Eric Schmidt at the Michael Hammer Memorial Lecture

Uploaded by Google on 08.12.2009

>> THURM-HAMMER: Welcome. On behalf of my family, Jessica, Allison, Dana, David and
myself, I would like to thank all of you for being here today. My late husband, Michael
Hammer, was so many things in the public eye -- a computer scientist, an educator, a thought
leader, a business guru, a writer, but coexisting with these many attributes were a surprising
yet complementary constellation of talents. He was a joke-teller extraordinaire, an aficionado
of Motown, a scholar of history and literature and a master of political [INDISTINCT]. What
underlined and linked all of these disparate areas of knowledge was a single theme: an
unyielding passion for new thoughts and ideas and an ever present desire to share them.
Through his love of ideas, his unique persona emerged, which enabled him to reach to people
in his personal and professional lives to teach them, to inspire them, to unleash in
them the passion and creativity that he exemplified. Nothing made him happier. For me, there was
no better way to honor Michael's memory than by creating an opportunity to hear from people
who share the same passion for developing, exploring, and understanding new ideas. We
are honored and so grateful to have Eric Schmidt, the CEO of Google, as a speaker here today.
Eric represents the kind of business leader that Michael admired -- creative, generous,
innovative, smart, and thoughtful. We are also grateful for the participation of Tom
Ashbrook whose reputation as a lively and inquisitive explorer of ideas makes for the
perfect partner in this conversation. Thanks to both our speakers for being here. We will
begin the program with a video highlighting Michael's professional accomplishments.
>> Mike was always searching for the real truth.
>> He was straight. He was honest. >> Incredibly funny, engaging.
>> Michael Hammer was the greatest thought leader that I've ever encountered in my life.
>> He was a salesman. He was a showman. >> Michael was enormously generous with his
time and his insights. >> There has never been anyone like him, and
I doubt there ever will be. >> MANNING: Re-engineering the corporation
is still the standard for how to take something that's in trouble and turn it around.
>> CHAMPY: You know, we work for years on that book, and we get a printed copy of the
manuscript back and within weeks, the pages will be filled with Michael's note of changes.
And Michael was such a perfectionist that our first publisher never believed we'd ever
finish the book and they cancelled the deal on us.
>> MANNING: It's been almost 20 years and I still use that book day in and day out.
>> CHRISTENSEN: For any one element of his model, he could just give you a story and
a story and a story and a story that brought it to life.
>> HAMMER: Automating a mess creates an automated mess.
>> CHRISTENSEN: His goal wasn’t just to win intellectual converts but to win emotional
converts behind the importance of his idea and the importance of acting on what he taught
them. >> SCHLESINGER: Bar none, he stands as the
best stand up large room presenter I have ever experienced in my life. The first time
I actually saw him at the Hammer Forum where I was going to follow him, I just kept hearing,
oh, shit, what do I now? Okay? How can I possibly follow someone like this?
>> HAMMER: You're really going to transform the enterprise, that's not okay…
>> FINE: At a certain level, his lecture style was frenetic. He was dancing around the room,
running around the room. >> HAMMER: This is revolutionary thought transformation…
>> FINE: And even though I'd heard some of the lectures multiple times and I knew his
jokes before he would say them in some cases, I was energized by his interaction with the
class, the way he would connect with students and I would have be able build off that in
other classes. >> HAMMER: Nobody had ever heard about them.
They were… >> FINE: He talked about a company called
Progressive Insurance. >> HAMMER: … that specialized in high risk
drivers. I'm not going to insult you and assume that's why you know them.
>> FINE: And he would say when people have car accidents, they can't drive to work so
they stay home and watch daytime television and whoever advertises on daytime televisions,
attorneys would tell you to sue your insurance company because you don’t have a car.
>> HAMMER: They can sue, that's correct. Very good.
>> FINE: So he said, "I know you don’t have time to watch daytime television, so I've
watched it for you." >> HAMMER: There's a man with a soul of an
accountant, delayed payment, good for you, exactly.
>> JOHNSON: He was hysterical. He had great ideas. He had great techniques. He was genuinely
and incredibly helpful, and he was just a really fun guy to have around.
>> HERSHMAN: He'd like to quote people -- Oscar Wilde, Groucho Marx.
>> MEYER: I remember jokes. Mike didn't really practice and bring jokes into the talks.
>> GREIF: The thing I always remember are the, you know, the Yogi Bear, the Dorothy
Parker, those things. >> MCDANIEL: There was just this constant
interaction with Michael, just because of him being so curious. And he was trying to,
you know, to break the current paradigms, to move process thinking to the next level
and beyond. >> HAMMER: I'm following in the footstep of
my hero and role model, Monty Python, and now for something completely different...
because that's the idea. >> HERSHMAN: He will depict a concept, but
he'll use the Monty Python castles and the catapults.
>> RAMAN: Michael was very much a teacher. I mean, the moment he started talking about
something, he'd grab a whiteboard and you know, in the conference room and start, you
know, drawing little circles and squares and linking it all up.
>> SARIN: Perhaps not many people know about his prior life as a professor.
>> ZDONIK: I was Michael's graduate student, 1976 to 1983, and changed my life.
>> SARIN: He taught me not just database management, which is what I work on still, but he taught
me how to write clearly. >> ZDONIK: Michael would take the things I
give him and he would turn the pages red with comments.
>> SARIN: The many people who have studied under him and what they have done is a major
part of his legacy. >> ZDONIK: He used to come in to my office
that I shared with my officemate, Jake Cunan [ph], every afternoon around five and he would
say, "Would you gents care to engage in a little stochastic seminar?" And he'd have
a pack of cards in his pocket and we'd go into his office and play hearts for an hour.
