ERIC SCHMIDT: I am-- I'm really
glad that you guys decided do this. I love the idea of Google
as a gathering place for these kinds
of conversations. And I think the rougher and
tougher and more aggressive the arguments are,
the better we can move the whole thing forward. I'm really convinced
that we at Google benefit when you
guys are successful. I learned this a long time
ago that when the network gets stronger, we win, and our
competitors win and everybody wins. And that's sort of a new
fact, for a lot of people, but it's very much I
think the way we operate. So thank you for doing this. LASZLO BOCK: No, thank you. I mean, thanks
for all-- everyone for coming and
being part of this. It's actually-- it's a
profound point you make. And I want to roll
back the clock because I've been hearing you
talk about this for some time. When you joined Google, you
were recruited in to be the CEO. You've been the CEO of Novell. You'd been the CTO
of Sun Microsystems. You'd have this amazing career. You come in to Google,
quite literally, John Doerr from Kleiner
Perkins recruits you in, literally the job description
is provide adult supervision. And you come in and you've
got Larry and Sergey who are doing all--
certainly brilliant, but doing all kinds
of crazy things. You've got engineers
who don't want to listen to anybody
and anything that smacks of management, people
kind of recoil against. So in a way, there was autonomy
and some sense of vision, as we just talked about,
and absolute chaos. So how do you come
into that and mold it and shape it and built it? ERIC SCHMIDT: I think it
helps to have some humility and have teenage daughters. And so, I sort of
view the young people that I met at Google as
similar to my daughters, which is that they don't listen to
me but every once and awhile you hear that if you say
something to them, then eventually, it comes out of
them as their own idea, right. And that was sort of
roughly how I approached it. And I did not
appreciate-- there were so many things I didn't understand. I didn't understand
how good the model was. I didn't understand
how successful the advertising would work. I didn't understand
that there would be different ways
of doing management. Because I had been trained
in the classic-- in the tech industry, it dated from,
data general and deck, we had a very specific kind
of engineering management. You had certain plans and
programs and so forth. And we had none of that. Wayne Rosing, who was the first
engineering VP, used to say, it's like the Borg. It just moves forward. And I remember the first
staff meeting I went to, it was a fascinating
staff meeting because the conversations
were fascinating. They were very interesting. It was like being
in graduate school. But of course, it just
went on and on and on. And so, the trick is to
maintain that level of curiosity and intellectual discipline
but put enough structure that stuff happens. And that is ultimately
what we were able to do, with a lot of
work, including help from you. But I think it's
best to understand that the programming of
the culture predated me. And what legitimate
management needed to do was to harness it in a good way. And the book is indeed
about a lot of this. So for example, everyone
is arrogant, right, especially in a
company like Google. Which arrogant
people do you keep? Well, you keep the
arrogant people who are self-confident,
lead teams that are driven, they're change agents,
they have a lot of passion. You don't keep the ones who
also are liars, self-deceivers, that kind of stuff. So it makes sense once
you say it that way. LASZLO BOCK: Right. But if I'm-- and I'm trying to,
I want to sort of get as well to something. I'm thinking of people who are
at other organizations, which don't have that same DNA,
that sort of Google startup-- ERIC SCHMIDT: But I
have a strong opinion. Since I have the perfect
audience for my message, bear with me. Everything we talk
about in our book and we talk about at
Google, you can do. And you know how you do it? What percentage
of your workforce do you turnover and
hire in a given year? 5%? 10%? It's numbers like that, OK? So you could literally
today, tomorrow change your hiring
practices to consistent with Laszlo's new book,
which you're late on. LASZLO BOCK: Again, no
hierarchy, no pressure. We're all love and hugs
and kisses at Google. ERIC SCHMIDT: Yeah, yeah,
yeah, all that shit. But my point is that you could,
you could set yourself out to remake the culture of your
company and over a few years, with the support of the
CEO, the board, or whatever, you could actually do this. And here's what you got to do. You've got to set
