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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  November 26, 2016 1:00pm-1:31pm EST

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david: did you think you would ever ld a lae company like pepsi? indra: it is a dream come true. david: when you get advice do you ever listen to it? indra: you never know if a nugget can translate into something good. david: not long ago an activist showed up. indra: my job is to make sure the company is performing very well. david: suppose somebody has a product from a company that is based in atlanta and you see it in their refrigerator, what do you do? indra: i let it be known i'm very unhappy. >> would you fix your entire? tie?x your
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david: people wouldn't recognize me if my tie was fixed. all right. i don't view myself as a journalist. nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i had a day job of running a private equity firm. >> how do you define leadership? what is it that makes somebody tick? ♪ you have been the c.e.o. of pepsico for more than 10 years. did you think when were a young girl in india you would grow up to be the head of pepsi? indra: it is a dream come true. to trace my roots and go back to where i grew up and where i am, the two points would never connect, and to be in the united states running such a large company is almost an incredulous
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thing it happened to me. david: let's go back to india for a moment. you grew up in a very close family and when you were very young your mother would say pretend you are prime minister of india or something. what was the drill she was trying to exhibit? indra: she was a very bright woman and didn't go to college because her parents didn't think girls should go to college, and they couldn't afford to send them to college. see lived vicariously through the daughters and kept pushing us to be whatever we wanted to be, dream big but always you can get married when you're 18 but dream big until then so dinner table she would have this conversation about give me a speech like you are the president or prime minister and one chief minister and critique us and say no prime minister would do this. she kept pushing us to be better and better. if we got one compliment we said
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wow you must have done really well. she really raised the bar on us and i think she gave us hope but anchored us firmly into the values that i have to get married at 18, which didn't happen. that is what she kept telling us. david: if you don't gemaied at 18 that is a disgrace? indra: this is the way she envisioned it. but my father and grandfather said do whatever you want. dream, but just get a good set of grades so your mother can get you married. that was my upbringing and we had checks and balances at home. david: you did get some degrees in india and you decided to get a degree from the yale school of management. when you said to your parents i'm going to yale which is in connecticut, united states, what did they say? indra: this is perhaps the biggest mystery of all. my conservative mother and my supportive father allowed me to
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come to the united states. shocked the hell out of me because i would have thought my mother would have fasted for days and thrown a temper tantrum. she came to the airport and saw me off. they bought me an airline ticket, which even today i wonder how they did it. what it cost them. but they were very supportive and they had enough people to look up on me to make sure i had a support system but they encouraged me to go and live out my dreams. >> how did you take yale? indra: there was an article in a time magazine or something which talked about the yale school of management, public and private management, and how they bring together different sectors. and it was a beautiful. i read it where i was growing up and i was so intrigued by the approach to education from yale that i decided to apply. david: when you graduated you then began to go into various
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strategy kinds of positions. where were you initially? indra: i went to the boston consulting group in chicago and spent six and a half years there, and perhaps one of my most formative experiences because being in consulting that time which was the father of strategy allowed me to see problems of companies holistically. not just marketing or operations or supply chain. i saw every aspect and it gave me 10 years of experience in six years and i became a better person. david: when did pepsico inquire of you? indra: somebody said pepsico could like to talk to me. david: they gave you the job of in charge of strategy? indra: head of strategy. david: you made some acquisitions as the head of strategy. one was gatorade or quaker oats. was that good, and were you happy to do it? >> it was one of the most
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brilliant acquisitions we did because gatorade was an amazing beverage probably the best isotonic beverage in the world today for athletes. david: isotonic means? indra: sports drinks. it gave us access to gatorade and we could do all kinds of things with that. we didn't have a good product for us and that was good. the bigger attraction was the quaker oats brand. in pepsico we had no food brand that was good for you. and we needed a "good for you" brand. we looked at the world and the best "good for you" even today is quaker oats. we wanted it badly. we wanted quaker oats and gatorade. other beverage companies only wanted gatorade and didn't know what to do with quaker oats. because we had both businesses for us the quaker oats company which includes quaker and gatorade was a logical acquisition. david: when i was a young person
