Nikesh Arora at Fortune Brainstorm Tech

>> Next, I'd like to welcome back Adam Lashinsky to the stage and Nikesh Arora of Google. Come
on up guys. >> LASHINSKY: Good morning again, everybody.
Nikesh, welcome to Fortune Brainstorm Tech, your first time here, I believe.
>> ARORA: Yes it is. >> LASHINSKY: We're delighted you're here.
And Nikesh is the top business executive at Google. Before we jump into that, I want to
ask you one of these important questions. You're a big cricket fan.
>> ARORA: Yes. >> LASHINSKY: Which do you love more, cricket
or Google, and why? >> ARORA: This is like, say, do you love your
wife more or your child more? >> LASHINSKY: Really?
>> ARORA: Don't you think so? >> LASHINSKY: I don't know, because I don't
have an appreciation for cricket, I do have an appreciation for Google.
>> ARORA: You have an appreciation of your wife and your child?
>> LASHINSKY: Yes. >> ARORA: Which one do you love more? If you
answer that, I'll answer the question. >> LASHINSKY: No, I won't answer that question.
>> ARORA: There you go. >> LASHINSKY: My wife is here, soů
>> ARORA: I love my cricket and I love Google. I love what I do.
>> LASHINSKY: Okay. Would you take a moment and explain what exactly you manage at Google,
what your purview is? >> ARORA: That's not very interesting. It's
just all the revenue that comes into Googleů >> LASHINSKY: That's kind of interesting.
How much revenue is that? >> ARORA: Over $20 billion.
>> LASHINSKY: $20 billion, okay. >> ARORA: Over $20 billion, yes.
>> LASHINSKY: No, but I am interested because the management of Google is kind of a mysterious
thing to the outside world. You've got this--you've got the founders whose precise roles are not
well-understood. You've got this engineering core that you don't manage, if I understand
correctly. And then you've got this giant business machine. So, you say you've managed
the revenue, but what does that mean? What does it mean as compared with other functions
of the company? You manage YouTube, for example. >> ARORA: So all the people who bring in the
revenue, the sales people, marketing people, customer service people, busdev people, they're
all part of the business team across Googleů >> LASHINSKY: How many?
>> ARORA: ůfor 50 countries, over $20 billion. >> LASHINSKY: And how many people about is
that? >> ARORA: Somewhere over 8,000.
>> LASHINSKY: 8,000, okay. So, let's sort of--let's talk about where Google is today
and where you see it going, tremendous success in search, advertising, to say the very least,
but you want to talk about something other than search, right?
>> ARORA: Well, search is still in its infancy, don't you think? People are still in--everyday,
there are countries that come online. Everyday, there are people that come online. Everyday,
people search more. What did I read the other day? Until 2005, five exabytes of information
was created. An exabyte is about $40,000 of TV. I think this year alone, 280 exabytes
of information will be created. So we're going to create like 50 times more information this
year than those created in history until 2005. I think we're going to have a problem. We're
going to have to figure out how to find information in this huge massive information. So I think
search is still in its infancy. >> LASHINSKY: But search revenue though for
Google is--search revenue growth is slowing. Are you suggesting that given this explosion
of information that there is going to be a way to reaccelerate search growth?
>> ARORA: I think the way to think about revenue in the context of the online world is to think
about revenue in the world of advertising, right? If you think about the world of advertising--I
overheard some people yesterday talking about it being about a $500 to $700 billion market,
roughly, you know, the whole world of advertising. If you think of what consumers are doing,
right, people are spending more and more time in an IP connected way. And you've heard all
of yesterday, all of today, everybody is spending time using some form of IP mechanism to consume
content whether it's news, whether it's video, whether it's listening to audio. So, you know,
people in this room who are getting bored are still using IP to look at their computer.
So we are consuming content with IP. And if you believe that, traditionally, marketeers
have chosen to go after that audience, that consumer. So I believe 50% of the content
is going to be consumed over IP in the next five to eight years. If you believe that,
that $500 to $700 billion has to shift from traditional means to IP delivered means. Now
I'm not suggesting that it's all going to end up on the Internet, but your revenue is
going to come from an IP delivered format. We talked about fortune.com earlier and the
fact that you're not being aggressive about streaming your videos from this conference.
