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it's an honor to be with you Eric let's try doing a a whirlwind tour of your career and life so between the ages 10 and 20 what did you have as a formative intellectual experience that helped to make you into Eric Schmid I wanted to be
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an astronaut as all the boys of my age did because this was during the moonlanding period my father who you are the natural successor to I must say as an economist uh took us to Italy and I grew up in Italy as a boy and this is at a time when people didn't travel the way they do today and so it was quite exotic to grow up Italian and I think that really changed me so as an American I've always thought Americans were very very locally
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focused and even today in the world you all live in we're still too locally focused and not globally focused how did it influence you having a father who was a famous economist he wrote on balance of payments crises what did you draw from him did that have a role in using so much so much economics in Google well what's interesting is I asked my father if you're such a good Economist why are we not rich um and his answer is lost to
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history but give it time right but I have a lot of respect for economics because people really do study these sort of platforms that people build on and my personal success I think has largely be been because I'm interested in network economics and network platforms and pretty much everything you all build on is essentially a platform and platforms have unique structures and scales and they in fact follow economics laws now I
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learned through Google of all sources that in college you were at first a major in architecture what was your thinking behind that well I was a terrible architect uh but I turned out to be a pretty good engineer and this was at a time when computer science didn't exist and at Princeton what I walked in and I said look I think I'd rather do computers and they said they talked to me for a bit and then they put
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me in their advanced class and then that's sort of how it happened and so not whatever you think you're going to do you may do something very different and I just naturally liked computer science I graduated with a degree in double engineer electrical engineering but I did none of the double e classes so never asked me to repair anything now early on you were an intern at Bell labs and also Park which belonged to Xerox and I think of those
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two institutions as stemming from an earlier Glory years of American Science is it fair to think think of your career as in some sense you're the person who spans those two eras the Bell Labs Park era of kind of doing things and then the tech era of manipulating information and that your ability to bring expertise from those two areas together is what has made you a unique figure is that a fair assessment of how you fit into the
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picture it's very flattering I I would say I'm defined by luck and I think almost anyone who's successful has to start by saying they were lucky lucky of birth of having intellectual and intelligent uh family home life upbringing Global upbringing Etc I was lucky uh because when I I worked at Babs and I wrote a program called Lex which is still in use today which is a disturbing given and that was 40 years ago um and the people at the time you
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have this notion that somehow the tech industry is like it is now it was then back then it was just technical nerds right there was no business context there was no formation it was just really interesting stuff and B Labs of
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course came out of a monopoly agreement around AT&T and as part of the way the Monopoly was set up B Labs was funded to do interesting things about 90% of what Babs did was related to Signal processing and telefony remember I
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didn't take those classes in college uh but the 10% that did pure research and computer science ultimately had this enormous impact Xerox Park came out of a similar structure Xerox at the time was a structural Monopoly Al not a legal one because they were the only people building zra copers and so they had the ability to create these research centers and during this sort of golden age of research centers this is where a lot of
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American Science happened right because they had enough money universities didn't have it today you wouldn't create a separate lab on the hill today and we've been through this in my career now over 40 years I've tried to set up these research labs and they don't work when they're separate so in Google when we did the same thing what we did is we created integrated Labs that actually there's not much distinction between the
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research part part and the product development part indeed the researchers and the developers work as a team so you then moved on to Sun Micro Systems you worked with Scott mcney what's the most important thing you learned from him
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well Scott was a very strong leader and Scott was a person of great Charisma he's now retired and what I learned about there was I'll give you an example the first month I was in the company the products didn't work at all which is
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characteristic of most of the first year of the company um and it was because at the time we were doing breadboarding and we would do wires to the computers and so forth and nothing ever worked I know it's hard to imagine but this is what the state of the computers were and I remember one evening Scott gave this impassion speech that we would all stay overnight in order to get enough Hardware built so we could make the
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quarter and I was shocked that people actually did this and what I realized is that charismatic leaders can get people to do stuff that they would otherwise not rationally do right but because we were a team and because we believed in
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our V mission right at the time these were workstations and we were battling the man in the sense that we were battling the older generation of of computers somehow we were motivated to do this uh that motivation works and it
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works today right you've said that praise is underused and underappreciated as a management tool why is it you think other CEOs don't understand the importance of Praise so there's no simple formula for success and there's
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no simple formula for being a great leader it's a unique set of skills but it is well understood that if you yell at people enough they will quit and if you're nice enough to them they are less likely to quit and since slavery was
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outlawed many decades ago as it should have been um you're stuck with the problem that you actually need people to support you all of the great leaders I've worked with have not used enough praise although they've they've dragged along people because of their unique skills and so forth but it just seems to me that if you take a moment and you add the Preamble of thank you or or I appreciate it or I recognize it people's
