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Brent Callinicos, CPA Vice President and Treasurer Google, Inc. November 2007
Presentation Outline <ul><li>G o o g l e  info </li></ul><ul><li>Starting with a clean slate </li></ul><ul><li>Treasury in...
G o o g l e ’s Mission Organize the  world's information  and  make it  universally   accessible  and  useful
Search : At the Core Search is at the heart  of everything  G o o g l e  does More engineers  working on search than ever ...
G o o g l e  Strategy : Search. Ads. Apps. Search. Ads. Apps.
Anti-Strategy – We Do Not… Projects Content Users <ul><li>Think small </li></ul><ul><li>Build niche solutions </li></ul><u...
G o o g l e   Evolution 1995 1998 2000 2003 2005 2004 2006 ? Core Search Ads   Monetization Communications   Collaboration ?
G o o g l e  Is a Data-Driven Company… Search, Sites, My Ads G o o g l e  Analytics G o o g l e  Website Optimizer G o o g...
Continued Strong Performance Gross Revenue (millions) GAAP Operating Profit GAAP EPS (Diluted) Operating Cash Flow (millio...
Some Interesting  G o o g l e  Data-Points <ul><li>Searches per day : Every day millions of people search on  G o o g l e ...
<ul><li>Starting with a clean slate </li></ul><ul><ul><li>very small group </li></ul></ul><ul><ul><li>few legacy systems <...
Treasury Areas of Initial Focus <ul><li>Take a big Bite! </li></ul><ul><ul><li>Foreign Exchange </li></ul></ul><ul><ul><li...
<ul><li>Aim high </li></ul><ul><li>Take a deeply analytical approach to everything </li></ul><ul><ul><li>A sophisticated a...
<ul><li>Take a long-term focus </li></ul><ul><li>Hire for strategy </li></ul><ul><ul><li>High level strategy drives hires ...
G o o g l e   Treasury Organization – Q1 ‘07 Brent Callinicos VP, Treasurer Assistant Treasurer (1 HC) Portfolio Manager (...
G o o g l e   Treasury Organization – Q3 ‘07 <ul><li>Blue   = Heads at end of Q1 </li></ul><ul><li>Grey   = hired in Q2/Q3...
Foreign Exchange <ul><ul><li>Net Revenue must be hedged </li></ul></ul><ul><ul><li>F/X risks should be managed in-house </...
<ul><ul><li>Diversification is key – a concentrated risk is not a good risk, even if it seems safe </li></ul></ul><ul><ul>...
Financial Risk Management <ul><ul><li>Without underlying Operation and Risk systems, it is impossible to innovate or truly...
Implementation example: F/X <ul><li>STARTING POINT: </li></ul><ul><li>No dedicated personnel </li></ul><ul><li>Broad polic...
Systems <ul><ul><li>Simultaneous search </li></ul></ul><ul><ul><ul><li>Portfolio </li></ul></ul></ul><ul><ul><ul><li>F/X (...
C AUG SEPT Consultant & Google  Vendor Landscape <ul><li>Process Overview </li></ul><ul><li>Onsite Vendor Overviews </li><...
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Google Presentation

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Transcript of "Google Presentation"

  1. 1. Brent Callinicos, CPA Vice President and Treasurer Google, Inc. November 2007
  2. 2. Presentation Outline <ul><li>G o o g l e info </li></ul><ul><li>Starting with a clean slate </li></ul><ul><li>Treasury innovation, G o o g l e -style </li></ul><ul><li>Some insight into what we’re doing in: </li></ul><ul><ul><li>F/X </li></ul></ul><ul><ul><li>Portfolio </li></ul></ul><ul><ul><li>Financial Risk </li></ul></ul><ul><ul><li>Systems </li></ul></ul>
  3. 3. G o o g l e ’s Mission Organize the world's information and make it universally accessible and useful
  4. 4. Search : At the Core Search is at the heart of everything G o o g l e does More engineers working on search than ever before Search is not a solved problem – offline info, personal info, personalized results, mobile experience
  5. 5. G o o g l e Strategy : Search. Ads. Apps. Search. Ads. Apps.
