not need them all in the office? ruth: we believe in people all together, it's a critical element for innovation. collaboration helps support innovation. collaboration within teams and across teams. we do look forward to having people back in the office. what we are looking at is the productivity lift you get it -- you get if people have the ability to work from home some days, the in the office in
particular when the rest of their team or teams are in the office. if you can save people commute time, you have better access to talent because you're solving what people want in their personal life will actually result in a better outcome. what that means for real estate, we are still figuring out. david: early on, google was well known for free food. and they're working at home, do you give them free food, showing up by delivery or something like that, or how do you compensate for that? ruth: we are not doing that. a lot of people focus on food, but really what were trying to create is a fun, quirky, magical campus. it is about more than just the free food, it is the experience on a campus. what we did when we moved everybody to home is we moved a lot of connecting the community to virtual delivery. for food, as an example, you can do a one-on-one session with a chef, you can do a cooking class.
we moved our fitness classes to virtual fitness classes and even some goofy, google style ones like yoga with your dog. david: what have you learned about yourself during this time? ruth: one of the things that was gratifying if i can broaden the question is what i saw at google and about my colleagues, and it's obviously been an extraordinarily stressful time. we feel this responsibility, because so many people are counting on us for quality information and the ability to stay connected. what i saw was we really stepped up, and that was inspiring . it has been an extraordinary time. what i learned about myself is, one of the positive elements of this has been sheltering in place and having my kids, who graduated from college, they are 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. david: some people say google, facebook, microsoft, apple,
amazon, are too powerful. they have so much power in our economy that it's not healthy. there have 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? ruth: we are very mindful of the fact that with the scale of the company come scrutiny, and it is incumbent on us to engage with regulators and help them understand what is it that we are doing that is of benefit, how are we providing better services at lower cost, which is really indicative of the competitive nature of the world in which we operate. we've got intense competition within the u.s. and outside of the u.s., and 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 a fair question, and we are engaged constructively here and around the globe with regulators on it.
david: you have more than 100 billion dollars of cash on your balance sheet, a lot of cash. why do you need all that cash? why not just dividend it out or are you going to use it for investments? ruth: at the end of the second quarter we had 100 $20 billion -- $120 billion, but who's counting? 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. the question i posed was -- how much is too much and how much is too little, and can we try and dimension that analytically? and put together the data that lead to a conversation about beginning a share repurchase program. it started small, but we've increased it five times in the last number of years. the last one we just did in the second quarter, $28 billion authorization. so it has been a journey.
we have been increasing the turn to capital. i spent a big chunk of my career covering firms like carlisle private equity firms, this is trying to get the balance. david: was it hard to break into the technology world or the financial world, as a woman? ruth: i think they are actually pretty similar. the difference is it's a more collaborative environment, in tech, i would say, but it can be -- but wall street can be pretty rough. ♪
valley. my father was a holocaust survivor, a holocaust refugee. he escaped from vienna when he was 16. he had no high school or college education. he escaped to palestine and as soon as he could, he enlisted in the british army under montgomery. 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 he was in the army. he told us at kids -- as kids his fellow soldiers would tease him and say he would die before he ever mastered physics. his answer was, if i die, i want to die an educated man. after the war, he was one of the lucky ones. he was given a place at the university of manchester. he got a masters degree and a phd. that's where i was born. he was given a position at
harvard. the only two places he ever worked were harvard or stanford. -- harvard and stanford. we moved eventually to silicon valley, and that's where i grew up. david: you went to stanford undergrad, and did you major in finance? ruth: i majored in economics and international relations and thought i would go off to be a lawyer. just like you. david: you're smart not to do that. you got an mba from wharton, and you went to wall street? ruth: i went from stanford to the london school of economics to wharton. i assumed i would be a consultant. i started in business school, i was convinced that what i wanted to do was work with companies and help them understand their problems. then i took a fascinating course with a great teacher and he opened my eyes to this thing called wall street mergers and acquisitions. i went from completely convinced i was doing one thing to completely convinced the only thing i wanted to do was mergers. david: when you went to morgan stanley, was it 50% women? ruth: far from it.