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hearts sing and you get a lot more work out of them but do you think there's some quality correlated with being a strong leader a kind of disagreeableness that actually makes it harder for those individuals to see the value of Praise
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or it's just like a lose $20 bill sitting on the table and they ought to praise employees more and they would do better but most of the great great Founders are disagreeable in the sense that they disagree right but that
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doesn't mean that they need to be disagreeable with humans right so it it does not necessarily follow to me that because you're an iconic CL and because you are a very clear thinker that you're also uh rough with people I don't think that the two have to come in it I think to frankly let's use a stereotype and and stereotypes are always risky but what's the stereotype of the 20-some male founder right you know the stereotype
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person I'm talking about right this person needs more social skills this person needs more like teaching from their mother or something about how to behave in these kinds of situations and and inevitably they grow up and they they become softer they become more insightful and so forth so early intervention from mother would help you receive an offer to run Google why were you so skeptical about Google at first well I assumed that search wasn't
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very important and I search assumed the ads didn't work and I was so concerned about the ads that after I accepted the offer because it just seemed like it was interesting and you know a lot of luck comes from doing things which are interesting right and and and sort of creating your own luck I called the then sales executive whose name was Tim Armstrong who you all know well and I said Tim proved to me that these ads
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work and so they showed me a set of ads and they look pretty foolish to me and so I said well let's go find the finance person of which there was one and the accounting system was done on QuickBooks and I said prove to me that
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people are paying for these ads and they did we then did an ads conversion in the first year uh which is called project Dro where we basically took three different ads databases which were simple compared to today's databases and
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merged them into one and I was terrified absolutely terrified that the rues that we had because we had fixed pricing on our ads the people would discover that our ads were not worth anything so I organized what I called the cash restriction period where the only thing you could do if you wanted to spend money is you could only spend money at Friday at 10:00 a.m. and you had to come to me to justify it which very much
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shuts down spending so we get to this conversion we turn the thing over and of course we didn't bother to build any of the tools we had no tell no metrics we didn't know what was going on I'm going oh my God the company is
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bankrupt you know my first year I've done a terrible job what will the board think and you know I did my best to notify everybody we're going to go kaput and the auction produced a price that was three times higher than the previous
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prices very interesting so so much for the cash restriction period and the rest is history so if you were so skeptical of Google at first what was it that convinced SG and Larry to actually hire you why should they hire a skeptic about their core Enterprise well they had actually been interviewing for two years they took the money from Connor Perkins and um seoa and part of the condition was they had to bring in somebody to run
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the company and Larry and were okay with this as long as they like that person so they interviewed many people and what they would do is give them a test usually involved hanging out with them and going skiing with them uh something
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like that and they typically failed because they couldn't ski or they weren't relaxed enough I don't know but when we met I had had the same professors as they had I was just an older version of their experience and we
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clicked and so they didn't take me skiing we had a meet we had dinner a couple times I wrote a lengthy memo of everything we would do together and then it was obviously we should work together if you think of one of the big successes of Google is scaling so quickly in terms of personnel without losing quality what insights did you bring to bear on that process because obviously it worked right yeah let let me make a different
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statement you can systematize Innovation and you can systematize pretty much anything in a fast growing company all you have to do is have you know sort of a scale model of it and you can systematize strategy you can systematize hiring you can systemize product development so at various stages we improved each of those so in hiring what happened was we were hiring along and we hired basically Laren ser friends people from Stanford
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and they were super smart somewhat disorganized kinds of people they hired a bunch of managers and then they decided they didn't like the managers so they got rid of all the managers this was called the disorg and so we then had one manager managing 120 engineers and Larry and Sergey said well there's no problem here that means the managers cannot interfere with the engineers work right so that's kind of the engineering
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model of the time and eventually we brought in management that could handle this kind of management style uh but the recruit recruiting started off as informal but It ultimately became very very structured and we were famously focused on the school you went to and your GPA and not your experience and um this caused all sorts of consternation but it produced people who were both young in a sense of of inexperienced in in business It produced
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people that were aggressive and ignorant of what they were doing right so they didn't know what they were doing but they could make mistakes and our argument was that in a fast growing company we we need people who can pivot around whatever the new challenge is and we weren't convinced that the people who had experience since it was a new field that that experience would allow them to Pivot into the new problems so it was a
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reasonable business analysis we did all sorts of things my favorite example is that we would interview people to death so we interviewed this one gentleman 16 times and we couldn't decide so I picked a random number which was half and I
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said we should only we should have a Max of eight and if we can't decide after eight we've since done a statistic statistical analysis and the answer today is four to five interviews what did he do wrong in the 15th
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interview uh I I just think it's cruel you know you you can get and and companies can make mistakes right because you're growing quickly the systems that you put in place can produce outlying effects that are not okay whether they're illegal you know inappropriate behaviors on individuals or uh or or just the company's mechanisms so again this is the benefit of being a computer scientist you think of scale and mechanisms right so I
