The woman bringing back discipline to Google

Photo / 123rf.com
Photo / 123rf.com

You've probably never heard of her but she's one of the most powerful women in Silicon Valley.

She's known for her grit and toughness which is lucky because she is tasked with bringing discipline to one of the world's most prominent and ambitious companies.

In 2015, Ruth Porat took the job as the chief financial officer at Google with a difficult mandate to oversee the restructuring of the company under the name Alphabet, and to tighten up many of its more expensive pie-in-the-sky enterprises.

Despite the enormity of the task, so far she's proved her weight in gold.

Since taking the job, Google's stock (which is actually now Alphabet's stock) has risen by 40 per cent. After announcing her first earnings report just months after taking the job, the company's market value increased by $US60 billion in a single day - the biggest ever gain by a US company.

After working for nearly three decades in the financial sector becoming executive vice president of bank Morgan Stanley, her move to Google means she has conquered two worlds where women can be hard to find at the top: Wall Street and Silicon Valley.

Fortune magazine listed her as the 16th most powerful woman in the world last week but she is one of the highest paid on the list, earning $US31.1 million last financial year. She also holds to noteworthy distinction of being the highest paid non chief-executive on the list.

The magazine also published a long-form profile on the woman who before opting for a career change, played a major role in stemming the pain from the 2008 financial crisis alongside former US Treasury Secretary, Hank Paulson.

The now 59-year-old was slated as a prime candidate to become deputy Treasury secretary but instead allowed herself to be quickly courted by Google after a meeting with co-founder Larry Page.

And just like that she went from the epicentre of wealth generation in the east of the country to the epicentre of wealth and innovation in the west of the country.

"No normal person could walk into a massive restructuring ... with new subsidiaries and compensation and be completely fine," Alphabet chairman Eric Schmidt told Fortune of her move to the company.

The renowned billionaire who helped lure her to Google refers to her as "extraordinary".

Google headquarters. Photo / 123rf.com
Google headquarters. Photo / 123rf.com

Her father was a Holocaust survivor who went on to become an accomplished physicist and her mother was a psychologist. So it's easy to see where she gets her gumption from but as the honeymoon period subsides, it's a quality she will need in spades as she tries to bring a new order to Google.

Since it was restructured to become a subsidiary of Alphabet, the company discloses revenue and profits for two categories: the Google side of things and what it calls "Other Bets".

An overwhelming majority of the company's revenue comes from online advertising and the Google side of the business includes its search engine, cloud services and Android.

In the second quarter of 2016 it accounted for 99.1 per cent of Alphabet's $US21.5 billion in revenue. The remaining 0.9 per cent of revenue came from Other Bets.

In the third quarter this year, the Other Bets portion of the company lost $US859 million on $185 million in revenue.

Given the enormous profits of Alphabet it's a situation the company can easily endure for the sake of chasing something big, but in the meantime Ms Porat wants to make that pursuit more fiscally prudent.

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INTERNAL TENSION AND THE FUTURE OF GOOGLE

As one tech blogger put it earlier this month: "adult supervision is returning to Alphabet and Google under CFO Ruth Porat," - referencing a famous 2011 tweet by Eric Schmidt.

The statement was made after Google axed modular smartphone business called Project Ara. Such decisions are a big part of why Ms Porat was brought into Google - to trim the fat.

But as you might expect, some of those who she is tasked with supervising might not be all that happy about it. At the same time some have expressed concern that by requiring Google's more ambitious "moon shot" projects to become more financially strict, it might inadvertently strangle the development of the next big thing. And for a company that desperately wants to diversify its revenue streams, it's a concern that holds some weight.

Among the most notable research-focused, innovative pursuits of Alphabet includes a semi-secret division simple known as 'X'. It acts as the jumping off point for many of the company's more innovative ventures including Project Loon which provides internet connectivity to rural areas via floating balloons.

Verily is Alphabet's life-science unit which among other things wants to create a Star Trek-inspired diagnostic device to cure cancer. Despite some misfires, Verily has found financial success with partnerships in the medical industry. Meanwhile Google-owned Calico is an anti-ageing research company trying to cheat death.

Google has also rolled out a fibre internet service and like many other major tech companies, including Apple, is getting into the self-driving car business.

Google wants to avoid suffering a similar fate to that of Yahoo! or Nokia; two tech giants that were once so powerful but ultimately got left behind - and successfully managing these types of enterprises could prove to be crucial in that regard.

At least one Google employee has complained that it's harder to get approval to hire new people for "moon shot" projects since Ms Porat was instilled as CFO.

But according to the head honchos of the company, it's about cleaning things up and investing more efficiently in the businesses that are showing the most promise.

"The cost cutting is real, and it's the right thing to be done, and it's driven by Porat," Schmidt told Fortune. "Before she was there, we had lost discipline."

So far, it appears that Ruth Porat has brought some of it back - but at what cost?

- news.com.au

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