>> MEYER: It was clear even then that he was a really remarkably, an unusually capable
graduate student. He was promoted to a rank of instructor. And they recognize his great
abilities and gave him tenure. >> ZDONIK: And I've also asked myself, "Why
would somebody get tenure at MIT and immediately quit?" And I think for Michael it was about
achieving things. And he achieved that. He saw there was nothing left to do so he had
to find some other line of work. >> GREIF: He wanted to write mysteries.
>> MEYER: You know what? So you know much more about him personally. We just never talked
about that kind of thing. We talked about, you know, [INDISTINCT].
>> PURVES: You know, I learned very early on you never wanted to play movie trivia with
Michael. >> ZDONIK: You wouldn't have a lot chance.
>> MANNING: If you weren’t listening, you'd miss the jokes, you know, so you had to really
pay tight attention. >> HERSHMAN: Michael's mind would go so quickly
that oftentimes it would take the audience a while to catch up. And he would literally
stop and say, uh, wait. >> KAMPOURIS: When he was most serious, when
he was really willing to communicate something, which is important, he sort of injects it
with humor, and that made it more palatable for people to hear but there was a great truth
being said at the time. >> LEMELLE: Michael changed the conversation
in the halls of corporation around the world. Before Michael, it was about functions, it
was about just great components of your business. After Michael, it was about the connectedness
of your business, it was about processes, it was about how the businesses worked together.
>> PURVES: Michael had a great sense that work was more than just work. He had a great
sense that work was a significant calling and that the value of people and the importance
of people and the work they do, helping them to see their work as valuable work was something
that was all about responsibilities. >> FINE: His belief was it was much more ennobling
for a person to be involved in end to end work because people could identify with their
work, they could feel that they had - there was a final product they were achieving and
that there was customer that they were achieving at and serving as a result of that achievement.
>> CHAMPY: Michael was without question, the principle proponent of these ideas.
>> SCHLESINGER: The notion that "processes get designed to consequently redesign" and
that those designs and redesigns are linked to outcomes, he owns it, okay? So, he owns
it. >> GEIGER: Michael was fundamental of our
process journey. I think that's clear. Without him, we would not be there where we are today.
>> JOHNSON: He inspired us. He motivated us and he let us see that it was possible to
conquer some of the big challenges that we were looking to conquer.
>> CHRISTENSEN: Other consulting firms saw process reengineering as just a goldmine.
>> DROLETT: Most consultants are wanting to sell and, you know, one of their main thrust
is the profit they make from their clients. Michael had a very little interest in that
aspect. His interest lied primarily in the teaching, the understanding of the concepts,
making sure that the value and benefits were actually going to be created.
>> MANNING: The model that he had for hammering company is a unique model for a company. And
in a consulting world that is really driven by profits; Michael's approach was all about
educating and not at all about profits. >> HERSHMAN: He was a diplomat in every sense
of the way where if you look at the meaning, that a diplomat can tell you how to go to
hell and you've actually enjoyed the journey. >> MOTNEY: And you just generally don’t
get that level of honesty from anyone, right, even a spouse in most relationships, and then
you breathe and read to the end and think about what he said. It's just brilliantly
on point, absolutely, directly on point, and as a result, you know, it causes for you to
say, "Wow," you know, "I can do better." >> HERSHMAN: Another thing that people may
not know about Michael is that he was a DJ, and so he would always find a line in a song
or a title to a song to work into his conferences, Buffalo Springfield being one of them.
>> BUFFALO SPRINGFIELD: Something happening here. What it is ain't exactly clear…
>> SIMONSEN: I've got a great career. I've been very fortunate, I love what I do and
I always have. And if I think about the people who have either cause that, contributed to
it or enabled it, and I start thinking about my parents and my wife and things like that,
Michael winds up on that list. There's no about that.
>> He was a great individual, a great friend, a great colleague, a great coach, a great
listener and a great visionary. >> SARIN: He once had to videotape a lecture
because he was traveling. >> ZDONIK: He didn’t like talking to a room
with no audience. >> SARIN: And what he did was he brought one
of his daughters, a few of his daughter's dolls.
>> ZDONIK: Sesame Street characters and he set him up in the front row of a big lecture
hall. >> SARIN: And lectured to them, so he had
an audience. >> ZDONIK: Oscar the Grouch.
>> SARIN: He also came in one day to work wearing a Big Bird costume. He had rented
it for his daughter's birthday party, unfortunately, his daughter got scared so he couldn’t use
it there. But he paid for the rental and he wanted to get his money's worth.
>> MOTNEY: And he said, you know, Sesame Street characters are popping up and there's a mallet
and you hit them on the head and he said, you know, I used to think that was all about
hand-eye coordination and now as I've learned and studied, what I found is that that's truly
an early executive development tool as you're learning how to say no, no.
>> ZDONIK: I don’t think many people understand that he did a lot of fundamental groundbreaking
work in the database research world which eventually led to his work in office automation,
which eventually led to his role in the management consulting world.
>> SCHLESINGER: He had a unique ability to read biblical stories into the process of
implementation in ways that actually run credibly powerful.
>> GREIF: I think of him more as just being so sensible. Like, you could always just go
to him for advice and he'd have a pragmatic, useful answer.
