[clapping]>>SCHMIDT: Audrey represents the very best
of Pittsburgh. The energy, the enthusiasm, the sense of what
you can be when everything is so focused on excellence.
And I’m here because I like Pittsburgh. I have a history with Pittsburgh because much
of what I do today in computer science was invented here many years ago.
And I’ve always thought that as an industrial model, and as a place of innovation, it’s
very hard to find other really good choices. It’s some combination of how the government
here works, the universities work, and the notion of the pragmatism born of Westinghouse
and Mellon and all of the great people from years ago are all imbued deeply in the culture.
And what I wanted to do today was to talk a little bit about sort of the preamble to
the G-20 and a little bit about technology and what’s going to happen.
And then have your questions and comments. You know as…to put it in perspective if
everybody shows up tomorrow and the meetings are Thursday and Friday and then everybody
leaves. And there’s…a lot of concerns about growth
globally. There’s…a lot of concerns about many, many
things. We are all familiar with them.
You’ve all seen all the stories. And these are hard jobs.
I don’t envy the leaders, their tasks. They have to sort all of this out in an even
more difficult political climate, shaky markets, lots of uncertainty and so forth.
But I want to bring some light to this. I want to bring some–a more realistic assessment
as to where we are and also give you a sense of what the future looks like.
There is a quote from Alvin Toffler who…some of you may remember who he is… he described
the great growing engine of change, technology, as the impact on economic growth.
02:05 And I think we often think that somehow moving money around is economic growth.
Or buying and selling established companies that are growing for ever higher prices…well
that’s growth, isn’t it? Because we added the value that they did.
Growth occurs because of private sector investment and innovation, building new products and
services that people care about. That’s how growth happens.
It doesn’t happen because of more government spending or more inflation of the currency
or whatever. Real growth…sustainable growth comes from
the investment in businesses and services that we all take advantage of.
And so part of that is a fundamental focus on technology.
And the kind of cutting edge technology that makes you uncomfortable because it is so disruptive.
Because it changes things. It causes current models to be changed, right?
They fall by the wayside and a new model, a more interesting, more direct model emerges.
And it seems to me that this is all happening so quickly that we haven’t really quite figured
out how it’s changing our society, and I want to talk about that as well.
As…so the venue of Pittsburgh, seems to me, particularly appropriate.
When Pittsburgh was originally chosen everybody said, “Oh, why would you choose Pittsburgh?”
Pittsburgh is a great story, right? The whole notion of going from sort of a steel
city to a producer of high-tech alloys, you know titanium.
My dentist, who I visited yesterday, explained to me that dentists invented titanium because
it’s the one thing that your bones grow around and everybody loves it, and they have been
doing this for 50 years. Titanium is this incredibly important thing.
It didn’t exist before. The healthcare system that you all have here
with UPMC, now the number 1 employer, the unemployment rate being much lower than the
national averages especially given the sort of tough economic travails that you have been
through over the last 10 years. 04:03 So it seems to me that the nice thing
about this is you got a situation where the rising powers…the sort of G-20 inclusive
are now all here to see a success model for a democracy, which blends both the old and
the new in a particularly clever way. So there are lots of laws that people talk
about when they talk about technology, and I would like to introduce a new one which
I am going to call, “Gutenberg’s Law” which I’ll make up roughly like this.
History has demonstrated that there is a direct correlation between the amount of information
available to the average citizen and economic growth and the progress of that citizen’s
country. And almost everything we deal with in the
negative or positive context has been because of time compression because of all of this
information. And the more information that’s available
the more smart people can act on it. And I’m one of these people who believes that
there are smart people everywhere. Here, there, in other countries, in other
races, in other religions and so forth they’re all there too.
And so in the global competitive model it’s not so much that the fact that you have an
industrial policy…it’s that you have an openness about information, and that you use
the information tools. And the good news is that the statistics and
so forth all favor what we’re doing so well…so very much.
If you look at the printing press, for example, the impact that it had on completely changing
the understanding of…what was it at the time a very small number of people who were
even literate. The telegraph…moving the original sort of
Twitter model of the world. Fast moving news…you know spreading wildfire,
stocks going up and down, crises and so forth and so on.
And telephones and the gift of e-mail having us always be in touch, even if we don’t really
want to be. But all of these are basically communications,
and if you look what’s happened it is that the cycles of society have accelerated.
The ups and downs. All because of the transparency and the connectedness
of all of us. It used to be that your regional model was
local, now it’s global. We now respond to things in a global context
that we would have never even known about 10 or 20 years ago because of the rise of
all of this. There’s a lot of evidence that this is true.
There’s a study that the ICT sector, that’s essentially computers and telephony, represents
in Europe 5% of European GDP, but it drove 40% of overall growth…sorry, 25% of overall
growth and 40% of increase in productivity. So not only is this happening, but the jobs
that are being created are accelerants. They’re high paying.
They have a lot of leverage. If you have a choice of a job to fund if you’re
a government official you would do one of these.
In another World Bank study of 10 percentage points of increase in high speed Internet
access, economic growth was 1.3 percentage points.
And for countries where economic growth is negative or 1 or 2% that’s a huge number.
So this stuff works. And it works because of globalization: globalization
of information, globalization of markets. Now this is all happening in the backdrop
of what the physicists are doing, and the physicists continue to make our networks and
our computers that much faster. Japan leads in the speed of broadband.
The average Japanese city dweller has 160 megabyte connection, which is inconceivable
to us here. The new DOCSIS 3 standard here in the U.S.
is capable of generating 50 megabytes per second, so that’s pretty good.
That manages to bring us to the 13th in the world in terms of broadband penetration, not
so good for America, the leader in technology. 07:45 But this is a wonderful revolution.
Because everybody is benefiting, even Africa, who are putting in new cables and so forth.
And the data that is being generated as a result of everybody being connected is overwhelming.
An interesting number here is that…this is an IDC number…487 exabytes of digital
information…and I will tell you what that is in a sec…was created in 2008.That’s double
from 2007. Today we’re generating about one zetabyte.
A zetabyte is 10 to the 21st power of bytes, which is a very, very large number.
To put this in context, we estimate that the data generated by all of humanity from the
inception of humanity to 2003 was about 5 exabytes.