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thought a lot about those things now many published accounts of Google as you know they describe you as having been the adult in the room or the person who brought discipline to Google's processes but if you step out of your modest self for a moment and I'm trying to write a revisionist account of Google titled Eric Schmidt as innovator and you are going to describe for me in say two or three minutes what you did personally
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that was the most Innovative how you imposed your Innovative stamp on the company what would be your story of Eric Schmidt as inovator within Google and not just the adult in the room well I it's important to establish that Larry and Sergey were the technological and strategic Brilliant Minds here and my job was sort of keep everything organized and uh I had a I have I had and have a bunch of rules in my mind about how you should run things so an
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example is you have a a room full of people inevitably half the people talk half the people don't talk right and often the women are are more likely to be dominated by the men so again in general terms so in in terms of
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interruptions and so forth so what you want to do is you want to basically call on somebody who's not speaking a typical scenario call on the woman who hasn't said anything she will inevitably give an extraordinarily interesting and
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thoughtful answer and then get people to respond to her right and let her speak that kind of mechanism forces a leveling of the discussion and gets everybody on the same table often in companies uh if you see Executives that don't manage to build the uh things are happening so quickly they don't build common knowledge things go after rails the marketing people are doing one thing sales people are doing another another
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thing that that we did is we had this uh thing called 20% time which was a safety valve it would allow people to work on things that they thought were interesting and that was your idea no that was actually laran sur's idea that I promoted But Eric Schmidt as innovator what was the main Innovation you brought to Google uh it's hard to know is it true you had a plastic slide leaving your office uh yeah yes there are many such things
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that are true and how how did that fit into your vision of Google the plastic slide it's very important not to do anything culturally inappropriate when you're the adult so so in my case whatever was happening it was fine so one day there was this telephone booth that showed up and I said sitting in the hallway and I said who bought the telephone booth and everyone's looking around and I said I thought we put in place a proper
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procurement rule okay well it turns out there were a few extra credit cards in the company floating around and random things were showing up this is how I ran things but you it's important not to go to the person who bought the telephone booth and say you're fired the important thing to do is take their credit card away you've spent many years hiring very smart people in economics there's a debate about higher education how much
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of it is human capital acquisition how much of it is just signaling how smart you are if someone is coming out of a top school do you think of the main contribution of Harvard or MIT is it human capital or is it signaling it's both and again in our in our model of the world the the fact that top universities had sorted through these people was a pretty good piece of data for us to understand whether we should spend it was a good a good selection
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process um today we are not quite as snoody as we were back then uh we're much we've figured out better ways than even the ones I'm describing to bring in people so uh don't despair if you didn't go if you don't follow that exact
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profile but in the early days we were quite rigorous about this the other thing that happened was one day I was talking to Larry and I said this is a long time ago and I said Larry you know we're building glue people and glue
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people is my term for people who are very very nice who sit between two functions and you don't need them but Everyone likes them because they carry the person's bag and they write memos and so forth but you don't actually need them they make the system less efficient right if you will and he said well it's obvious I said like what he said we should just review all the offers and so we began a process of reviewing all the
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offers to make sure that we were achieving the kind of specialized skills that we thought and we did this for until the company was many thousands of people and you know the simple example is you get a big company and you get some CEO and I say well and they're complaining and I say well how many people will you hire this year they go well we're kind of flat that's not the question I asked a typical American company has a turnover of about 10%
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sometimes it's higher so if you have a 20,000 person company you're hiring 2,000 people plus or minus okay that's a lot of Leverage over a few years in terms of the hiring pool and yet the CEOs are unwilling to go in and do the surgery necessary to bring in the kind of talent to lead them to wherever they're going in the Next Generation Google saved a lot of money doing its own IPO in essence why don't more companies do this Spotify did a
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version but it's otherwise fairly rare well I'm not sure I agree with you that we saved a lot more money because had we negotiated on a traditional IPO with the same cost structure my guess is we would have paid the same fees um the reason that we did our IPO and I've I've written about this publicly is that we were in the auction business and we did more auctions than anyone else in the world by far it made no sense to us to
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do the traditional IPO which is not really an auction it's really a placement and it's hand negot negotiated so from our perspective the notion of a sort of a vicory auction or double blind auction where people bid made perfect
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sense um there's not evidence that it materially changed the outcome but it was our way of doing it and I I thought a lot about it and I think the answer is we would still do our own unique auction I think the reason people haven't other
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done it is it hasn't been sufficiently worth and other words the gain has not been sufficiently worth to those companies the the cost of being different now as you know Google Groups never took off and arguably Google failed with social networks maybe in some ways that was a blessing in disguise but given all of the talent you had assembled what was it that was missing in the Google cultural DNA that made it hard to succeed with social
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networks well first place I need to take responsibility for that failure um there were there were plenty of things that went on well but I think that in my CEO ship that was probably the one that that I missed the biggest and uh my answer is because we didn't use the we didn't use it right that uh we were of the age where we were more comfortable with telephones and email and that kind of stuff and this was emerging and there
