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00:00What propelled you to pick Google was the company you wanted to go to. I said who cares about a search engine. I didn't particularly think Google was going to be that successful was it awkward to kind of come in and be the CEO. When you're dealing with founders it was an immediate click. We do have a dress code. You have a dress code. You have to wear something. OK . It seems as if the driverless car phenomenon is on its way . You've been in one of these cars and you feel safe. We're doing this to save lives. It's more than 32000 people scheduled to die this year. The Europeans seem to not like Google as much as maybe Americans do. Have you resolve those issues with Europe . Would you fix your time please. Well people wouldn't recognize me if my tie was fixed but just think this way. All right . I don't consider myself a journalist and nobody else would consider myself a journalist. I began to take on the life of being an interviewer even though I have a day job running a private equity firm how do you define leadership. What is it that makes somebody tick when you join Google Google was a very small company. Did you in your wildest dreams ever imagine to become the second most valuable company in the entire world. I don't think any of us did. I certainly did. Did not. When I met Larry and Sergei they just seem incredibly intelligent. We had this huge argument over something technical and I hadn't have that good of an argument in a long time. And I thought I've got to work with these people. I wanted to join a company that was going to stay in one building today of course we are many buildings. So you were the CEO of Novell at the time that you were getting ready to go to Google. What propelled you to pick Google was the company you wanted to go to because you had many opportunities . Well I actually didn't interview anywhere else. I John Doar asked me to visit Google I said who cares about a search engine won't matter very much who uses search engines. But he said nevertheless go visit with Larry and Sergei. And what they were doing was so interesting in the quality of the people that they had recruited so compelling that I just had to be there. So search engines were not that novel at the time because there were plenty of search engine companies right. So why did you think Google had a search engine that was going to change the world. Well I didn't particularly think Google was going to be that successful. But I thought the technology was unusually special. Google had invented a different way of doing ranking and all of the previous search engines had used ranking that was easily manipulated by you know business forces and so forth . But Larry Page had invented something now known as page rank which has a different algorithm a different way of doing search . And it had spread virally first at Stanford and then throughout the Bay Area and it was all word of mouth that I thought what a great project. So Google is a word that existed before it kind of meant infinity and it's spelled differently . Did Google intentionally spell it differently than the original word Google. What happened was there was a number called 10 to the one hundredth and I'll spare you the details but this is a very large number 10 to the one hundredth and it was named by a Russian mathematician Google geo geo L.. And it was too hard to pronounce. And so Sergei decided it should be called Google . Now today the company is not called Google anymore it's called Alphabet. So why did they pick Google as the original name and why did you change it to alphabet. In terms of the parent . Well Google has always done unusual things. So after 15 years of being Google we had all of these other companies that were sort of proto companies but they weren't real businesses and we didn't have real CEOs and we talked internally a great length about how do you how do you get great companies founded. And the answer is strong CEOs strong incentive programs strong boards of directors. There are other models. So how do we recreate that within the context of Google. And that's what alphabet is so alphabet is a holding company of companies of which Google is the best known so many technology companies that are well-known let's say Microsoft or Apple or Facebook are run . The CEOs initially are the founders. You had a different situation you had two people who were quote the founders Larry and Sergei but they wanted a CEO had more experience released the venture investors did. Was it awkward to kind of come in and be the CEO when you're dealing with founders who don't have the CEO title. Well in their case they had been searching for somebody they could work with for 16 months. And what they would do is they would have each of each of the candidates do something with them for the weekend. So they go skiing with one of them and they play sports with another one to see if they were compatible. And so when I met them we all have similar backgrounds in the sense that we're computer scientists. But it was an immediate click. And I always knew based on what had happened with John Sculley and Steve Jobs in the 1980s that it was their company and my job was to make their company successful. So when you were interviewed by them was it a normal interview. Well what happened was I walked into their office and it was a tiny office in this incredibly crowded building which Google still has by the way. And this tiny little office they had lots of food and they had my biography on the wall and they proceeded to ask each and every question that was possible against the biography. And I had never been so thoroughly question and I had just gotten to visit and they came to a product that I was building at Novell and they said this is the stupidest product ever made which I of course had to respond to. And you didn't think you were going to get the job. They said that are you. Well I didn't realize it was a job interview . But as I as I left the building which was curiously a building that I had had when I worked at Sun years earlier. Show you how history repeats itself. I knew I would be back. So when you did come back and I was a small company I think a hundred two hundred employees when you joined. Did you realize that advertising would be the medium through which you would actually make the company grow . No and in fact I