>> CHAMPY: He had such a commitment to his family. I always saw that as part of the perfection
with which he, you know, he lived his life. >> HERSHMAN: He would challenge you in your
thought, but he would also challenge you in your action, and that is something that we
hope to preserve. >> There are many different words that can
be used to describe the two men joining us on stage today. Eric Schmidt has gained the
most fame as CEO of disruptive technology companies, like Novell and Google. After a
distinguished career at XEROX PARC, Sun and Novell, he was hired by Larry Page and Sergey
Brin to be Google's resident adult to harness the great energies that abound at Google and
help convert them into healthy and successful businesses. As CEO of Google, he has presided
over the dramatic growth of one of the most important and relevant technology corporations
of the 21st century, helping them become a vital force in the worlds of information,
media, and advertising. But his contributions have been broader than that. He has also been
an influential computer scientist, developing tools that are still in use in many technology
firms around the globe. He has served as a political adviser on technology to many, including
President Barack Obama, and has taught students at Stanford Business School. Tom Ashbrook's
most well-known titles would be journalist and radio personality. After decades covering
the globe, reporting on political and economic trends, Tom joined NPR as a host of the show
On Point where he regularly engages with world leaders and thinkers on a wide range of issues.
Just as easily, though, Tom could be described as an entrepreneur. In 1996, he started the
company that eventually became and ended up authoring a book entitled The
Leap about that experience. It may not seem evident at first, but I believe that both
these men ultimately have the same job that my father did. At their core, all three men
are educators, teaching us about technology, about change, about society and about the
world around us. It is my honor to introduce Tom Ashbrook and my boss, Dr. Eric Schmidt.
>> ASHBROOK: Hello? Can you hear us? Good, then we're on. It's a real honor to be here
both in celebration of the life and work of Michael Hammer and to have the opportunity
to speak today with all of you and with the CEO of no less than Google, Eric Schmidt.
So, I think, you ought to give him one more round of applause just for being here today.
It's great to have you. >> SCHMIDT: We’re here actually to honor
somebody else. >> ASHBROOK: Yes, indeed we are. And we're
honored to have you here to do it. I just say at the outset, Eric and I will talk for
a few minutes and then we will open the floor to questions. We're very -- he and I are very
open and eager to have your questions, so begin formulating right now, and before you
know it, we'll invite you into this conversation. Maybe in -- I'll start off this way, in the
spirit of Michael Hammer, is Google in the process of reengineering the world? What does
it look like on the other side and when will we know you're done?
>> SCHMIDT: I'm here because Professor Hammer was somebody who I admired, somebody who I
took a lot of ideas from. And I do agree with the premise that Google is an example of the
kind world that his work, both as a computer scientist and later as a business consultant,
imagined. And what I particularly liked about what his views were is they were the views
of a computer scientist, which is sort of me, too. And although we're not perfect, I
can assure you, we think in terms of scale in a way that a lot of other people don’t.
And Michael did that, and, hopefully, Google does that as well. So to answer your question
about Google, to understand what we're doing, think about a world of an infinite amount
of new sources of information and infinite number of visual devices, all GPS locator
attached to people with an infinite explosion of information, and imagine the scale of the
kinds questions that you could ask, that you could not ask before, you literally could
not do it before. So I don’t when we will be done, but Google is a metaphor I think
in this conversation about getting the world interconnected, and I've become convinced
that people do not understand how profound that revolution will be in everything we do.
>> ASHBROOK: We thought we had a pretty good sense from the disruptive effects already.
If we still don’t understand how profound it will be, give us a glimpse, lift the cover
on it. If you've got a cosmic vision, tell us now.
>> SCHMIDT: Well, Google is in fact not a company with a vision. Google is a company
with a set of values and approaches that we iterate into this new space. So we don’t
necessarily argue, we know what will happen but we can see something that are pretty obvious
if you think about them. Go ahead and imagine what -- everybody here has their mobile phone
on and everybody here has a --- because of who you are, has very powerful data capabilities
and good browser on that mobile phone. Every one of those mobile phones is connected to
the world's largest collection of real time information both the Google and the other
companies. What are the questions that you could do with that? One of the most obvious
question is, "Tell me where I am and tell me where I'm going?" And not only can we actually
tell you where you are -- in other words, you are the search -- but we can also predict
where you're going to go based on your patterns and movements and so forth and so on. So,
the notion that somehow we had all these questions we could never ask before I think is a new
matter. Why do we teach the old way, since the all the world's information is literally
on this phone or equivalent to a phone device that you carry around with? We should learn
how to search. When I go to a new place and I'm walking down the street, why is it not
searching and saying -- and producing a constant stream of information about the history of
the place and things that I care about? We’re moving from this old static model to this
new real time model, and this explosion of real time information which all of us live
in and all of us participate in, whether it's we're Tweeting or Facebook updates or instant
messages, so forth and so on, is the defining information paradigm. Another example would
be governments. Government should spend their time actually answering questions rather than
theorizing it. You can actually instrument things now. You can actually find out what
people are doing and what they actually did and whether a program work rather than just
pontificating about it. Not the data is the highest goal of government, right, but imagine
a data intensive, information-rich environment, it would produce I think different policy
outcomes. >> ASHBROOK: I promised to get more specific
and I'm sure our audience will as well, but one more kind of just a big picture of one,
I mean, if capitalism and new technologies are about creative destruction, where are
we in the arc of creative destruction that comes with this technology, the Internet?
>> SCHMIDT: I think we're early, which is not necessarily a good message to the people
who are fighting it. The Internet has this bizarre property that it changed the economics
of a large number of information industries and, unfortunately, the consumers sort of
like the new model, the new model of information, whenever they want it on any terms on any
device, and so forth and so on. And many of the business models that we've grown up with
have assumed scarcity in a world where information technology makes essentially infinite copies
available in an inexpensive way. I don’t know how we will play out. I do know that
it will take 10 or 15 years for the new models for how you monetize content and respect copyright
and so forth, but it would really take off. And this interim period is incredibly painful
for all the people involved. >> ASHBROOK: You're, I guess, thinking that
media companies in particular, a lot of companies said have been empowered by the Internet.
