CHM Revolutionaries: An Evening with Google's Executive Chairman Eric Schmidt

good evening ladies and gentlemen and welcome to the museum I'm John Haller the CEO and it's my pleasure to welcome you tonight to our closing event of revolutionaries 2012 on behalf of the board our staff our members and our amazing volunteers were really really pleased to have you here tonight major funding for the Revolutionary series is made possible by Intel we're very grateful to Intel for its financial support for the fourth year in a row the major funder of our lecture series and additional funding is provided this year by the William K Bo's jr. foundation the story of how Eric Schmitt came to be chairman and CEO of Google in 2001 is the stuff of book-length articles and book length books I googled Eric using his own product today and I got exactly 43 million 900,000 search results back the one on top of course was the one I was looking for because that's Google's goal as we know and it was surrounded tastefully by relevant advertising so my little search contributed to the roughly 11 billion dollars that Google will earn in this quarter it would be hard to imagine more than 10 years ago someone better suited to the job of helping Google grow up than Eric Schmidt a PhD in computer science a software engineering scholar a background in startups chief technology officer at Sun Microsystems CEO of the big networking company Novell and most importantly as co-founder Sergey Brin later said he was the only candidate they interviewed who had been to Burning Man tonight we will explore with Eric what he's seen and done in the Google revolution a decade of history-making and invention at one of the most remarkable companies of our time and we'll talk about his vision for what's ahead please join me in welcoming Eric Schmidt it's so glad to have you here No thank you and before we begin let me just say I really appreciate you all supporting the Computer History Museum now Gordon Bell founded this 15-20 years ago and when it all Tomoka to here we were able to really get the most amazing collection of the history that most of us have lived through and so for me to go through the exhibits and go oh my god I didn't realize how ugly it was or how slow it was or whatever the only quibble I have is that at the opening you said you have to turn off your phones turn on your phones we love our phones so we won't bother with the ringtones or anything else that happens right so long as people are tweeting and posting and it's a mobile world guys they used to of course absolutely let me start off just you know in this little film that we showed beforehand you're talking about the borough's architecture did you ever figure out what it was about maybe not that but a piece of technology like you were just talking about that was really deeply meaningful to you and shaping what you pursued I think this faculty member who was Bob Fabry at Berkeley who since retired was actually trying to teach me an arrogance lesson I don't think it was about facts at all because I was really sure that this thing sucked and I had a much better design and he was trying to teach me a lesson that I would pass on to you that it was some really smart person who really thought this was really good and maybe I should understand why before I just willingly attacked them without any basis my architecture by the way was better but theirs was good too mm-hmm and I learned an important lesson about humility our industry tends to attract very smart very arrogant people who want to change the world which is great right but let's have a little respect for the people who preceded them who were trying to make the world a good place to let me start off by asking you if you remember the first time you encountered the World Wide Web and what you thought about it and what it meant to you at that moment I remember quite well because I was at Sun and this was in January roughly 1992 and we had finished a series of announcements at Sun in the networking space and I remember meeting with my team and saying pretty much everything that he's going to be invented in networking has been invented sort of a typical error and I was quite convinced of it because I could see nothing new or interesting aside from improvements in bandwidth and improvements in router technology which son by the way had managed to invent some and then give up because we weren't focused on it so I was quite annoyed about that and I remember sitting there thinking you know it's sort of calm and boring and then John gage had discovered mosaic which I think everybody understands is the predecessor of all of us and came in and gave a presentation of this what was essentially a link a link structure in a directory and we said oh my god and of course it's to Tim berners-lee his credit that he invented this you know while he was at CERN I mean what's interesting is that the that I remember sitting there at the time saying why didn't we invent this right I mean that's hard talk right we're supposed to be the innovators why is this random guy who I don't know turns out to be brilliant but it's a separate discussion you know sitting in a side of Geneva do this because we had all the precursors you know we had all the necessary we were busy a few the technical people will remember that you were basically moving FTP files around and opening them up and we had to have a Usenet link structure and so forth but it was a leap a genius from Tim that did it and another lesson that you learn from that is that often innovation occurs from outside the industry even your own right which is always a shocking fact especially for us so let's skip ahead just a bit from there to 2001 search engines had been around for a while and Google certainly was not the first one to the party when it came to search that Google would say we were the last we were you were we were there were there were many fine choices before hell so in that context what was it about Google as a proposition that really seemed attractive to you well I actually didn't think at Google would account too much so show you how smart I was as I understand what was happening was that the the predecessors AltaVista and the other search engines that were present at the time were relatively easily biased by clicks and so this was early in the development of the web and it was sort of accepted that if you wanted a higher ranking or a better treatment you would just click more now if we look at it in hindsight that's obviously a wrong strategy so Larry and Sergey and in particular Larry developed the PageRank algorithm which is independent of click rates in other words the rankings are not determined by the number of times that you that you click on something and that that strategy gave a differentiated solution and I suspect that they were also helped by the fact that they started out at Stanford they had a lot of very very smart friends who were sort of among the cognoscenti the the fact that the accuracy was better spread and it became a word-of-mouth phenomenon then at that same time as you were starting to look at that technical side of it in your specific discussions with Sergey and Larry at the time as they were thinking about bringing someone in it's everything that's been written makes it very clear that the chemistry has been important from the very beginning did you have a sense of that as you were going through that blood process they were unusual but I was unusual to understand it so they had been searching for a CEO for 16 months before and the board had agreed to do the search and they had hired a very very successful recruiter to run this and they would haul these people in and they would barrage them with questions and their strategy for interviewing people was to spend a lot of time with them so you had to go skiing with them right which I refused although I liked the ski and just didn't seem relevant at the time and but they were very concerned about fit as well and it turns out that although we were divergent in age we had a very common underlying basis of history Jeff Holman was my faculty member at Princeton he was also there in surgery as faculty member here at Stanford we had pretty much the same personal social executive and technological views and so when you meet people like that you don't really have a choice but to work with them and sort of my advice would be when you meet somebody who's that alter ego don't let them go right find a way however crazy and however weird to make them part of your world and you because the benefit of having a partner in a business context is completely undervalued yeah we have a sort of myth that the executive sort of you know smart executive who makes all these unilateral decisions and is so incredibly smart but if you look every company even the iconic companies are led by teams and the best way to do that is with highly bound partnerships and what I learned and working with Larry and Sergey was that we would fight very very hard over issues but there was not a moment where there