So you are going to start looking at revenue coming from an IP delivered mechanism. So
the bogey is $500 to $700 billion. Now, to change that bogey, you have to make sure you
understand what technology needs to be deployed in the future to serve advertising. You know,
it's no longer one ad in the middle of the Super Bowl. You know, my grandmother, my child,
you, me, shouldn't be watching the same ad. At the same time, we can't be watching 50
million different ads. So we're going to find a way that technology allows us to bridge
that gap between one ad and 50 million ads, and that's going to be delivered over IP.
So we're going to see a big shift in the technology that's deployed to serve advertising. We're
going to need lots of advertisers who're going to have to be online. I think there are--you
know--of all the SMBs, all the businesses out there, a few million advertisers advertise
online. But there's lots and lots of other companies out there which haven't come up
with that pattern, right? So in that big scheme of things, I think we're still at the infancy
of the world of online advertising. >> LASHINSKY: So--but let's be clear about
where we stand. The shift thesis has been in place for, let's say, just make up a number,
five years now. It's been the thesis in the industry. It's been Google's thesis. And it
has worked. The shift has happened. >> ARORA: I think we're up to what, a $50
to $70 billion industry on online advertising. >> LASHINSKY: But for Google's revenue, that
shift has been overwhelmingly search advertising. And the growth has been slowing. So the question
the thesis is in--the thesis is intact but the growth thesis, the growth thesis on search
advertising isn't. So talk about how you get to the next step, which I assume has to include
two things; display advertising and mobile search advertising. Neither of which is a
meaningful figure for Google now compared to search, web search.
>> ARORA: Well, we've been successful in search, so we like it, and it's the good thing. In
terms of display advertising, I think the industry has been a bit stagnant because of
the fragmentation on the industry. Like today, if I, you know--I used to buy advertising
when I was at my last job. And you had to use a spreadsheet to buy across various websites.
So if I wanted, I could buy fortune.com, I could buy Tiffany's, I could buy the Financial
Times. Today, by applying technology and trying to create things like the ad exchange and
trying to find a way that--and as an advertiser, I want to buy an audience.
>> LASHINSKY: Explain what the ad exchange is. You're talking about that.
>> ARORA: Okay. So, you know, as an advertiser, I'm used to buying audiences. I want to buy
18 to 24-year olds who are tech savvy, who are interested in my product. And actually,
it's too much of a leap of faith for me to understand how should I buy fortune.com, should
I buy Tiffany, should I buy USATODAY, should I buy the Wall Street Journal? It's just complicated
because each one of them has their own profile of audiences. So for me, I need a way that
I can strip out audiences across multiple publishers. To do that, you need some sense
of consistency between publishers and between sites so I can buy audiences. And that's what
something like an ad exchange does. An ad exchange is effectively a place where lots
of publishers can list and lots of advertisers can buy using a consistent set of rules.
>> LASHINSKY: And you're talking about a Google product.
>> ARORA: I am talking about a Google product. But there are other ad exchanges in the market.
And the ad exchange purpose is very simple, to create efficiency in the advertising buying
process on display and create some degree of consistency because I, as a consumer, don't
want to be hit by the Fortune ad seven times when I go to seven different websites in one
session. I need some mechanism out there which understands, that don't flood me with advertising
I'm not interested in. >> LASHINSKY: Okay, so I want to come back
to the ad exchange in the moment. And to get there, how much of a concern is it that Internet
users are doing some of the searching they previously would have done on google.com on
sites like Twitter and Facebook which have just giant audiences now that didn't exist
when Google was ramping up its business. >> ARORA: I think--if you think about it,
the number of searches in the world continue to grow. I think I read something like four
billion searches a day, so people are searching more and more. As information content increases,
people are searching. And people will consume content whether they'll do it on Facebook,
whether they'll do it on Twitter, they'll do it in different places. You know, the--if
you think about five to seven years, when you searched, you were happy that you found
the result. You'd be happy to click on the second page or the third page of the search.