when i started at morgan stanley, it was 1987, so it was sort of the stone age for any sort of sense of what was the world of women in banking. in fact i think the 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, it was the best of the best. that was sort of the ethos on wall street. a couple of years into my career, i was working on the -- 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 and said, ruth may come back after the first child, but there's no way they will come back after the second child. unfortunately, the client liked me more than he did the partner and told him he was an idiot, and that made an impression on me. the thing that was inspiring and critical in my career was there were so many extraordinary men
who really bet on me, helped open doors. i didn't know at the time those were sponsors, but that's what they were. david: you became the cfo, and at some point you were one of the most important people at morgan stanley, and u.s. government calls up and said why don't you come and work at the treasury department in a senior position. did you seriously consider doing that? ruth: in the 2008 crisis when secretary paulson asked me to lead a team to help him with the housing crisis, and spent the entire period working on fannie mae and freddie mac and 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 remains one of the most meaningful times for me. david: were you doing that as an
employee? ruth: i was. david: morgan stanley also went through a crisis during that 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 will put in some money. it turned out that money was at three times the stock price you were trading at, and people weren't sure if the japanese company, mitsubishi would show up. were you ever in doubt they would show put that money? ruth: that was a terrifying period of time. the series of events was, there was the lehman brothers famous weekend, followed by a call i got from the federal reserve saying 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, and in fact it was tuesday and they were out of money. that's the point at which morgan stanley was running into its own very severe liquidity crisis.
david: morgan stanley obviously prospered through the period of time and survive, and did quite well. then somebody called you up, was it a headhunter or somebody from google, saying we would like you to be considered being the cfo. were you surprised at that offer because you were wall street person and not a technology person? ruth: 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. tulare gay, sergei, eric schmidt -- i left the board meeting and went to his home and sat down with him to talk about life, generally. he started probing what next, what would i want to do? my comment to him was, i didn't know, at some point i would want another chapter, but one thing i knew for certain is that i would not leave morgan stanley as cfo to be a cfo anywhere else. for two hours, he kept coming
back to that strong assertion. at the end of two hours, he said, so you wouldn't leave to be a cfo anywhere else, and i was adamant. he said, i have the perfect job for you, you should be the cfo of google. of course i burst into laughter, and said, that one, i would do. i didn't believe it. i left his home and didn't actually believe it was real or that it would happen. within a couple of hours he called and said go over to larry page's house and spend some time with him and see if this works. david: so you went over to see larry page and he said, guess what, i want you to be the cfo. ruth: i had known him and had worked on the google ipo. i had different interactions through the stanford board. we spent two hours in a fascinating conversation, as larry page always is. i left again, not believing it would happen, and quickly it came together. david: so you took the position, but now you're breaking into another world where women are
not that prominent. was it harder to break into the technology world as a woman, or to the financial world as a woman? ruth: when i broke into the financial world, i was a junior. it's harder when you're junior as opposed to when you're coming in as someone with credentials. if you're asking which was tougher, wall street or tech, both have evolved meaningfully since those days of the boys club on wall street that were so painful. there is a much greater awareness that it is not just the right thing to do to have diversity in the senior ranks throughout an organization, but at least a better outcome. so i think it's a more collaborative environment. in tech, i would say, and wall street can be pretty rough. david: the more testosterone filled places wall street or silicon valley? ruth: there's enough to go around.