was any question as to their motivation or mine in terms of making the company successful we had complete goal alignment and that is such a great thing in life and it's been that way from the beginning yes it was always yeah and and in my case I didn't even interview anywhere else I just knew and again I would encourage you if you find yourself in the situation jump because it's so personally successful you integrate your families in your life and your social you know all the things that you care about and something really fascinating is going to happen I had I was personally skeptical of the success of the company I thought this ad thing like is this gonna work or what in fact when I first started as CEO I actually insisted that the finance people come and show me the capital accounts and the cash accounts because I was concerned that there was fraud going on because people couldn't really be clicking these things but indeed they were and I learned very clearly and very very well that these ads were extraordinarily valuable so again I was wrong and the rest the rest of all I want to talk about that ad thing here in a minute but just a couple more questions about about the the early history you're in you're you're thinking about it you have a PhD in computer science that's correct was that important to you as you were first moving into the company you know there's this sort of phrase about someone having the chops to do the job and I just wonder if having that PhD and having done what you did was important in the early days is you on board with it with respect to Google I'm not sure it was the degree was important it was certainly important to be technical to understand the challenges one of the great things about computer scientists is that we're trained around scale and replication and so Google at the time and today is still true it's really about sort of a community of people moving in synchrony with an awful lot of freedom to innovate and it takes a certain kind of training to understand that that's how you win and that you have to tolerate failure and so forth and the way you build a growth quickly is through scale and and sort of allowing the sort of growth to occur naturally and very very quickly and then there's this googliness that people have within Google that word has come to define the culture how early did you understand being googly was really a valuable Larry and Sergey talked about it a great deal and I assumed that it was a marketing ploy on their part and which is fine you know marketing is fine so after a few months I was sitting in one of the conference rooms and I would come up to speed and I understood issues and there was a discussion over a particular interaction between search results in a hats and these are complex issues involving you know what kind of data can you use and so forth and one of the engineers pounds is fists on the table and says that's evil and it was as though a bomb had gone off because I had never seen this kind of behavior I was used to I'm gonna use the term Digital Equipment Corporation sort of horizontal sort of their sort of their hierarchical but they're still team oriented which is sort of roughly what the way son was run so the fact that this thing was bottoms up and that somebody could literally felt empowered to do that I think showed it at exactly the same time I walked into my office I had a little tiny little eight by twelve office and I discover I have a roommate and his nice nice gentleman gentleman who identifies himself as a meat and I said well hello and he goes hi you know I'm your new roommate and I said okay you never you know Google you never fire you always listen first you know you never quite sure what they're up to and so I said I mean you know how are you here he said well you know my office had six people and you're never here and I said okay and I said did you check with anybody as to whether and by the way we're talking about his tables here might my tables here and I look at my assistant who's out in the hallway and she gives me this I don't know what's going on look right and so like we're it's one of those things where it's you're in a new culture and you don't quite know how to behave and said okay so who did anyone suggest that you might do this yeah I check with Roy Rosen who's the VP of engineering who works for me he goes wait and suggested it and so he go ah this is Wayne's practical joke on me so the problem is at this point you can't kick the guy out so I said okay so we sit next to each other and I mean next to each other like this and he's an engineer he puts his headphones on and he programs and I'm busy doing whatever I'm doing at the time this goes on for a few weeks and you know every day like when to work we work hard 12 hours a day we you know we don't really talk to each other because he's busy and I'm busy and one day I'm on the phone to a Meade who's running sales and Omid goes and and and in we're having this argument over revenue and I still remember the number was a Mesa the revenues to be 121 million and I said well how do you know that you know what have this conversation so we hang up the phone and a meet who's my next door neighbor literally right here takes his headphones off says I know what the revenue is and I go what you've been listening innocent and listening to all your conversations okay thank you for he's an engineer so he tells the truth right I said okay I meet thank you for letting me know and so I said well what is the revenue number he says it's gonna be a hundred and forty two million and I said how do you know I'm in charge of building the systems that produce the revenue projections and I said you are so if you're gonna have a roommate this is by far the best roommate to ever have your CEO keeps his headphones on tell you the revenue number cuz revenue is everything so I said okay and again in Google you know you sort of don't act so I said okay how can I use this information so mu calls up and I said o mean how are you doing on the quarter and he says revenues getting better what's it at 132 I said good good good is there any evidence of sandbagging in your organization and he goes no I said good I'm glad to hear it I would never want you to sandbag and give me a number lower than the number you're gonna hit and said our systems are producing 132 of course he was using a different and less accurate system than my engineer so this goes on and eventually of course it's exactly a hundred and forty two so we bought a large sandbag and we made Omid make all of his presentations standing on the sandbag and Anita and I became best friends and we were office mates for actually years we could not continue this after we became public as a materiality and he's a great human being that's a goo that's googliness for you that's a great googly story you know Steven Levy found unnamed Steven Levy founded me when he was riding in the Plex we had Steven here last year to talk about it and he asked me what's the the number one thing you learned from Eric and he said I learned I would never want to be the CEO really somebody said yeah that's extraordinary all right so let's let's talk a little bit about how Google does what it does and I'm going to ask you a question that we talked about just a few minutes ago and I'm really curious about the answer which is think about 2001 and the technology that existed when you started Google then and think about the technology you're using today if what existed today had existed back then would you have done Google the same way how would you have done things differently I think the biggest change would be that all of our first attempts at programs would be on a mobile device and not on a web device so if I go back to 10 years ago what was the story it was HTML 2 or 3 and DM and the various DSS and other sort of CSS standards and so forth at the time and we optimized around that platform this was before the technology that ultimately would allow things like Gmail so this is before JavaScript would allow you to build these or powerful web apps so today what we would do is we would have gone straight at building these powerful mobile apps using these sort of new technologies and of course we'd have a lot more bandwidth but I think that the other aspects of our approach which are the core algorithm that we use we would use exactly the same and we would certainly do the same advertising model because we were fortunate that by moving to this ROI based database system we really did produce huge revenue growth have another story for you we one weekend we decided to make a database transition which is called Project Drano and it's a pretty big deal in a small company we didn't have a lot of cash so what happens is I come in on the South Bay and the Sunday to see what's happening and I walk over to the engineers and I say what are you working on this day to working on this project and that's great why are you not at the data centers and they go we've never been at the data centers and I said you're just about to do the