When was the last time anybody clicked on the second page of search or the third page
of search? Very rarely. We're used to searching on the first page. We expect the information
to be right there. Now, when I type Canon camera, I actually don't want to go to Canon's
website. I actually expected the picture of the camera and I expect to get the pricing
details and product details. So this complexity of search has increased. The--sort of this
need for instant gratification has increased. If something happens right now, you want to
go search and find out the earthquake happened or what's the latest on the BP oil spill,
you knowů >> LASHINSKY: And you do that--and you would
do that where? >> ARORA: You do that in Google today.
>> LASHINSKY: But you wouldn't because if Google doesn't have anything yet on the earthquake
that happened one minute ago and Twitter might. >> ARORA: Says who? Well, we get a Twitter
feed into Google, right? I don't know. Is there an earthquake that happened a minute
ago? >> LASHINSKY: Let's notů
>> ARORA: Let's not even go there. Let's not make arguments, right? But I think the important
part is there's this big debate about whether people do vertical searches or people do a
search in one place and expect to find the information?
>> LASHINSKY: I think vertical search a few years ago was kind of a put down. But if vertical
search is Twitter and Facebook today, I think they'll take it. It's pretty good. And what
I'm getting at is I'm trying to understand if you're making--if you're, you know, artfully
making lemons--making lemonade out of lemons here. And that the question is, is the fact
that these two and others have giant audiences where people are engaging in the kind of activity
that they use to exclusively or almost exclusively on Google, is that a threat or is it a concern?
>> ARORA: Look, I think it's a good thing that people are going out and searching to
find multiple different places for information. We have to up our game and can do to provide
them that information. I think Marissa was here earlier this morning. She's somewhere
outside. That's what she does for a living. She's constantly paranoid about trying to
make sure that we're providing a better search experience every morning. And we're constantly
think--we did like real-time search, we did universal health search, so we're constantly
improving our ability to provide the information to customers. And people will go to other
places, you know. The whole premise of search advertising is "Come buy traffic and try and
create your own brand." That's what happens. So we have to deliver on that promise. And
in the meantime, everyday, 20% of the search terms that are searched for are different
from the previous day. So you can't predict what people are going to search for.
>> LASHINSKY: So I'm going say, I'm going to paraphrase and say mild concern, not a
threat. >> ARORA: You have to be paranoid, right?
>> LASHINSKY: Fair enough. Okay, I'm going to--I want to sort of load up a softball for
you to smack away. >> ARORA: All right.
>> LASHINSKY: Androidů >> ARORA: Yes.
>> LASHINSKY: ůwhich is Google's mobile operating system. Jim Lanzone gave you a free plug a
few minutes ago. >> ARORA: Yes, he did. I want to check how
many bars he had on theů >> LASHINSKY: Right.
>> ARORA: I couldů >> LASHINSKY: Tremendous success by a lot
of measures but, and here's the softball, there's no revenue associated with Android.
You give away the operating system. It doesn't sound like such a good business to me.
>> ARORA: You know I joined Google six years ago, and I came from a traditional business.
And you know, when I was there, we used to spend a lot of time working about the four
Ps, you know, price, product, promotion and placement. When I came to Google, it sort
of required me, sort of, bit of rewiring my head. To understand, we only focus on one
P in the beginning and that's product. And the view of the founder--it was the reason
I love being where I am. The view of the founder is once you create a great product for the
consumer, you get a lot of people to adopt it, ways of monetizing it will become apparent
than obvious. When Google Search was created, there was no way of monetizing it the first
three years, but that's not what stopped us worrying about it. We all worked for traditional
companies, we all work in different situations, and we get too hung up about pricing, promotion,
placement, all the other things, and you take away your focus from product. So our focus
on Android has been, "Let's make sure it becomes the world's best mobile operating system.
Let's make sure that people want to adopt it. And let's take away the friction that
exists between people being able to use it." I mean, and its test--you know, its success
is a testament to that philosophy. It is available in 40 plus countries and 40 different operators
around the world. And I think it outsold the iPhone, in me, I think Mary Meeker said that,
I don't know if that's true or not but, I'll believe it.