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i played sports and in those days it was such a long time ago that the conventional wisdom was you were not supposed to drink anything at halftime because you would get a cramp. the idea of hydrating had not come along. one time we played a team in australia and they had a different idea, to drink beer at halftime, and they did better. so we went to that. indra: i think somebody gave you wrong information, so you should hydrate to avoid cramps. david: but before that people didn't know that. what about tropicana? how did this come about? indra: in 1997 we bought it because we had no beverage brand that served consumers before 10:00 a.m. the first time somebody reached for a pepsico beverage was 10:00 a.m. which was pepsi or mountain dew. so the first early hours of the morning we had no product. so tropicana was always on the
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radar as a brand we needed in our portfolio for a breakfast beverage. so when it came up we grabbed it. david: so people say make pepsi different or frito-lay, you get advice, and did you ever listen? indra: they give me ideas on products and how it tastes and what new products to develop and ideas and feedback on commercials. they give me ideas for commercials, packaging. the most important thing is to keep both ears open because you never know if a nugget of an idea can translate to a big success. one thing is not dismiss them. i can't log all of the ideas i get. i send it out and say i listen to this talking and what i heard. is there something i should be doing? i listen to everybody. david: you do the testing or some testing yourself? indr one of the greatest things in my job is i can test and taste in the early stages. in the annual cycle i must taste
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between 50 and 100 products over three days, whether snacks, beverages, quaker products. everything that is launching in the next three to five years they will show me and i can give an opinion -- not that my opinion is the only thing that counts but i can give an opinion. something else i do, i will tell you any time i visit somebody's home i find my way to the kitchen and open cupboards to see what products they have. it is very important if i visit somebody in their home anybody who invites me -- it can be a friend or anybody -- they have to have pepsi products. david: let's say somebody has a product based in atlanta and you see it. what do you do? indra: i let it be known that i'm very unhappy. so if you ever invite me. david: i will change everything. i don't have the other products but don't worry, i would have your products. indra: i appreciate it.
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david: what about snack products and how are you trying to make them healthier? indra: a bag of lays has less salt than a slice of bread. david: i make take in less salt, but i wonder whether i'll gain weight. indra: you exercise. you play whatever. david: not enough. david: you have been the c.e.o.
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more than 10 years and most c>e>o>'s are five years or so. so you have done very well. the stock is up 67% since you have been the c.e.o. harder to be a c.e.o. now than 10 years ago? indra: i think when you look at the world the last decade the financial crisis changed the world enormously because you had
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since then really the world has not recovered from the financial crisis. you have had political upheavals and technology is rewriting the rules. what kinds of jobs will you keep in the company and how are you going to digitize the chain and how will e-commerce impact the business? there is some technology impacting every part of the company. in the last seven years in particular it has been a challenge to run a large company because you have got to be a foreign policy expert and technology person and got to be on the front line and talk to the front line and world leaders. c.e.o.'s have to do a lot just to manage the companies and keep them going in this incredibly troubled global environment. david: not long ago an activist showed up and said maybe you should spin off the frito-lay business.
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what was your response and how did you keep the activist pretty happy? indra: my job is not to keep an activist happy but make sure the company is managed for the next generation performing well, and if the activist is happy sobeit. i'm an internal activist. i own 33 times my salary in pepsico stock. my entire net worth is in this company. so if anybody on the outside has a great idea how to improve the value that is sustained i listen to them. i listened to the activist. i have my personal convictions and superb boards of directors. so i shared this with th company, and i'm transparent, and told them where we are headed and where the activist wanted us to go and it was clear to the board as to me that was more of a short-term strategy and what we want long-term is what we want.