most important transition in the company and you are not there to watch that make sure these servers they upset know never occurred to us so today you would build Google on top of one of these extraordinarily set of cloud computing services and it would happen much faster as result Google has had to build all of the infrastructure to handle these complex web services deal with denial service attacks deal with replication complex things involving the sequel databases and those so all those things are now well established we would just occur faster is this the equivalent of a pivot for you are you constantly having to change a huge amount of the underlying architecture I mean it seems like it's it's like trying to change the tires on Indy cars it's going around the track I think it's fair to say that Google's infrastructure goes through these cycles which are two to three years old and they go something like the key scientists invent a new way of doing what we call charted file storage where you can spread the files you know even more sophisticated way Google is all about sparse matrices large numbers of entry matrices of information which are we do math over to do ranking and things like that we're constantly coming up with sort of new ways of doing that we invented a particular way of organizing all the computers to give us the answers back again that's now popularized in the public eye and something called Hadoop which is open source technology which does something similar we again have version 2 version 3 version 4 of all of those systems so I'd say it's fair to say that we have one of these every two to three years and I suspect that will be always true every system another example for years the Gmail infrastructure was on a database system that stored all of your attachments and so forth it was incompatible with the database system that's that stored all of your search results and there were complex technical reasons why and I remember one day Larry decided that he was fed up with this so he got all the technical teams together and asked each of them to present the reasons why their database approaches were correct and of course there were 12 approaches and everyone had exactly the reason they were right and why everyone else was wrong and I remember him coming back to me and saying I don't know what to do you know how do I get this sorted out and of course Larry by sheer force you know went in and sort of got these teams to sort of put together this sort of scalable architecture and we're now on a common one so this this phenomena where you have divergent systems which you then have to unify by one level of abstraction I think he's characteristic of computer science I would tell you that the this opportunity continues to be true in cloud computing in general today there are large numbers of startups here in the valley and elsewhere that are essentially rebuilding UI tools of one kind or another various forms of storing data etc and somebody's going to come along with new infrastructure that will standardize that and then they'll become even more productive so the consequence is that today if you're starting a startup takes a few programmers you can rent or buy all the infrastructure you never meet your servers like I was trained to when I was a young younger executive and in fact if you founded a company today you would not have an IT department you would use a combination of the cloud computing solutions and the Google app solutions that's all you'd ever need you said something a minute ago that I just want to follow up on which is that Sergey will go in and start to make some of these things happen there are so many stories about his active involvement in so many different aspects of the company from a technology standpoint is that rare and your experience is that unusual do you find this to be just an exceptional aspect of the way Google works I would say it is normal in the most successful companies if you look at the history of Apple Intel Oracle Microsoft there was a key technical leader or a couple that would go in and drive change one of these it happens of engineering teams is they get sort of used to their own sort of structure and thinking and sometimes you have to push and push hard to get people to sort of merge their views or combine their approaches or so forth and that's one of the arts of engineering management in all tech companies in in my time as CEO it actually worked it was actually remarkably easy because Larry and Sergey would run ahead literally by the time I had arrived at something they had already been through and rationalized these and that's why our partnership has worked well so well for so long hmmm let's talk about that add thing that you were talking about a few minutes ago was can you describe the aha moment yeah it's when you learned advertising was going to be as incredibly successful as it has been I mentioned this transition and project Drano and Project Drano who knows why was it called drain 'god knows you know some some twenty three-year-old named it whatever and so I remember eyes I mentioned that we did this transition over the weekend we did it successfully and it was a key decision in the first year was we have three separate advertising systems and we combined two one and we of course moved to the one that was the riskiest and the system was designed by an engineer sort of techni product manager his name is Sal R who now runs YouTube by the way and who was one of the true heroes of Google by virtue of having invented all this and at the time he was you know 23 or 24 years old and I remember first walking up to him and said you better not screw up because you're gonna bankrupt this company and he looks at me all of 24 and says not worry we'll be fine and I go okay and of course he was exactly right we made this transition to this new model which is this which had to do with the way the auction worked and our revenue began to grow very very very quickly but for the first few weeks we had forgotten to do some of the systems that you need to deal with customers in particular revenue reporting click reporting and so forth for some reason or another I had flown to New York which is where advertising was run to meet with Tim Armstrong who an exceptional sales executive now running AOL and I was meeting with Tim and then I had a little cube where I was doing my work and I'm overhearing it's five o'clock and I'm overhearing a young woman who's in our ad sales department who's in the cube next to me and sort of loud loud in a New York sort of way and okay I'm listening this I'm sorry I'm sorry I'm sorry we don't have your report I'm sorry I know I know I know I know you know and it sounds like there's some death or something so this goes on for maybe 20 minutes and so I go over to this young lady and I said I need to know what's going on you know and she said he calls me every day at 5:00 I said why said if the company that he's in depends on the clicks that day if I don't have the report to him at 5:00 he may lose his job by 6:00 or 7:00 and I said what he said you don't understand you've always worked in these companies with all this cash most businesses are hand-to-mouth we gave them the cash to make their payroll and we're not telling them how much he doesn't know whether you should lay off people then she goes into this write you know sort of you know sending his his sort of guilt trip to me and I go I got it all right so I got on the plane flew back and we got the reports out but it was a lesson that things which we think are toys they're interesting and fun and we use these these are essential so from that moment on I understood that Google was not some interesting technological experiment but it was rather something that was deeply embedded in how people got paid the accuracy was important I remember Sergey getting a letter which he showed me very proudly from a fella who said that thank thank you for saving his life because he typed I'm having a heart attack and the first result was you're having a heart attack call nine-one-one these are your symptoms and the ambulance said that if he hadn't called him immediately he would have been dead and you know five five minutes later so you understand all of a sudden the power of information is not just some interesting academic thing but it's fundamental to people's lives their privacy the way they operate the way they get paid how they grow and all those things and then as far as Google's own business model goes those those of us who are old enough to remember Lycos and Alta Vista and all of those other search engines we were quite used to seeing paid search results pop up which were absolutely irrelevant to what you were searching for but fairly early on Google unlocked the fact that you could combine advertising and search and a business model for Google that was unlike anything that had ever been done when did that become clear again a story from the first year where I sort of get it as a new CEO and I kind of understand I'm trying to run everything and Larry