>> LASHINSKY: Let's just say that it is true but, obviously, the revenue associated with
Android power devices outselling the iPhone didn't generate nearly the revenue to Google
that the iPhone sales did to Apple. That's an understatement. So just--you are the business
guy, finish the thought. Where is the revenue? >> ARORA: I thinků
>> LASHINSKY: We know it's there but I wantů >> ARORA: ůit's very important to understand
as people use Android devices, they end up searching more on Google. They end up using
a lot more Google applications. And a lot of those applications are--applications that
we were able to monetize and Google Search and Android device is monetizable. You know
the search traffic grew 300% in the last six months. That's wonderful. More peopleů
>> LASHINSKY: I'm sorry say that--this is mobile searches?
>> ARORA: Android searches grew 300% in the last six months.
>> LASHINSKY: And over--what kind of base? What kind of--You're talking about searchesů
>> ARORA: Sure. >> LASHINSKY: ůand does it monetize the same
exact way as a web search with the same existence? >> ARORA: It differs differing--differs depending
on which part of the world you're in. >> LASHINSKY: And how much revenue is associated
with that? >> ARORA: That's the question I'm not going
to answer. >> LASHINSKY: Fair enough.
>> ARORA: Good try. >> LASHINSKY: Okay. The product that you talked
about, the web search product had, you know, just--let's say one of the most amazing experiences
in the history of the technology world, you just killed the competition. They went--they
either weren't there, they went away, they were out to lunch, what have you, and here
is Google today, hundred, how ever many, $140 billion market cap something like that.
>> ARORA: Something like that. >> LASHINSKY: The competition's watching you
now, including a company called Apple. And they're going right up against you on mobile
advertising. They want to--they do not want you to have, for example, 63% share in the
United States of mobile search advertising. Does it--does that make for a different picture
going forward for Google? >> ARORA: I don't think so. If I go back to
the notion of the bogey being a $500 to $700 billion bogey around the world, I think we're
in the early stages. I think we need to be--as Google, we need to be present in as many countries
as we can be. We need to understand how to sell advertising in the online world as many
countries as we can be. We need to make sure we have the best technology that allows us
to serve this. And you know what? It's perfectly fine as the traffic comes from various places
in the industry. Unlikely that we're going to have a lion's share, the $500 to $700 billion
bogey, there'll be many different players, whether it's a Facebook, you know, AOL, the
Yahoo!, or Microsoft, an Apple, or even other places that we don't know of. So that's perfectly
fine. >> LASHINSKY: So if you can't have the kind
of share that you've enjoyed in the past to sort of have the same footprint then there
has to be better growth, there has to be tremendous growth to make up for that.
>> ARORA: I think that the size of the pie is going to explode in the next five years.
I think we're underestimating the potential of video advertising shifting to the web,
I think the whole conversation you heard earlier this morning, the conversation you heard yesterday.
Consumers are being--are going to two levels of aggregation in video. You know I have channel
that aggregates content. I have a broadcaster that aggregates channels. On the web, that
becomes disaggregated. So people like yourself, you're streaming this conference on your website.
In the past, if you wanted to put on television, you'd have to go syndicate it to some channel
and that channel didn't have to be part of some broadcast lineup. Today, you can just
do off your website. >> LASHINSKY: So give us the update on YouTube,
the business of YouTube. >> ARORA: You know, YouTube, the business--remember,
YouTube is not more than five years old. So you know, part of it is that, in the Internet
era, we are so used to instant successes that we say, "Oh, my god, it was five years ago,
you should be worth doing billions of dollars of revenue." We're very happy with the trajectory
of YouTube. YouTube is now in a place where it acts as premium inventory for us in display.
At the same time, you know, it's very interesting how we're seeing the initial successes and
our ability to monetize video on YouTube so we can put ads into the video. Now you have
to understand, the advertising industry on video has to stand up on its head in the next
five years. It's all wrong, right, from a video advertising perspective. Today if you
go watch a clip on your website or ABC or CBS website, what you see as an ad in front
of it is a clip which is being cut off from a TV ad.
>> LASHINSKY: Uh-huh. >> ARORA: So I see an eight-second ad or somebody
had designed an ad for television and they stick it in front of a clip and force me to
watch it for eight secondsů >> LASHINSKY: It sounds like a creative problem,
not a business problem. >> ARORA: It is a big creative problem but
until that creative problem is solved, you have a problem where advertisers won't be
willing to move a lot of money to this site. >> LASHINSKY: People expect a lot of YouTube
in part because Google paid a lot money for YouTube when there was no revenue associated
with it. Is Google--is YouTube making money today?