a five year plan and strategy that people like. And it's got to make sense. You've got to evangelize
it really strong. You've got to tighten
up your hiring and look for the kind of people
that will drive you forward and then there'll be
an internal revolution. But that's fun. That's business. If somehow you
thought that business was stable, predictable,
hierarchical, that's a government. They don't pay so well and a
long list of other problems in government. Business is naturally creative. It's called creative
destruction, right. Schumpeter, all
that kind of stuff? And I used to think why
does it keep changing and why am I always behind
as I did other jobs. And why am I always screwing up? And the answer is,
it's always changing. And what we say in the
book and I'll say here is it's going to change
much faster in each and every one of
your businesses. And the reason is
because the internet has unleashed a whole
bunch of competitive forces that you can't control. And Google can't either. I mean, it's just-- we're
doing it all to ourselves. LASZLO BOCK: Well,
when you think about though-- so you have
this five year plan. Let's say somebody
comes up with the plan and they want to push forward. And they're going to resist-- ERIC SCHMIDT: I'm sorry, can
I interrupt for one second? By the way, the Russians
had five year plans. I'm not talking about those
kinds of five year plans, I'm talking about a
five year plan that anticipates the competitive
and technological changes that will affect your business with
good and reasonable responses to them. OK. And it's easy to
give you examples-- BlackBerry RIM, right? The competitors to the
Intel chipset, right. Sun Microsystems,
where I worked. Novell, where I worked. 20 years ago, just
telling stories, I sat with then CEO Scott
McNealy and the president Owen Brown. And Wayne and I and
a CFO did an analysis that we should be
in the PC industry. And the CFO, very
smart guy said, we can't get our cost
structure low enough to compete in that market. Now it took 15 years
for that to become clear to the shareholders
and ultimately, the company was sold. You have a good
time for 14 years but had we acted
on that sentence, and I was too dumb to sit
there and say, stop, you know. I didn't know how
to ask the question. So I vowed never to make
that mistake at Google. So we started with
the price of free. I mean, we can go down further. LASZLO BOCK: Well so Lord Acton
wrote that "Power corrupts. Absolute power corrupts." And absolutely-- and he
talked about how once you're in a position
of authority, you're tempted to
be more autocratic, to hold yourself to a
different standard-- ERIC SCHMIDT: That is my plan. LASZLO BOCK: It's not your plan. I've seen your plan. It's not your plan. If people do what we've
been talking about, where you give
employees freedom, and you treat them
right, and you give them a voice in how
things are run, we heard from Zingerman's
earlier today, grocery chain in Michigan, where they
have-- it's a partnership. Grocery store-- partnership. And people want more and more
freedom and yet as an executive and our guests here are by and
large, many of them executives. It's kind of
annoying when people ask me all these questions. And I know at Google,
we have this tradition of the all hands and TGIF. And they're not always the
most polite civil questions. Like how do you, how do
you hue to these values of transparency,
involvement, engagement when you've got people who
are rude and obnoxious-- ERIC SCHMIDT: Well
in the first place, I think the human
condition includes entitled or rude,
arrogant people. We understand that. Some of them, you keep, some
of them, you get tired of. And remember, you can work with
people who are not your friends if you respect them,
if you treat them well. You can often produce
great success for both. So I think there's a bunch of
things I would say to that. The first is, you've
got to establish a culture of trust
and transparency. If there's something
fundamentally wrong with your position
as a business-- let me use the tobacco companies
lying about smoking and cancer. It's very difficult to
communicate truthfully inside of the company
when the employees know you're lying to them, right. It's just people have a
bullshit detector, right. So you have to be careful that
what you say, like Google says, we put the user first. So if we ever do don't
do that, our employees are very aggressive. And as they should be. So, part of that is
that shared trust between the executives
and management. And that's solved
by communication. And people, by the
way, want to be led. They want to win. They want to see the low
performers not promoted. They want to see the-- there's a