  6. 6. Anti-Strategy – We Do Not… Projects Content Users <ul><li>Think small </li></ul><ul><li>Build niche solutions </li></ul><ul><li>Build for the short term </li></ul><ul><li>Develop vertical solutions </li></ul><ul><li>Create content </li></ul><ul><li>Discount tail content </li></ul><ul><li>Focus on the average user </li></ul><ul><li>Hold user data hostage </li></ul>
  7. 7. G o o g l e Evolution 1995 1998 2000 2003 2005 2004 2006 ? Core Search Ads Monetization Communications Collaboration ?
  8. 8. G o o g l e Is a Data-Driven Company… Search, Sites, My Ads G o o g l e Analytics G o o g l e Website Optimizer G o o g l e Trends G o o g l e Ad Metrics My Sites
  9. 9. Continued Strong Performance Gross Revenue (millions) GAAP Operating Profit GAAP EPS (Diluted) Operating Cash Flow (millions) (millions)
  10. 10. Some Interesting G o o g l e Data-Points <ul><li>Searches per day : Every day millions of people search on G o o g l e for information </li></ul><ul><li>International traffic : More than half our searches come from outside the U.S. </li></ul><ul><li>G o o g l e Network reach/frequency ( G o o g l e Network includes all G o o g l e sites and AdSense for content pages) </li></ul><ul><ul><li>The G o o g l e Network reaches more than 80% of worldwide Internet users </li></ul></ul><ul><ul><li>The G o o g l e Network reaches more Internet users worldwide than any other web property or ad network </li></ul></ul><ul><li>PageRank ( just one of more than 200 signals we use to determine the rank of a website) </li></ul><ul><ul><li>The web changes all the time (10–20% of the web is brand new every time we crawl it) </li></ul></ul><ul><ul><li>G o o g l e has never seen 20–25% of its queries before, showing the creativity of our users and proving that small indices aren’t useful </li></ul></ul><ul><ul><li>G o o g l e updates its search algorithms on a weekly basis </li></ul></ul><ul><li>G o o g l e News: now includes articles from over 10,000 news sources in more than 18 languages worldwide. Among these, over 4,500 are English language news sources </li></ul><ul><li>Advertisers : Hundreds of thousands of advertisers worldwide </li></ul><ul><li>Client Software: G o o g l e Toolbar has millions of users worldwide </li></ul><ul><li>G o o g l e Desktop : has millions of users worldwide </li></ul><ul><li>Audio Advertising : More than 1,600 radio stations available to U.S. AdWords advertisers </li></ul><ul><li>Print Advertising : More than 600 newspapers now available to U.S. AdWords advertiser </li></ul><ul><li>TV Advertising : We are currently in a closed trial to test an auction-based TV advertising system working with EchoStar and Astound Cable </li></ul><ul><li>YouTube : People watch hundreds of millions of videos on YouTube every day </li></ul><ul><ul><li>Hundreds of thousands of videos are being uploaded to YouTube daily </li></ul></ul><ul><ul><li>Every minute, eight hours of video is uploaded to YouTube </li></ul></ul>
  11. 11. <ul><li>Starting with a clean slate </li></ul><ul><ul><li>very small group </li></ul></ul><ul><ul><li>few legacy systems </li></ul></ul><ul><ul><li>no inertia around “how we’ve always done things” </li></ul></ul><ul><li>Deep Dive </li></ul><ul><ul><li>G o o g l e ’s culture </li></ul></ul><ul><ul><ul><li>bottoms-up and tops-down </li></ul></ul></ul><ul><ul><li>G o o g l e ’s objectives </li></ul></ul><ul><ul><ul><li>ascertain Treasury’s involvement </li></ul></ul></ul><ul><ul><li>Treasury’s history (and timeline) </li></ul></ul><ul><ul><ul><li>how fast do we move? </li></ul></ul></ul><ul><ul><ul><li>what has focus been? </li></ul></ul></ul><ul><ul><li>Existing Treasury personnel </li></ul></ul><ul><ul><ul><li>skills and career goals </li></ul></ul></ul><ul><ul><li>Listen!!!! </li></ul></ul>Starting with a Clean Slate