likes to look at how the product works and so he gets increasingly upset with her ads so he because they weren't very good in his opinion so he takes a series of queries which he thinks are representative he types them in he prints them out on a piece of paper in the whiteboard in the break room and he writes a note saying these ads are terrible can you guys critique them so for the afternoon right everybody is busy critiquing them well that's a stupid ad or this should have been a different or the ordering was wrong but he writes another note and the other note says can't watch you guys fix this I thought now this is going to be really interesting this is the founder just wrote a random note in the in the break room normally you would like call the vice president of engineering you know the the directors of engineering all that didn't do that I figured okay we'll see what happens this is a Friday at five four I was doing something else over the weekend and I came in Monday morning the problem had been solved a set of engineers who were not in the ads group at the time had thought it was a really interesting question and they invented the algorithm over the weekend that's amazing so then Larry and Sergey decided that they didn't like the engineering management that had not done this so we decided to do a disorganized and I thought this is a stirrer so this is a formal thing this is a term of our to dis or well it was you have to name things to implement that okay so we ended up taking reorganizing things so that one of our executives had a hundred and twenty-one reports he extraordinary extraordinary executive who now works as a venture capitalist and I would say to him how do you do on your one-on-ones he said oh I try to not have them and so the hardest thing to have 121 direct reports is writing the reviews but he managed to pull it off eventually we got the right management and the right kind of culture so I'm gonna ask one final question about the past and then what we wanted today and especially tomorrow Larry I think was famous for saying Larry Page that Google's ideal in search would be if the engine knew exactly what you were trying to say when you typed in your search result and it gave you back exactly the thing that you were looking for and it did it every single time Sergey actually suggested that search that was Larry's proposal service proposal was that there would be some sort of thing we screwed into your brain and I said Sergey would you stop and of course he was joking just for the record so how close are you we're not going to be screwing things into our brain anytime soon but how close are you to Larry's original vision we're getting there it's a race because what you forget is that the information explosion is all around us something like 97 or 98 percent of the content that's now on the Internet is Laura's user-generated so if the user would stop generating all this new content which of course is not going to happen I think we could get closer to it but the fact of the matter is it's a race between increasingly sophisticated algorithms that are hard to describe magical against this extraordinary increase in end data we think our algorithms are by far the best I think most people agree but we're always being critical last year we had about 500 improvements to our search algorithm you don't see them because they're incremental but when you understand the challenge that the other end says the amount of incoming you'll appreciate how difficult the ranking problem is you have to take as you pointed out 50 million things or a hundred million things and rank them so that there's a 1 a 2 a 3 and a 4 and you have to do that in milliseconds ok data let's talk about data for a management mmm it's only just now I think becoming clear at least in the popular media the role the data played in the presidential campaign room and you were embedded for many months with the Obama campaign and the stories that are coming out now are just fascinating about the way data worked this time around can you talk a little bit about that what you saw and what the influence was yeah when I was not doing my my Google stuff I was working with Jim Messina and I it was a personal friend in Chicago and the campaign on the on the infrastructure not on the policy issues and the infrastructure can be summarized as a cloud computing platform with mobile apps to mobilize people with backups that you'd print out with heavy use of Google Docs Google Spreadsheets and Google Maps which I was very proud of the the wonderment of a political campaign and I think this is true of both the Republicans and the Democrats is that these are in this case each side spent on the order of 1.2 billion dollars over 18 months they hired in the Democratic campaign I think on the order of 5,000 professional people and they had on the order of a million and a half volunteers all of which culminates an activity on a single day the technology that was used in data was roughly the following there are these things called voter files which are produced by the secretaries of state and I did not know that know this but that information is public and updated quite frequently so your voter history and not who you voted for but that you voted along with your address typically your home address as well as a few other identifying things is in fact available and so both campaigns use that data to build essentially a profile around people start with the voter file and most of that people have gotten this message wrong most of the information was information that you volunteered but what happened is you would log in identify yourself and then the computers would match that to the voter file and then they would do a score and the most interesting thing is that if the score is zero then you're probably going to vote for the other side so we're not gonna spend too much time on you if your vote is a hundred squares 100 then you're probably gonna be a volunteer and we're not going to spend that much time on you so the targeting was around people who were likely to support arcs ID but who needed some inducements and to give you an idea of how ridiculous this can get people would be would have their doors knocked on six times like after a few times wouldn't you like decide to vote or not right and I was told that people like to have a conversation and of course because of the extraordinary of money in the campaign people were subjected to 50 or 60 political ads every week that they actually saw for which both campaigns spent literally fortunes and enriched the TV industry no end so the data analytics was an integral part in both the targeting or understanding who the voters were and then what it's called get out the vote and get out the vote is ultimately a volunteer who has or what is a walk list and they walk around a little neighborhood and they knock on doors and say can I help you do you need any help get into the polls and so forth and I think most of the analysis indicated that this technology gave the Obama campaign a couple points of advantage which was enough to take swing stage and I don't know why by the way as a country we have decided to only have five states elect our president but that's a separate discussion and thank you all for voting here in California but I'm not sure it mattered by the way I'm I was joking please vote anyway and say the same thing in the Republican States but the fact of the matter is that this enormous focus did ultimately produce strong wins for the president in the campaign and I think that technology was certainly a part of it I think I read a story where on the Sunday before the election someone in the campaign was getting some intelligence and the Obama campaign was getting some intelligence from the Romney campaign about the campaign had knocked on 55,000 doors that Sunday to get out the vote in Ohio and it was alarming and the president happened to walk in at that moment and the this 55,000 door knocking story was going around and someone turned to one of the people working in data and said telling the door thing and he said well I wouldn't worry about that too much because we knocked on 343,000 today is that the kind of that that's the disparity there was and again another thing that the the Obama campaign did particularly well is register new people one of the things that you saw on television it was interesting by the way to be to see the actual data versus what the television people said and they didn't have as good engineers you know they didn't they didn't have the real science behind it but they if you look at the the Obama campaign managed to get better turnout among young people than they did in 2008 which was one of the sort of memes that everybody assumed would be false and that was not in fact in fact it was it was greater turnout and huge registration gains and you know I would argue registering to vote is a good thing regardless of party now along these same lines you're just about to publish a book aren't you on technology and diplomacy is that there is