So we have generated the entire world’s humanity of information between our birth as humans
in 2003, in the last 2 days. This is an explosion.
And it’s an explosion with very, very far reaching implications for all of us.
And you all know this. Everybody here has a mobile phone with you?
And you probably won’t get it to…more than a few inches from you, right?
And you never let anyone use it, unless you knew where it was, right?
When did this happen to us? When did we become so enslaved to our mobile
phones? In the last few years, huh?
There were 77 million smart phones sold last year.
That number globally will eventually be in the hundreds of millions of…these are sophisticated
phones. There’s more than 3 billion mobile phones
of any kind. 10 years from now when my grandson is 14,
it will be possible that the systems will be at least 100 times more powerful.
It will be possible to have all music ever recorded on the equivalent of an iPod.
In 15 years, it will be possible to have 85 years of video on your iPod.
Which means you’ll die before you watch it all [audience laughing] so you have the ultimate
sort of frustration device, right? So…and this is…another very…speaking
of young people, a very alarming statistic. The study that I read indicated that the average
teenager is now going to send 10,000 text messages per year.
Now that’s an awful lot of time texting, trust me.
And I guess now I sound like my parents who were worried that I was watching too much
television. 10:12 The scale of Facebook and social networks
is phenomenal to be connected, and it gives you this appearance of being connected to
everyone. Historically, you know you knew 100 or 200
people in your tribe, and now you feel like you’re a global citizen.
So imagine what you could do with that. You can now sit there with your mobile phones,
and you could vote real-time for the performance that you’re seeing.
At Woodstock of today, you’d have instantaneous feedback as to whether you should get that
guy off the stage or not. And the community crowd sourcing would be
used to determine an awful lot of things of what would happen next, so what happens as
a result is we have these resources that can do amazing things.
You can find interesting errors, and my favorite current example is that in 1973 the Navy in
San Diego decided to build a building. And they built this building and is just happens
to be the shape of a Nazi swastika. Now this was…nobody noticed this for 25
years. Because you know you can’t really see the
building from above it. And Google Earth comes off and everybody says,
“Oh my God!” Right?
We have built a building in the shape of this horrendous and terrible symbol.
So they then spend a whole bunch of money to change the shape of the building from the
satellites. And my reaction, by the way, was like, “Didn’t
they notice this when they were doing the plans in 1973?”
[audience laughing] But that’s a story for another day.
People were using Google Earth, and they were looking, and they discovered a part of a jungle
in Southern Africa that had never actually been visited.
And they sent in an investigation, and the whole team went in, and they found all sorts
of animals and plants that no one had ever heard of.
11:59 This is unbelievable in the last year. It gives you a sense of how big the world
is and how powerful it is. And in the same case, what’s happening is
all of these people are spending all of their time contributing stuff to each other.
And so the information that you get is now more likely to be from your friend, or person
to person, user to user. We finally have now seen the breakdown of
the traditional hierarchy of single individual to broadcast.
The majority of information that you get every day, the way you hear and the heuristics and
the judgment that you make are from what your friends generate or what your peers recommend.
And that’s another permanent and important change in how our society works.
So imagine a situation now where you collect all that information.
I mean, I would like to see the equivalent of Wikipedia for the doctors.
Who are the doctors? Instead of sort of saying, “Oh well I’ve seen
5 patients that have the same thing” they have a resource which codifies all of medical
knowledge in one place collaboratively which they can then say, “These are the sum of all
the cases, and this is what standard of care is.”
You can do all sorts of crowd sourcing for real-time information.
Weather, pollution, crowds, this flash mob, so forth and so on.
And you can do truly personal search. Remember what I read yesterday.
Remember what I know. Don’t tell me things I already know.
Tell me something I don’t know. And those technologies are available today.
You can walk down…when you walk down the street with your mobile phone…because the
mobile phone, remember, isn’t really a phone. It’s a GPS, a video camera, a still camera,
a browsing device, and you can talk on it too.
Walk down the street. It can tell you everything that happened on
the street if you love the history of where you are.
It can suggest where you go. It can predict where you will be.
So this means a lot of changes for the way government works, and I want to explore that
a little bit. If you look at the Obama campaign, and I was
a little bit involved in that, they organized both a powerful website and a powerful field
marketing program. And that model, right, of field organization
as well as a powerful website, is probably the new model going forward.
25% of the people who pulled a lever for Obama on election day had already connected to the
campaign. Pretty interesting.
So now you’ve got the same ability to connect to things real-time.
14:27 So, for example, car auctions. You really can find out the price of a car.
eBay is now, for example, carrying car manufacturers. You can find the true market price, as opposed
to that negotiated price, with a car salesman that you don’t really like anyway.
You can do all sorts of price comparisons. There’s an application for Android, which
is a phone that we offer. It’s available for many people now, where
you can take a picture of a barcode while you’re in the store and tell you if it’s cheaper
online. Pretty interesting.
A real consumer benefit. Not such a good thing for the shopkeeper.
And can you imagine a situation where the government, and the people who write reports
for the government, we could actually figure out if anyone reads these reports.
You know how you go, and you get…I produced this report, and I produced this survey.
And my thought is–like–nobody reads this stuff.
Well, now we can find out what they actually read.
Did anyone read all that research you did? And if the answer is no, maybe you should
get a different line of work. All of a sudden this notion of real-time tracking
becomes useful for a lot of things that we take for granted.
You can actually figure out who influenced the outcome now with real data, as opposed
to all of the heuristics that we always talk about.
And we’re all convinced of things without any facts whatsoever.
And imagine a situation where the government itself changed.
And what it did is instead of, for example, announcing the stimulus package, which in
general I was in favor of over a 2-year period, the government said, “We’re going to do this
for 3 months, we’re going to measure the outcome and we’re going to iterate. And then we’re
going to iterate again. And then we’re going to iterate again as we see what works.”
Because we can do real-time data now of the economy, of what people are doing, of what
people are thinking and of what people are reading.
We really can know questions that we have to estimate from our friends.
And we can do it scientifically. So when you instrument the world…another
example, health care. Contentious debates over and over again.
We should know the answers to these questions. If we got all the computers linked together
in such a way that we knew the aggregate information, not the personal details, but the aggregate
information of what people were doing, we could accurately estimate every one of these
scenarios. 16:47 Every one of the 535 modifications of
the bill, we can do them instantaneously. Or more properly, the press and the analysts
can do–we get a more accurate idea of what’s really going to happen with these very, very
important political and policy decisions. Had we done the same thing we would’ve known
this horrendous financial crisis. We would have seen it coming.