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really was a slightly younger generation that was really driving it the stuff was invented uh well past when I was in college right and because we didn't collectively use it I suspect we didn't fully understand how to do it um I think we've remedied this for example today we have quite a powerful social network embedded inside of YouTube um but I think it would be fair to say that the rise of Facebook Etc right occurred on
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my watch given all the data that search companies and some of the other major tech companies have why aren't they bundled with hedge funds what you mean by bu bundled well literally in the same company you'd have a tech company and a
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hedge fund and there would be a Synergy because the hedge fund would use the data generated by the tech company for investment so the hedge fund would have that data first we don't see that in the market I'll give you a more generic
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answer which is from the moment I joined the company there were many people who said why don't you take this information and do something that will be that will Define its that will use it for marketing purposes and the answer is
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always the same which is that you need people's permission to do that and you can be sure you won't get that permission if you follow that reasoning so we decided that was pretty bright line and so if we were to if so for
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example if a tech company that were a consumer company were bundled with a hedge fund you would have to disclose that it was being used in that context and people would go crazy the other thing that's true and Google was good about this is we we took the position that it was important for us to disclose everything we were doing as well as we could because I'll give you a governance argument in a large company the the
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employees are independent citizens of human ity and if they see corruption in your leadership in other words if they see you doing things which are inconsistent with the values you will be criticized right now sometimes that criticism is incorrect and sometimes it's correct but the important point is that if you make a mistake you better disclose it pretty quickly for obvious reasons so if we were to do that kind of
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stuff which we are not going to do so we're clear we would have to disclose it it would have to get debated and then we would eventually say what a stupid idea why did we decide to do that in the first place you don't have an option you can't do these things in secret nor would you want to right now there are various devices you can speak to such as Alexa and it will play a song for you or buy something for you on Amazon just in
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your mental wish list something that doesn't exist now if there were a function where you could speak to a device and the device would perform that function for you what would it be what do you want that you can't get right now as a consumer um well if you look at the current generation of devices says what I really want is the Google Assistant to work at scale which means that I want an assistant that I can talk to that talks
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back that is like a human assistant and Brilliant right that knows everything and so as an economist um you might want to sort of talk to your assistant and ask them theoretical questions of Economics I can imagine lots of things I
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would like to ask today sitting there and saying to your Alexa or your Google home please turn off the lights strikes me as kind of a low-level question right there must be some much more sophisticated things we can do many
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people believe that we can get to the point where you can have incredibly intelligent assistants that are on these that are on these devices and that much of the interface will be verbal not text I look at 's generation and people you know I carry my computer around all day which I'm very happy about I used to have a computer that was immense now I have a tiny computer from your perspective a smartphone is is your computer and you
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would prefer to just talk to it and I think the technology is finally there there to be able to do that there have been many accomplishments that have surprised me I the kind the quality of image recognition and of voice recognition that we have today I thought would be unachievable in my lifetime those are phenomenal gains I want something that will answer the doorbell for me uh now in all of these discussions there's a segment in the
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middle called overrated versus underrated and I'll toss out some ideas or things and you tell me what you think of them if they're overrated or underrated of course feel free to pass on any of them our first one Antarctica well well so I went to Antarctica and it is underrated tell us why um there's something amazing about being on a continent you've not been on and um let's just say it was summer and the weather was a 50 knot Gale so it's a
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it's a rough place there are people who live there year round and they're very interesting to talk to blockchain overrated or underrated uh in the public format overrated in its technical use underrated and what do you think that technical use will prove to be what problem is it there to solve well today blockchain is blockchain is a great platform for Bitcoin and other currencies and it's a great uh platform for private uh banking banking
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transactions where people don't trust each other I think the most interesting stuff that's going on are the beginning of execution on top of um blockchain the most obvious example being the capability of ethereum and if ethereum can manage to figure out a way to do Global synchronization of that activity that's a pretty powerful platform and that'd be that's a really new invention the painter ceson um I prefer Picasso but it isn't
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I'm not sure if that's helpful how about late Picasso overrated or underrated many people dismiss it but it's priced much lower a lot of works in the late period not yet discovered um I i' I'd say I'm an earlier Picasso fan early Picasso fan effective altruism as a movement that people should give away their money using quite rational standards which can be derived by reason using economics and philosophy so so what happens here this is when
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economists think they actually understand how humans work so so and you've done a great deal of work on this question of of uh whether humans are rational or irrational So my answer is different you cannot take it with you as much as you want uh we had a we have a a subsidiary called Calico and they did a one of the things they work on is aging and they put up a chart of of how long people live and what they die from and it's
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it's stunningly sobering right so if you're if everyone here is alive today figure it out and make sure you use that opportunity to your best and serve the world with it with respect to economic reason and rationalism um most of the stuff that's not business is not very well managed so as a general rule broadly speaking seeking Healthcare uh education governments philanthropies they're not well-run compared to businesses and surely systems that