>> SCHMIDT: Well, the ones, the fundamental issue with the media company space is that
they're both production companies as well as distribution companies. And the content
production is of enormous value of quality, you know, the things that you do, et cetera.
The distribution has historically been structured around Windows, control and limitation, and
so forth and so on, and the Internet is blowing off out of way. So the most likely scenario
there is an adoption of either an advertiser-supported model or a subscription model that is independent
of a transport. And that shift is a very difficult shift for the industries as a whole.
>> ASHBROOK: What shift comes next? You've talked about a very widespread, high-bandwidth
connections that dissolve the boundaries between media, describe that for us.
>> SCHMIDT: I mean, a simple example is that it's technically possible to have a gigabit
per second Internet connection through fiber to your home. Indeed, many of the telecom
operators are busy doing smaller versions of that. Today, in America, which is by the
way, the 14th in broadband leadership, not the first, Comcast is rolling out to access
three-modem for the 50 megabit subscription, you know, for a reasonable charge for it,
of course. Korea has a 160-megabit fiber. Japan has a pretty universal 100-megabit.
These are very, very real. When you get to a hundred megabits to a gigabit, the distinctions
between cable and broadcasting and so forth and DVDs all go away. So, an example would
be that just as Comcast is bringing out this incredible Internet service, they also sell
a cable model where you pay for television services that you don’t consume -- ESPN
for example, if you don’t like sports. That model is going to be under attack for obvious
reasons because the Internet allows you to piece apart media out. It doesn’t like bundling
of this kind. >> ASHBROOK: So we have this constructs of
a radio, a television, the Internet and text and so on, do those melt together? Do they
become one? Is there just one box or not even a box?
>> SCHMIDT: They don’t become one. You have one pipe and many devices. And that pipe for
most people would be fiber optic or some combination of hybrid fiber coax and maybe, eventually,
I think, maybe 80 percent of America will be some form of HFC and fiber and the last
high-band would be probably done by wireless. Fiber is significantly faster than wireless
simply because in the fiber you can have an infinite amount of broadband, whereas in the
wireless, you're constrained to whatever provisioning the FCC was able to give the operator. So
the effect of this is that for most people you'll have one or more of these connections
to your home, your business, where you go, you play, and then all of that content will
be available to you regardless of transport, regardless of limitation, and you'll have
the subscriber where you'll pay for advertisements for.
>> ASHBROOK: And what about the base technology beneath this? The Internet that we have now,
the internet we will have, you’re an engineer, if you can reengineer the internet, what would
it look like? And is it possible to reengineer or is it just accretive and so the base is
the base? >> SCHMIDT: It's a remarkable achievement
of humanity. The Internet is on par with the development of air-conditioning -- really
important. And you think I'm joking, but without air-conditioning, you wouldn’t have computers
because you need to air-condition the computer centers, electricity, gas, those sorts of
things, transportation. There are versions of the Internet. There are in fact new designs
for the Internet which have even higher performance that I'm describing and even better switching,
and they handle the kind of latency and performance that we can only imagine today. Many, many
people have argued that the Internet -- what typically happens is people who don’t really
understand technology say, well, you know, it growing like this, but in six to nine months,
it will slow down. You'll discover with such people that all such forecast are six to nine
from wherever you are today, but that's not in fact true, that the architecture of the
Internet in its distributed capability really does allow -- it really was designed to withstand
nuclear attack and it really can scale to levels that we cannot imagine. There have
been issues around running around -- running out of addresses, for example, with IP before,
and so forth, and all of those have good technical solutions.
>> ASHBROOK: Give us a sense of the scale of Google's own infrastructure at this point.
We're hearing about server farms the size [INDISTINCT] or maybe that's just in our imagination.
Give us a sense of that. >> SCHMIDT: Well, people like to imagine all
that stuff. We benefit from centralization, so we have some number of relatively large
data centers, which are attached very near to power dams, literally hydraulic, you know,
water systems because we need a constant supply of base load to power these things. And we
don’t say the exact number, but think that we benefit from the Morse Law, we build our
own central super computers out of PC components. Connected with them is a fiber optic network
that we own and control which we bought when the -- remember everybody built all that fiber
and it was all cheap? Well, we bought a whole bunch of it, technically bought, it was great
deal. Trust me. And we span the globe with that. And we needed to do that, in order to
move all the data around. When you look at the scale of YouTube, had we not done that,
with the growth of YouTube, YouTube would have taken Google out simply because the amount
of video and audio and so forth that has been used -- and, again, those of you who are scientists
can do the math in your head -- but imagine the number of video streams even with compression
and yet we’ve been able to handle it. So we engineered Google in the same way that
Michael would have with a notion of scale. And when you imagine the next set of applications
that will be real-time-intensive, data-intensive, maps-intensive, we're ready for that. I would
argue by the way that one of the things that's going on that people have not, I think, articulated
correctly is that you can now have a new dimension on things. You know, using Google Earth, you
can actually see the changes that we're bringing to the Earth and then adding a new dimension
to thinking. It's a very profound thing. It allows us to see things differently. It allows
us to decide as a society how we want to address them.
>> ASHBROOK: With your energy requirements and we're open to questions from the floor
at anytime now, so just stand up and make yourself known as best as you can there. Are
you energy agnostic in terms of source? Do you prefer to be, you know, to have your plants
sitting next to the nuclear or hydro or solar or does it matter?
