Alex Chriss, President and CEO, PayPal
Paul Hudson, Chief Executive Officer, Sanofi
In conversation with: Kristin Stoller, Editorial Director, Fortune Live Media

Fortune Global Forum 2024: Competing In the Global Marketplace - Strategies For Growth

Conferences

Hello, everyone. All right, Alex Paul. Thank you so much for being with me here today. So you both come from two vastly different industries but have kind of parallel stories. I think. So you both lead decades old brands. Um but are relatively new, Ceo S Paul. You've been at snowy five years, Alex. You uh just had your one year anniversary. Congratulations. Um And you both, you made some giant pivots in your very short but very productive time. So, Alex, let's start with you. Um You've called yourself an underdog in the past. Uh You took over at a time when paypal stock was struggling a bit. So what would you say has been the biggest pivot you've made in the past year? Yeah. Well, first, thank you for having me here. It's been fantastic to be with you all. Um You know, paypal 25 year old company, uh one of the most well known brands in the world. Uh We also have the Venmo product, which again is a top brand, so incredible products uh serving hundreds of millions of consumers and tens of millions of merchants. Um but a product and uh uh a company that I think had lost its way a little bit uh from an innovation standpoint. And so coming in, uh what I really wanted to do was get the innovation muscle back and open up the addressable market that we could go after. So go after. So one of the things I've really focused on in this past year is changing the mindset of the company and the mindset of the external world from being just a payments company, which is what we were all known for uh to really focusing on commerce and commerce, you know, spans so many other things from the moment a consumer tries to find something all the way through to, you know, post purchase. And with the data that we have with the technology that we have and with the talent that we have, uh that's an opportunity for us to uh to expand and really become a commerce company. And Paul, you've had a bit of an easy last week. Um You uh your company prepared to sell a steak in your consumer health. You know, Paula, can you tell us about what this means for your overall business strategy? And if it's a bigger pivot for you, well, we um I'm five years as you know, so if you produce almost a billion dollars of a billion doses of vaccines and medicines every year were absolutely focused on miracles and breakthroughs for patients, but it wasn't always that way. And five years ago, we decided to double down on being best in class or first in class, doing things that companies, drug companies had never done before to try and treat unmet need, take more risk. But in areas where we were strong and we had great capability and we stepped back, in fact, from quite a lot of the areas where we thought we couldn't offer real radical breakthrough for patients to step change in efficacy or safety. And so, uh part of that streamlining and taking us towards a pure play by a farmer was to exit our consumer business and you reference it, uh we're gonna uh exit about 50% through private equity to CD. Nr uh who we think will create even more value for patients and those that go into the pharmacy in a trusted way to get what they need and, and we'll focus on chasing miracles, which is really what we're supposed to do and what we're designed for. And I think what we're best at and we're, we're well underway in achieving that. Excellent. And I know we talked about this a lot today already. Um but have the results of the election last week, I impacted how you're looking at your 2025 strategy at all, especially Paul for you with health care. And is there anything top of mind? Well, the first question we ask ourselves with any administration, of course, governments are changing in most major markets. The vast majority of the world going to vote at some point over the last 12 months and coming 12 months. And um it's really about what will it do in terms of changing access to health care, access to medicines? That's what we ask. And you know, we hope the democracies choose the right leaders. But beyond that, um we want to know what will it mean for out of pocket here in the US. What will it mean for making sure innovation is rewarded that scientific jobs are encouraged and they can proliferate even more and we can do incredible things. So we come at it almost entirely from uh you know, a health care innovation angle and, and that never changes. We're always iterating and I think most big businesses look at it through some lenses, Alex, any, any thoughts for you, you know, very similar. You know, we start first and foremost, working customer back. And so we focus on our customer, nothing based on the election changes, how we serve our customers. Um But six months ago, you know, we took the leadership team aside and said we need two playbooks and, you know, post election, we'll pull one of the playbooks out and throw the other one away. And so, um you know, we'll, we'll run with the playbook that we have now. But, you know, otherwise our focus is really on the customer makes sense and I want to come to the audience scene for questions. So think of any you have and feel free to raise your hand. Um But first, Alex, I want to talk to you about acquisitions because you've said publicly that paypal had done too many acquisitions. Then of course, a big one for millennials like me. Um But how you approaching acquisitions over the next few years, is that something you want to keep doing inorganic growth is, is gonna be an essential part of uh of our long term strategy. But at the same time, I feel like you have to earn the right to be able to, to get into the market and, and find the right acquisitions and coming in new, really taking a look at, at, you know, a number of acquisitions that the company had done over over the previous, you know, four or five years. I wanted to make sure that we were on stable footing. And so we're working really hard internally right now, uh focused on our organic growth focused on ensuring what's core uh and what's context uh delivering on our strategy and then we'll look into the market and, and figure out how we grow in organically, Paul, what about you? Well, I'm just thinking about Venmo actually, I mean, I have paypal but my, my kids are a bit older like, hey dad, I'll Venmo, you um knowing, I don't, knowing I don't have it, which means I never get it right. But I think that's