The computers knew that they were overextended. We didn’t ask them.
And in some cases these computers knew one thing, and these computers knew another, and
the 2 computers weren’t connected. Had we been transparent and open we could
have avoided the horrendous pain that the globe has gone through, or at least some of
it. And let me tell you it has been painful for
an awful lot of people. It was a disservice to them, to put them through,
when we could have done it differently. So if you take the trends, the trends of instantaneous
information, the explosion of information, personal information in this real-time nature,
it says a lot of implications for business as well.
Hal Varian is an economist at Google, our chief economist, in fact.
He calls this time a period of 17:51 calm and editorial innovation.
It’s not any one thing that did it. It’s the system of innovation, and it’s innovation
here, here, here, here, here, here, all working together and going as fast as they probably
can. 18:07 The example that he uses, which I like,
is that this is analogous to what happened to standardizing of mechanical parts in the
19th century. When you standardize mechanical parts all
of a sudden you hit interchange. You can repair things, and things like that.
And it wasn’t a single company that standardized on mechanical parts, it just sort of happened
because it made good sense to the smart people who were alive at the time.
Standardized electronic parts in the 20th century–the same thing,
We’re doing the same thing with standardized Internet components and that standardization
has now made it possible. So what happens is that this lowers the data
18:39 bearished entry enormously for innovation. This is another point that is completely missed
in the policy debate. Now Audrey, who I said I view as sort of a
national resource, articulates very clearly something very fundamental.
When you want to see innovation, you’ll see it in these creative communities.
Typically near coffee shops. Little companies that have banded together.
Small groups of people who have a mission. And they try something, and they try something,
and they try something. Pittsburgh is a good example of this, but
there are many other places in the United States that have this characteristic:
parts of Seattle, parts of San Francisco,
parts of New York. parts of Cambridge and Boston and so forth.
You know the list. But my point is that if you want to look for
the face of innovation, don’t look for a tower with the sign “innovation” on it.
Look instead for this messy, creative, unstructured, interesting, full of creative people kind
of a model because that’s how innovation really occurs.
And that’s where the innovative people will ultimately go.
So what happens is that this creates the opportunity to do businesses…which I’m going to call
micromulti nationals…these are 10 people who see themselves serving a global audience.
This was not possible until this generation of Internet technology.
Because you literally couldn’t reach them, you couldn’t advertise, you couldn’t get the
points out, you couldn’t make it happen. And these are the businesses that are going
to create the jobs that will get us to where we need to go.
And what’s happening, of course, is that as we lower the entry price, there’re also advertising
models…Google, of course has pioneered this…where a lot of money is going to these small companies,
which allows them to get to the next stage and see how big they can really get.
And another phenomenon has been the rise of the cloud.
The technology people call this cloud computing. For those of you who don’t know what it means
it means that the computers are managed by the professionals…and your computer you
just turn it on and it uses the network and it gets everything that it needs.
And instead of spending all your time managing your personal computer and wondering, “Did
I backup that thing?” or something, it’s all taken for you.
20:59 So the opportunity that we all have is to let people manage these data centers…Google
was in this business, as are many others…and you can do what you do best… which is to
use computers to solve interesting information and entertainment problems.
So this rise of the cloud, and the opportunity, is actually a large business in and of itself
because companies are now moving one after the other, after the other from the old model,
the PC centric-mainframe centric model, to this new cloud computing model where everything
is managed by others, and they again spend their time working on business processes and
things like that. The potential for cost savings, by the way,
is a factor of 10 and so forth and so on. People really care a lot about that.
And what’s interesting about this phenomena as a result, is that…if you go back to the
multinationals…is that size isn’t such a big barrier to entry before.
An interesting statistic, that we have more than 452,000 bloggers in the United States
under…this is a Wall Street Journal count, I suspect it’s even low…and this is a…these
are the number of people who say that blogging is their primary source of revenue.
That’s pretty amazing. What’s interesting is that that’s even more
than the number of lawyers we have in our country.
So think about it. And of course one is growing much faster than
the other. So this is a permanent shift in the economics
of our world around us. It means an awful lot of people are dependent
upon these systems, and we’re going to hear their voices, and I think that is absolutely
wonderful. Now this of course is not unique just to the
U.S., I’ve given U.S. examples, but you know in India, for example, the mobile operator
is using mobile phones and having farmers to remotely monitor and switch on their irrigation
pump sets, right, so they can water and so forth.
And you sit there and you say, “Oh, that’s no big deal.”
For them, it’s life or death. If they don’t get the water, they don’t get
their farming, they don’t get their farming, they literally die because there is no…so
it’s very, very real. You go on, and on, and on, and I’ve got example
after example. So what happens when this is done?
So remember here is the model. Mobile phones everywhere, and data everywhere,
that’s huge scalability. What does the world look like?
23:12 Well I assure you something, which will seem obvious.
Humans will continue to do what humans do best, which is to be human.
All the things that we know, creative, intuitive, paradoxical way that we are, and you know
what I’m talking about. What will computers be good at?
They’ll be good at remembering everything. To recognize everyone, to know where everyone
is, and to predict the short-term future and to continue to beat us at chess, right?
Think about it. All those things involving rote memorization,
calculation and so forth, we’re not very good at.
And even the best professionals forget those, but computers never forget.
And what happens when this happens, when all of this gets put together, is that our world
becomes more ambiguous that the world becomes more shades of gray.
And the reason is that you can now finally suck in all the perspective.
It won’t be a simple good guy-bad guy, us versus them.
And that the kind of leaders, and leaders I think we have in this room that will do
very, very well, are the ones that flourish in ambiguity.
We’re not so sure we think we did this, we thought this and so forth.
Those are uniquely human characteristics and the great leaders of the future will handle
them in particularly good ways. And what happens at the same time, and I don’t
want to be so completely Pollyanna here, is that it gets harder because of sophisticated
techniques to know exactly what the truth is…now Google is in the business of trying
to produce the very best search results, but we don’t claim to know what the truth is.
