President and Chief Investment Officer of Google | Ruth Porat 169

One of the earliest mantras at Google was to take 70% of your capital and invest in the core, 20% adjacent, and 10% in what at the time we called moonshots, big bold audacious bets. One of the leaders in AI said if you're a radiologist, you should find a new role because in five years you will be out of a job. He said this 10 years ago. Sitting here today, not only was that five-year prediction wrong, but there are more radiologists and there is a shortage. One of the most important lessons I've learned in my career is if you're not investing for long-term growth, you are sowing the seeds of your own destruction.

We're sort of working on teleportation. Something called Google Beam, which you'll be hearing more about.

Thank you. It is wonderful to be with you.

I would say why did I voluntarily choose to leave a plane by jumping out of a plane?

Well, the reason I actually chose that question is I think one of the most important things that I've learned in life, it was a lesson from my parents, is education is a passport for life. Never stop learning. Never stop taking risks. It's what's going to make your life the richest, most exciting it can possibly be. And I got a call asking if I would do a Navy SEAL jump. So, if anybody knows about the Navy SEALs, that means that it's a really safe jump. So, it's risk, but really smart risk. It's not really risk. And it was just an opportunity that seemed like too good to pass up. It was completely exhilarating as we were going up in the plane and I was with the Navy SEAL and I saw him measuring the height and I thought we were pretty high and we were only at 4,500 ft and then we went up to 13,000 ft which is where we did the jump rolling out of the plane. It was completely invigorating and it just made you feel alive. It was beautiful. So I did that jump.

Mine.

I think throughout my life that message keep learning, keep growing, take smart risk, open doors, don't be rigid. Like did I think I was going to ever jump out of a plane? No. But when the call came, it seemed really exciting. So there was no way I would miss it. And if I had the opportunity to do it again, I would. And so I think if anything it was reaffirming that life is a gift. It's really special and it can be enriching when you open doors and go through doors that you hadn't thought about previously.

I would say there was a long lead-up to a moment that I think is one of the most defining in my career and that was during the financial crisis. And the reason I say there was a long lead-up to it is I had been at Morgan Stanley. I ran a number of different businesses including the technology investment banking business. And then I was asked to run financial institutions, banks, insurance companies. And I had an immediate response which was that's so boring. There's no way I want to do that. But I did something I had done throughout my career. I always would turn to somebody I respected and I would say what do you think my highest and best use is? And I wasn't rigid. I was open to their ideas. And although my instinct was that would be painfully boring, somebody I really respected said, 'It's going to open doors you didn't even know existed.' And that was in late 2006. So I took on leadership of this group. And lo and behold, going into 2007, the cracks became evident and the world was moving into the great financial crisis. In 2008, then Secretary of the Treasury Hank Paulson called and said, 'I need some help analyzing the housing situation in the United States.' I ended up leading a team really living down at Treasury that entire time working on Fannie Mae, Freddie Mac, all the way through the crisis out to AIG with Ben Bernanke at the Federal Reserve. And it was such an extraordinary experience and it was an incredible privilege to use skills I developed throughout my career to do something that was so important for our country at the time and more broadly. And that then opened the door to become CFO at Morgan Stanley which opened the door to become CFO at Google which opened the door to this role now. And it all started from that immediate reaction. That sounds boring. But trusting someone when I said, 'But what do you think my highest and best use is?' Flexibility is important. Not to be too rigid with our thinking.

I think there are things on which we should be flexible and things on which we should be quite rigid. And I think one of the really important enduring elements is your moral compass. And on that I think the principles which guide our lives are critically important. Knowing what your north star is is critically important. Holding to that is really key. And yes, the world changes and you need to challenge yourself and grow and I'm certainly very mindful of the inputs that are valuable. But that moral compass is really important and it does help you then answer the second part of your question which is in the moment when there are doors that open and doors that seem like they're going to be closing, how do you decide which to take? And I've already said I went to somebody I trusted and that's an important element of this which is I think about someone whose judgment and values I trust in asking the question what's my highest and best use. But I definitely moved as the world changes, you have to. I started in something I was passionate about in the mergers and acquisitions area and I thought that was the only thing I wanted to do. And then there was a market correction, the biggest one in the history of markets. And so different businesses opened up and I'm so glad I embraced them because everyone was a learning opportunity. And I think that learning keeps you young, which is also why I jumped out of the plane.

Professionally it was in many respects. It was the precariousness of the financial system. I'll never forget in particular when we got through Fannie Mae and Freddie Mac and then went into Lehman Brothers weekend, the bankruptcy of Lehman Brothers and it looked like everything was melting down and I was down at the New York Federal Reserve and went home thinking Lehman Brothers was going to be in bankruptcy and I received a phone call from someone at the US Treasury saying we worked on the wrong thing. Come back down. AIG will be out of money by Wednesday. And it was due to a problem actually in a derivatives subsidiary in the UK, not their core business. And so the shock of it was something as iconic as AIG would be out of money in days and nobody could see it coming and protect. And there were so many lessons that came from that that to this day I go back to whether it was during COVID or other really challenging times in the world. I go back to those lessons.