>> SCHMIDT: Well, the company has both committed and, indeed, is carbon neutral, so every time
we put our data sit next to a coal powered plant, it's like really expensive, and so
we try to avoid that. If we back up, almost everybody and certainly everybody who's educated
and can deal with facts understands -- which is not everyone, unfortunately -- understands
that climate change in aggregate is perhaps the greatest threat to humanity for the next
100 and 200 years with a possible exception of a nuclear war. And if you're confused by
that, I want you to imagine what happens when Himalayan watershed, which roughly provides
water for a billion people, is gone or gone for the much of the year, and just imagine
the human suffering for the things that we're doing. So, Google sort of recognizes this
and so for years, we’ve been working in the best way we can to try to help people
both understand this and also address our own needs. We have to set an example, so we
did lots of obvious things. We insulated our buildings. And by the way, the ROI and the
return on investment for improving the insulation, making your businesses more energy efficient
is so obvious. Even if you don’t believe anything I'm saying, you should still do it.
That's why it's such a good business proposition. Just do it. We've then also spent a fair amount
of time working on various forms of plug-in hybrids, you know, the kind of power systems
that are information intensive to try to improve that. And recently we've been working in a
partnership with General Electric around a smart grid. What we've discovered is that
if people are aware of their energy usage, they actually reduce it. So typical studies
that we’ve done with people involved in power meters, by being aware of the amount
of energy they use, they reduce their power by 10 percent. That percent affects the peak
power more than anything else, and their peak power use is what drives the marginal costs
to these operators. So it's billions of dollars simply by having more information awareness.
So we look forward to where people will not only be primarily using renewable as opposed
to polluting power systems, but they're going to be using information technology. It's a
very, very powerful ways. One final comment is that we did an analysis of this, and it’s
a relatively sort of political view but I think it's important to stay right up front,
it is possible with a relatively moderate investment in the scheme of things to have
the majority of America's power systems be replaced by renewable energy systems, for
transportation and coal in the next 21 to 22 years, by 2030, and as a result, essentially,
get off of the oil addiction that we're on today. So this really is in front of us. There's
a lot folks here at MIT who are actually doing a lot of important research to even make my
projections even conservative. >> ASHBROOK: Before we leave scale -- and,
again, I'm happy to take questions, it’s a little bit hard to see you in there, but
I'll come to you in just a moment -- scale, Google is enormous. When you look at that,
we see a lot of your strengths. On the front of vulnerabilities, do you see your major
vulnerabilities as economic or political? And in particular when it comes to scale,
Christen Varney is President Obama's new Anti-Trust chief, I know we all saw the Fortune article,
Obama and Google, A Love Story, but their bottom line was that you, your scale has become
such that you are may well be a target of Anti-Trust attention by the Federal Government.
How do you look at that? Are you an out of control monopoly, sir?
>> SCHMIDT: I can't think of the
appropriate response aside from no. >> ASHBROOK: Christine Varney will review
the tape later, but go ahead. >> SCHMIDT: That's right. There's a number
of different sort of ways of approaching I think that subjects. We get a lot of criticism
as a company I think, fundamentally, because we're disruptive and also because we are a
scale company as you said and then finally because people care a lot about information.
So, we're used to that side of the issues and I don’t think that's going to go away.
What we do believe is that as long as you're on the side of the consumer, you're pretty
much on the right side of all these debates. And if there's a lot of hemming, you know,
going on and on about it, but the fact to the matter is, and people will review what
we do and so forth, but as long as our consumer-focused will be fine. So, we Larry Page, in fact wrote
a memo which early in our years as a company, he said if we were to become big, what were
some of the principles that we would establish? We've established those. And one of the most
important one is that you own your own data, so we don’t trap end users. So if you, for
example, just decide that you're unhappy with Google services, we make it easy for you to
take the data that we have of yours and you can go to a competitor, whatever you want
to do. We recently announced the oddly named day deliberation front group at Google whose
sole job was to make this actually happen, so we're real serious about it.
>> ASHBROOK: But, ultimately, Anti-Trust law has maybe less to do with consumer and more
to do with corporate competition, anti-competitive behavior. On that score as you move in to
more and more industries, which you throw away behind you, do you think you're approaching
a kind of red line? >> SCHMIDT: Well, we do not. And from a regulatory
perspective, regulators are going to be looking at the things we do. We understand that. They
have a job to do. We have a job to do. It's perfectly reasonable, separation of powers.
From my perspective, the Internet is the story, not Google. And the fact to the matter is
that the technologies allow consumers to do amazing things and we are in the process of
trying to enable those. And, again, if it has the property that it lowers, that innovation
lowers prices and has consumer benefits, then I'm all for it.
>> ASHBROOK: I could ask all day, but I'm sure there are questions here. We have Eric
Schmidt for just a short and special time. Questions from the floor, sir?
>> Yes. >> SCHMIDT: It's nice to see you.
>> It’s nice to see you, too. >> ASHBROOK: It's nice to see you also. We're
all happy to see you. >> I know Eric, so, but...
>> ASHBROOK: Yeah, that's great. >> As we heard, Michael was a role model for
integrating the spiritual side with his work side in what he did and with being model to
look to the religious classes and being able to work that into his work, could you comment
on Google's spiritual side other than just "don't be evil?"
>> ASHBROOK: It's not enough? >> And then also in terms of all the ratings
and everything and how things were done way back in the past.