>> ARORA: Another question I'm not going to answer.
>> LASHINSKY: Widely rumored that YouTube is breaking a small profit, small cashů
>> ARORA: I think we said in our earnings call that we're very happy with the trajectory
of YouTube and YouTube is on the brink of imminent profitability.
>> LASHINSKY: On the brink of imminent profitability and happy with the trajectory. Okay. We'll
take that. Will Google renew itsů >> ARORA: Adam told me this is all about him.
I've got to find a way that I create news so that he looks good. He's desperately trying
that. I'm trying to avoid beingů >> LASHINSKY: I appreciate at least you're
with the program. >> ARORA: I'm with the program. I get it.
>> LASHINSKY: Yeah. >> ARORA: This is a break even opportunity
for me. The best I can do is break even. >> LASHINSKY: No. Well, anyway, I disagree
but--will Google renew the MySpace deal? >> ARORA: I'll let you know if and when we
do. >> LASHINSKY: Do you want to renew the MySpace
deal? >> ARORA: Well, if we want to do every deal
that makes sense for us and our partners. >> LASHINSKY: Did the last MySpace deal make
sense for your and your partners? >> ARORA: At the point it was done, it did.
>> LASHINSKY: Okay, $900 million that you paid to News Corp. over a two and half year
period. >> ARORA: Look, come on. You know, who could
project--who could predict the trajectory of MySpace at that point in time?
>> LASHINSKY: I don't know. That's your--now, it wasn't your job, to be fair.
>> ARORA: That wasn't my job. >> LASHINSKY: Okay, very good opportunity
to transition. You've had a big management turnover at Google that you're a part of.
>> ARORA: Big management turnover, I think we have one of the lowest attrition rates
in the industry. >> LASHINSKY: Okay, mayů
>> ARORA: Of a company of our size. >> LASHINSKY: ůmost of the top people on
the business side of the operation have--most of the very most senior people have left,
that's why you've been promoted. >> ARORA: So you're suggesting that my--I'm
just like the "last man standing" type scenario. Thanks, Adam. I really like that.
>> LASHINSKY: I said nothing of the sort. >> ARORA: That's what you just implied. Every
single guy is gone, you're stuck with the job, damn. I better brush up my resume.
>> LASHINSKY: Talk aboutů >> ARORA: [INDISTINCT] I saw ahead on to that
issue, yes. >> LASHINSKY: That's right. Talk aboutů
>> ARORA: You could be more complementary and say, because of my capabilities that I've
got the job, right? Come one, Adam. >> LASHINSKY: You got the job as I understand
it because you crushed it in Europe, is that right?
>> ARORA: There we go. Something like that. >> LASHINSKY: You have likeů
>> ARORA: You bet, I'm liking this thing. >> LASHINSKY: ůwith various geographies have
90% market share, for example. >> ARORA: Something like that.
>> LASHINSKY: Okay, so I wasn't planning on going there yet but let's go to that. How
much of a threat to Google is--are the various regulatory challenges in places like France
where the government is upset with you, and in places like Connecticut where the government
is upset with you for spying on people and so on?
>> ARORA: All right, let's separate the problem in two specific keys, one is Google's specific
issues where, you know, we make some mistakes and we publicly apologized for them like the
Wi-Fi datas of Connecticut. But I think there is a broader issue and I think somebody alluded
to it earlier in the morning and Barry talked about it earlier. Let there be no mistake.
The Internet was an interesting thing on the side for many years. Suddenly, it has become
the mainstream. All of you in the room had something to do with Internet businesses and
every regulator and every government has started getting interested in it.