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include measurement criteria objectives Google uses something called okrs the ability to measure things and outcomes is now so much better give your money and give your time to groups that actually can have an impact right and that measurable impact people are constantly asking me to do something for them and the problem that I have is show me what the outcome is and it's an emotional pitch it's a marketing pitch
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what i' and and everybody including me is subject to marketing and I would say that's a marketing pitch tell me what you're going to accomplish tell me the probability and tell me how you're going to get there and then I'll participate Yellowstone Park overrated or underrated uh Yellowstone's fantastic I have uh I have a house in big in um in the Big Sky area it's fantastic wonderful your view on the Cuban economy is it going to take
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off or is it stuck with most of the other Caribbean economies plus the heritage of Communism and socialism I um I think I was the first person to meet the new president from America he's coming to New York in the next week so I'll see him again and um Cuba is a very poor country they need a lot of help we have managed to blockade them as they call it for 50 years and that's not a good thing so I'm I'm in favor of opening it up I think the
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economy will do well if America works with Cuba and at the moment we're going the wrong way you've been to North Korea most of us have not what is it you think you might understand about the place having been that maybe we don't um the scarest thing about North Korea is the ability to control everyone's behavior in a systematic way and as you all know the they have a system of both hierarchy they have a particular religion which is called I
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can't pronounce it but is a particular religious structure which includes stratification people in various levels and various incentives and disincentives to Pro to play in it and it's quite striking to be in a country where the kind of debate and bitching and complaining and so forth and so on does not seem to occur or if it occurs it's highly highly suppressed and that's that's the thing I took away from it now
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having said that uh I also took away the fact that North Korea is very poor U again one of the vestages of Communism and socialism and so forth is the economies aren't very good and the people really suffer and so I came away
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with great respect for the people and concern for the ability of such a strong-minded Central State to keep people in in such buckets now some very general questions if you could make One reform to American corporate governance
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what would it be longer time frames I think pretty much everybody agrees that the quarterly cycle is makes it very difficult for companies to to invest and do that's voluntary though right so companies could move away isn't really
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voluntary because uh remember systems run based on alignment of incentives and so if you if you create a situation where to get promoted when you get promoted you get a you get a rug in your office and if you're not promoted you
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don't have a rug then you've created a market for a rug right so my goal was always to not have a market for the rug I you know I don't want to spend people being I don't want people to be focused on the wrong incentives I want them to be focused on the right incentives which is to change the world have impact have scale deliver great products serve the customers so what I worry about is that in companies where the sh you have
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misalignment between shareholder interests hedge funds short-term interest short-term owners I'd rather have long-term shareholders uh in corporations I think it would produce better governance so the quality of the shareholders you think is the key feature here well you don't get to choose your shareholders unless you're a private company sure so but but my my point is that in a situation where the share holders can overthrow anything you
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can have all sorts of interventions um you might not be getting optimal long-term governments um most of the most of the companies I'm aware of are more focused on short-term earnings and paying their debts and so forth and so on than they are building for the long term and most of their owners won't reward them for taking risk even if risk is the right thing for them to take and that's why ultimately you get sort of
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sheepish leadership as opposed to aggressive leadership one of the great things about Google is because we have a two class system now three-class system um we feel somewhat insulated from that although I can tell you even then the
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share price to our employees matters we give out op options people pay a lot of attention to these things putting aside all partisan issues of this current day but do you think there are major long-standing systemic flaws in US
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politics that could be remedied by structural reform well people who have looked at this all see the Brilliance of of our founding fathers but also a rural bias in the structure so the fact of the matter is in the Senate as people as more and more people move to the cities and remember that when the country was founded it was a rural country as more and more a percentage of our population moves the cities the more there is a
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disconnect between where the people are and where the leadership is from and how the leadership makes its decision you see this every day and the way our government runs so the leaders should be more rural is what you're saying no think no I think that I think that the citizens should move to rurals or the there should be more power allotted to where the people are what is the chance in your view that the internet simply
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fragments globally over say the next 20 years so China has the great fir wall the European Union is going its own Direction with tech and internet regulation and it's mostly not their companies they're regulating what's the chance that say 1015 years we just have three or four separate internets we spent a lot of time worrying about this in one of my books we wrote quite a bit about this subject we called it vulcanization and then my friends from
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the Balkans says please don't please don't use that term so uh you use the right term which is the Splinter um I think the most likely scenario now is not a splintering but rather a bifurcation into a Chinese Le internet
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and a non-chinese Le internet presumably led by America and if you look in China um and I was just there the scale of the companies that are being built the services that are being built the wealth that is being created is phenomenal the
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Chinese internet is a greater percentage of the GDP of China which is a big number than the P than the same percentage in the United States which is also a big number so if you think of China as like oh yeah you're having good with the internet you're missing the point so globalization means that they get to play too and I think you're going to see fantastic leadership in products and services from China and there's a a