  12. 12. Treasury Areas of Initial Focus <ul><li>Take a big Bite! </li></ul><ul><ul><li>Foreign Exchange </li></ul></ul><ul><ul><li>Portfolio Management </li></ul></ul><ul><ul><li>Corporate Finance </li></ul></ul><ul><ul><li>Financial Risk Management </li></ul></ul><ul><ul><li>Cash Management / Operations </li></ul></ul><ul><ul><li>Insurance / Business Risk Management </li></ul></ul><ul><ul><li>Stock Services </li></ul></ul><ul><ul><li>SYSTEMS! </li></ul></ul>
  13. 13. <ul><li>Aim high </li></ul><ul><li>Take a deeply analytical approach to everything </li></ul><ul><ul><li>A sophisticated approach doesn’t have to be scary </li></ul></ul><ul><ul><li>Risk management as a foundation for forecasting, strategies etc. </li></ul></ul><ul><ul><li>Strive for as-close-to-as-possible visibility into exposures, market values of positions, risk metrics, etc </li></ul></ul><ul><li>Diversify your portfolio </li></ul><ul><li>All insurance should be strategic </li></ul><ul><li>Use systems wherever possible </li></ul><ul><ul><li>Straight-through processing is critical </li></ul></ul><ul><li>Look at entire transactions and processes from start to finish and to use real-time numbers </li></ul>Directional Themes
  14. 14. <ul><li>Take a long-term focus </li></ul><ul><li>Hire for strategy </li></ul><ul><ul><li>High level strategy drives hires </li></ul></ul><ul><ul><li>Personnel drive bottoms-up strategy validation and details </li></ul></ul><ul><ul><li>Don’t rush hiring </li></ul></ul><ul><ul><li>Hire expertise + adaptive intelligence </li></ul></ul><ul><ul><li>Bar should be to be as good as counterparties </li></ul></ul>Personnel Focus
  15. 15. G o o g l e Treasury Organization – Q1 ‘07 Brent Callinicos VP, Treasurer Assistant Treasurer (1 HC) Portfolio Manager (1 HC) Operations & Cash Management (1 HC) Stock Services (4 HC)
  16. 16. G o o g l e Treasury Organization – Q3 ‘07 <ul><li>Blue = Heads at end of Q1 </li></ul><ul><li>Grey = hired in Q2/Q3 </li></ul><ul><li>Green = Heads to be hired </li></ul>Brent Callinicos VP, Treasurer Assistant Treasurer Portfolio Management Assistant Treasurer Cash Mgmt, Insurance & Stock Services Assistant Treasurer F/X Portfolio Manager Portfolio Analyst Portfolio Manager Portfolio Analyst Business Risk Mgmt (Insurance) Business Risk Mgmt (Insurance) Operations & Cash Management F/X Manager F/X Analyst Corporate Finance & F/X Mgr Executive Assistant Operations & Cash Management Operations & Cash Management Stock Services (3 HC) Stock Services Corporate Finance Analyst
  17. 17. Foreign Exchange <ul><ul><li>Net Revenue must be hedged </li></ul></ul><ul><ul><li>F/X risks should be managed in-house </li></ul></ul><ul><ul><li>You need robust underlying risk systems, operational controls, trading and reporting platforms </li></ul></ul><ul><ul><li>You need industry standard benchmarks </li></ul></ul><ul><ul><ul><li>Not measuring performance is a mistake </li></ul></ul></ul><ul><ul><li>Having a handful of professionals in house is necessary </li></ul></ul><ul><ul><li>Options are more flexible, have better accounting treatment and are better risk management tools than forwards </li></ul></ul>