>> SCHMIDT: Michael was unusually gifted. You know, there are these people who are basically
very, very smart, sort of brilliant type people who also have a way of emotionally connecting,
right? And Michael had that characteristic, and it's a wonderful thing. It's very, very
rare. Google as a corporation, right, so you don’t use the same terms for that, and we
have some people who are like that, but they're, as I said, they're rare at Google, too. So
I would describe Google in this context, as a company that operates under a set of principles
and values, that it’s always confounding to people when we actually implement the values
that we set, that we really do actually do things for the benefit of the consumers even
if it hurts our earnings or hurts our revenue and so forth. And everyone gets so upset,
and my attitude is we told you this is the way we run the company. We run the company
for these values. And it's perfectly fine. If you look at Michael's work, his whole notion
of going to the customer, going right into it, every single employee had a notion that
they were affecting the world directly by their activities. It's very similar to the
way our culture works. So from Google's perspective, we see our mission as making all the world's
information available, the vast majority of which is largely unknown, right? So the fact
that we can now automatically translate from languages that you've never been inspired,
you know, you've never been inspired from because you have never been able to read it.
So those kinds of things just are phenomenal. If you look at the impact that Google is having
in countries that never fundamentally had pretty much information, obviously, Africa,
with the spread of SMS-based search and so forth, it's just a phenomenal, phenomenal
impact. And I think that our legacy as a company, I hope will be similar to his and that we
were able to have that kind of connection between information and then the impact that
it has on people. >> ASHBROOK: To follow up on that, because
it's so important, Google does have so much information on so many people, individually
and collectively, that is a lot of power, so what's the source of your principle? Is
it just in your person and in the sort of thinking day to day of you and the founders?
Is it based somehow more deeply? All things must pass, when you guys aren’t running
the company, what keeps Google good? >> SCHMIDT: I'm not sure. Well, we're certainly
not immortal, but the principles maybe immortal. It may very well be that successful companies
in the information are really do have to have principles that transcend their leadership,
their board and so forth. There are two reasons: One is it actually becomes the culture of
the company independent of the leaders. And people are always focus on our founders and
myself, but the company is run pretty semi-autonomously in the sense that people pretty much do what
they think best under these principles. But the other reason that these principles might
hold is because if we violated them, we would lose our customers very quickly. But you cannot
fundamentally run an information-rich business without a compact between yourself and your
customers about security and privacy and so forth. And so if we were to sort of go to
the evil room and turn the light on, if you will, and all of a sudden do something evil
with all these information that we happen to be collecting in a normal course of what
we do, we would not only would be, it would be a violation, it would be immoral, it would
inappropriate. It may be illegal, but we also would suffer tremendously in the marketplace.
So there are many, many reasons why the scenario that you’re describing looks to me to be,
you know, more than a lifetime stuff. >> ASHBROOK: But where would that challenge
come from? Given Google, just the fact of its, you know, omnipresence, even if you did
get a little of the evil light turned on, how would you be challenged? What quarter
where challenge or could it come from? >> SCHMIDT: Well, it would start with the
press. >> ASHBROOK: Oh, yes, that would be criticism,
but not necessarily a business challenge. >> SCHMIDT: Yeah, but in our case we would
be regulated. I mean, there are all sorts of reasons why these things. I mean, the threat
is usually expressed by the way in the inverse rather than what we would do, but what somebody
likes with a gun would do to us. I'm thinking of the Patriot Act, for example. So if you
are a person who's not in the United States but your information is in the United States,
there are people who actually are very concerned about the application of the Patriot Act laws,
the information that's held in the U.S. against them. I'm not taking a side on that, although
I personally not particularly like it. But the facts of the matter is these are very
complex political policy and legal issues of which Google is clearly subject to. And
I want to make sure that everybody knows here, we are absolutely subject to these laws and
they will have to evolve as we collect more and more information to our folks.
>> ASHBROOK: Questions. Yes? >> Yes, since Google has attracted the lion's
share of advertising that used to go to traditional media, what do you see for the future of news
gathering particularly investigative journalism? Free news on the Internet isn't worth anything
if nobody can afford to pay the journalists to gather it to be created in the first place?
>> SCHMIDT: Let me answer your question, but I do want to say that we've not gotten the
lion's share of advertising. The advertising model overall is about a trillion dollar market
and we're not currently planning on that amount of revenue anytime soon. So we've got, there's
a pretty big gap there. The problem on the media and news, investigative reporting is
incredibly serious. What has happened was that newspapers grew over the last hundred
years with sort of three sources of income, right? Traditional print advertising, and
then, I'm sorry, classifieds, the other one, and actually people paying for them and they’re
being subjected to a number of terrible problems, the classified revenues as far they moved
online, print costs are going up, and the targeted advertising that Google and others
do works just more efficiently if you will look for an advertiser than a print ads, and
the sum of all that, plus the fact that the circulation is declining, it's just a horrific
problem. The other problem that's not as well understood, is that people are spending less
time reading the newspaper, while it's true that they’re more online readers than they
used to be which is great, people used to spend, in many studies, that rough ratio,
is roughly 20 minutes on the newspaper versus four minutes on the - online for similar massive
information. And I worry about that as cognition issue. And people actually know less about
what's going on. And it's (INDISTINCT] by the fact that people are now much more likely
to get information from their friends and social communities, Real Time networks and
so forth and so on. So these are fundamental shifts that I don’t know exactly how they’re
going to get reversed. From Google perspective, we don’t know how to fix the long-term newspaper
problem. What we're busy building are advertising products that work in the online world that
work and it will attempt to make up some of the revenue, is being lost because of the
transition. The issue in my view, just trying to be as blunt as I can possibly be, is I
don’t see at least in the short term, us making up that difference, otherwise, the
shift from offline to online. It's a problem that record - recording industries has had,
with CD sales and so forth, is analogous to that. So I'm not quite sure what we should
do. There have been proposals to create non-profit newspapers. Sometimes the newspapers’ response
is, well, we're already non-profits, not such a good thing. Let me – make light about
it. So I think we’re waiting for some new models of journalism to come out, but if we
lose the investigative journalism that you're referring to, it would be a tragedy for America,
it really will. >> ASHBROOK: And I think plenty of newspaper
people would say that Google piggy backed on the press and parked to reach its current
success. You are now a $22 billion company, the situation is so dire for traditional news,
there's talk of even government support, which has a load of its own problems attached. Does
Google owe something to the traditional media; should you be sponsoring investigative journalism
directly out of your coffers? >> SCHMIDT: We’ve actually thought about
this at some length. If we could clearly just write a check to the newspapers, right?