24:55 But legitimate truth groups, ones that are actually trying to get a real message
out, will have to battle with well-funded, targeted, literally people trying to deceive.
Because it will be in their economic incentive to do…this is known as spin, by the way…it’s
not something that we’re inventing any time here; it’s been around for 100 years.
But in these new networks it will be possible to spread disinformation as quickly as to
spread information, and if you’re a targeted attacker, you might find that is particularly
beneficial to whatever your cause is. And what’s interesting is that it will be
possible to do clever forgeries and smart people will figure how to trick people with
these clever forgeries, and all of us will have to learn how to deal with that, how to
detect it, and hopefully how to not be influenced by them.
And what’s interesting is that in a world of essentially perfect copies, people will
be quite happy with a copy of an original because the digital copies will be so good.
So that’s a lot of implications for how the … world work.
And I’d love to tell you that in this new world, because it’s so brilliant, we have
all these smart computers and all these smart people, and we’re all so incredibly educated
and wonderful, that there will be fewer bubbles. But in fact, there will be more bubbles.
The bubbles will be higher and faster and up and down…because it is true of all markets.
Markets are not perfectly rationally stable. But they will be up and down, and up and down,
and up and down, and we’ll all have to get used to that.
And we’ll all have to figure out how we want to get through life with it.
I’m not saying it’s good. But I’m saying it’s going to be true.
So how…in this situation how could you, how could we react to this?
How could we…how do we feel about it? I’ll tell you that the only answer, I’ve been
able to come up with…we at Google have been able to come with…is about transparency.
That in the situation that I’m talking about open government, open activities, open standards,
open networks are really the only way. Any time you start to partition, or withhold
things or so forth, you get yourself into trouble…because information-hiding is ultimately
a bad thing in these sorts of open networks. There are lots and lots of examples of this,
the growth of the Internet itself, the rise of Linux, the rise of Wi-Fi.
All the things that we take for granted today really came out of this fundamental principal
which has been around for a long time. The Internet is a very, very good example
of this. As you know, the Internet was developed by
DARPA originally for university components and then eventually commercialized in a very
clever way in 1991. Another thing that people should do is they
should stop consuming energy and start consuming data.
That if you think about it, all of these should be faced with climate change can be addressed
in many, many ways by a much smarter use of information to control and use our energy.
And climate change is clearly of…between nuclear power so that…deadly nuclear power
the two really great threats to the world going forward.
So here we have a situation if you go back, we have real-time data, we have everything
connected and so forth. We can actually run real-time experiments.
28:13 We have the power to collect and analyze data in real-time all over.
And I think–I think this change is one that we’ll all have to get used to because I think
it’s a good one. And we’re going to use computers and use information
to be more careful with how we use the most precious resources we have all around us.
Everybody is going to be a critic in this new model.
You know we went from sort of the Nielsen box to everybody’s a You Tube critic.
People are using hybrid auto drivers that, you know, you can have your little diagram
of your gas efficiency. So all of a sudden people are going to be
watching and measuring these things at a level we’ve never really seen before.
And what happens is that you get these open networks and plays, and you could do some
amazing things. So why are we not using the batteries that
are in our cars to backstop the smart grid in the middle of the afternoon on a hot summer
day? It was better than just sitting there idle.
All that energy is sitting there, you can charge them up at night.
Well, the technology exists and the networks are being built, and they’re open enough that
you can build…and people here in Pittsburgh are, in fact, building the components of that
power train. The power train not inside your car, but the
power train from your car back into the grid, to help us with some of our climate and energy
issues and save another coal-fired plant. Another thing that we can do is take advantage
of the fact that the network is more powerful than your computer.
Remember behind that network is literally millions and millions of computers and servers
that have a lot of interesting data that you can figure out.
29:45 You can open up opportunities for businesses and governments, entrepreneurs can build systems
that can monitor and measure and detect new things.
And this is going to happen now with so many people having mobile phones in very, very
powerful new ways. You’re going to have to adapt and evolve…now
I don’t mean to say this in Pittsburgh, Pittsburgh’s story is a perfect example of this.
In 2003, when the city was in very dire financial straits, you actually reduced the size of
your government sector. You made really, really hard and painful decisions,
probably, then setting up the growth that has occurred since then.
Was it worth doing it? It was sure painful at the time.
I remember when this was going on. But what I like about this now is you’re seeing
the benefit. You’re seeing the uptick of all of that hard
work that you did 5 or more years ago. Let’s make sure that the principle that’s
established in this dialogue is that extremists don’t win.
And there are extremists in all categories. I’m not picking any particular extremist group.
Let’s make sure that we use the collective wisdom of us to understand what is good, and
what is valid, and let’s have both the decency and the proper approach to try to get to the
bottom of what the real truth is on any particular issue.
In our country and in many western countries, we have a tradition of openness, which has
really helped us and the government, in particular the federal government, now has instituted
many, many principles of trying to put real-time information out there, so people can literally
see what the government is doing. The Obama presidency has, for example, already
promised to fully identify all the aspects of the federal budget.
In addition to that, President Obama on Monday outlined an innovation agenda that called
for the full funding of NSF and DARPA and the other things, the impact of those decisions
over a 10 or 20 year period is phenomenal. Because after all, where will the growth come
from in America? 31:44 It’s not going to come from high-volume,
low-wage manufacturing jobs. It’s not going to come from the service industries
selling to ourselves, unless there’s an economic structure that will generate the returns,
that will generate the demand for…that can satisfy the service industries.
It’s going to come from industries like advanced manufacturing.
High-tech manufacturing jobs here in America using very sophisticated supply…basically
manufacturing lines and not just in physical goods also.
There are technologies such as nanotechnology, where such manufacturing plants, which look
a lot like an office building, produce tremendously interesting new products and also very
high-waged jobs. This is where the growth is going to be.
So from my prospective, and I want to put this into prospective for all of you and then
take your questions, you have all of these things put together, right?
You have this change occurring very quickly. I think, in many cases, more quickly than
we’ve really assimilated. The empowerment of individuals.
The rise of real-time. The collection of all of this data.
The ability to answer the questions that I am talking about in new and very, very fast,
stunning ways. I think it’s wonderful.
