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The Conversation: Google and Alphabet CEO Sundar Pichai on managing a tech giant’s growing pains

The Conversation: Google and Alphabet CEO Sundar Pichai on managing a tech giant’s growing pains

Sundar Pichai, the 47-year-old CEO of search-ad giant Google, also became head of its parent, Alphabet, on Dec. 3, when the company’s cofounders, Larry Page and Sergey Brin, announced their intention to step away from day-to-day business. In his first interview since his promotion, Pichai sat down with Fortune at Google’s Mountain View, Calif., headquarters for a wide-ranging conversation that covered Pichai’s path to power, the heavy management load he carries, and the benefits and burdens of running a massive, no-longer-youthful company. This edited version has been condensed for space and clarity.

What to expect from the new boss

When did Larry Page and Sergey Brin tell you about the change? 

Pichai: It was a series of conversations over time. As Google turned 20 last year [in 2018], that was the first time I think they probably started having longer-term ­conversations. Particularly when Google hit 21 in September, that was a kind of a milestone. They did actually speak about it with me in the context of the company turning 21, like a child ready to be independent. And they did want to play a different role as advisers and founders.

Alphabet was formed, and you became CEO of Google, in 2015. Now that you’re running both, does the rationale hold today? Do you still need Alphabet at all?

I definitely think so. It has allowed us to not have a single management team try to scale and deal with many different separate areas. And how we need to approach each of these areas sometimes can be very, very different. They are different businesses with different time horizons. Alphabet allows us to pursue some of the other areas with maybe different structures we need. So, for example, we have a very successful venture and growth investment portfolio¹, which allows us to partner literally with hundreds of companies.

And we can manage them with the discipline and the rigor of an investment company. Also I think with the “other bets”² we are definitely at a phase where, while we take a long-term view, we also want to marry that with the discipline of making sure they are doing well. The Alphabet structure allows us to set up some of these things as independent companies and to raise money from outside investors. So if you take Verily³, for example, we have world-class investors like Silver Lake and Temasek, and we have a board. It’s a proper functioning company. 

A technologist-manager leads

You mention investment discipline. The non-Google part of Alphabet loses a lot of money. Now that you’re in charge, should we expect to see more investment discipline? 

The question is, how do you assess the value of the entity you’re creating and how do your other partners and other stakeholders? It’s a direction we had already gotten underway. But you will see me focused on that more and emphasize that more⁵.   

Will you seek outside investors for additional Alphabet entities? 

We expect most of the “other bet” companies to follow a process like that over time⁶.   

I was interested to learn that while you’re an engineer, you’re not a computer scientist. You studied ­materials science. Why did you pursue a career as a manager rather than a technologist?

I worked in engineering for a long time. I was a semiconductor engineer. Some of my early work was on building a 1GB DRAM [chip] in ’95⁷. But with the advent of the Internet I realized it would have a profound impact on everything we do. I saw that shift and wanted to play more directly in the development of the Internet. 

Your claim to fame at Google was overseeing the development of the Chrome browser. Why was that so important?

In 2004, Flickr and Google Maps
and Gmail were part of this
exciting development where the
web was shifting from just being
about content to actually running
applications. This was the moment
when we realized the browser was
actually a platform, a modern
operating system for the Internet.

We started working on Chrome
around 2005. Chrome really found
its footing in 2011 or 2012. These
things take time, and that’s what
innovation looks like.

Managing at scale

Google is so much bigger than when you started. As a manager, how do you confront bigness?

First of all, there are a lot of advantages of scale. It allows us to take a long-term view, be very user-focused, and pursue projects, even where the immediate value is not clear. For example, we started investing in A.I. very early on. One of the big shifts I made when I took over as the CEO was to really embrace an A.I.-first shift in terms of how we were building our products. Many years ago we had to invest tens of millions of dollars to build special A.I.-purposed chips. That was before it was clear what we would use all this for, but scale is what allows you as a company to kind of bet on those trends. But with scale comes definitely challenges. It’s tougher to execute at scale.

But you constantly find when companies are smaller, they make more decisions that are more like betting the company. Then they tend to get more conservative at scale. So how do you make sure as a company, you’re ambitious, you’re willing to take risks, you’re willing to be wrong, you tolerate failures as you embrace success? 

Other than in “other bets,” what’s an example of how you’re doing that in core Google? 

Quantum [computing] has been a 13-year effort for us. Many years ago we saw the opportunity to provide other companies with our cloud technology, but we realized it’s a deep commitment to drive that shift to be an enterprise-first company in our cloud area.  

That’s the kind of commitment you take and the journey you take. So we place big bets all the time. But you have to work harder at making sure you’re effective. 

It must be a personal challenge for a CEO too. How many direct reports do you have?

It’s about 16. 

That’s a lot of people.

It’s a lot of people. It’s a big company⁸. 

Do you intend to have a No. 2, a chief operating officer? 

We have extraordinary leaders, people who are really empowered to run their businesses. And we have world-class functional leaders. I do think it’s a team sport. If you think, for example, about building the great “assistant” experience in the context of Google Pixel⁹, we need different teams to come together to make that possible. And we have very capable leaders. Take Thomas Kurian running Cloud¹⁰. He can make decisions for Cloud. And I partner with him closely. 