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the board backed me and the courage our convictions prevailed and we are where we were before the activist came and performing well. david: one of the main things you sell is pepsi-cola and another company coca-cola and if you have a blindfold test can you tell the difference? indra: yes, absolutely. have you tried the two beverages? david: i'm told that years ago when there were blindfold tests more people liked pepsi-cola and coca-cola tried to reformulate and it didn't work. the secret formula for coca-cola is said to be in a vault. indra: we have a formula in the vault, but i'm a chemist by undergraduate and i'm always testing products. the pepsi-cola product invented by a chemist is one of the most complex refined amazing formulas. david: people say it is very
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good, but most would say pepsi-cola and coca-cola are not that healthy for you, so you must have heard that argument before. indra: yes. david: how does pepsico under your leadership try to make products like pepsi-cola healthier? what is your plan to do that? indra: first, it was invented many years ago when society was different. it was more under-nutrition than over-nutrition, and people felt drinking products with that much sugar was all right. society has changed and it behooves us to change with society. we are launching more products with zero or very low sugar. we are taking pepsi and reformulating it for lower sugar levels to train the public to accept carbonated drinks with lower sugar. you can't do it overnight. you have to take them down piece by piece so when we get to a level like 50 or 60 calories for
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eight ounces or 70 calories for 12 ounces they are comfortable with the product. that is the journey. david: what about snack products? they have been criticized for having a lot of salt. how do you make them healthier? indra: a single bag of lays potato chips has less salt than a slice of bread. because it is the salt. you need it in bread for leavening and in soup as a preservative. there are three ingredients in a bag of lays. a little salt, potatoes, and heart-healthy oil. so eat them with a smile on your face. david: i'm sure i would eat them with a smile but would i gain weight? indra: you exercise. david: not enough. indra: you should be fine. david: what if somebody says i don't care about being healthy, i want a great snack. what will make me happiest? indra: fritos. you feel like you died and went to heaven. d:
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pepsico. you have over 200,000 employees. how can you possibly relate to them? do you do it through e-mails? how do keep them informed? you have so many employees. indra: we do videos, e-mails, town halls and forums every quarter. every time i travel we meet with employees and i do town halls in the town or country. sometimes i write a letter. for example, when my kids were going to college i wrote a personal letter saying i'm going through tremendous separation angst. or if i felt employees were not calling their parents often enough, i would write why it is important to call parents. so whatever is on my mind i want them to know me as a person rather than just an executive. i'm accessible to them and talk to everybody from the front line to my senior executives. david: a number of years ago you spoke at the economic club in washington and made a statement that, i thought, captured a lot of people's attention.
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one thing you said was you write letters to your senior officer'' mothers to give them a report card on how their children are doing. do you still do that, and what was the theory? indra: i should take you back a few years. when i first became c.e.o. i went back to india to visit my mother. my father had passed away and my mother was there. i stayed at a hotel because the home was a little bit more rugged and i wanted the comfort. she told me i had to dress up and show up at 7:00 a.m. in the morning. when i got home and sat in the living room a stream of people showed up and would say hello and go to my mom and say, "you did such a good job with your daughter," a compliment, "she is a c.e.o.," but not a word to me. when i watched that interplay i related that i was a product of my upbringing and my parents, if
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my father had been around, they should get the credit because of what they did for me and to me that allowed me to be who i was that day. and it corrected me that i never thanked the parents of my executives for the gift of their child to pepsico. so i came back and started to write my reports and senior executives and writing the story my cultural background what happened when i went to india then i wrote a personal paragraph what their child was doing and said thank you for the gift of your child to our company. and it opened the floodgate of emotions. parents started to communicate directly with me, and it has been an amazing experience because i now write to about 400 executives. david: you write a letter to their parents. what do the executives say? do they say don't, do that, or i'm glad you told my parents how well i'm doing? indra: our executives get very emotional about it because the parents never received such a letter and it is like a report card.
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i won't write anything else. the participants are so delighted about getting the letter they tell neighbors and uncles and aunts, and then the executive says, my god, this is the best thing that happened to my parents and best thing that happened to me as an executive. david: have you ever written to the interviewers you had? indra: not yet. david: ok. do you think a woman today has it easier than when you became c.e.o.? indra: i'm always afraid if i fail i may have to go back to something that i don't want to go back to and that is always motivating me and i drive myself to be better and better and better at my job every day. "the david rubenstein show: peer to peer conversations" is brought to you by state street global advisors.