>> LASHINSKY: What question? >> ARORA: Because it, you know, very simply,
when you operate in the digital world, you will leave digital footprints, right? There's
no way to stop you from leaving a digital footprint. And every one of your businesses,
whichever one it is in this room, any demo we saw is going to be able to collect those
footprints. You are, whether you're Miso or you're--whatever else I saw yesterday, whoever
you are, you will collect digital footprints. And, somebody, somewhere is going to get paranoid
about the fact that you have data that they would much rather you didn't have. And how
will we collectively, as an industry, deal with that data issue is going to be something
that regulators are going to get interested in? Is it more fun regulating a mining company
or an Internet company? Guess what, I'll tell you. It's more fun hanging around with Internet
guys because they're cool, right? So, we're all going to have some level of scrutiny that
is going to come to us. You know, we're not going to go like you know regulate McDonald's
or a sunglass company. We're going to regulate the Internet business. So broadly speaking,
the regulators are going to get interested in our industry. Whatever they decide whilst
they may have Google in the headlights when they decided, it'll have repercussions with
everybody else in the room. So I think it's important that we all understand that collectively,
and I can't think of many situations where regulatory intervention has resulted in faster
growth of an industry. So we've got to find a way that we balance the needs of regulators
in terms of acting responsibility with data as it relates to privacy, as it relates to
how products are created. At the same time, we have to make sure we can keep them at bay
so that they don't get overly interested in us and it somehow cripples our industry.
>> LASHINSKY: And so how can you keep regulators at bay? I mean they're worse than journalists.
When they want to sink their teeth into something, they're going to.
>> ARORA: Is that what you're saying? That's kind of a news item in itself.
>> LASHINSKY: That the regulators are worse than journalists?
>> ARORA: Yeah, from you. >> LASHINSKY: Sure, they're--I don't--I'm
totally confident. >> ARORA: I'm sure somebody's going to tweet
that, right? >> LASHINSKY: The question is Microsoft, IBM,
AT&T, all just went through horrendous periods when the regulators wouldn't leave them alone.
And how do you avoid going through a period like that?
>> ARORA: I don't know how you'll avoid it. I thinků
>> LASHINSKY: Market power, by the way, the digital. Your discussion about the "How interesting
the digital business is" is nuanced but they care because Google is so successful, honey
attracts flies that sort of thing. >> ARORA: Well, you know, I'm not going to
say--let's not--the solution of that problem is not that Google becomes less successful,
so I'm going to keep that--that's how we want to continue and we want to be successful.
I think the only way we're going to have to sort of deal with that is to constantly engage
with them and make sure they understand what is going on. Make sure they understand the
consequence of decisions they might want to take. And it is going to be a policy of engagement
as opposed to estrangement. >> LASHINSKY: Good. I'm going to try on this
management thing in a slightly different tact now thatů
>> ARORA: Okay. >> LASHINSKY: ůa few minutes to think it
about it. >> ARORA: Good. All right, okay.
>> LASHINSKY: Would you tell us your view of Google's culture. It's an object of fascination.
And now Google is much older than it was when it was a young company with an interesting
culture, what's your take on the culture of Google?
>> ARORA: You know, the culture of Google is for me has been a fascinating journey in
the last six years, right? I think you have to strike the right balance between innovation
and order. >> LASHINSKY: Okay.
>> ARORA: If you get too orderly and too regimented, and you run the business too efficiently then
you run the risk that you stifle innovation because then everything has to be defined,
everything has to have a business plan, everything has to be done with pre-defined resources.
If you go on the other extreme where you say, you know, let a thousand flowers bloom, everybody
can do whatever they want, you end up in a situation of tremendous chaos and lack of
ability to create scale. So we have to constantly strike that balance between taking some great
ideas and getting them to scale. For example, Android was a small team, small idea. Now
we think it's scaling, right? It's got 160,000 being activated a day. It's over 15 million
Android devices out there. It's gone from being a small idea, small team to scale. There
are other ideas which haven't scaled as well or which are still in stages where they haven't--they're
sort of, you know-- they're sort of just languishing. So that's okay. So somehow, what we're trying
to do is we try and look at interesting things and get people to work on them, get them to
develop on them, as we believe something is beginning to get traction, then we bring in
the people who can help scale it, and take YouTube for example. I know, YouTube's got
a very concentrated effort around it, trying to scale it. Android has a concentrated effort
on trying to scale it. There are some other ideas where people are still discovering,
they're still working on them to see if they hit traction then we'll bring in the guys
who will bring the order to chaos. In the meantime, we'll continue to maintain some
chaos from an innovative perspective. >> LASHINSKY: So ifů
>> ARORA: It's not always--you don't always get it right.