>> ASHBROOK: And they would take it. >> SCHMIDT: I'm sure that they would. The
problem is that, is that now you're creating a funny kind of subsidy, you're basically
creating a subsidy from us to them without essentially a connection that really makes
good business sense. And ultimately that model does in scale, so and what [INDISTINCT] with
newspapers is that they allow us to use their content I should make it clear. And they could
– every one of them could ban us using their content by the insertion of a simple
command and it’s something called the robots.txt file. So we're trying to figure out a way
to make money together rather than writing checks and just watching this decline.
>> ASHBROOK: They're getting skinnier while you look health - is there a question? Yes.
>> Yes, just to get back to the do no evil, of course, if that's going to be more than
a slogan and going to truly be a principle behind the company, it very much has to depend
on what evil is, and of course there's no uniform definition on that, and it turns back
to how it's defined by whom and what the process is, does Google have or should Google have
an outside ethical advisory board with some real clout to have some input into this?
>> SCHMIDT: Who would you suggest? It’s a serious question, I mean, describe this
board, and how would you, what sort of people would be on this board?
>> I think you could have outside people from a variety of different areas who had an interest
in the question and are balancing really the issues of privacy and maybe privacy really
is dead and we should get over it, against the dream world where as we're going somewhere,
our phone knows what kind of food we like and tells us where we should go for lunch
when we leave this talk. But I think that having some outside input just as for important
ethical decisions within a hospital. There will be an ethical board that has people from
the lay community, the medical community, and the clergy in various areas, coming together
with the input. Would there be some value in that sort of thing. As Google grapples
with what are admittedly very, very difficult choices.
>> SCHMIDT: We have talked about it; so far we've not decided to create one. The reason
I ask who would be on it, is usually the problem then becomes, how do you decide who goes on
these things. Because, it can - as you pointed out, so correctly, there isn’t an absolutely
agreement on these things, and usually with - in the, don’t be evil context, it's really
a question about privacy. I can't tell you that we spend days and days and days with
people who represent the many points of view that you articulated in your ethics board,
looking at the privacy questions. Privacy questions are more than just values, there
are also legal issues, and there are disagreements within countries and we have to follow the
laws in those countries. And so, on a per country basis, we actually have different
rules. So at the moment we are - we make the decisions and how does Google make the decisions?
We make the decisions by a committee, and so, we have a set of people, which include
legal representatives, government represent - actually people that deal with the government,
which are Google employees and so forth, who make the recommendations. And that has worked
out pretty well so far. So, I think your idea is a good one, but the question is, how would
I figure out who would go on. >> ASHBROOK: How do you deal with the Real
Time search, Real Time information, Twitter and all the rest?
>> SCHMIDT: Twitter is very interesting, Twitter has really exploded and it's used in the last
basically year as everybody sort of new micro blogging model. We just did it, recently did
an indexing deal with them. We want all of these services to in Google. The hardest technical
problem is the ranking of real time information, with the other stuff that's within the Web.
It’s very difficult to know whether at Tweet, if you will, using that as an example, there
are many other examples that are not Twitter. It's very hard to know where to put that compared
to a Web result, and a video result and so forth. And that's in the area of great computer
science research for us. >> ASHBROOK: But what you do about that? I've
heard you mentioned many other--many others besides Twitter, but Twitter is pretty big
and they're working with Microsoft, I think. >> SCHIDMT: Well, the same day that we announced
a similar deal. >> ASHBROOK: So, how do you rank things that
are flowing in, in Real-Time? How to begin to grapple with that?
>> SCHIDMT: Well, the actual technical answer is secret, business secret. But the--but basically,
we used the relationship between the Tweets has value analogous to the way the rest of
the Web does. >> ASHBROOK: Along the lines of the number
of people getting, receiving, subscribing to that?
>> SCHMIDT: That's usually a bad metric. The reason is that, if you…
>> ASHBROOK: If Shaquille O’Neal is the answer to everything.
>> SCHMIDT: Yes. If we were to used that, what would have happened is a million computers
would sign up, and that all of the sudden whatever that thing would be will get promoted
to the top. So we've learned that we have to use things which are not--that are not
spamable in other words. You have to use the six structures of the information that exists.
And if you look really, really hard within each of this information, [INDISTINCT], you
can actually find a hierarchy that makes sense. ASHBROOK: You're sucking up millions of books,
digitizing them and have announced that you will also sell books. Will you kill Amazon?
And you put out your own sort of a Smartphone, will you kill the iPhone?
>> SCHMIDT: No and no. >> ASHBROOK: Why not?
>> SCHMIDT: Well, let me finish answering his question. The--with respect to books,
what we're doing is we're busy scanning out copyright books and also books that are--have
sort of lost copyrights, is the best way to describe it. We've done this so effectively.