whole bunch of things which you all take for granted that
they want to see done. But ultimately,
communication is a start. The second is that it is true
that absolute power corrupts absolutely and I think all
forms of human governance need a check and balance. And I think you can see this in
dictatorships around the world. And I sort of come
to the conclusion that it doesn't matter too much
what the human structure is, as long as there's an
independent verifier. In other words, you can do
whatever kind of country you want, as long as you
have an independent Supreme Court with a real constitution
that really has the power to sort of keep people in
check, deal with corruption and so forth and so on. That's from my personal view. So, you will be-- you'll
see a lot of executives on power trips and ultimately,
I think the best executives are people who understand that they
work through others, right. And a simple test is
do they say "I" a lot? Do they ever emerge from
their corporate office when they run meetings? Another example, when
you run a meeting, do you do all the talking
or do the employees do all the talking? It be the latter. The less you say, the more,
as they say, the better. Another thing is, if you think
about a meeting that you're in and all of you spend all your
time in meetings because you're senior executives, out of the 10
people you normally meet with, three talk a lot,
three never say a word, and two are sort of annoying. It's OK, right. So one day, why
don't you see if you can make the people
who never say anything say
something interesting. And then get a real
debate on a real issue and see if you can find the
best idea, not the consensus idea, and not your idea. So these are some simple rules. LASZLO BOCK: Brilliant. Wonderful. Any questions? I've got some more but I
want to give a heads up in case anybody wants
to ask your question. Yes, go ahead. ERIC SCHMIDT: Oh, my god. LASZLO BOCK: So the question-- ERIC SCHMIDT: Entitlement? I see Chris DiBona here. Do we have a problem, Chris? You and I had this conversation. Everyone just says this
is a kumbaya place, right. LASZLO BOCK: So the
question was, do we have a problem with entitlement? AUDIENCE: And how
do you deal with it? ERIC SCHMIDT: My god, you
think we're successful? Maybe you have something fun-- AUDIENCE: People can
learn something from you. LASZLO BOCK: Next question. ERIC SCHMIDT: There's
something about-- well, all I can tell you is
I spend most of my time not here because I deal
with [INAUDIBLE] issues. And when I come
back here and I look at the sunshine and
the smart people and so forth, and people start
bitching to me, I say like, do you have any clue what goes
on in the rest of the world? I mean do you literally
understand the suffering that the average
employee goes through? So I think, there's a
couple things you can do. One is that you sort
of-- often, you're better off in a challenge to
somebody to use humor, right. Basically, if you're in a
situation where you say, I can't stand you, you're an
idiot, you're so arrogant, get out of my face. You're losing, right. And I'm sure you
wouldn't do that anyway. You're transferring
power from you to them. You're giving them
your emotional control. So sort of a good human rule. So you're much better
off using humor and fun and so forth to bound them. You'll never really
confuse the arrogance. What I like with engineers,
who are highly arrogant, and we like highly
arrogant engineers because it takes that kind of
ego is they'll come up and say, what do you think? And I say, well,
actually I think it's fine but my
opinion doesn't matter. And they go, why? Because I'm not the
judge of your success. Your customers are and I'm going
to measure the hell out of it. That freaks them out. So sometimes the way
you do this is you say, appeal to a
higher power, right. Hey big shot, I'm with you. You know, you're God's
gift to humanity. You're going to get judged. And not by me. But I'm watching. Say it in a nicer
way than I just said. LASZLO BOCK: So like, all
of my performance reviews are being explained
before my eyes. Go ahead. ERIC SCHMIDT: And I should say
about this, Laszlo is, I think, the pioneer inside the company
of decide things with data. And we talk a lot, again, in
our book, which none of you have actually bought yet but I
hope you'll buy it very soon, we talk a lot about
how one of the ways to solve a lot of the typical
problems you have in management is start with data. So Laszlo is literally
the poster child of this. He walks in and he says,
here are the facts. And in an interesting
conversation always ensues when
