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It’s all relative.
That’s the most powerful point Ruth Porat, chief financial officer of Google, and its parent, Alphabet, made to me in a recent interview. Before the creation of Alphabet, she told me, investors thought the company’s non-core projects—self-driving cars, Internet balloons, and the like—were losing on the order of $10 billion or $11 billion a year. “The reality was that the operating loss was around $3.5 billion that first year,” says Porat. “And I think that what that said is we have a portfolio of businesses we’re investing in, and it’s a really reasonably sized portfolio.”
It’s a profound statement. Because Google—which doesn’t give financial guidance the way most other companies do—was losing less in a particular kind of investment than investors thought, suddenly those investors were more excited about the financial prospects of Google overall. None of this changed the bottom line in any way, though the shift also helped Wall Street understand better just how good Google’s core business is. In fact, Alphabet’s renamed “other bets” continue to lose roughly the same amount of money as they did two years ago. But investors seem to like them corralled in their safe place.
The bottom line here is that good communication—transparent, forthright, detailed—can make a huge difference, as can finding the right communicator. Credit Porat, a longtime investment banker, with helping Google figure that out, and Google for finding Porat.
A fuller account of my interview with Porat appears in the current issue of Fortune. I also discussed with her how long Google will keep giving away so much food to its employees—and, in my case, visitors. (The current tally is 178,000 meals daily.) Spoiler alert: Porat promises free grub for Googlers for a very long time.