When I put it in a backdrop of innovation, I see the story I’m telling as a key component
of how America will grow out of this recession…which we hope is ending and which many people think
is already…the growth is going to come not by moving more money around between the banks…which
we’re particularly good at by the way…the growth is going to come from the investments,
and the decisions, that are being made in cities like here and by groups like this.
There is no question that we face serious threats in our economy.
It’s obvious. But there are sensible strategies to address
this, and I think one of the strategies is optimism.
33:40 Literally, when people feel better they invest, and they get better.
So it’s not as simple as just a math problem. It is about feeling.
It is about feeling confidence that you know you can get through it.
And at the low point, the stimulus package and other things that were done by the governments
around the world really did have a way of jump starting, and it really did work.
There’s a quote that I like–it’s from de Tocqueville in 1831, “America is unique because
of its abundance of land, its absence of a king, and its democratic and equalitarian
institutions and values.” From my perspective, this story…the story
I’m telling, reflects the possibility of newness, new places, new people, to have a chance to
be heard, new institutions that must, sort of, earn and re-earn their relevance.
That’s the challenge that everybody faces, every government, every CEO, every citizen.
And I think we have a lot of reasons to be optimistic.
Here we are in Pittsburgh, which has a great story.
I personally believe very much in the genius of the American people.
When I look at my own story, when I look at my colleague’s story, if I look at the story
of my industry, what I see is creativity and the power of technology and the genius of
people working hard in small groups doing clever things.
What I would suggest is our message, as our leaders show up basically tonight and tomorrow,
is for them to look around and try to figure out where’s the growth going to come from,
and it’s going to come from exactly here And exactly in this right way.
And I’m excited to be part of that so thank you very, very much. [clapping] I think…Audrey how did you…did you want
to do questions?>>AUDREY: I think we’re good if we can just
line up and there are questions, and we have mics there.>>Hello-test-okay I am wondering…>>SCHMIDT: I can see you’re just going to
jump right in so please jump right in.>>AUDREY: Yes, jump right in.>>–so I’ve been wondering where Google’s
position on the long-term would be in the string of innovation?
Especially if I was an investor, I would see the…how do you say it, the opportunity to
promote your own products with the…yep to promote your own products while you promote
your search, and all the other services even closer to at the customer, and now what I’ve
been reading approximately, well, let’s say I think it was 2 months ago on the news, maybe
you know about this…probably, I think, there is said it was discussed that there might
be the possibility of an antitrust case against Google similar to the Microsoft…similar
as it happened to Microsoft because of this overall position close to the customer with
the opportunity of promoting your own–let’s say, for instance, product search, which will
give you a good opportunity to increase your revenue.
Or let’s say promoting You Tube directly in front of your search because also one of those
opportunities even directly and closer to the customer similar as to what happened with
let’s say Internet Explorer and the Microsoft case.
Maybe your comment on that? That would be really great?>>SCHMIDT: Yea, I think I understand your
question. Could Google do the kinds of illegal acts
that Microsoft did…was found guilty of [audience laughing] for…this is the question you asked right?>>No, I neither said that Google would be…that
Microsoft did something illegal nor…I just say that the opportunities there and…>>SCHMIDT: They were found guilty, trust
me.>>Okay… [audience laughing]>>SCHMIDT: Use your favorite search engine
you’ll find the details. [audience laughing] You’ll find them on Bing as well. [audience laughing] The rough answer is no.
And the simple answer, the sort of longer than no answer, is that we run Google on a
set of principles, which have to do with end user benefits, and we’re careful not to advantage
one property over another because it would screw up consumer benefits, so we, in fact,
show all the other properties. We don’t integrate particularly well.
We’re careful about that for the reasons that…the reasons that you outlined.
The antitrust question is actually slightly different.
Microsoft was found guilty of essentially tying one thing to the other, and they were
essentially blocking competitors. Because we’re not that kind of a platform,
we don’t have that kind of market power. In Google’s case, if we were to begin to do
that, it would be trivial for you to switch to a competitor, for example, Microsoft.
It’s much harder to switch from a platform like Windows to somebody else, and Google,
we’re literally one click away.>>Okay, thank you.>>SCHMIDT: Okay, thank you. Next question.>>Hi. I’d be interested in hearing your vision
for Google ventures and also your thoughts on the open Internet provisions that were
introduced by the FCC chair a couple of days ago.>>SCHMIDT: Thank you.
Google has created a venture arm called Google Ventures.
It’s an experiment from our prospective. We have lots of cash as you know, because
we have a large cash portfolio, and we decided that we wanted to invest in the technology
area both to get a financial return, of course, but really to help accelerate the kinds of
technologies that eventually Google benefits from.
So it’s too early to say how successful it’s going to be, but we’re definitely investing…we’re
investing very similar to other venture companies. So think venture company.
39:33 On Monday the chairman of the FCC, Julius Genachowski, announced a set of principles
around net neutrality and those principles were very similar to what President Obama,
then as candidate Obama, announced when he was at Google about a year and a half earlier.
The rough summary is that net neutrality is about making sure that a particular kind of
content is not treated differently from another similar kind of content by the operator.
And the scenario that people are worried about is that the carrier, for example, has a vested
interest in a particular video, and so they discriminate in favor of that video and against
another video from a third party who wants to use the same transport.
And in general, obviously Google supports that restriction.
We are careful to say that we want to do that within the same category.
So there’s a very legitimate concern from the operators that if they couldn’t discriminate
at some level, they could be flooded by bad bits.
We understand that. We just want to make sure that if there is
a particular category, say video as an example, that they do not unduly favor their own over
alternatives that are coming in. If they were to do that, and I’m not saying
that they have, but if they were to do that, it could prevent startups from being able
to come in and get there content on the net. So we’re strongly in favor of what the FCC
is proposing and we’re happy to work with them to make sure that the regulations, as
they are ultimately adopted, reflect what I just said.>>Thanks.>>SCHMIDT: Yes sir.>>So my question relates more to something
that you said early in your speech, which was kind of thought provoking.
It seemed like it was a rather idealistic solution proposed with the collection of all
of the information–like it’s a citizens responsibility to sort of respond to things that they feel
powerful about. To collect all that data, to collect the statistics
that say, “We want this to happen, and we want this change.”