that the subject it's hard to describe what it's about it's about what the world is going to be like when five billion people join us to our party book should come out early next year it's my co-authors a guy named Jared Cohen who now works at Google it's a brilliant young man who worked in the State Department it's not primarily a technical book it's more about what happens when everybody has mobile phones and we spend a lot of time discussing how governments will react to it and our core thesis is governments have idea what we're doing by the impact of empowering citizens he's going to revolutionize the way government's interact with their citizens it's almost all good by the way so it says clearly an optimistic message and there's a number of cautionary areas can we do a book launch here at the Museum I'm sure let's do increasingly the consumer world seems to be dividing up into a quartet of Amazon Apple Google and Facebook would you agree with that assessment in and if so roughly can you all coexist together is there enough room for everyone how are we as consumers going to be affected by this this coalescence the point of the four is not that there are four cities not that the specific companies but that there are four as opposed to one all of us grew up might either an IBM dominance or a Microsoft dominance I of course growing up with both and we've never had a situation where we had four extremely well run tough smart global scalable very rich companies they're vying for a declining cost business so one way to think about it is think of it as the contest between the four I can give you the numbers about Android to do a little plug for Android while we're here Android is lighting up 1.3 million phones per day industry estimates are that it's the scale of Android is on the order of four times larger than the iPhone infrastructure and iPhone is quite good by the way we are we have more than 500 million Android phones installed and we have more than 700,000 apps which roughly rivals the number of apps in the Apple App Store and the competition between the two of course Apple has a great story to produces amazing value for you think about what's happening over this brutal competition between these two companies and the back and the forth and the screaming and the lawsuits and so forth and so on you're winning look at Amazon and which has clearly done a fantastic job in building the world's largest store not just a bookstore and then think about all the partnership programs of what Apple's trying to do and what who was trying to compete with that you benefit from that in terms of fast delivery no no sales tax no payments what have you no tchard no shipping charges etc and now people are getting into same-day delivery whoo-hoo funds this competition look at Facebook which has now a competition as a competitor in Google Plus which is doing quite well sort of you know coming up at them forcing them to both open up their strategies as well as focus on their monetization and serve their customers in each of these cases they are Network platforms that scale enormous Lee in defense of Apple I was course proudly on their board for three plus years they have many many important partners above and below their ecosystem well that's also true of Google it's also true of Amazon Amazon is a platform for resellers so many people now put their products through Amazon to get them to you and face of Facebook of course through Facebook Connect and the Open Graph has a similar partnership strategy we've never had four like that now we can debate whether there's a fifth people have argued that it should be Netflix or it should be Twitter it's interesting people don't argue that it's Microsoft and but that's sort of the nature of things that though the architectures move forward and I think the four are fantastic value it's a real pain right to be in one of them because the other guys are really good and so you can't use the classic strategy of we're just smarter we won't talk to you because the other guys are just as smart just as capable and feel just as strongly about how well they're serving their consumers in this era of emerging mobility that you talked about just a minute ago and and all four of you are rushing to that platform what are you learning about the way we behave one of the things that you're finding out about us that are influencing your business direction not only what editor's are doing but what we're doing I think it's early to say that we're we're busy empowering all of us with devices that can be used for this information there are complicated privacy and data uses issues which are still not fully worked out we're trying to be conservative about that the most important fact that's true now toward the end of 2012 is that for normal people and I would claim I'm not normal so I'm excluding myself from this who don't people who don't spend all day on a keyboard you find that the combination of the phones and the tablets pretty much replace your need for a PC to me that's a shocking thing to say if you'd asked me that two years ago I'd say no that's not gonna happen but we have a lot of evidence that people's primary computer in the non knowledge worker you know sort of the normal people not people who are tied to desks it's really not programmers or what have you they can get pretty much what they need done and they prefer it because it's more convenient I'll give you an example use Google Maps I use a Mac I have Google Maps on my Mac or any PC why does my Maps not show me where I am Oh doesn't have a GPS why doesn't my Mac have a GPS oh it's not supposed to be used outside it gets wet you know but but once you get a used to having an accurate GPS table you say why doesn't my map show me where I am I'm using that as an example to talk about convenience now I'm of the generation of guys that thinks that instead of tinkering on your car you just build your computer so for me the fact that you have to wire your GPS and plug everything in and so forth and build everything by hand is perfectly good it's what are occupy my free time one that's not normal okay people actually want their car to just work turn it on it it just works so what's happened with these mobile devices is that the standard for consumer utility that just works is so tough now and again to criticize the for each of the four and in fact most of the other large companies are still in a web to mobile transition I was talking to the CEO of Live Nation all right something like 60 or 70 percent of a ticket that they sell are now purchased on phones I said you've got to be kidding I said no no here's how it works it's interesting data concerts are always sold out immediately people always have their phone the alert comes on because they hit there are services which tell you you know XYZ group your favorite Roop is going to perform they sell out within five minutes boom you just bought the ticket because you know somebody else is gonna compete with you that is a gym that is that point is a generic point I think of how our world will evolve cuz we're always gonna be connected I'm glad you raised the subject of maps were you are are you are you referring to those excellent Apple maps were you were you surprised at the backlash that occurred when Apple switched the map platform it was a rare misstep on Apple's part that was a well-run company they have very happy customers they're a tough competitor it was a rare error on their part and I think that they misjudged how much better our maps were they made a decision a couple of years ago and we know this because they were busy buying companies I had left the board so I wasn't part of any of this to offer their own maps to compete and I don't think that they properly understood the amount of capital investment in time that it takes to build your own Maps because we had had a project which is internally known as ground truth where we had mapped everything we actually had remember all the cars and driving around we've been driving with cars mapping roads precisely for maybe five years and so there's incredibly accurate maps serve as the basis for why somehow Google Maps works better than anyone anyone elses and it will take some time for Apple I think to catch up I think that they have every intent of competing with us they've not indicated somehow surrender on this particular issue and I think it's you know it is what it is there's a competitive decision that they made do you have any prediction about where this may ultimately come out I think people will continue to use Google Maps there they'll find a way to Google Maps Google Maps is just too and there's so I'm sorry but I mean it is actually my opinion and the other thing about maps is you think of maps as being sort of boring trust me they're not boring because maps are locations places are where you go places are alive so we took our maps infrastructure and we hug we hung places and ads and maneuvers and businesses and so forth on top of that so when we talk about maps we're not talking about some