you start with that. Yes, ma'am. AUDIENCE: So Google recently
released its diversity numbers and I wonder if you could
say a little bit about how that decision came
about and why now? ERIC SCHMIDT: We
have-- well, there's a tension in the company, in
all companies between what are secrets and what
are embarrassing facts and what are leadership moves. And for years, Larry
and Sergey and myself, Laszlo, and so forth
felt that it's better to be more out front because
people are watching us. So if you make a mistake,
the best thing to do is to admit it. Now the first problem you have
is you have a lawyer who tells you can't. But every aspect of business,
history, crisis, and so forth says if you start and say in an
legally non-binding way, right, we screwed up here,
everybody calms down. And the worst possible
thing you could do is a cover up or
people well meaning misleading the information say,
oh, our situation with women is not as bad as you think. And then we release the
numbers and like now, we look like we're a cover up,
even though this person was just clueless. So we've got a problem. We have a problem that in the
engineering field, especially computer science,
female participation is either level or
declining, depending on what metrics you use. That problem has been
known for a long time. When I was studying
this 15 years ago, the percentage of women in
computer science was 18%. It's now fallen to
12%, 13%, and so forth. There maybe a recent
revival, which I call the "Mark Zuckerberg
Effect" of people in freshman year. But there are many,
many solutions to this. The best one and the one I
think that Google's talked about and I've personally
talked about funding, is to try to get every
student in college to take a data analytics course. And data analytics
means enough programming to understand how a computer
works and enough data science to be able to figure
out what the data says at a freshman college level. And I think that would help. And this belies the
success that women have had in other
scientific fields. The majority of the
Ph.D. In biology are being given to women
now and they're fantastic. So there's something about
the computer science program and the way we're
behaving that's causing the wrong outcome. LASZLO BOCK: Questions? ERIC SCHMIDT: Yes, sir. AUDIENCE: Yes, so, I clearly
agree with literally everything and everybody has
said here today. And I spend-- thank you. And I spend most
of my time trying to fix the way that
government works. That all of this stuff
actually works in government but I hear a comment that
you made a few seconds ago and think, maybe
it's hopeless, right? And I'm an optimist. So I sort of rebel against that. ERIC SCHMIDT: All
progress depends on unreasonable man or woman. I mean, you have to actually
have an unreasonable attitude in order to really make progress
against these tough things. AUDIENCE: That's a fair point. The question is--
part of it, I think, is the way the public
reacts to government. Part of it is how the
media reacts to government. Part of the problem
is how politics exists and how those kinds of
conversations happen. Do you have any
thoughts about how we can change that conversation? ERIC SCHMIDT: So I've spent
many years now working on this and I have lots of opinions. The current political
system in the west is largely a problem of
misalignment of incentives. So if you're a
government executive, what incentive do you have
to release any information publicly or to take any risks? Because any information you
realise, you'll be criticized. Any risks you take,
you might fail. So from your perspective,
your incentives are to do exactly what you're
told, never take any risks, and don't provide
any leadership. Now I'm obviously
oversimplifying it. Now the people I
know in government went to government
precisely to lead. So you have a misalignment
between their incentives and their intent. What I like to do is think about
what's a point where we could-- what's a leverage point? And I do think that
basically trying to understand where
the money is spent is an opportunity to do that. And governments are
always thin on money because the money's
always been allocated. So figure out a
way where there's a source of new
money and use that to drive the incentives
that you really care about because government will drive to
whatever those incentives are, financially. Literally, new
programs and so forth. LASZLO BOCK: I think
I saw one hand come up somewhere back there. ERIC SCHMIDT: Yes ma'am. LASZLO BOCK: Go ahead. AUDIENCE: So it's
clear to me and I think to probably most people
in this country or world have a lot of respect for
the company you've build. So that goes without saying. I'm curious with all