david: so you're a button-down cfo of morgan stanley, google is probably a less precise place when you get there. they are making so much money they don't have to worry about every little dollar. did you say we want to change things and people said don't want to change because were doing well, or did they want to change? ruth: my view is that if you anchor your points in data, it becomes very easy to engage people in what is the issue and what is the proper path forward. one of the extraordinary things that google is we have very smart and very inquisitive people. as i laid out whatever issue it is, anchored in data, it engaged the conversations. so i actually didn't find it to be discordant. i was impressed with the view of yes, throw in the new idea -- let's understand what and why. it has been a journey. david: what is the secret to having it all? ruth: the most important thing
is to find a mix in life that works for you. ♪ david: i assume you are coming to us from your bedroom. reed: it is actually my son's old bedroom. we are locked down in covid. we are working out of the home. david: how have you found that to be? you are a technology company so people would presume you are good at adapting. did it turn out to be harder than you thought? reed: the hardest thing has been producing our film
of the culture to be very adaptive. no one waits for me to tell them what to do. when you've built a culture as we have, everybody pitches in and figures out what they need to do. an example would be our animation group. i cannot take the credit, but they moved hundreds of workstations out of the office into the home over a weekend and have been able to continue to produce great animated films and series from the house in a way that was remarkable and not centrally directed. david: many ceos say off-camera they are not going to be hiring back everybody they once had. they realize they can get by with fewer people and they do not need as much of a space -- much office space because people are happy to work from home. will that be true in your case? reed: the virus has been so tragic for people, the economy and unemployment. and certainly hotels and other businesses like that are down. as an internet business, we are up, so we have continued to hire through this crisis. we are adding new buildings.
we are incredibly fortunate. david: so alphabet is the parent company, you are the cfo of that and also google, who is a search engine, and that is still massively profitable by anyone's standard. it is profitable, right? ruth: right. david what about cloud : computing? you are number three in that business, but catching up to number one is amazon and number two is microsoft. is that an important growth engine? ruth: it's a very important one. it's a sizable market, the opportunity for businesses to migrate to the cloud provided them with extraordinary edit -- added capabilities and they are looking to us, whether for security or data analytics or ai. that's what we are able to do working with customers and you
have really seen the important migration to the cloud, so we are investing meaningfully in and we see it as a sizable opportunity. david: one of your areas of focus is health care. why is that such an important focus of the founders and you in terms of health care? why is that so important to you? ruth: we have the opportunity to make a fundamental difference in health care, in particular with with ai in a host of areas. for me, personally, i'm a breast cancer survivor. i've had breast cancer twice, of gone through chemo, radiation, more surgery than one can imagine. i view myself as one of the really lucky ones. i lived 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 as healthy as i've ever been. not everybody gets that kind of break. a year or two ago, i remember when our ai engineers had a
breakthrough in early-stage detection of meta-status -- metastatic breast cancer with ai, which struck me as precisely the kind of thing that is transformative. there was so much debate about whether ai is a positive or not. i wanted to make sure i got an objective, non-tech view of this. i called my oncologist to ask whether i was reading this the right way, and it really had the impact i expected. his answer was, you cannot democratize health care without ai. so we look at this as this opportunity to democratize health care, to provide service, to identify diseases earlier, to do things by telehealth, that enables everyone to get the kind of care that i had. that's why i am passionate about it. david: if someone is watching this, man or woman, they say she is a leader, she must have some qualities i would like to know about more. what are the qualities you think are important to be a leader? ruth: 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 and where to double down on great opportunities for the long-term and where you should be pulling back. 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 the other is making it really clear that you want to build a diverse team and you are open to, not only open, really expect diverse views and debates. i've often been asked how do i think about rising stars, and my answer is, i want some who is in my face, who challenges me. creating an environment where there is that open discussion is really important. david: some people say it's very difficult for women to have it
all, but you seem to have it all. what's the secret to having it all, and is it harder than people would think, or easier than people think? ruth: i think it depends on how you define having it all. i think worklife balance is a horrible term and everyone should banish it from their vocabulary. getting balance, the physics of it are hard. to me, the important thing is to find a mix in life that works for you. 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 forever and we have three wonderful kids. for some people, it may not be kids, but it's got to be something, other than work. and it's finding a mix. sometimes you may be more heavily focused on work, other times more heavily focused on family, and that makes changes throughout your life. to me, that's been the most
important element of it. 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. i would say particularly, when i had cancer and didn't know what was going to come, i was able to look back on my life and say i have no regrets. ♪ give you my world ♪
emily: it is a game that has taken the world by storm royale. in just three years, fortnite has racked up hundreds of millions of users hosting celebrities, celebrations gone viral, and popular dance moves gone viral that may well define a generation. the game's creator, a generally under the radar billionaire, who avoided the spotlight until slamming apple and google with explosive lawsuits accusing the tech giants of illegally using their alleged monopoly power to suppress app developers