Google’s Eric Schmidt Talks To Charlie Rose

Eric said there were only 1billion users on the web – about 1/6th of the global market. There were 1.6 m wireless devices and 3-400 million of these were designed to be able to use the web. The market was “way under-penetrated” They knew that the demand was there and that there will be lots of different devices. Google will help deliver content to these devices.

Google’s Success

Charlie asked what the forces at work behind the Google success.

There is a tremendous hunger for innovation. Traditionally systems like federal government have been supported innovation through research funding. Today, graduates from grad school these days have amazing vision and the capital in VC let’s people build companies very quickly. One or two people at Stanford can change the world.

Charlie wondered if that was what they said about Netscape.

“Netscape changed the world!” Eric responded. They showed a new way of computing. Netscape provided access to lot of information out there on the web.

Charlie asked how all this information has changed us?

Eric thought that today are in a state of partial attention – they’re on the web, watching TV, on the phone – and somehow they manage to do it all. Eric even admitted that he had to get people to turn off their laptops when they come to a meeting in order to get their attention.

Charlie asked what would be the downside to the future?

Stress – there’s so much information, people want to tune out. Time competition – more things to do each day.

Innovation At Google

Charlie asked about innovation at Google.

Eric described how each employee spends 20% of their time on what they want to do. If Google likes an idea someone comes up with, that person stops their current job and go off and explore it.

“People work very hard at their regular jobs, so this isn’t a problem. This 20% is a source of our ideas.” Charlie questioned what proportion of their ideas come from the 20%. “Virtually all of them,” Eric conceded.

"If it works that well, why not 50%?" Charlie asked.

Eric suggested that maybe he should run that as an experiment although he was worried about the possible anarchy. The ideas have to fit within the objectives of Google:

•    70% search and advertising
•    20% near to that
•    10% other

Charlie asked about ‘being competitive’.

Eric said it was very difficult with technology. With Google, you were one search away from losing a customer to a competitor. “We spend every day worrying about that.” He suggested that there were many tech companies that had taken their eye off the ball.

Leadership

Charlie asked how the business leaders of today ticked.

“There’s no off-switch. When they’re at home, they still going. They are absolutely driven,” Eric replied. “Smarter?” Charlie asked. They are very smart, Eric replied. They may have high IQs but they also have a brain that constructs new ideas. They see new ideas before others to do.

Charlie asked why people like Gates and Jobs had not finished their education. 

“They were bored”, came the reply.

Inside Google Search

Charlie asked how the Google Search worked.

Google uses a system called Page Rank. The name Page Rank comes from founder Larry’s last name. Google decided to base their search technology on how other people rate you. They built an algorithm to provide the search. Algortihms are very important at Google. Even the "spell checker" for search queries is based on an algorithm – no dictionary is used.

Charlie asked why people feared Google.

Some of it is competitive. They did worry about some of the content – the bad things. "We try very hard to be true to our principals," Eric siad and added that they didn’t use our business to alter our rankings.

At Google’s core – they solve people’s problems.

Google Advertising

Charlie wanted to know how big the market was.

The dynamic auction behind the advertising powered Google’s growth, Eric said. Larry had said “there’s value in ads because they’re useful” – to help people find the right information. Currently they made $6-9billion revenue from advertising. That was relatively small compared with the global advertising market that was $500 to $700 billion per year.

Eric told the audience that technology in advertising is not very sophisticated. The ads on TV are a bit of a waste. If you open a newspaper it’s full of ads that are not accurately targeted. “We can do this better,” Eric suggested.

Eric also added that Google’s clients tended to be head of sales rather than marketing – and that stopped them being affected by changes in Madison Avenue spend. "The market has room to grow. We’re in a space so large that there’s room for all of us – and new companies too."

Charlie mentioned the recent move into radio.

Eric said that they were taking their system to radio advertising. And then they would apply that to TV.

Google’s Future

Charlie asked about Google’s video service.

Eric joked that people can now watch Charlie’s different suits on through Video Google. Eric said that commuters are watching shows on their mobile devices. Money is being made from clips. And it’s going to accelerate.

Charlie asked where would Google be in the next 10 years.

Eric said that was very hard to predict. He said that a lot of people were finding each other over the web and creating communities. “We will help them make money,” Eric said. The next generation of content will come from the stuff that people are doing out there.

These notes do not accurately reflect the order of the verbatim of the show. Conversations about similar subjects have been arranged together for reporting purposes.