static thing we're talking about a much more sophisticated sort of ecological or ecosystem if you will of information that's central to your daily life I'll give you another example I used to think that calendars were really boring I don't know about you all and then I met somebody who said that we use Google calendars to schedule my whole family and then I met somebody who uses Google calendars to schedule their whole company and of course Google uses Google calendars to schedule our own company why is this relevant because the maps are completely integrated and shared so something which was really static and really uninteresting when it became integrated shared and fully expressible in a programmatic sense all of a sudden it becomes a new interesting platform that's the narrative in each of the areas that Google has tried to pursue and it's worked well it's one of the reasons why it's a stickiness if you will of our apps people really like them because they have the sort of amazing capability of sort of coming alive on the line well for me the change in maps brought absolutely into my consciousness something I really had stopped thinking about which is my role I'm sorry you know you realize that the Google Maps are available on the Android phones you are your own really in the ER and there's some fine choices okay sorry um anyway now I know how much I depend on a great map and I didn't know that before well we can get you an Android they're available for all the carriers you use okay thanks very much Eric I appreciate that and do you realize you could realize that you can actually take your music into the Android Play system and do the match without having to pay the $25 at Apple charges you know there there you go so you $25 I wonder you know you're at a point now as a company where even the you talked about the volume of funds that are being activated on a daily basis which is just a mind-blowing number of phones activated daily and just keep interview but do the math in terms of growth rates these numbers have been doubling every six months and they're not gonna grow that fast because you can't grow that way forever but at roughly 1.3 million per day right how many days are there per year 365 through the math we're five at a million we'll be at a billion plus you know sometime next summer if current trends continue and that number is all gonna grow we will eventually run out of humans but the good news from our perspective is people like to have more than one phone so is this Schmidt's law have we just heard Schmidt's law I'm gonna let you you're in charge of the History Museum you can name things I'm that's the unique position you have is being in charge you go to find trends and law we may you may have just made history tonight I don't think we will call it the Law Project Dre no I'm pretty sure we won I'm sorry I think we won't be doing that let me ask you though there's a your business and technical models are now so pervasive that a change that Google makes in the way that it does something ripples out at an incredible rate now across businesses technology companies partners consumers is there a point at which the sheer size and pervasiveness of these things becomes a constraint in some way on innovation of course and I would argue in fairness that the other three or the four that we named have similar issues I agree you know one of the things is once you get one of these things going it becomes your own sort of trap it traps you into your your history you can't make changes too quickly your subjective knows how many regulations you know etc etc so these do become constraints if you build the system properly your consumers help you they build your next app on top of your platform or they show you the path they build you the infrastructure they call you they help you they need you to be successful and that's in fact the secret a very strong outreach to these partners and I need technical average there's been quite a bit of speculation that we're moving into this post Internet era as it's called and maybe what you're talking about with mobile and the mobile platform is what's leading that I want to make a segue into talking about the future now by asking you that question first is it a post Internet era that we're moving into I don't understand that term because to me the Internet has always been the connectivity of data and platforms and so the fact that there's a new set of extraordinarily powerful data sources and platforms is just a validation that the internet people were right and I'm proud to have been part of that and I suspect many people I see in the room that I know feel the same way we really created as a group something that will outlast all of us and the impact of driving the Information Age as as you as you pointed out and as your folks in your video pointed out is very very real so to me if I look forward I think about give you some examples the real sort of interesting things that will happen in the next five or ten years have to do with the integration of things that were not possible before let's think about holography because we have pictures of everything you of course will build in your next house a memory room which will synthetically create recreate your memory and a holographic image that you'll just walk in so you can sort of feel it it's obvious the technology is available today and of course if you're well-to-do people here in the Bay Area are pretty well-to-do you'll probably have your own robot which you'll send to the rock concert so that you can sit at home with your kids but if you want to experience that pounding you'll put your hands in the haptic gloves put your headset on and all right you're gonna be at that concert right and of course the concert will charge a fee for your robot to attempt so everybody wins you will take drugs that will help you be healthy you'll take a pill for example that will Wi-Fi out your stomach situation you think that I'm making that up there is such a pill that was just approved by the FDA right your grandmother or yourself had a fall you needed a new hip that titanium hip will Wi-Fi out how how is she doing what's going on how's mobility what's going on with blood pressure there'll be apps you know how's my mom doing right people follow in certain patterns she violates the pattern maybe she's in trouble maybe I should call her I should call her anyway you know you get the idea so the the pervasive conic connectedness means that a new generation of devices which have all been science fiction we'll all be able to make our lives so much better both in health and entertainment and education we have taught about education much them but we're on the cusp of a revolution in education because of companies like Coursera Udacity at the collegiate level Khan Academy I'm on their board at the k-12 level where we really can run the test of one learning paradigm versus another and then with some real data see if we can come up with the best way to educate the next generation of people which is probably the most important thing all of us all of us can do to serve society going forward I have such a stack of questions here it looks like it and I'm gonna ask a couple of them now first of all this is just fascinating to me if return on investment was not your concern what would you let's say Google what would you pursue that you aren't pursuing now because of that it's hard to know the answer to that question because as Larry and Sergey founded the company and I certainly agreed we thought it was important that Google be a for-profit company that we thought that profits disciplined the management team kept everybody focused we also felt that as had value if I were to speculate I would say that we would probably Sigmund secondly increase our exploratory and early basic research into new areas that we could only imagine if we had even more money we could probably do that as to whether we would tactically be able to do it ultimately companies at Google scale run out of people we're ultimately constrained not by our vision which of course is quite aggressive or cash in our case we have you know on the order of too much right and we generate too much every quarter right it's ultimately about these unique leaders and one of the great things about Silicon Valley is that we somehow produce these leaders that could somehow build these products see the future and run really fast and I think that they're the real heroes of of our valley are you prepared for the inevitable self-driving car accident I am and I'll take this very serious crash first place there will be an accident we haven't had any yet let me tell you why we're prepared for it how many people died on American highways in 2012 anybody know the number it's about 30,000 people by the end of this year on a mild adjusted basis that's a good number if you are a family member or a friend who went through that you know what a terrible tragedy that is and it's not even covered these days 30,000 of our fellow citizens being killed on the highways every day