>> LASHINSKY: So--and so how are you doing today? Let's say in 2005, there was too much
chaos and you--the company worked to, you know, bring the chaos-order balance back to
five from wherever it was, where are you to--five being perfect equilibrium, where are you today?
>> ARORA: So the problem is that there is no answer being perfect, right? I don't know
if five is perfect and I don't know if the right answer is 7 or if the right answer is
3. So, we feel somewhat comfortable that, you know, we are putting more wood behind
lesser number of arrows. So we are trying to create more scale for some great ideas
and big ideas. We are at $20+ billion revenue business with 20,000+ people, so now scale
has a different dimension to it for us than it used to five years ago. You know, five
years ago, we were at $3 to $6 billion revenue business as opposed to $20 billion. So now,
we advocate bigger businesses. So I think we're constantly evolving and trying to follow
that journey to see how we're going to be able to create ideas of scale.
>> LASHINSKY: Do engineers still get 20% time at Google?
>> ARORA: Yeah. Engineers get 20% time at Google. Some of our salespeople get 20% time
at Google. >> LASHINSKY: And do you think it's a good
idea? >> ARORA: I think it's a fantastic idea. I
think, letting people take some time off and think freely and do something which is different,
off the beaten track keeps them engaged, keeps--allows them to follow their passion. And you might
end up getting some great ideas and great products out of it.
>> LASHINSKY: I think, McKinsey consultants and Fortune Magazine writers should have 20%
time also. >> ARORA: I think there are some management
of Fortune hanging around over here. You might want them toů
>> LASHINSKY: I'm going to go questions in just a second. And we're going to go--I'm
going to eat into your break time and go over for a few minutes so we can make sure to have
lots of good questions. Explain the business opportunity of Google Me, your social media
project that's in the works at Google. >> ARORA: It's a very subtle way of asking
about the project. What project? >> LASHINSKY: You know, you know what I'm
talking about. >> ARORA: I don't think we're ready to talk
about it yet. When we will, I'll come back to the next one and tell you about it.
>> LASHINSKY: Okay, so. >> ARORA: As I told you first, in any event,
any product, any project is about getting users excited about the project, so business
opportunity canonizations can wait for 12 months.
>> LASHINSKY: Okay, so that's interesting. So, your attitude as the, you know, chief
revenue officer of Google with a fire-hire title on that is this Google Me project that's
in the works, "How to monetize it," just isn't on your list of concerns right now. That is
somethingů >> ARORA: Show me 50 million users, 100 million
users if I get a buck from them, that's--you're [INDISTINCT] get me interested. But if you're
not going to have enough users, what's the point of worrying about the revenue opportunity,
end up building systems, sales force, and all these different things. I'm trying to
focus on it and you distract them from creating a wild consumer product.
>> LASHINSKY: Good. And let's go to questions. I think--and just wait for the microphone
and remember to identify yourself. Here comes the microphone, Mark.
>> MAHANEY: Hey, Nikesh, Mark Mahaney at Citi. I just want to ask about display advertising.
Externally, it seems like it's hit a bit of a tipping point. It actually seems like it's
moving your overall revenue growth. So talk me down why wouldn't the Google of search
become the Google of display advertising? If you're doing $20 billion a year in search
and your 70% of search revenue worldwide, could you do that in display given what's
a highly fragmented market where leaders seem to be falling off and you've acquired through
DoubleClick and Ad Mob, two of the best assets out there, why won't you be the Google of
display? >> ARORA: I think, it's a very important thing
to understand that in the display space, I think every broadcaster, every content channel,
every content owner is going to become an owner of a display property, right? So ABC,
CBS, Fortune, all of these guys are going to be owners of display properties. We don't
own display properties ourselves except for YouTube. In search, we own the property where
people search. So you can be--you can't have a lion's share of the revenue because you
are--that's where people come. But the display is going to be more of a network play where
there's going to be lots and lots of publishers. And I hope that becomes a $100, $200 billion
industry. And our role in that will be to help monetize the network through our advertising
teams and to provide technology from [INDISTINCT] perspective as well as technology for advertisers
and publishing their sites. So I think, therefore, it's not going to be the entire display market
but we hope it'll be a healthy share of the display market.