uh I think that's, they, they know that I'm never on the receiving end. Um um, but, but the, um, you know, for us, uh we really doubled down in October last year. We declared that we were going to invest uh 700 million more a year in our own R and D. And we've spent five years uh improving our probability of success. How sophisticated our machinery is to make the right decisions on which medicines to double down on. We've built out our desire to be the world's leading immunology player and we stay very open minded to acquisitions. We typically guide that when the 2 to 5 billion range where we can to do things. Um because, you know, buying uh science early for those that don't really follow the healthcare sector in phase one when you've got about 789 years to go um to uh you have a 90% chance of failure. And typically you want to buy a really great phase one asset given the 500 million to 2 billion range depending on how exciting it is with a 90% chance of failure. And so we have tried to use A I and other things to improve our probability of success. Set a high bar comparing external opportunities with our own science internally to say just simply does it make sense. And um so we're picking off the areas where we think we can do something really revolutionary for patients and that's the exciting thing now. So, like everybody, we look to see what could be the next great thing and stay open minded about that. Tell me more about that. I'd love to talk about A I um especially I feel like in health care, how are you incorporating it ethically and into your, both your decisions and your, the research that you're doing? Well? I, I think um first of all, you have to have rules of the game. We have an ethical A I uh review board. So almost all of our projects go through that. But I think we need to uh be a bit more sophisticated in how we calibrate the A I initiative. First of all, I think there's a lot of A I washing a lot of CEO S we were talking about there is doing A I projects to say they're doing it. Most ceos I that I've met talk more about A I as cyber risk and perhaps a little too much Terminator Two and Skynet. And perhaps not enough actually, really understanding what the opportunity could be. And we break A I down to a couple of components, what we call expert A I that could revolutionize a structural biology to be able to target an ruggle disease by designing a molecule that can tax to receptor. You don't need to understand, you just need to, it's bloody difficult. So that's A I can really help us with that. And then we have, and we're very careful about how many people get access to that. What it means a lot of intellectual property around that. On the other side, we have snack. A I, which I, I phrase a coin just because, you know, a lot of a I is like people using ways or people getting an informed decision. Should I turn left or right at the end of the street? Sometimes I think I know better than ways. I don't frankly. And so it's just I got to get in the car, drive it, but I'd love to get the nudge about whether it's better to turn left or right. And so we have about 18,000 people using A I every day in sackable format to make better decisions. We call decision intelligence, democratized data to unleash the resources of the company. That's actually more fun than people realize. And I have the whole company on my phone leave with this little nugget on it, which is every morning I wake up and I get like Instagram notifications and it's in our business, which is a sort of €45 billion business. You know, it, it tells me where I should look to create more value where I should look to pull back and it's processing the entire data set for the entire company real time. And that's useful for me to be able to have data real time. The other right through all the levels of the organization cured for me and my interest much like say Instagram, but in a business context and that's giving us a competitive advantage I believe versus the naysayers on A I last comment would be A I is a huge opportunity and we can't sort of be deniers. Uh but we do have to manage the risk, but we really have to go for the opportunity. Yeah, that makes sense. And if you have an Instagram, I think you also need a Venmo. So we'll come back to that in a bit. I'll tell you. Yeah. Um and Alex, you made uh some big announcements at paypal. Um You have talked about smart receipts, fasting, tell us about this, the new, the new interesting things you're doing over at paypal. Yeah, so tremendous uh focus on uh on innovation and really again, delivering for the customers. I wanna, I wanna comment on A I um and how we think about it as well because it, it, it moves to some of our, our innovations. So we've been using A I for, you know, a decade as you can imagine uh when it comes to risk and fraud and ensuring that we've got the data to make the right payment decisions for people. Um But one of the things that, that we think a lot about now is with 40 million small business merchants that use our platform to be able to accept payments around the world. Um There's really two paths that A I can, can lead us down. Um in order to be successful with A I, you need a tremendous amount of data and need a tremendous amount of really good data scientists. Well, those are two things that small businesses don't have. So there is one path where the largest merchants in the world just get really, really good at personalization, really, really good at ads, really good to make sure that that Instagram feed is personalized to you. And the small businesses are left behind. We see that as our opportunity and our responsibility to be honest, to be able to say, look, let's build a platform where we can leverage the scale that we have the data that we have and give to our small business merchants. The opportunity to be able to personalize their uh their data, find the right customer at the right time price. It in the right way, ensure that the purchase is done and then have the follow up with a smart receipt that says, hey, you're a new user how but I'd like to bring you back and maybe give you a discount so that we can have a follow up. And so all of the innovations that we're putting out our customer back and customer focused, but leveraging A I and trying to democratize the data that we have, the data scientists that we have the scale that we have and put it in the hands of, you know, the small businesses around the world that that really need it. Mi maybe that's this brilliant uh uh point really the the snack initiatives that we run, we deliberately