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Google’s CFO on Growth, Capital Structure, and Leadership
Patrick Pichette describes the attitudes and behavior that Google hopes will keep it growing like a start-up.
by James Manyika, Partner, McKinsey
When it comes to playing the classic role of the no-nonsense chief financial officer, Patrick Pichette has his own personal interpretation. Google’s CFO may oversee $36 billion in cash reserves at one of the world’s most recognized companies, but he still flies coach class, rides a beat-up bicycle to work, and responds directly to e-mails from fellow ‘Googlers’ every day. “It takes a little more time,” he says. “But it crushes the idea of bureaucracy—and that’s the way it should be.”
An alumnus of Bell Canada and McKinsey and a Rhodes Scholar with a master’s degree in philosophy, politics, and economics from Oxford University, Pichette is no less direct about the business side of things. He calls acquisitions an ‘accelerator’ for growth and scoffs at the idea of business units because they force people into ‘ownership’ positions that hinder creative flexibility. Pichette is also a passionate advocate of sustaining Google’s start-up culture—even as the company now generates $30 billion a year in revenue.
Clad in a rugby shirt and jeans in his office at Google’s Mountain View, California, headquarters, he recently sat down with McKinsey’s James Manyika to lay out some of his thinking on growth, strategy, and the financial side of Google’s business.
How do you think about growth?
If we’re not building a product that at least a billion people will use, we’re wasting our time.
As [Google executive chairman Eric Schmidt] once said, “If we’re not building a product that at least a billion people will use, we’re wasting our time. How can you be a company that wants to change the world if you don’t have at least a billion people using your stuff?” The corollary of that is if you have a product that a billion people want, he’ll also say, “Give me a billion users, I’ll show you how to monetize.” And, by the way, computer science is the key linchpin to actually delivering that. Once you understand those three things, Google’s initiatives completely make sense: Android, Chrome, Chrome OS, Google Wallet, and of course search.
The challenge is in the planning. How do I feed the winners and hold back on the ones who aren’t performing the way they should? They shift a lot.
How do you do that?
We have a quarterly review process that examines every core product area and every core engineering area against three beacons. First, what did it do in the last 90 days and what will it do in the next 90 days. Because in those 180 days, there’s a lot to deliver—for example, in the amount of code that has to ship out and the number of users and whether it’s going viral or not. We track these things continuously, but it’s worth taking a look at—in some cases weekly, in some cases monthly, but at least every 90 days, given where we are.