>> LASHINSKY: There's one over here, I think. Raise your hand. I didn't see where the microphone
went. Yup, okay. Please just identify yourself. >> SIMONS: My name is Bright Simons. I'm from
Ghana. You know, there's this notion that most of Google's great ideas and the same
way of most other companies might actually come from frontier markets like places like
Africa. And, you know, I've looked at one particular area where we're not talking about
combining our [INDISTINCT] and automation with human cognitive intelligence to improve
upon search and I'm sure you've had products like question box and the rest of it. And--but
the point is I don't think Google is putting enough resources there and if we look at products
like Google Health tips and others that seems to combine the developmental needs of these
societies which is what get people excited in these countries with the kind of resource
that are needed. >> LASHINSKY: The question is "Do you agree
that Google hasn't put enough resources into places like Africa is thatů?"
>> SIMMONS: Yeah, but also it would [INDISTINCT] us, you know, trying to mine for ideas in
these places. >> ARORA: I think that's a fair observation.
I think you have to step back for a second and this is not an excuse. You have to understand,
Google is an 11-year-old company. As a student of business, I don't know any other business
which has enjoyed such rapid growth over a period of 11 years. There's no company in
the history of business which has gone from 0 to 20 plus billion in 11 years. And which
is we're expected to behave like an adult wearing a suit where an 11-year-old wearing
a suit trying to be like an adult, right? So, it's going to take us some time to understand
how we leverage ideas from various markets and bring them back and scale them. And we're
trying, we've put in people in Africa, we have a team, we have a wonderful leader called
Joe Mucheru who runs our African business. Two years ago, we weren't there. Now, we have
a team with 20, 30 people. They're trying to localize product. The problem we have into
some of those markets is we are actually working with the governments and the ISPs to find
the way of creating broadband penetration of the market because we believe the more
technology you can deploy, the more innovation you're likely to see from those markets. So,
it is a play where we think our--focus our support can be in getting more people technologically
savvy, getting more technology adopt in the market and then using that as a springboard
for getting more ideas. >> LASHINSKY: We have one more question right
up here please. Oh, we'll do two more. Oh, you already have--okay, you and then you,
and then we'll finish. Go ahead, please. >> LEVY: So, my name is Cory Levy. I'm from
Houston. My question is, "You get 20% of time off. And if so, what are some of the passions
and projects that you work on?" >> ARORA: Look at me. I'm here. This is 20%
of my time off. >> LASHINSKY: No, this is work.
>> ARORA: I'm in Aspen. You know, I spend some of my time with the YouTube because I'm
very passionate about that. I think that is the next big bastion in terms of the whole
idea of getting video online, trying to crack that problem. I spend some of my time playing
tennis. I spend some of my time hanging around different parts of the world, meeting people
from my team. I enjoy that. I enjoy traveling to various parts of the world and standing
up with people from Google over there, so that's what I do.
>> SCHNEIDER: I'm Michael Schneider from Mobile Roadie. I was wondering if you could talk
about your very ambitious project to put incredibly high-speed connections in various cities in
the US and is that an experiment or is that something that you might roll out on a grander
scale? >> ARORA: You know, the beautiful part of
as Adam said, this is a 20% project for some people. They said they were very passionate.
They had some ideas how they want to do it. And I think us seeding that, us trialing that
has created enough interest and motivation for other people who do this for a living
to try and accelerate their view on how they can do it.
>> SCHNEIDER: But you guys are pretty good at it.
>> ARORA: That's pretty good that those people are so well-motivated that they want to go
and deploy this now around the country, so the fact that we can seed an idea into a market,
demonstrate it to people and have other people take it on, eventually, miss the objective
because the objective is to have high-speed connectivity around the US as well as other
parts of the world. The objective is not that Google has to do it themselves. It's great
if it's going to happen. >> LASHINSKY: Before I thank Nikesh, I just
want to remind you we're going to take a break now until 10:40 when Stephanie Mehta will
interview Ralph de la Vega of AT&T Wireless. And you're welcome to stay for her interview
which is a virtual session for our broadcast study, it's for lack of a better way of putting
it, to Peggy Johnson, an EVP with Qualcomm. Nikesh, thank you very much.
>> ARORA: Thanks, Adam. Thank you very much guys.