  18. 18. <ul><ul><li>Diversification is key – a concentrated risk is not a good risk, even if it seems safe </li></ul></ul><ul><ul><li>Asset allocation is key vs. trading </li></ul></ul><ul><ul><li>A mix of in-house and external management is logical </li></ul></ul><ul><ul><li>You need robust underlying risk systems, operational controls, trading and reporting platforms </li></ul></ul><ul><ul><li>You need industry standard benchmarks (i.e. universe of money managers) </li></ul></ul><ul><ul><li>Having a handful of stellar Capital markets professionals in house is necessary and economically sound (external managers are more expensive) </li></ul></ul><ul><ul><li>Although derivatives can obviously be abused, they are ideal risk management tools </li></ul></ul>Portfolio
  19. 19. Financial Risk Management <ul><ul><li>Without underlying Operation and Risk systems, it is impossible to innovate or truly understand/model the risks being taken or quantify the risks that need to be mitigated </li></ul></ul><ul><ul><li>Robust systems can also provide a competitive advantage </li></ul></ul><ul><ul><li>Multiple risk measurement methodologies is important </li></ul></ul><ul><ul><ul><li>VaR </li></ul></ul></ul><ul><ul><ul><li>Sensitivity analysis </li></ul></ul></ul><ul><ul><ul><li>Scenario analysis </li></ul></ul></ul><ul><ul><li>F/X and Portfolio policies should incorporate statistical risk measures </li></ul></ul><ul><ul><ul><li>Risk limits </li></ul></ul></ul><ul><ul><ul><li>Risk-adjusted returns relative to benchmarks </li></ul></ul></ul>
  20. 20. Implementation example: F/X <ul><li>STARTING POINT: </li></ul><ul><li>No dedicated personnel </li></ul><ul><li>Broad policy </li></ul><ul><li>Balance Sheet only </li></ul><ul><li>No specific risk parameters </li></ul><ul><li>Forwards only </li></ul><ul><li>No systems </li></ul><ul><li>CURRENT STATUS: </li></ul><ul><li>Team of 2 (going to 3 in ’08) </li></ul><ul><li>Focused world-class policy </li></ul><ul><li>Full F/X revenue cycle </li></ul><ul><li>Statistical risk drives policy </li></ul><ul><li>Full range of economically-efficient instruments </li></ul><ul><li>Full range of systems imminent </li></ul><ul><ul><li>trading platform (F/X all) </li></ul></ul><ul><ul><li>exposure measurement </li></ul></ul><ul><ul><li>trade management </li></ul></ul><ul><ul><li>Robust accounting (FAS133) </li></ul></ul>
  21. 21. Systems <ul><ul><li>Simultaneous search </li></ul></ul><ul><ul><ul><li>Portfolio </li></ul></ul></ul><ul><ul><ul><li>F/X (whole lifecycle including FASB133 acctg module) </li></ul></ul></ul><ul><ul><ul><li>Financial Risk Management </li></ul></ul></ul><ul><ul><ul><li>Treasury Workstation </li></ul></ul></ul><ul><ul><li>Logic and cost/benefit dictates choice </li></ul></ul><ul><ul><ul><li>Not just cost </li></ul></ul></ul>
  22. 22. C AUG SEPT Consultant & Google Vendor Landscape <ul><li>Process Overview </li></ul><ul><li>Onsite Vendor Overviews </li></ul><ul><li>Surveys </li></ul><ul><li>Detailed RFP </li></ul><ul><li>Detailed Onsite Demos </li></ul><ul><li>Demo Score Cards </li></ul><ul><li>eAuction (SW license, maintenance fees, hosting) </li></ul><ul><li>Full Day Deep Dive Demos </li></ul>Systems Selection - Methodology JULY DEMOS FINALIST VENDORS Final Vendors FINAL APPROVAL GO-FORWARD DECISION B A F G E J H D M I RFP A L B C
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