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real danger that along with those fantastic products and services comes a different leadership regime from the government which is censorship and controls and limits and so forth and if you look at the way the brri works which
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is their belt and Road initiative sort of 60-ish countries it's perfectly possible that those countries will begin to take on the infrastructure that China has as well with some loss of Freedom do you think the major Chinese tech
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companies have managerial strengths that the US tech compan companes do not are they in some ways beyond our Frontier the managers I've met in the tech companies feel exactly like Google did 10 years ago crazy growth this problem that problem with one more problem which is that because they have regulate tours they have to deal with they they also manage up right because the government can can say yes or no to many of the
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things that they're doing uh but the leadership is impressive they're smart you once said the following quote people are surprised to find out that an awful lot of people think they are idiots is this still true you go on Twitter many people think you're an idiot right people get offended are we getting better at this or worse at this I'm worried about so I try as a general rule I try to blame the internet on everything because everyone
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else does and I think some of this is true and some of it's false that was a joke by the way and you can't joke anymore in in because in the age of Twitter I'm worried that the um see if I can say it right I'm I'm worried that the the sum of the way social media works is organized around some human weaknesses not human strengths and so I'll give you an example there's evidence that if you're shown a fake video and you're told it's
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fake you can't eliminate that memory from your brain right it's a human thing right so if that's true then eventually some startup will figure out a way to exploit that without necessarily the best societal outcomes so what I worry about is that the um the structure that we have now on the internet allows an individual crazy person to be Amplified and uh there are many many examples of what occurred of this occurred in 2016 perhaps we'll see this
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again in our election year in 2018 but the important point is crazy people always existed but now we can sort them and hear them at at a level and an amplification especially if they serve someone else's business interest that's not good we've known for a long time that disinformation would be a good business for some businesses so I worry that the sum of people who have special interests which are governments foreign
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governments special interests of one kind or another lobbyists and so forth will be able to create an environment where people are uh not able to distinguish between legitimate individual speech and and sort of marketing speech in the the sense of stuff that's being sold to them or pedal to them by some foreign power it gets much worse with AI because you can imagine AI subtly learning what your preferences are and then learning how to
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manipulate you this again is a theoretical scenario and so I thought a lot about it and I'm strongly in favor of free speech for humans right makes sense right but I think we have to deal as a society with this question of how much of an amplifier do
37:24
you want to give to two people who are truly insane Silicon Valley has had a phenomenally successful team building culture and you see this in the productivity of the successful companies other people allege there's
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excessive ideological Conformity within some of the largest tech companies is the success at team building and the ideological Conformity two sides of the same coin and if you have one you get the other uh or do you think there's not excessive ideological Conformity or is ideological Conformity a separate problem that can just be peeled off and solved on its own without breaking down the team building culture you see what
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I'm asking I do I think it's important to remember that the tech culture is not mainstream culture um the mainstream tech people are always shocked that the rest of the country doesn't vote with them and the average Tech person as a gross
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generalization is socially liberal and fiscally conservative if you look at the quadrants of combinations that percentage is the smallest percentage of the demographic of the United States it's not the largest and and if you
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spend all day in Tech you assume that everyone else is like you and I suspect this is true in the other Gatherings as well there's this sort of um selection bias where you select your friends and you all agree with the same thing so I think there is a uniformity in some values along the lines that I just described with some reasonable variation among them uh I don't believe that that is necessarily a bad thing because
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ultimately teams have to work together they have to have a common belief right and they produce amazing outcomes the major tech companies have done very well of course but if we imagine some world in the future where some tech companies are at or near insolvency and if we think maybe they have a fiduciary responsibility to sell off the information they hold on people is that a regulatory problem we will need to address obviously a successful
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tech company is not going to do that they would wreck their franchise yeah so the so the problem that you're you're posing is we have a company that has a great deal of useful information that's also bankrupt right and that's that's not a scenario that's likely because if it has a great deal of useful information then that can be monetized in a good way in a way that's valuable and serves their customers interest so I
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think that's you know I think it's an oxymoron I think it just is not not not going to happen a way of rephrasing your question would be you have historic data in a company that's in big trouble should that be there should there be some regulation MH and I'm assuming that whoever would purchase that company would want to respect the value of that information which includes the restrictions on it so I think the scenario where somehow you have a
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bankrupt company you have historic data and somehow they just they just do something horrific I think it's just there's no economic reason why that would occur there are plans for Google to help with planning part of a smart
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city in part of Toronto what's the biggest obstacle toward that working well well we we have a subsidiary called sidewalk Labs which I've been helping out with and um when I say Google I'm meaning Google alphabet technically part
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of alphabet yeah and um this again came from the founders who were interested in rethinking about cities along with rethinking about a lot of other things which is why they're so special and we were able to hire Dan doov who had done a lot of work in New York to lead that what he's been doing is he first assembled all of the sort of new ideas about cities and everyone has lists of complaints about cities along mile long