I actually watched that movie while I was firming up my offer from Google sitting at my kitchen table and it was a lot of fun to watch and now being on the campus. So, what does it take to thrive at Google? Look, I think that we're I feel super privileged to work with these amazing colleagues. I've been here in Riyadh and talking about some of the extraordinary breakthroughs with science as a result of AI. And when I talk about the stories, I'm able to talk about my colleagues Demis Hassabis and John Jumper who were awarded the Nobel Prize last year in chemistry. They took on this grand challenge, a 50-year grand challenge to address protein folding and to create the 3D simulation of protein folding. Historically, it would take three to four years just to do one. They wanted to take on all 200 million, and they did. It was a four-year effort to solve a 50-year grand challenge. They were awarded the Nobel Prize. It's called AlphaFold. And what's amazing about it is it's been described as the greatest contribution to drug discovery in our lifetime. We open sourced it. I'm going to get back to your question, but I get really excited about this. I love this. I love it. Three and a half million scientists around the world. So, people all around the world trying to solve problems that make such a difference in life. This year, another colleague was awarded the Nobel Prize. This time in physics around quantum AI, which again is really exciting. Now, it's not that everyone at Google wins the Nobel Prize, but this the incredible intellect of people, the intellectual curiosity, the notion that if you apply yourself with technology, you can solve some of the most important problems for humanity. And it really goes back to the mission from the founders to organize the world's information, make it universally accessible and useful. So we have people who are passionate, really brilliant, curious and I think when you have that curiosity and drive, you can solve so many issues. So that's the sort of foundation.

Look, the reality is competition is inevitable, it's everywhere, and competition makes us stronger. And the roots of Google, Google was not the first search engine. We were actually the eighth search engine. If you turn back the clock to 1998, I was leading technology investment banking at Morgan Stanley and we were teed up to take a number of other companies public. And then there's the birth of this thing called Google and we put pages up on the wall to try and compare both relevance and speed of response and it became quite clear very quickly that Google was just better. The ethos of the founders has always been focus on the users first and the rest will follow. And throughout history, it's always been about continuing to push ourselves knowing that change is inevitable. And with technology, as I've already said, you can solve any problem. So at CFO, I always said 100 enhancements every quarter in search. We just kept trying to raise the bar on ourselves. Back in 2016, 2017, our CEO Sundar Pichai said, 'We are moving from a mobile first company to an AI first company.' And what we're going to do as a result, we're going to focus on a full stack approach. It's going to be a differentiated approach to deliver. And it's about chips. We created TPUs. It's about the models. It's about the extraordinary research talent in delivering on this platform. And he focused the entire company on our ability to better deliver by taking a full stack approach. And we think sitting here today, what Demis Hassabis is leading with Google DeepMind and Sundar overall with Alphabet, we're continuing to raise the bar on Gemini and how we infuse it across products, how we can deliver better for both individuals and for businesses. So, I think it's an extraordinary time to be alive.

Absolutely. When we talk about this time in history, what's extraordinary is there is the upside potential with the proper application. It's the economic upside. It's advancing science. It's better delivery of health and education. It's fortifying cyber security. It's having fun the way your kids do, putting a dinosaur in front of them. And I think what's really exciting for us is getting people on that journey. So your kids are probably using something called Nano Banana. And anybody who's watching should definitely try Nano Banana. And you can play in all sorts of different ways and create. It's your imagination. Just take it wherever you want because the computer scientists have created the magic underneath that lets us imagine anything we want to do and just keep telling it. Letting your imagination take you to the dinosaur can be playing with an animal and have you as yourself and an older self wherever you want to go. That gets you on the journey which is a really important journey to be comfortable with AI, to understand that it is here to provide us with operating leverage to unlock what we can do. And in fact I was talking to another one of my amazing colleagues, his name is Vint Cerf, and if you Google him you will find that he is described as the father of the internet. So I figured let me ask the father of the internet what is more profound, this time with AI or that time when he gave birth to the internet? And without missing a beat he said this time because AI really leverages human creativity and ingenuity and there is no limit to that. So what your kids are doing is starting on that journey that all of us every age need to be on to then start to think about well what does it mean for how I can better deliver for customers or how I can better deliver for my citizens? I'm a small business. How can I scale up? There's no end to the possible.

That's beautiful.

So with kids, they can tell stories. It can help them with studies. I think, you know, when I look at what it's able to do in so many different areas, the way it can make us, it's like we have a personal coach that can up our game. So, one of my favorite examples is many years ago, one of the leaders in AI said, 'If you're a radiologist, you should find a new role because in five years, you will be out of a job.' He said this 10 years ago. Sitting here today, not only was that five-year prediction wrong, but there are more radiologists and there is a shortage. And the reason I bring that up is that it is providing support in the workplace. It's letting kids be more creative. You can take it a lot of different ways.

It's such a great question. I think one of the most important lessons I've learned in my career is if you're not investing for long-term growth, you are sowing the seeds of your own destruction. The world changes. You need to keep investing for long-term growth. And I've seen it time and time again. What's beautiful at Google is the founders from the earliest days wanted to ensure that they were continuing to invest for long-term growth. In fact, very early on, Larry Page, one of our founders, made the point that what's really important with technology is it's revolutionary, not evolutionary. And it is imperative to continue to push the frontier. Someone will and you want to continue to grow. So no question a major part of capital allocation is continuing to innovate in our core in search to make that experience better for users everywhere. But one of the earliest mantras at Google was to take 70% of your capital and invest in the core, 20% adjacent, and 10% in what at the time we called moonshots, big bold audacious bets, out of which was born Waymo, our self-driving car business, and Wing, which is a drone delivery business. But it was really making sure that there was some capital that you were continuing to invest for innovation. As we've progressed over time, clearly that core is so much about Gemini. It's AI. We're in the AI era and continuing to invest to ensure that we can deliver because change is revolutionary, not evolutionary. But if you don't invest for long-term growth, and I think that's relevant in every industry, you will rue the day when you say, 'I'm behind.' Technology is that catalyst now for all of us.