But I just wanted to clarify whose responsibility is it to enforce or make that change as the
government is in big corporations–like once all these–once all this data is collected
who–I like what you said earlier actually where you said in your report, “Who is reading
this information?” So we have all this information that’s been
compiled, who’s reading it? Who’s saying, “Oh, the people are expressing
this as their goal?” Who is going to make the change?>>SCHMIDT: 42:05 Well, I would start answering
by saying that I think we should have a moment of pity or compassion for our elected leaders
who we are busy sort of yelling at all the time.
Because imagine if you’re one of them, and imagine trying to figure out what the legitimate
people’s voice is today, in between the specialized groups and the bloggers and the interest groups
and the lobbying and the surveying, it will give you a headache.
And furthermore, it occurs on a 24-hour news cycle so it occurs every hour, and you have
to sleep some number of hours per day. It is almost an impossible job.
You’re never satisfied. You’re never on top of the issue.
And we need to develop a sense of where the body politic is…and then the politicians
would make that decision. The principal of transparency says, “That
we collect the data and illegitimate and legitimate groups will use that data.”
But the data should be open–especially data that government decisions are made of are
made of everyone. And I will tell you that all of the really
important decisions are hard decisions, and they’re shades of gray.
They really are. And I think that if we look at issues like
war, for example, which everybody has an opinion about, we would be better informed with more
information, more analysis, more public discussion, more data analysis of what’s going on, on
this political issue, or this political behavior, of this group, or they got threatened that
kind of stuff, so I think you could replicate that over and over and over again.
We’re better serviced by more transparency, more people looking at it, more people measuring
it.>>: Thank you.>>SCHMIDT: Yes sir.>>Hi.
When do you think cloud computing will help non-IT industries focus on their core competencies
without having to worry about security and other issues like that?>>SCHMIDT: 44:02 It’s happening now.
What happens today is many people are using, for example, e-mail systems that are outsourced
so they don’t have to run their data servers anymore.
There are companies that do a VMware, as an example of a company that does virtual machine
outsourcing, where you can actually run your computers on the Internet and have the image
look like it’s inside your computer. Companies are generally trying to get rid
of their data centers and have somebody else own their data centers.
This, by the way, is not a new phenomenon. It was true for IBM personal computers 15
years ago when people would literally have somebody else run their–excuse me IBM mainframes
and called mainframe virtualization. So I–my view that this is an inexorable shift
from the old model to the new model. It’s highly beneficial to corporations.
And they’re doing it, by the way, not out of some … they’re doing it because it’s
cheaper. You get better reliability.
The security stuff is largely now solved.>>Thank you.>>: 45:04 Hi.
My question is on cloud computing too. So I am actually writing a paper on how cloud
computing is better for smaller businesses and startups as opposed to bigger businesses
and I was wondering if you could comment on the same?>>SCHMIDT: Well, if you were to start a company
today, and maybe you will when you finish writing your paper, what computers would you
have to buy? Well, you’d have to buy some laptops, I prefer
the Mac, but you could also buy, you know, PC’s or what have you, and you would need
an Internet connection. And everything that you did you can do on
a server. Let’s go through the list.
You have to pay people…you have a payroll. You have to get customers where you can use
add Google AdWords–sorry for the plug…to advertise your product…whatever widget that
your building. And that’s much more efficient than hiring
salespeople and building all the computers to do all that.
You do much of your manufacturing–manufacturing can be outsourced.
All your e-mails, all your services, all your communications, all your marketing, and all
your productions. So if you’re a small company, it makes no
sense to have any computers except for the computers that are on people’s desktops.
That’s a huge change. Huge, huge change.
And I think that illustrates the point you should make in your paper. [all laughing]>>Yes, but the thing is what I mainly see
in all the marketing stuff that I saw both on Google and the other cloud company providers
is that all the authors don’t focus in on the niche thing that they actually offer,
which is–ya know I saw that one cloud is better for processing where as the other better
in the storage which is why I came up with a starting point, that particular startups
need particular things. And why is that the companies don’t focus
on those?>>SCHMIDT: Well, I’m not going to criticize
other companies marketing. All I’ll tell you is that the technical solution
concludes that you don’t need any computers except your laptop.
And so your job–your new job is to go figure out which solutions when you sum them up together
really work. I don’t think there is going to be one vendor
of cloud computing services I think there’ll be many. Just as there are many IT vendors
today.>>Oh, and do you mind if I quote you on this
statement? [all laughing]>>SCHMIDT: Yes everything, I do is transparent. [audience laughing] We are clearly, clearly on the record here. [all laughing] Thank you very much.>>So I heard recently from a Rwanda engineer
that Google has plans to open up a data center in Rwanda, and he told me that the capacity–the
demand for this data center will be about 45 megawatts and that is equivalent to a total
installed electrical capacity in Rwanda today. So it’s effectively doubling capacity.
You spoke quite a bit about the availability of information, the availability of data and
the fact that everywhere in the world, there are–smart people exist.
So it would seem to me that Google would have an incentive to increase access to this information
and to the Internet in Rwanda and in other places in the developing world.
So I was wondering if Google does have any plans to facilitate the development of rural
electrification and rural computing in Rwanda, specifically and/or in other parts of the
world?>>SCHMIDT: You’re getting my speech internally
at Google so thank you, we agree. The rough argument goes something like this.
For the last 40 years there’s been one initiative about Africa after another.
And Africa on a proportional basis is worse off today than it was 30 or 40 years ago especially
when you compare it to say India, China, the rise of Asia.
There are many, many reasons why this is true. So what could we do now that’s different?
Let’s wire the country. Let’s wire the continent.
So you dig into it, and you discover that until maybe last year, there was only one
fiber optic cable that served the whole continent. It went from Lisbon all the way down to Cape
Town on the left side–I guess it’s the west side.
After a lot of work, a lot of telecommunication carriers and amazing, amazing acts of courage
have laid a couple fiber optic cable now also one on the east side.
And they’ve now connected a land line cable that will actually go all the way from Darussalem
basically into Rwanda and Uganda. It’s interesting that if you’re operating
Kenya, Rwanda and Uganda, all your Internet was connected by satellite…so incredibly
expensive and slow and so forth. And that becomes a pretty big deal if you’re
trying to build an outsourcing regime. A lot of the Asian countries became successful
because they had a lot of cheap labor, and they were able to outsource jobs to them,
but if you can’t connect to them, you can’t do it because the costs were too high.