We were sued quite extensively a few years ago. And after a long and drawn out negotiation
have come up with a settlement, which we believed will be approved in some form at a current
or a slightly modified form very, very soon. Out of that, it will be possible for so-called
orphan works to be identified by people where the copyright has been--have been lost and
so forth, books that in copyright and controlled by publishers, we are only able to use if
we have a contract with those publishers, and that's very careful to say that we respect
their copyright. With respect to the phones, we have all these new phones coming in Android,
and we'll see how successful that platform is. It looks like it's going to be pretty
successful so far. And of course the iPhone is the category leader in that space. And
I'd say that as a person, as a proud former member of the Apply Board. Go ahead.
>> ASBROOK: Question? >> Thank you for coming. I think we're all
energized by this talk, and excited. If we're talking about reengineering the world through
information--I'm a Corporate Social Responsibility Consultant before I came at the Business School.
And I need Google’s help. I need--you were talking about the ROI on insulating your building,
on really becoming socially responsible. As a company, you guys have an incredible foundation
that has a mix for and non-profit as well that I would like to for you to speak about.
It'd be great if Google could help reengineer the world in a sense of creating a database
where we actually have information about social return on investment which is so scarce, which
companies do not published, which I as a corporate social responsibility consultant have a hard
time pitching to corporations because they want concrete numbers. So, how--how do we
create a world in which markets reward positive social attributes which is starting to happen
with Climate Change? But how do we make it happen at a grand scale?
>> ASHBROOK: Great question. Thank you. >> SCHMIDT: I think the simplest answer is
that corporate social responsibility is good for your shareholders. And anything that's
good for your shareholders, the CEO should be focused on. And the reason it's good for
your shareholder is you get a higher quality of employee who cares a lot more about what
they're doing and why they're working. And again, Michael--Michael sort of foresaw this
in a lot of his work. And the fact of the matter is that you must--you're going to have
a better financial and business outcome with employees that feel the way that you do and
that we at Google do. So the things that Google could do, the only thing I can come up with
is for us to set an example, to invest in the parts of the industry because we have
cash, we can invest to actually try to save the market and also help popularize it with
our own statistics. We're not in the construction of database business, that's what the Web
is about, but I think if we can--if we can provide the data, all the people can follow
as well. >> ASHBROOK: Thank you very much. We reach
the end of our time nearly here. It's been really interesting to see, to look back both
on Michael Hammer’s life. Is there any question I should? Oh, yes, please.
>> I'm sorry. Yes. But thanks again. Thank you for coming. My question is, it's clearer--it's
become clearer over the past six months that Microsoft is serious about this search space.
And they've made a deal with Yahoo. And I just wonder generally if you could comment
on how you view your competition and whether or not you view Microsoft as having some sort
of chance still in the source space. And, I guess, more importantly, does Steve Bomber
frighten you just a little bit? >> SCHMIDT: I'm not going to comment about
Steve, and I'm also not going to provide any advice to Microsoft. We at Google don't really
focus so much on our competitors. It's true we have studied what Microsoft is doing. But
a lesson from business is that you should focus on what you do best and do it better
than anybody else. In all of the companies--you asked earlier what people were worried about,
what I was worried about inside of Google, and I didn't really answer that question.
>> ASHBROOK: Yeah. >> SCHMIDT: What I really worry about at Google
is our own non-performance. I don't really worry about our competitors in Microsoft and
Yahoo because Google is in a wonderful position, that if we can continue to stick to our values
and be the innovator in the spaces, we can--we can stay ahead. And I think that's the best
way for us to answer that question. And I'm not going to talk about Steve from Microsoft?
>> ASHBROOK: Is there one more? >> Hi, there. I want to leave the last word
for Dr. Hammer which is one of the lessons I learned from him is that one of the mistakes
many companies make is that they fail to plan for extreme success. So they'll think about
everything that goes wrong. Everything that could go wrong, they have a plan A, they got
a B, a plan C, but they don't think about the plan A+. Google is an example of one of
the few companies who's had A+. Did you and Larry and Sergey sit around and think about
what happens if we actually achieve everything we’re setting out to achieve even more and
how do we prepare for a runaway success and scale for that?
>> ASHBROOK: Thank you. >> SCHMIDT: I think in our case, Larry and
Sergey were unusual founders, and that they started with Global Vision of what they were
trying to do. And so every decision that was made was made with a factor of 10 of scalability
or a factor 100 of capability. So rather than accepting a current generation of hardware,
you'd get the next generation, and constantly, constantly, constantly pushing for faster
and more scalable solutions. I do think that, as you go to Michael, his diagnosis was correct,
and I hope that Google can be an example of his prescription. And I would argue furthermore
that if we fail to do that, we are toast, that's how fundamental his observation is.
>> ASHBROOK: Final thoughts on this day, at this event, with this gathering?
>> SCHMIDT: I'm proud to be a member of this community. And I'm very, very happy that you
were able to--I know you just literally got off the radio and rushed over here. It's pretty
special to hear you in person and see you in person. But I'm really glad to have participated
in a pretty important event of my life. >> ASHBROOK: Well, in honor of Michael Hammer,
and with gratitude to you for being here today, our thanks to you, Eric Schmidt, and thank
you so much for joining us. Thanks to everyone. >> THURM-HAMMER: I also would like to take
a moment to thank our speakers; Eric Schmidt, Tom Ashbrook for an insightful and exciting
discourse, and of course, to thank all of you for coming and being here today to help
honor Michael Hammer's memory. Thank you.