your success, what it is-- what is it that
keeps you awake at night? ERIC SCHMIDT: Well,
I think in general, the seeds of the destruction
of a large, successful company are inside of it. And when I look at my
career and the things where I've been close
to, you could see it. People knew it and the
leadership didn't act. So I would-- that's
my number one worry. My second worry
is very specific. Google today is an enormous part
of the internet in a good way. I'll do a little small
introduction of you should use Chrome, right. It's free, safer,
faster, and so forth. You should use Gmail,
on and on and on. I can go on and on. Android, obviously billion
and a half platforms. None of these were foreseen
by any of us a decade ago. That's how successful they are. To me, the question is what
happens one level higher? And I worry about this a lot. That Google will end up being a
key part of the infrastructure but think about your
employees today. What are they doing? They run some painful
Microsoft-based system that the MIS people force
them on 10 years ago and then aside from that, they
use Facebook and Instagram. They're texting each
other and so forth. What does that look like
over a five year period? Frame it as the
five year question. Who are the winners? How will people interact? We know the answer is
going to be smartphones. And we know the
majority of those are going to be Android-based,
so we're in good shape there. But what do the apps look like? How do they interact? How does this security work? Think about in corporations
and government. I mean, these are
really hard questions. And I worry a lot about that. LASZLO BOCK: Any final
questions from the group? Any? There. There's a gentleman that
has a hand up in the back. AUDIENCE: So the
sociologist Erving Goffman, I think, popularized the
term "total institution" for an institution in
which people not only work but also eat, also socialize-- ERIC SCHMIDT: What
was the term again? AUDIENCE: Total institution. ERIC SCHMIDT: Total
institution, like a mental-- like a mental institution? AUDIENCE: Yes. And he gave us examples of this. At one end, the university
and at the other end, the insane asylum. And so we can-- ERIC SCHMIDT: We're trying to
figure out which part of that we are. AUDIENCE: Exactly. And so I guess the notion is,
we've heard a lot about work and it seems like
increasingly, the model that you've pursued
so successfully is the total institution. So is this the
workplace of tomorrow where Google-ites eat here,
they pursue their hobbies here, they socialize here, they
work here, obviously. Is that a good thing? Or are there limits
that we should be wanting to impose on that? ERIC SCHMIDT: Well,
I'm not sure-- I'm not sure which limits to be
imposed by someone else. I think there are some
natural limits to this. It's easy to think that
Google is about the benefits. Sorry, Laszlo. But what Google
is really about is about empowerment
with smart teams. I can assure you that if we
eliminated all the perks, which we're not going to do,
but imagine if we did, the employees would grumble
a lot and in entitled way, as we discussed. And then they would get back to
work because their friends are here, the people
they collaborate, the projects that
they care about. So to me, the test
of an organization is whether the
work is meaningful. And by meaningful,
I mean, in a kind that it mean that you
understand meaningful to you is. I enjoy it, I get up, right. I love to come to work, I
love to be part of Google. It is my home. I'm asked all the time
what would I do next. I say, Google is my home. And I actually mean that. And I don't mean I live
here because we banned that a while ago. But you get the idea. So I would encourage
you not to think of it as a sort of a total
institution model, but rather as a very
specific way in which one can conduct one's adult life. So in that structure,
it's a little bit like a graduate school. I was in graduate school. You were, as well. And what happens
in graduate school? You're with the same people. You're working on
the same things. You're there, breakfast
through dinner. You have this enormous sense
that you have a discovery and impact and so forth. That's very empowering. And I think it's very sad when
I meet people who spent 20 or 30 years in organizations and
jobs where they don't have that sense of
individual empowerment, as defined by them. That they're doing it because
their parents told them or because they decided
to be a lawyer and now they think it's boring. And they just don't
like what they're doing. That's a life lost. And I'm old enough now to see