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there is opportunity in complexity. david: some people who might be
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watching this would say this person has it all, a woman who has become the c.e.o. of a great company and has a husband married to for more than 30 years, two happy and healthy daughters who are gainfully employed. and is it possible for anybody, certainly a woman, in our society to have it all? and do you feel like you have had it all?
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indra: on a relative, basis yes, i have had it all. on a relative basis i'm very fortunate to have a wonderful husband, two great kids, very tightknit family and awesome job and great team. but to get here around stay here lots of tradeoffs and sacrifices under the water, a lot of collateral damage. but i have had the strength to power through all of that. can you have it all? that is the big question. in this definition. i think if you have the right support system and an understanding spouse and you want to be married, if you are willing to make all the tradeoffs that you need to make, you can have it all. but while you do all of that there will be heartaches and pain and there will be some collateral damage. david: when you became the president of pepsi you came home one day and your mother was there and she asked you to get some milk -- and maybe you can tell the story better than i could. indra: way back in 2000 i was
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informed by a phone call i was going to be president of the company and i went home -- because i was working on the quaker oats deal -- to tell my family i was going to be president of pepsico. i walked in the house and mom opens the door, she was living with me, and i said i have news for you. she said before the news go get some milk. it was 10:00 p.m., and why should i get milk? my husband was there. why didn't you tell him? he came at eight and he was tired, now you get the milk. you never question your mom. so i went and got the milk and banged it on the counter top. i had big ws i was appointed president of pepsico and all you care about is milk. she said when you walk in that door leave the work in the garage because you are the wife, daughter, daughter-in-law and mother of the kids and that is all i want to talk about. anything else, leave in the garage.
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don't even try that with me any more. so, i think with mom you don't try anything. david: she must be proud you are the c.e.o. of pepsi. indra: i think she is, but she keeps me grounded. david: what is more difficult, being a c.e.o. woman or immigrant or combination? what did you have to overcome? indra: i think being a woman and immigrant has had its positives and negatives. it had positives because people take notice of you if you are so different you walk in the room and people go, she is a different sort of a person, female, immigrant. tall. all these work together. it has been difficult because they go, how does she know how to run this great american company? it is both a positive and negative, but on balance more positive. david: do you think a woman today has it easier than when you became c.e.o. or do you still feel you have to work harder to be a woman c.e.o. than say a man who is c.e.o. of an
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equivalent sized company? indra: easier today because there are more of us in positions of power. but i think from a personal perspective it has nothing to do with women or being in this position. i have the fear -- i'm always afraid if i fail i may have to go back to something i don't want to go back to and that fear always motivates me and i drive myself to be better at my job. david: you are a role model for many women. do you see yourself as a role model and particularly from women from india or outside the united states? indra: i don't have a choice but to be a role model, and i feel a privilege to be the role model and particularly from women from -- for women, minorities, indian women for sure. everybody looks up to me and wants to learn from me and get my advice. i can't give them all enough time. that is what makes me sad,
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because i get letters every day asking for advice to be a mentor. i can't do it all. so i try to do my best by speaking in public forums and disseminate information on a large scale. but i think because there are so few of us we have to play the role of being the role model and make sure we do a good job. because we have to set the standard for others who might follow in our footsteps. david: one time i think i read when your husband was saying you are spending all your time on pepsi, pepsi, pepsi, and what about me, and what was your response? indra: you always -- even today he will tell me -- your list is pepsico, pepsico, pepsico, then kids and mom and at the bottom i sit there. and i said you are on the list. be happy you are on the list. but he knows that i love him dearly and he's my rock, he's my life. but he likes to be higher up on the list.
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>> david rubenstein david is brought to you by state street global advisors. there is opportunity in complexity.
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