So we prioritized getting everybody connected, getting those connections in place and accelerating
the information and the production of local information as our key initiatives.
With respect to Rwanda we actually signed an agreement with the President Kagame to
actually offer Google’s App services essentially, which are cloud based.
The issue fundamentally in all these countries is the one you laid out.
There is not enough electric power to run the data centers.
The telecommunications networks are in the cities only.
They don’t reach the rural thing. And those are systemic issues, and it will
take many years for this to get addressed and we’re going to help as best we can.>>Okay, but there aren’t currently any products
or programs that you’re developing or are you in the process of developing a project
that would facilitate rural electrification?>>SCHMIDT: We’ve looked at it.
We don’t do the electrification ourselves, so we have to have the government working
with the local providers. One of the good stories is that their local
operators, those are MTN and those kinds of guys, have to have their local power anyway
for the telephone system. So the–one of the great stories, and again
we really appreciate how powerful this is, that the spread of inexpensive mobile phones
in Africa has changed their world in a way that is inconceivable anywhere else.
Yes sir. Thank you.>>TORRES:
Dr. Schmidt thank you for spending your time with us.
I’m Miguel Torres and I’m a PhD student at the University of Pittsburgh.
Right now healthcare is very expensive and this of course has driven perform and you
know their ongoing efforts. However, one of the challenges is there is
a disarray of, you know, different…the different components within the providers of healthcare.
How do you see Google being part of the solution to this?
Do you have any take on that?>>SCHMIDT: You probably know more about this
than I given your research. Let me make the following argument.
Imagine if each one of us had the equivalent of a USB stick that had our medical history
since birth. And when we walked into the doctor’s office
we could plug that in and the doctor could see, Oh, I see 10 years ago you had such and
such an operation or such and such a disease or such and such a drug, and then powerful
servers could go over that data and then make recommendations to the doctor based on the
knowledge of that specific core letter or pattern matching around that patient.
That’s a pretty interesting idea. And it’s enabled by the general availability
of open patient health records. There’s legislation and in fact, there’s a
requirement for a standard to come out in December of this year, again through an office
of the White House and a series of legislative activities in HHS, which are trying to standardize
on what that format looks like. 52:45 And of course we all understand that
you wouldn’t carry the USB stick out, in fact, that information would be held in some cloud-based
server somewhere so you wouldn’t have to carry it with you all the time.
So what could you do with that kind of information? Well, not only could you do much more accurate
healthcare diagnosis by computer because you would have it all in some reasonable computer
health record and make recommendations to the doctor, but you could also do some very
sophisticated drug trials because you could really follow the impact of this combination,
or that combination, in things that we couldn’t do.
So from my perspective, the use of information to do two things is possible, and Google is
doing the best we can to help there. One is that more information just empowers
the consumer. And one of the voices that’s been lost in
the healthcare debate is the consumer voice because consumers are confused and so forth,
and they don’t remember things very well, but remember computers do.
And then the second one is making that information cycle much faster.
Thank you.>>My question is about your ideas about clean
jobs and high-tech manufacturing. What specifically gives the U.S. a competitive
advantage over India, China and developing countries in this sector given that in India
and China and these other developing countries you can find qualified people who are willing
to work for less money, and therefore, it makes the products cheaper?
What specifically give the U.S. an advantage in these fields?
And do you think that these fields will ever completely replace the high volume of manufacturing
jobs that have been lost over the last 30-40 years?>>SCHMIDT: That’s a very good question.
The simple answer is that the only competitive advantage we have in America is the quality
of our higher education system and the graduates that it produces.
It’s already the case that China is on its way to being the world’s leader in green manufacturing
technologies because they’ve decided–because they’re more or less command of control organized…to
invest there. So the only game we get to play–because the
people in China and India are just as smart as we are if not smarter–the only game we
get to play is to use the tremendous resource that’s represented here, for example, by Pitt,
by Carnegie Mellon and other universities, is true throughout the United States.
That tradition of innovation, the one that I’ve highlighted so much, really comes from
there. The other question you asked is over the 30,
40 years, can they replace the jobs? If you look at the history of–a typical example
would be the loom in 1860, 1870 if I get my dates right.
The development of the mechanical loom ultimately was one of the key components of the rise
of the Industrial Revolution that ultimately built things like Pittsburgh and so forth
and so on. When they study what happened with the loom
it displaced a very large number of people who were previously doing it by hand.
The bad news for those people was that they did not get new high paying jobs.
Their children did. So the real problem with all of the changes
that I’m talking about is a generational one. I’m very confident that an innovation agenda
around advanced manufacturing and the things that America does well will replace the jobs
that we’ve lost, for example, high-volume, low-tech manufacturing, but the jobs will
be numeric jobs. They will be the children of the people who
lost the jobs. The people who lost the jobs will probably
not come back and that’s a real tragedy for them.>>Okay, thank you.>>SCHMIDT: Yes sir.>>Thank you for coming, I really enjoyed
your talk. I typed my question into my phone so if I’m
staring at it that’s why.>>SCHMIDT: I think this is the new correct
behavior. [audience laughing] Thank you for modeling the correct behavior
for all of the older people in the audience.>>My pleasure.
Your vision of a future, sort of enlightened by high-tech, is persuasive and attractive.
I think up to this point the tech sector has enjoyed a lot of good faith from people that
has helped it to grow, and it’s produced promising results, but do you think that we’re at risk
of a social backlash founting from the ongoing rumors about cloud computing being dangerous?
About companies like Google collecting too much data on us and turning into Big Brother?
If you think this kind of skepticism is a real threat to continue growth of tech, how
could it be overcome?>>SCHMIDT: I do believe it’s a threat.
I believe that most of us our ignorant of history, and we are too stovepipe to really
look at everything correctly. It seems to me that the phenomena that you’re
describing has existed in America for hundreds of years.
That the rise of every technology has brought people who were naysayers and in some cases
they were generally terrified of it. In some cases, they were part of an institution
that was threatened by the rise of the technology, and they were doing their best to delay it.
And the reason, by the way, it’s so messy is that the encumbrance fight tooth and nail
against the change because it’s in their economic interest to do so.
It’s not that their bad people. They’re essentially incentivized to fight
progress. And what happens is eventually they give up
because they retire, or their companies go bankrupt, or nobody cares anymore.