so let's say that a combination of the technology that was invented at Google and other places could cut that number in half I would love to have that happen and yes of course there will be problems along the way but to me it's ultimately about lives it's the most important thing you can do hmm are you optimistic we're gonna see self-driving cars become pervasive soon or is this a longer term project it will clearly be soon but you have to define soon in car epochs the car industry for many reasons is much slower than the computer in in terms of innovation it's reasonable to expect that some of the technology that Google has invented will see its way into cars will be available to you over the next few years as to whether you know they press the button laughs you know drink a lot of beer while you're driving a scenario I think that's gonna be a long time from now probably not ever it's important to know that these cars have a driver behind the wheel and they have a really big red button right here you go wham so that you can stop in case something bad happens and as long as we need that you want to be careful be careful when you're driving anyway to me the the real opportunity is think about your teenager right you'd really want them to have a self-driving car and you want to be able to program where it goes or not go there are some wonderful questions here for you as someone who's been through the ultimate startup and who also worked in a more traditional setting before you went to Google so let me just see if I can pick one that summarizes what clearly young people in the audience are curious about could you give three if there are three most important lessons to us young programmers who aspire to be a CEO or CTO of a big technology company I think that well there's a number of lessons I think the first is that you won't be successful by being a general-purpose person in this market which is so competitor you have a competitive you have to be really good at something and you have to build your credibility with that I was fortunate that I was a programmer and an engineering manager and in these really narrow areas and so I built my experience but I started from a small but important and successful area and I think all success ultimately starts from something small and you look back and you and you you remember that that was what you did just as hard as what you do now is so so that's sort of the first comment I think the second comment is that most people when they conceptualize what they're doing understate the opportunity that technology provides I've been guilty of this forever one of the geniuses of Larry and Sergey was that they were always seek the impossible sometimes they were wrong and I would argue with them but overwhelmingly their their ambition in terms of the impact that they gonna have they saw farther and faster than others and so I think if you can spend some time trying to imagine what the future will like it will occur quicker then other people think and if you can ride that and I think the third thing I would offer is that it's no longer a loner game I went back earlier to the comment about teams if you can find somebody who you like to hang out with and who's smarter than you are right and admit it there's at least one person in the world right smarter than you hang out with them try to work with them try to even if they're kind of crazy and wacky and so forth and they're kind of insufferable in the way that crazy people can be but try to because they're gonna change it they're gonna they're not going to accept the traditional things and I think the transition from the way I would describe it is if you look at the over my 30 years of this almost all of the management through the end of the 90s was sort of traditional I'm gonna use Digital Equipment ISM it was a particular model of hierarchy in a way of making decisions a way of pre announcing products and managing your businesses and so forth it was all thrown away by this new and by the way younger generation than myself executives it tells you that every assumption you make in technology can be overthrown by the next generation which is why these jobs are so interesting and do you have a point of view about start-up versus big company is the first place that someone might go to find these exceptional people to be a mentor or a model I think you can find them in both the startup cycle in our Valley is a series of waves you know the funding magnifies you have a huge number of thing there's a lot of copycats and so forth but out of those failures come some of the greatest life lessons you know the best CFO you can hire is one that went bankrupt because that's the one thing that's not gonna happen again right they're gonna understand man you know money we within as long as it didn't go to jail or something you get the idea we have a terrible shortage of engineering talent here in the valley and in this country what should we be doing about that well we could actually reverse the stupidest policy of the entire US government anyone know what it is the h-1b program right here's what we do this is such a brilliant strategy let's get the smartest people in the world bringing them to United States educate them to their teeth and kick them out because we don't want them here they might pose a danger but I digress it's got to be the stupidest policy in the world if you look at certainly in the US and we have lots of stupid Wallasey so it's a tough test if you look in here in Silicon Valley the evidence was that 40 to 50 percent of the startups are done by foreign-born and particularly Indian born entrepreneurs the wealth the creativity your house price everything you care about is completely dependent upon us fixing this and for 15 years we have been complaining about this and in fact every year the government finds a way to make it harder so it tells me that at the end of the a the political leadership of our country is not in agreement with us that the way that you build great wealth for America is you let people be creative you hire as many people as you can you have ruthless competition and you build global businesses and that's how strongly I feel everything that you all can do to put pressure on our government on this is helpful it's probably the single thing that each of all each of all of us can do to address this problem there are many many other things we can do but I find it offensive that we would treat these people so away company companies like Google and the others that I've named all condo people we actually keep them in Vancouver and Zurich and places like this and we wait for the October 1st date to arrive we pile them all in and then we move them into the country this is madness I I can go on I think my position is clear and is there an educational component to it as well and we have the policy concern about these visas and then what about just training a new generation and more of them to think engineering some pursuit well first place the generation that's coming out of the universities here in America are shockingly great I work with them every day and the sooner we can put them in charge the better right they're they're smarter than global they work harder I think they're more socially knowledgeable they're more socially adept they're more environmentally concerned I think in many many ways they are the greatest thing ever produced here in the United States and they will get because of the way our system works they will get in charge and it gets wonderful I'm not sure what else we should do besides recognize that real innovation comes from the next generation that comes through and we celebrate it it's interesting that the Silicon Valley the structure the economic structure has produced so part of the reason this occurs is that these companies that were successful before serve as a marker for those people to go off for their fortune and their success we have large numbers of mill school students come through the museum during the summer who are part of a Google program that is specifically designed to take eighth graders who are interested in math and science and get them excited about it are you a little like Alabama or LSU are you looking as a company are you looking down the road at the I hope the engineers that far ahead of tomorrow great programmers started about 12 or 11 these days it's shocking and Larry I think started in like seven this is a separate discussion so it breaks out early in our industry I think it largely correlated with math and science skills to answer this and then the question before you might imagine since it's always fun to ask the president what you would do differently and this president who I obviously support has focused on STEM education science and math education and a commitment to the facts and a few other things like that that actually matter there is something that that we could do and that he and the country could do that would materially affect this and I think would be to make a national commitment to increase the amount of I'm