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right the traffic is bad the air is bad I can't get a taxi Uber doesn't work here you know there's a long list of of people's complaints about cities they're not safe the educational system is strong enough so the idea is to come up with Urban settings where you can address a multiplicity of those another issue is housing costs are too high can we get the housing cost down and so we are doing a process of thinking through
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that working with the friendliest and most helpful if you will government regulator a body that you could imagine and it still take years takes years so it's uh the model we've chosen is a consensus building one and I think
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you'll see some interesting outcomes the most interesting thing about the city building is city building is extremely rare and even in in cities where they go they go bankrupt or they get in big trouble it's almost impossible to change
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the planning assumptions about a city because of the the sort of the way in which the human incentives and all the very special INR groups have locked themselves into a State and so we won't really see innovation in cities unless we're willing to exempt some some exempt from some rules or build completely new cities you are seeing new cities built in China and in Saudi Arabia and maybe in a few other countries and we'll see
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how that goes what kinds of Innovations do we need in cities or suburbs to lower housing costs in the Bay Area and what will happen to the tech cluster here if we don't have those Innovations well there's a the Bay Area is subject to
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historic no growth slow growth view which benefits the incumbents and hurts immigrants into the area right so I'm a land owner and so if I keep my land undeveloped then the price goes up because there's greater demand and there
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is a solution for this which is to build skyscrapers in um selected areas right that's how other cities have done it and for all sorts of reasons the Bay Area has not allowed that but if you look at New York the way New York has adapted itself over the over a 100 years is it built on very small parts parts parts of land High tall residential towers of one kind or another um so the bay area needs to solve its housing crisis because the
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Bay Area is not going to become less desirable and it's really discriminating and really hurting an awful lot of people skyscrapers are one there are other U there are other scenarios so for example um there are ways in which you
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build very dense low U low number of floors housing which are dense and relatively small in urban settings and there are planners to that effect the bay area needs to decide but the the current situation where any proposals
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get blocked right is not good because the growth is not going to slow down there had been a plan to scan as many of the world's books as possible and make them available online do you think that will ever happen and what's the main obstacle preventing it right now we made a good start at it and as you know if you use Google book search you'll see quite a few there and I think ultimately ultimately we had a lot of issues with
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the rights holders right because in many cases you'd have a 50-year-old book where we couldn't find the right holder and we had to follow the copyright law and so that's I think ul and I'm not suggesting copyright is wrong I'm just saying that's a that's a problem if you want to scan everything is it a solvable problem we had a number of solutions but we could not come to agreement with the book publisher industry and through
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legal process if you think about the dynamic future of vure capital and your role in Village Global how is it you try to stay in touch with Dynamic Trends in Venture Capital well venture capital is not about Venture Capital it's about entrepreneurs so if you're in my situation or anybody else like me you should have a pretty good map of where all the activity is and if you don't then you're not really going to be able
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to kind of have an opinion not really going to be able to see it so I work hard to hear the pitches so for example I'll sit through these life science pitches and I really don't have a feel for it I don't really understand the
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claims but I can at least draw the map right of where everybody is so my general advice is try to draw a map in technology of where the activity is I'll give you an example what's the thing that's going to explode in the next 10
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years in a good way explosion sensors sensors every conceivable kind of sensors why well you already have Android phones iPhones right you there's a huge number of sensors right there you already have very inexpensive cameras you have incredible connectivity now right there's every reason to think that every conceivable kind of sensor right in in a good way of sensor can become available what kind of businesses can
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you build on top of that what problems that the world has can you solve by by virtue of that what will these sensors do for us well if we go back to philanthropy um philanthropy you give your money away but but you have no idea if anything any of the stuff gets used right but now you can actually figure out by putting sensors on things whether they actually end up in the right place simple stuff like that RFID tagging alone meant an
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awful lot of misplaced and stolen activities they got to the right place so my point is um as a technological matter the world if you think about 20 or 30 years from now you can be sure that the are that we and hopefully World
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alive but more importantly our children and our grand children will be facing lots of governance problems right you know the uh religious conflicts and you know whether the Senate and the house should do a or b and whether people are
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happy with the president and on and on and on and the Chinese and so forth so what will be different is it will have incredible information on wired and wireless networks sensors and databases and tools which will help us make decisions now we're all just guessing at this question but what do you think will be the expect Ed lifespan of an upper middle class American child born today well there are numbers that have been
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published in that and the general the General accepted number is about 90 years old and the generally accepted number is it goes up on the order of one year every few years so it's reasonable to expect that a child born in 2030 or
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2040 could have a lifespan of about a 100 human lifespans on average have been increasing uh for many many reasons starting with um you know antibiotics better water and so forth and now there's an explosion in uh later of Life
47:33
