Google’s billionaire CEO tells employees not to ‘equate fun with money’ amid ‘aggressive’ cost-cutting

Speaking at a companywide, all-hands meeting this week, Google CEO Sundar Pichai found himself fending off some pretty tough questions from employees who learned they should scale back their “holiday parties” expectations amid the company’s “aggressive” cost-saving measures.

Though the social media giant recorded record profits as a result of the COVID-19 lockdowns, it, like many tech companies, is now looking at slowing growth — unfamiliar territory for Google.

But Pichai, who added a total of $6.3 million in executive compensation to his personal bank account last year and is worth an estimated $1.31 billion, asked his employees to remember the “scrappy” days of Google, according to audio of the event obtained by CNBC.

“I remember when Google was small and scrappy,” he told employees at the all-hands, held in New York and known officially as TGIF (Thank God It’s Friday). “Fun didn’t always — we shouldn’t always equate fun with money. I think you can walk into a hard-working startup and people may be having fun and it shouldn’t always equate to money.”

Naturally, the CEO dodged questions from employees who asked if the execs would also be enduring money-saving cuts to their compensation.

This year’s TGIF comes as even Big Tech is beginning to feel the impact of a potential recession and skyrocketing inflation. With interest rates rising and advertisers scaling back their ad placements, even Google’s parent, Alphabet, has had to think twice about excessive spending on things like travel and other perks, such as lavish holiday parties.

“In July, Alphabet reported its second consecutive quarter of weaker-than-expected earnings and revenue, and third-quarter sales growth is expected to dip into the single digits, down from more than 40% a year earlier,” CNBC reports.

And it isn’t just the economy that’s giving the company heartburn. According to Pichai, Google’s expanding bureaucracy is also to blame.

“Sometimes we have a product launch process, which has probably, over many years, grown more complicated than maybe it needs to be,” he said. “Can we look at that process and maybe remove two steps and that’ll be an example of making something 20% more efficient?”

“I think all of us chipping in and doing that across all levels, I think can help the company,” he stated. “At our scale, there is no way we can solve that unless units of teams of all sizes do better.”

One of the more popular questions, according to staff ratings on the company’s internal Dory system, pointed to Google’s “record profits and huge cash reserves” coming out of COVID and asked why the company is now “nickel-and-diming employees” with cuts to travel and swag budgets.

“How do I say it?” Pichai gingerly replied. “Look, I hope all of you are reading the news, externally. The fact that you know, we are being a bit more responsible through one of the toughest macroeconomic conditions underway in the past decade, I think it’s important that as a company, we pull together to get through moments like this.”

Another employee wanted to know why Google has pivoted from “rapidly hiring and spending to equally aggressive cost saving.”

The CEO dismissed the notion that the company’s measures are “aggressive.”

“I’m a bit concerned that you think what we’ve done is what you would define as aggressive cost saving,” he said. “I think it’s important we don’t get disconnected. You need to take a long-term view through conditions like this.”

Again, it’s all about being “scrappy,” according to Pinchai, who stressed that, in uncertain times, it’s important “to be smart, to be frugal, to be scrappy, to be more efficient.”

Employees will, however, be paid “at the top end of the market so we can be competitive,” according to Google’s Vice President of “Total Rewards,” Bret Hill.

Pichai echoed the statement.

“We’re committed to taking care of our employees,” he said. “I think we’re just working through a tough moment macroeconomically and I think it’s important we as a company align and work together.”

But if employees are going to party, they should keep it “small,” according to Google’s head of finance, Kristin Reinke.

“Where you have summits and big meetings, please try to do them in the office,” she told employees.

“We definitely want people to still have fun,” she assured the staff. “We know there’s holiday parties coming up, there’s year-end celebrations, we still want people to do that. But we’re just asking them to keep them small, keep them informal — try not to go over the top.”

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