So I’m hearing you say putting someone between you and your 16 direct reports is not currently a priority.

We have a structure that works well. 

Let’s talk about Google’s famous culture. Last year you dramatically changed the company’s TGIF all-hands tradition¹¹. Why? 

We are going to continue having TGIF, and we will always make changes to TGIF. Most employees, when they come into Google from the outside, regardless of the level they come in, they get blown away by the level of transparency within the company. Those are all cherished traditions of the company. It is just that when the company is over 100,000 people, at what unit levels do you kind of do those things? 

But you were clear at the time that there had been a problem with information leaking from the TGIFs. That implies some employees could no longer be trusted.

At their scale TGIF had definitely gotten harder. Transparency without context is also not easy. When you have 1,000 people, everybody has shared context for what the decisions are. To try to do this at 100,000 people doesn’t always work in that centralized form. So those are the nuances of it. And so it’s something we are going to play with and evolve and continue. But we’ll work through it as a company. We always have.

Do you think Google employees are too entitled¹²?    

Oh, no. I feel fortunate to have a company where employees deeply care about the work they do and the impact the work has. 

Who do you see as your biggest competitors?

I’ve always worried as a company at scale your biggest competition is from within, that you stop executing well, you focus on the wrong things, you get distracted. I think when you focus on competitors you start chasing and playing by the rules of what other people are good at rather than what makes you good as a company.

Do you have a scenario you plan for in which regulators break up Alphabet on antitrust grounds?

At our scale we realize there will be scrutiny. We always engage constructively, and we take feedback to the extent there are areas where sometimes we may not agree with it. But obviously we understand the role of regulators.

How can you convince skeptics that Google can be trusted with ­users’ data?

Today, we provide some of the most important services out there for users. Every day users come to Google to ask us profound queries. Privacy is something we are constantly evolving and trying to do better. We think we can use A.I. over time to give more benefits to users with less data. That’s the direction we are working on. 

Your emphasis on cloud computing seems to be a clear acknowledgement that Amazon has a business worth competing against. 

We are a cloud-native company. As a company we operate many services with a billion users each, and we’ve been doing cloud as long as anybody else. It’s a big opportunity, but we are doing it because we genuinely think when we look at our technology we see that we can offer something different-shaded and we are world-class in our ability to do so. We obviously have competitors. But why you do something is about user focus. You want to originate there, for that to be a true north.

Before we run out of time, I have my Fitbit on my wrist. I don’t see anything on yours. 

I’m careful about [what I wear] because we’re constantly testing stuff, and I never know what’s released or not. We are obviously excited by the potential for using technology to help improve fitness and health outcomes for millions of people.

Last thing. You got a big raise last month. Do you and your wife have a plan for what you’re going to do with your wealth?

I’ve always viewed society having played a big role in helping me to reach where I am today, and our intent is to give back. I’ve always viewed my life as a phase in which I’m working hard and trying to achieve impact in the context of the work I do through the products we build. But there’s a phase of my life when I want to step back, and that will involve giving back to society. 

Between the lines (footnotes)

(1) How Alphabet
invests:
Capital G is
an in-house private
equity fund that
invests in growing
companies. GV,
formerly Google
Ventures, takes
smaller stakes.

(2) Outside the core: When Google created Alphabet,
it categorized noncore entities like Waymo self-driving cars and Google Fiber broadband as “other bets.”

(3) Talk about healthy R&D: Verily Life Sciences is Google’s health- related research arm, one of several health initiatives. It has worked on projects as diverse as glucose-detecting contact lenses and robotic surgical equipment.

(4) Is the sky really the limit?: Wall Street expects the non-Google part of Alphabet to lose as much as $4 billion
in 2019. The head of Waymo, for example, recently said the company has invested “billions” in that project alone.

(5) Is the new CEO less invested?: Alphabet’s stock
has jumped in 2020 on the assumption Pichai would be less beholden than Page and Brin to the “other bets.” This comment will fuel that fire.

(6) Help could be on the way: Only Verily and Loon, a balloon-based Internet project, have drawn outside investors. Alphabet has a total of eight other noninvestment entities that could be candidates for new capital.

(7) Life before Google: Pichai worked at chip equipment maker Applied Materials after getting a master’s at Stanford. He did a stint at McKinsey and earned an MBA from Wharton before join- ing Google in 2004.

(8) Headcount: Google has gone from garage size to gargantuan in the past two decades. In 2018, the company had 98,771 employees, according to Bloomberg.

(9) Hey, Google!: Google Assistant is its answer to Amazon’s Alexa. The service is built into its Pixel phones and other devices. The company says it has 500 million users.

Culture

(10) Empowered deputy: An ex-Oracle executive, Kurian joined Google last year and has been given broad authority and resources to compete against Microsoft and Amazon.

(11) Not in the garage anymore: For years Page and Brin hosted all-company meetings every Friday afternoon at which an ask-anything culture ruled. Pichai has scaled back the frequency and free- wheeling nature of the meetings.

(12) 17 types of tofu: Google is famous for its perks, from free rides to work to ubiquitous free meals and snacks to back massages and dry cleaning. Another prized perk: the ability to comment to management on anything employees like.

A version of this article appears in the February 2020 issue of Fortune with the headline “The Conversation: Sundar Pichai.”

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