Medical Care around cancer and he heart and so forth you talking to my doctor and he said well it used to be people people just sort of died right and now you have to sort of work with them so you better for example expect to have a daily or or weekly physical therapy thing to keep your muscles going um you know take your quarter ASP and all that kind of stuff and is there a cap or an Asm toote on that process or we just
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keep on going so a lot of people have looked at this and many people think that uh God's design for us did have kind of an asot and that we're sort of pumping up against it and that we're going to keep finding ways to extend it
48:09
and nature will keep finding ways of making it hard to extend it so even with some of the Fantastic cancer improvements there's evidence that other Decay processes begin so um there are people who think that remember these are
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averages but remember that even if we could make the average lifespan 5 or 10 years longer across the global CER that's a huge increase in the number of people and their productivity why has there been so much middle class wage stagnation in the United States well I'm going to ask Ty Cohen this question well I would say there's been a technological slowdown but I'm not sure you're allowed that answer a technological slowdown in areas other
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than Tech the service sector no that you mean a non- tech slowdown other than Tech most sectors have been fairly stagnant in my view okay and why is that due we've run out of new ways to use fossil fuels and Powerful machines so
49:02
we're hitting an ASM tote in many other sectors Tech is doing wonderfully well but it's not a big enough sector to boost say GDP growth rates up to 3% uh people who export by way isn't our GDP growth 3% at the moment at the moment
49:16
but some of that's catch up year over year it's 2.7 but if you think we have 2.7 I'll take 2.7 if we have the perfect labor market performance and a big fiscal stimulus and the best we're doing is 2.7 when say in the 1980s we had 4% maybe that's underwhelming well first place the 4% could have been demographic rather than you know our current demographic not that may be a reason why we've had wage stagnation also yeah so
49:38
so so a couple of things first I think the 6070s and 80s had greater growth on average largely because of the demographic boom of of World War II and the the baby boom generation we Face the inverse going forward so I'm really glad
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to look at an audience of people who will be working very hard to fund my retirement and there are so many people like me that you have to work even harder right and that drives a lot of the um a lot of Economics around
50:05
productivity it's why for example AI systems will make you more productive and not not cause you to lose your jobs that's a way to understand that now so with respect to the middle class W wages I would argue that in many cases there missed opportunities to apply technology to these industries so an example would be that if if we use technology to make cars faster cheaper more you know more efficient so forth and so on they would
50:28
cost less or at least be easier to easier to manufacture so I'm all about applying technology to non-technology sectors to improve their prod productivity I'm convinced that a small number of software people apply to each of these industries looking at how they operate redesigning the way their business processes work will make a huge difference indeed Google has a set of businesses that are trying to do that across a set of Industries to close I
50:53
have a few questions about what I call the Eric Schmidt production function that is how you've been productive first very simple what would you describe as your greatest talent in business well I'm a a systemic thinker and I like people and I like to think about how people behave so the key thing in in leadership is organizing how do you get people to to do things now my father taught me that the best way to get
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people to do stuff is to have it be their idea so if you can find a way that your idea is also their idea then you can go back to working on the people whose IDE you don't agree with and so the ideal manager doesn't ever have to do anything because all the people who they work with are self-functioning they're self-organizing it's so obvious what they should do and they love it so much they never have any problem they
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solve all their problems of course that's not how it really works but if you can't motivate people around that then you're not really giving them an opportunity to be successful what's your media diet and how do you consume it um
51:49
well for a long time I read real newspapers nowadays I use the various news aggregators to read the news on my various phones um which I view as suboptimal but that's sort of My reality as a person who moves a lot around a lot
52:04
I think the reality is that first you should read multiple stuff and second uh I'm careful now to look at the source of information because it's so easy for people to mislead you and look like they're legit but in fact they're not and is there an underrated media source that you would direct our attention to the economist The Economist now named after you and your father Wilson Schmidt let's say I'm a young person and
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I'm coming up in the tech world and I say to you I'd like to be the next Eric Schmidt and they cannot obviously copy your career or follow in exactly the same footsteps but they want to be a next Generation analog of what you've
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done what advice would you give to that person well as I it goes back to the question of luck so I was lucky because I had good taste in friends and they help me out so the most is that skill and not luck okay I'll let you define
53:02
that so but but basically the best things in your life will come from the people that you hang out with and I mean the people that you love to work with and the people with whom you have passionate you know talks all night about and that kind of stuff and if you can find those people sign yourself up on their ship right that has worked incredibly well for me U I had the benefit of being early in the computer industry so that's like super luck but
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my but my real opportunity is I look at each of these stages I was picked early I work with smart people people took a risk on me uh and I learned and I want to make sure that that you all hear that so today when as entrepreneurs remember that the quality of the people that you work with the people you hire people on your board and so forth will determine an awful lot of your outcome in the media there's this fascination with
53:52
Founders and how brilliant they are but corporate success is a team sport right and as much as we love and identify our Founders it is the people who work for them every day who work the 16 hours a day and they did so because they love the founders they love the vision of the company and they cared a great deal about that and when they went home to see their families exhausted they said I was proud to go to work and I was proud
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to do this right those are the people you want to associate with because those are the people that will change the world Eric Schmidt thank you very much thank you very much thanks for listening to conversations with Tyler you can subscribe to the podcast in iTunes Stitcher or your favorite podcast app and if you like this podcast please consider rating it on iTunes and leaving a review this helps other people find the [Music] show