Before his famous resignation, Google CFO Patrick Pichette made finance an integral part of the internet giant’s think-big culture.
If you type Patrick Pichette’s name into the world’s most popular search engine, you’ll get more references to his resignation from Google than to the business strategies he implemented in his seven years as Google’s senior vice-president and chief financial officer (CFO).
The public announcement of Pichette’s departure from the company (via Google+, of course) was certainly unconventional. Then again, so is Pichette. This is a CFO who wore Hawaiian shirts to work and chose to fly economy, despite owning US$87 million worth of Google stock. He managed the finances of a company valued at US$432 billion but didn’t have a formal qualification in accounting. He’d respond directly to emails from any of his fellow Googlers each day and encouraged his finance team to reinvent the business by doing “crazy analyses”.
While Pichette expected his team to think beyond the numbers, his strategy for Google (now a subsidiary of Alphabet Inc.) began with creating much-needed discipline around the company’s financial procedures. If Google’s “crazy ideas”, as Pichette puts them, were to fly, they had to be founded on sound financial strategies.
Financial rigour and foresight
Pichette joined Google at a time when the company’s share value was beginning to slide. The technology company had been searching for a CFO and had interviewed candidates for more than a year before the board granted permission to search outside the US.
Pichette, who was born and raised in Montreal, was president of operations at telecommunications company Bell Canada when the invitation arrived for a coffee at Google’s headquarters in the heart of Silicon Valley.
“If you are going to change the world, you need products that everyone on the planet can benefit from.”
He believes he landed at Google at the right time with the right combination of operational insights, financial rigour and unorthodox thinking to help steer the company through a period of steady growth. This included fuelling the success story that became YouTube, the introduction of Google Fiber and the expansion of the Android operating system.
“I joined Google when there was no formal budgetary process,” he explains. “The accounting was OK, but clearly they didn’t have the tools that provided foresight. They could close the books, but they had incredible difficulty telling you what the next two quarters would look like. They didn’t have the kind of rigour I was accustomed to.”
Beyond the numbers
A former principal of McKinsey Company in Canada, Pichette says he is forever indebted to the discipline he picked up at the global management consulting firm. “I mean, they hired this young, reasonably smart but completely disorganised individual and they mentored me into understanding the benefit of being organised, of having rigour and analytical processes and working incredibly efficiently,” he says. “I carried that through my time at both Bell and Google. My output per unit of energy consumed is very high because of that discipline I learned at McKinsey.”
Financial discipline and transparency were key to Pichette’s strategy at Google. This allowed the company to make smarter decisions about its capital allocation and identify potential pressure points and growth opportunities.
The development of Google’s Android operating system is a good example. When Pichette joined the company, Android, which Google acquired in 2005, comprised a team of seven.
He believes a clear financial overview helped Google prepare for the speed of Android’s growth.
“If we could see forward and have a good view of where Android was going, we could hire just slightly in advance of the curve and basically fuel the engine of growth,” he explains. “That way, you’re always capturing opportunities of growth and there’s no panic.”
The Android operating system now powers about 85 per cent of all smartphones around the world.
Time to get crazy
With the right financial toolkit in place, the next phase of Pichette’s strategy was to apply it to those crazy ideas, many of them developed in a semi-secret research and development facility called Google X.
Ideas to come out of Google X include Google Glass, driverless cars and Project Loon, a network of balloons travelling on the edge of space that is designed to provide internet access to people in rural and remote areas.
“You get the benefit of both worlds, where you are allowed to dream big while using the discipline that actually gives you a reasonable shot at it,” he says. “I think that Google has ambitions that are just completely out of the norm. I really thrived on thinking big and working with my colleagues at Google, and that was something that is quite unique to the culture of Google.”
Pichette’s finance staff were instructed to help drive this culture by using numbers as a powerful mirror to the rest of the company.
“If you take the time to look for insights into the math to see the physics of the business, then, as a finance employee, you can tell the story of what’s going on that most managers can’t,” he says. “That’s a job that finance has a crucial role in, but often does not do it.”