friends of mine actually die, not to be a downer here. And these things actually end. And so, your time is
limited so choose it wisely. Again, in a plug
for our book, we talk a lot about how do you run
a culture where people actually feel empowered. And we're not perfect, we
make mistakes and so forth. But it can be done. And I would argue that
each and every one of you has a sort of a
business responsibility to do this because
I think it produces more productivity, which is
good for the shareholders. But it's also the right
moral thing to do. By having people more
empowered is just a good way to live one's life. LASZLO BOCK: Well as my
second favorite journalist on the planet, Jon Stewart--
you need to get to the city. ERIC SCHMIDT: No, I'm fine. My talk isn't [INAUDIBLE]. LASZLO BOCK: It's nice. AUDIENCE: From what I
understand, you-- when Laszlo joined, there wasn't a
People Group, per se. Or you made the decision
to invest in this area. I'm a-- I started a startup. We have 100 people, Indiegogo,
and making a decision to hire a VP of
people now, trying to address a lot of this-- ERIC SCHMIDT: Well,
you can't have him. AUDIENCE: This is not-- ERIC SCHMIDT: I'm not. I'm just going to stand
between the two of you and prevent any
further communication. AUDIENCE: We'll
see about that now. I'm fearless. What was your thinking process? When did you know that you
needed energy investment in this area? And what were the
triggers or what was the data that
showed you that? Or how did know it was time
because we're-- I'm afraid we're maybe too
earlier, I don't know-- ERIC SCHMIDT: I think-- AUDIENCE: It's
just a hunch and I don't like to make
decisions on pure hunches. ERIC SCHMIDT: First place,
that's the right answer. And if you want to lead and
you want to lead with people, you better have a
pretty good answer how you're going to manage them. And we're the
company-- the company's run by computer scientists,
right, scientists and so forth. So anything we do in HR is
going to be very data analytics driven. And there was no finer choice
than Laszlo at the time because his Hungarian-- [LAUGHTER] --his Hungarian background,
notwithstanding, and the fact that he
worked at General Electric and he's basically--
there was just a bunch of obnoxious
things that we had to overcome but we hired
the right person anyway. So my advice would be
for a small company, try to find somebody
who looks at the world analytically in the
measurement context and cares about innovation. And you can find these people
in HR, in finance, right, in security, in those things. And nobody believes that but
I'll tell you they exist. And they're such
a delight to work with because they're
just smarter. They're just more interesting. They have more problems. They're just all sorts
of challenges, right. So to the degree that this thing
goes back to this hiring bias, you want to hire
people who will make you a little bit uncomfortable
but in a respectful way. They're going to push you. What about this? What about this? What about that? That will produce a
better organization. And what happened
over the years was that I have these various
ideas and Laszlo would say, well, let me see if
it's true or not. And I never liked it when
he disapproved me, right. But the problem was I could
never argue against this data. And I'll tell you, by the way,
just to go on just a bit more about our model. So we have board meetings and
we board members and the board members say that they've
never seen in the corporation the amount of
analytics that we do about people presented
to the board. That's how we run Google. And you can do it,
too, at any scale. LASZLO BOCK: I will
say-- I'll just add that the first HR person
we hired, Stacy Sullivan was I think, employee 51, 52,
something like that. She's still with
us today and she's here today and is amazing. And is the heart
and soul and we-- ERIC SCHMIDT: She was
interesting because she had both the analytical
capability and also sort of emotional component
that you associate with HR. And so what happened
with Stacey was, we had all these various
young company problems, like person A hates person
B and we need them both. And she had this unusual ability
to go in and talk to both and resolve it. So again, I don't want
to overweight analytics. You clearly have
to have EQ, but you need to have an
analytical basis, as well. LASZLO BOCK: Other questions? ERIC SCHMIDT: I think it's time
for everyone to have dinner. LASZLO BOCK: OK,
well, as I was going to say, my second favorite
journalist Jon Stewart would say, the book is
how Google works. It's on bookshelves everywhere. But Eric, really, thanks for
taking time and surprising us. [APPLAUSE]