going to call it use the word analytical training to the level that you find in the Asian countries the fact the matter is that for whatever reason our educational system does not produce as many engineers and as many I'm going to use the word analytically train so economics things with numbers essentially in one kind or another as many of the Asian models and we compete with them globally so we can complain all we want about China and Japan and Korea and so forth and so on well invite when you go there they have all their own problems it was a separate discussion but there is something we could do which is to shift the educational priorities in this country to increase the number of analytical trains I figured over a five-year period you couldn't shift it by about 10 percent and that would roughly and this would have to be a sort of a moonshot type approach that's probably the best thing that the current president could do to ensure that successor and successor and successor will see huge economic growth if you look at globally what the problems are in the world you have a problem of demographics because you have too many old people not a lot of young people to support the income needs of the older people and medical needs you've got a problem with globalization because it means you can't raise prices and you have a problem of automation where the low wage skills are being replaced by machines the only solution that I can come up with may be you all have other ideas is education and especially in the fields that are needing in our industry there's a huge shortage which is why this h-1b thing is so so stupid but the fact of the matter is we would be a stronger country if we trained more analytically capable people I think we've got the wealth model I think we've got the in the innovation model nailed we are the the winner in a global sense by far everyone's trying to copy our model but we're still holding ourselves back because we're not producing enough of such people Google has done a small amount of work as you mentioned on this but this is much bigger than what Google and companies can do this has to be a national priority at every level there are quite a few questions here based on the discussion we had about big data about privacy which is the backside of the use of data that we were talking about how do you balance and this is an excellent way to phrase this I think how do we balance what is needed for the purposes you're talking about with our our twin mean for privacy this area is I'm gonna call an evergreen area it's an area where the technology is going to continue to advance and there will continue to be very significant privacy concerns I think it's important to understand there's a difference between privacy and security privacy is something which is sort of a shared responsibility you have to decide if you want to disclose all this information about you or if you want to engage in this particular activity or what have you you have some rule there but security that is the security of the data that you give us that's our responsibility and if we violate that we've done a terrible disservice to you so the two go hand-in-hand and I think that what you'll find is that these technologies are generally fairly invasive in the sense that they tend to generate for various technical reasons as information here's an example everyone here has a mobile phone on which I encourage you to turn on everyone here understands that your phone knows exactly where you are and you know why 911 it's an incredibly valuable service it's regulated it's called even on one one it's regulated the requirement that all the phone companies have to do and yet we're not too upset about that at least I haven't heard it because because there's appropriate constraints on the use of that data so I think ultimately what will happen is we will adapt as a society but people will properly want the data to be very secure and only be used for the right purpose and people will learn what are the appropriate balance for privacy I am very worried about the next generation of young people who in my view you'll have sort of the the online talk before you have the adult sex talk right you know you're going to talk to your eight-year-old about don't don't do that because we've got a situation where 10 11 12 year olds are publishing information which is innocent and appropriate to a 12 year old which will follow them around for the rest of their lives as an example let's say you have a teenager your teenager gets into legal trouble under US law those juvenile records can be remanded and eventually eliminated and so forth but they can't be deleted from the Internet it's a real issue for society and not one which we for which we have a good solution I'm gonna take one more question from this stack here and then I'm gonna save the final one for me the Google Books project this is a more granular sort of question than we've been talking about the last few minutes where does Google look Stan are you encouraged that Google Books is going to realize the original vision for it and where do you think that's headed I hear every day from people who were at 2:00 in the morning stuck and because of Google books result they were able to finish something and they had no mechanism no place to go to a library to get that answer I would argue that Google books in the library project in particular are a tremendous public service we've been litigated to death over this stuff largely because I think in the book industry we were the only change in the book industry in a hundred years and I think we came to a pretty good understanding of how to solve the problems which are legitimate and of course our settlement was then thrown out by a judge so we're busy working on a new settlement but I think we'll get there we also are in the process of selling books of course Jared and I running will be on Google Books and you'll be able to purchase it so I would argue we've done two things well first we got the historic information out there and there's plenty of people for whom the you know 1890 history of you know Irish folk dance is incredibly important I'm not one of them but that person got their answer at 3 in the morning because they needed it right then and there and I'm very proud of that but the other thing has happened and Google is one of them is the fact of the matter is that books are now online I was shocked and I shouldn't have been when Amazon announced that the majority of the books they sell are now ebooks many newspapers and magazines and so forth I'm moving to digital only or primarily digital circulation models so the transition is both inexorable and clear the question is not will it happen but how will it happen how will we make it happen and I think we've made a great public service I'm happy about it so one final question I'm intrigued by the extent to which you talked about policy issues tonight you obviously were closely involved with the presidential campaign you're very articulate on a number of public policy issues is this an area of growing interest for you personally are you are you hearing the call of policy more and more I've actually discovered you know when you visit another community you're initially intrigued by their language and then after a few weeks you discover it's the same sentences from two weeks before and then you sort of learn the patterns and you're not quite so as intrigued I've enjoyed learning about this my personal roots are in technology and I'm most interested in how technology can surprise people and hopefully Surprise them for the good my own personal career has been a constant surprise of myself of what technology could do in the impact we could have overwhelmingly positive so I've decided some of my time trying to understand that and so I enjoy meeting with traditional political leaders and scaring them because nobody ever scares them I said look you know the following thing could occurr are you ready no I hadn't thought about the fall anything could occur it are you ready and getting them to understand that we are a force that we're hopefully a force for good that we need to be nurtured and understood and paid attention to and I'm very very proud of the role and power that our industry now has globally when I think about ten years ago you're asking about 2001 we didn't have this role and if you want an example of this look at the SOPA fight which is February of last of this year in fact where we actually showed that we were an industry of the scale and size of the of the media industries and just as important and we needed to be treated with respect I like that you've been incredibly generous tonight and with your opening remarks and with your support in museum air thank you very very much thank you and thank for their nature

Channel: Computer History Museum

Views: 50,074

Keywords: google, ceo, chairman, eric Schmidt, john hollar, computer, history, museum, android, revolutionaries

Id: NfalakTPsnE

Length: 75min 17sec (4517 seconds)

Published: Mon Nov 26 2012