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The bigger the better
Pichette maintains that big thinking should be fostered within finance teams. “If all finance does is accounting and reconciliations to make sure that the books are certifiable, I think you’re doing an important part of your job, but also missing the largest opportunity finance offers,” he says. “I think that portion of finance and accounting is necessary but not just a condition of a great finance or accounting employee.”
Central to Pichette’s strategy was the pursuit of big ideas. If someone presented a project model for funding that didn’t include a billion users, Pichette wouldn’t look at it. He regarded it as a waste of his time.
During his tenure, the company invested heavily in YouTube (bought by Google in 2006), Android, Google Maps and the Chrome browser. “What do they all have in common?” he asks. “Everybody, whether you’re in India, Indonesia, Finland or Canada, can use these products and they can make a real impact on their lives. Google’s business is to change the world for good, and if you’re going to change the world, you need products that everybody on the planet can benefit from – not just the rich people, not just the 1 per cent.”
Pichette explains that when Googlers would show up at his desk with great ideas, they would be met with two questions: “what are your growth rates?” and “how many users are you going to have?”.
“They would show me 150 million users after the first seven years and I would say ‘we are wasting our time; that’s not who we are’. We had bigger things to crack.”
Time to hit the road
By the time Pichette finished up as CFO at Google last year, his responsibilities extended well beyond finance. Eric Schmidt, the company’s executive chairman and former CEO, was concerned Pichette would get bored with finance. So he was given responsibility for human resources and the management of employee services, which included bus transport, massage therapists, chefs and concierge services. He also oversaw the company’s economics department, its internal consulting business and its philanthropic arm, Google.org.
Pichette didn’t get bored, but he did get restless. While on holiday at Mount Kilimanjaro in 2015 with his wife Tamar, he began to consider retirement. Pichette wanted to spend more time travelling the world with his wife of 25 years. He returned to the company, mulled over his decision and posted a long, emotional resignation letter on Google+ explaining that he wished to enjoy “a perfectly fine mid-life crisis full of bliss and beauty, and leave the door open to serendipity for our next leadership opportunities, once our long list of travels and adventures is exhausted”.
It sounds like an easy decision for the CFO of one of the world’s most valuable companies, but Pichette says he just wanted to jump off the treadmill.
“I think that many people get so caught in the money wheel that they can’t get out of it,” he says. “They’ve either built themselves a lifestyle that is driven by the next $20 million or they have that neighbour problem, which is when you make that kind of money and you have six Lamborghinis in your front yard but your neighbour has nine, so you have to have nine Lamborghinis otherwise you’re not really part of the neighbourhood.”
For the record, Pichette says he rarely drives. When he does, he’s behind the wheel of a Volkswagen Golf.
Who is your favourite thinker and why?
“I don’t have one specific business thinker, but I do have a real soft spot for Warren Buffett. The reason is that he is a hyper capitalist who has created immense wealth, but who has the audacity to (1) defend higher taxes in the US and (2) gave most of his fortune to charity through the Gates Foundation. It’s pretty impressive and inspirational in this age of capital hoarding and the 1 per cent.”
Thinking big the Patrick Pichette way
Patrick Pichette’s strategy for Google helped steadily steer the company through a period of growth. Here are his three keys to its success.
1 Financial discipline
Pichette brought much-needed rigour and foresight to the finances of Google. “Discipline from a financial perspective gives very high transparency to the financial situation of a company and good foresight into your performance, so you can make much smarter decisions about your capital allocations.”
2 Thinking beyond the numbers
Pichette believes finance staff should use numbers to identify opportunities that can help drive a company’s culture; they should not be about adding up numbers. “They are there to make a physical representation of what’s going on in the world.”
3 Passion for big ideas
Pichette’s unconventional approach made him a good fit for the company and allowed him to align his strategy to the company’s mission. “There is a saying at Google that you don’t have to wear a suit to be serious. There is a kind of passion for action and change, and that part of the Google culture I really fitted into.”
This may not sound like a typical CFO approach, but Pichette says it was hardly offbeat within a culture like Google. “Google is such an unconventional company that unless you’re unconventional yourself, there is no way you’re going to fit into the culture. You’d be an organ reject in no time.”
Patrick Pichette is speaking at CPA Congress in Melbourne and Brisbane. For details, see cpaaustralia.com.au/congress
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