decided to keep them open. So other comp every time we innovate other companies that are now on the same platform can use because even our data set as huge as it is, isn't enough. And we want everybody to benefit a bit of a sort of all boats rise. Uh I didn't realize you could do it like you're doing it to the individual retail. I think it's so important. Otherwise you just left behind and even in big companies, it can still apply to. And so we, there's an open nature that I think, and I think historically, maybe perhaps more in health care, people like to innovate and then keep things very much to themselves, perhaps even as a competitive advantage. And if you, if you join healthcare because you want to do good and you wanna make people better, the all boats rise has to be part of the phenomenon. And A I is maybe our first moment in health care to be able to do that. That makes a lot of sense. Um I wanna go to the audience. Any, any questions we have out there. So he went down here, Alex Jink in silico medicine. Uh My question is to Paul Hudson. Uh Paul, you are the first CEO who openly stated that they are going all in on A I. Uh and you did it just on the right time. Uh when generative A I started uh truly producing miracles. So how do you assess the productivity uh increases that uh you see at Sanofi and also the shareholders recognize the value of what you are doing and give you credit for that. Well, I think it's gonna take a while for shareholders to give us any uh bump in sentiment based on the fact that we're doing it. I think the proof of the pudding will come in our success rate to your uh first part of your question. Um If, if our, if our probability of failure is 90% in phase one and we can drop that to 80% with A I, you know, over the next three years, that is a log change in ability to reinvest more in chasing miracles. And so what we're hoping for is those probabilities of success get stacked uh cumulative into the positive for us. And so there's one point just doing better, what we do today, more informed, more reliably with more predictive capability. The other part is doing things we've never done before and, you know, we've met before and I've seen some of the work, for example, you do it in silico. And I understand, um you know, uh being one of the first companies to bring a medicine through which I think is one of your objectives that was rooted in discovery in A I, you know, it has never been done before and you may be the first we will see, but we have to then go on and do that ourselves because that's the next great battleground to do something incredible for patients to anyone else going down here. Thank you, Alex and Paul. Uh great insights and perspective. Thank you. I have a question and we, Jeff, I'm a founder and president of sustainability woman in the world. It's a nonprofit. And so my question is around sustainability. I want to congratulate both of you for setting net zero by 2040 for paypal and 2045 for so no fee and access to funding for uh small to mid size businesses. I think it's like over 2 billion and also access to 30 medicines um to 40 more of poorest countries around the world in the Trump era. And you talked about uh Alex, the, the two playbook under the Trump Trump playbook. How would uh sustainability strategy and roadmap in context of innovation? A I would, would, you know, how, how would you uh you know, what does that look like in terms of continuing to do uh great, making great progress in, in paypal and similarly for, for you to uh Paul in, in context of, you know, the Anti VX uh discussions that are going on on the Trump era. What, what, what are some of the strategies under that playbook that you can share with us. Thank you. Yeah, I guess I, I hit it just, um, you know, sort of for us, regardless of, of administrations, we have a mission for the company and we follow uh where our customers are and when I go around the world and meet with small businesses, sustainability is top of mind for them. And so when we talk to our end use c end user customers, when we talk to our small businesses, when it's important to us, and it's important to our customers. Um We have a strategy we will continue to execute on that strategy. And you know, obviously, whether it's, you know, I mean, when you're a global company, uh you deal with different regulatory issues in every part of the world. And so you find a way through uh when you have a clear strategy and you're serving your customers, so nothing I think is gonna change for us, we will just continue to, to march forward. And so I know we're running out of time here. But if you could give me just a few things that the, the, the the backs Antiva discussion is really about um data and facts. And I just implore everybody always just to go to uh you know, trusted sources for the data because the data supports uh the use of vaccination um on uh just to give you some sense of perspective, 95% of the carbon um negative in healthcare is is actually uh scope three. So it's a real challenge for us is the partners we work with and we have to work in together to try and address that because that's a lot right. We work, we will be at net zero. Long before the date that you suggested though, you're very well informed by the way, but long before those dates, um it's about them moving our partners at the right speed with the right level of accountability. Just a couple of things for you to realize the delivery of health care is 5% of global emissions and more than airlines. But 95% of that is not making medicines. It is somebody driving needlessly to a hospital, driving around and around it, looking for a parking space for a non-essential visit that could have been done remotely in a hospital that's overheated or over cooled. And then perhaps somebody that is prediabetic who will create about 16 tons of carbon in their lifetime who becomes diabetic because they weren't coached properly, didn't make the right life choices and create 48 tons of carbon. So I passionately lead with King Charles and others, a project on decarbonizing the delivery of health care because that delivery is going to be critical. We're chasing the miracles that an O now we've got to work on the rest of it to make sure when the patients get access to those medicines it can really change the impact on the environment because ultimately, there's a convergence between climate and health and that's the next big battle grade battleground. After that, we'll do our best like everybody else. Amazing. Thank you both so much. I appreciate it. Thank you.