And there’s example after example of that. So from our perspective we believe that the
principles of consumer focus, consumer benefit and transparency will ultimately win over
the skeptics. That this is not an industry that operates
in secret. This is an innovation–this is an industry
that operates in declining costs, not increasing costs.
And so it’s always better next year. Which is a nice message from the standpoint
of the political operatives and so forth and so on.
So as long as the industry doesn’t do anything stupid, I think we’ll be just fine.>>Thank you very much.>>SCHMIDT: Go ahead.>>So no one’s asked about the recapture acquisition,
so I will. So you might say recapture belongs to a larger
class of services including Amazon’s Mechanical Turk or Crowd Flower from Dolores Labs where
there is a large task such as OCR clean up in all New York Times you defined into very
small pieces, and you could distribute it to thousands of people around the globe and
you arrogate back to accomplish the task. What are your opinions on this general phenomenon
some people call it crowd-sourced-labor whether … or more generally?>>SCHMIDT: It’s clearly one of the industries
of the future, and it’s enabled by all the platforms that I’m describing.
What I like to think about is–think about a world where you have a billion people who
have smart phones, with ideally Android phones but there will be others as well, with very
powerful applications running on their smart phones where computers behind them can both
take that information in real-time and also do interesting problems.
It’s obvious, for example, that not only can we if you wish, and again I want you to be
able to get permission on this, not only do you tell your friends where you are, but we
can also predict where you’re going using these kinds of algorithms.
Now again you can turn that off, but for a lot of people I would like to actually know
what is the probability of my friend showing up within the next 10 minutes.
Or shall I go back and go do something else for awhile.
So there’s lots and lots of applications where you have points of information, people.
You have servers and then you can either disaggregate the problem which is the examples that you
described, in other words, distribute it out, or you can centrally answer it.
And this is a problem of computer science, and it’s one that I think is a very, very
open one for a long time.>>AUDREY: Hey Eric.
Time for one more question.>>SCHMIDT: Okay maybe we could–we have four
people let’s do this quickly. I don’t want to…can you just each four of
you tell me your questions, and I will try to answer them all at once? [audience laughing] So Pennsylvania has a particularly urgent
economic and environmental interest in the cost of renewable energy generation dropping
below that of coal and Google has obviously been involved in this and, in the name of
transparency, I was wondering if you could give us any insights or updates into the innovative
renewable energy innovations and investments that Google has particularly made, like high
altitude wind?>>SCHMIDT: Perfect.
Tell me the next question please.>>The question is about motivation.
When a startup is in its initial phases there are two things that motivate it.
One is if it fails its completely destroyed it’s forgotten about, and if it succeeds it
becomes wildly successful often. If the employees of a startup were to join
a big company like Google both of those motivations are dampened.
If they fail, there’s their paycheck and their company can keep them there, and if they succeed
the success is dampened because of a lot of the credit is taken up by the company.
I don’t know if Google is less of a place like that.
I’m not entirely convinced that, that problem has been solved at Google in that there is
still good motivation to innovate, but I am sure you are trying to address that problem.
And that would be interesting.>>SCHMIDT: I think I can answer that question.
Yes ma’am.>>Hi, my question has to do with something
you said in the beginning of your speech. You said that growth was driven by technology–private
investment in technology. However, in the beginning of the 20th century
it was brought–firms with a broad technological base that introduced major radical innovations.
Also with the current focus on short-term information, firms are much more narrow and
specialized. Aren’t we–don’t we face the danger of just
seeing more incremental innovations instead of big radical innovations?>>SCHMIDT: I really hate to end this on a
quazi-confrontational notes, but a lot of people have criticized Google’s efforts to
collect information on [indistinct] as Orwellian. How would you respond to that?>>SCHMIDT: Okay perfect.
A great set of questions let’s see if I can remember.
Let’s start with green and renewable energy. The goal here is to get the cost of any form
of renewable energy roughly equal to or better than that of coal.
And we started with electricity. Wind is getting very close.
The other ones are still relatively expensive. We are working hard to invest in–we Google
are working hard to invest in companies which we think will show that way.
Even if we don’t achieve that objective, and I hope we will, there are so many other things
that we can do for climate change insulating buildings, better efficiency, better energy
management and so forth. But we can make a pretty–becoming carbon
neutral yourself. Getting your building carbon neutral.
Getting your university carbon neutral. All of those things are important.
Let’s see there was a question–I’m going to forget all four, so I apologize.
There was a question about Google as sort of a 1:04:14 wellyen[??] and that’s easily
written, and I understand the concern. Google is run on a set of principles as we
discussed earlier about information, and I would remind you that if we were to do something
evil with all the data that somehow we’re getting people would leave us very quickly
because they would go somewhere else. They would find another choice for their–or
they would just stop using search engines in their entirety.
So the real check on our behavior, besides our hopefully good morals and good leadership
and good decision making, is that our customers would flee.
The press would hate us. We would be in big, big trouble.
You had a question about the industrial model and the focus on short-term profits and so
forth. In evolutionary versus revolutionary investments
in the area of revolutionary investments innovation leads to both evolutionary as well as revolutionary
innovation. Much of what we see today is incremental if
you look in the computer industry. Many of the products that I use today are
really a wonderful refinement of something that was pioneered 10 years ago, 15 years
ago. And then, every once in awhile, there is something
revolutionary. I would argue, for example, that in its current
use Twitter, as an example, of something that just sort of happened, right?
And there are plenty of examples of that, and so it’s easy to decry the short-term focus
of the industry. But I would say that long-term innovation
is alive and well. The incentives still work, the money can still
be raised, and it’s a good message. I’m sorry and there was one more question
which I forgot. Oh, this was the culture question.
Yes, on acquisitions. It depends on how what you think people work
for. I believe that they work to change the world. Nobody gets up in my view and says,
“Oh, I’m going to work, and I’m going to get my so many dollars per day and you know I
really just wish I didn’t work here at all.” At least not in my world.
People work for passion and so as we become larger we try to keep it going.
We try to remind everybody why we do what we do, and it works and I think whether it’s
a small company or big company, I think you can motivate around passion and innovation.
It produces much better leadership. Thank you so much, thank you very much. Thank
you again Audrey.>>AUDREY: Thank you so much. [audience applauding]