was quite convinced that the advertising approach that they had taken did not work at all. And when I became CEO I was very concerned that there was something wrong and I actually asked them to audit the cash accounts to make people where we're selling these ads and what we learned was that these targeted ads worked incredibly well. Even though they were these little text ads and that discovery and then the subsequent algorithmic improvements which allowed for auctions and so forth which were done by impossibly young and creative engineers who I sort of viewed as sort of experimenting with things created what is today Google the culture at Google was very unusual at the time. Others have emulated it but it's a culture of kind of do what you want a bit where what you want . Sleep in the office if you want. We don't have a dress code . You have a dress code. You have to wear something OK. We had problems where engineers would move in and put cots on the floor . We would explain that you can do anything you want to a Google but you can't live here. You have to have a bed somewhere else . We famously encourage people to bring pets right. And we would have we had lots of rules about the pets. We didn't have any rules about the people. But you know if your pet was over here you had to keep your pet over here. So what about the food . Very unusual you had free food for everybody. What was the purpose behind that. Well the the comment was that the free food really changed everything. But the real reason we did food and of course many of these things were marketed as great fun but there was a serious business behind them. We with new case of the food. This was serious idea. Families eat dinner together and he wanted the company to be a family. And so if you had people have proper good food breakfast lunch and dinner they would literally work as teams and it would work in whatever way made the most sense Larry and Sergei invented something called 20 percent time. And the idea is that for each of the employees especially the engineers if they are interested in something they can spend 20 percent of their time on whatever they're interested in. Oh my God. How could you run a company that way. Well that allowed the engineers who were sitting there at dinner to have conversations about what do you think what do you think. What do you think. I'll give you another example. Larry Page was looking at our ads just as they came out and he he studied them and he put a big sign on the wall and he he wrote these ads suck and he said this one and this one and this one and I was looking at this. I said this is another stupid Google thing right . Nothing's going to happen. We have an ads team. We have a manager we have a plan. So this was Friday afternoon. I come in Monday morning in a completely different set of teams had seen the sign and it invented over the weekend. What today is the underlying ad system of Google and delivered on Monday morning that could not have occurred without such a culture 20 percent time. Have you gone to the businesses that came out of the 20 percent time. Well the most interesting examples are maps. Many of the ad system components most people believe that the 20 percent time is the source of real creativity and now what is a very large company. So one time I think you told me previous occasion that you were out of the office and then you came back to your office and somebody had occupied your office . It's important to remember that at the time Google's culture was seen as very unusual. And I knew this and I was always careful not to commit a faux pas if you will in the in the culture. And so one morning I walk in and my assistant has this look on her face like something bad has happened. And I walk into my office which is eight feet by twelve feet. And here is my new roommate Amit. And he's moved himself in. He's working and so forth . And I didn't know that I had a new roommate. And after all I am the CEO someone should tell me these things. Right. So I said hello who are you. It's this hello I'm Amit and I go OK. And he goes . Nice to meet you. And I said well kind of why are you here . And he goes well your office was not occupied you're never here. And I was in a six person office. It was too loud. And I thought what to say to this because this is a career limiting moment. If I say get out of my office you or they're going to fire me or something. So I thought OK. Did you ask permission. And he goes yes I asked my boss. And he said it was a great idea. And I said OK so we sat next to each other and he would program and I would do my work literally next to each other for a year and we became best friends. Do you think the United States government is better at cyber terrorism than other governments are against us. The one that I worry about the most about right now is actually Russia. They're not shy about it . They don't mind people knowing about it I just want to talk about your own background. So your father was an engineering professor. Economics International Economics . You grew up in Virginia. Yeah. Rural Virginia. What made you think you wanted to be an engineer as a boy. I think I was a normal sort of science interested boy. This was at the time of the space program and everyone wanted to be an astronaut. In my high school they had a terminal. These were the old teletype S.R. 33 teletype with paper tape and my father had the good thoughts to get one for our house which is highly unusual at the time and so I'd spend every evening working and reprogramming and so forth. Today of course if I were a 15 year old at home I'd have five personal computers and a super network and sound blaring out of the speakers. So you went to high school in Virginia. You must have done pretty well to get into Princeton . Yes although it was easier back then. But you knew you wanted to be an engineer at Princeton. And if I actually applied to Princeton as an architect and when I got to Princeton I discovered that I wasn't a very good architect but I was a much better programmer and Princeton again was kind in that I was advanced enough that I was able to skip the introductory courses and go straight into the advanced courses in the graduate courses at Princeton. So you must have done pretty well because you then got a scholarship to go to Berkeley and get your HD and was it hard to move across the country and. No I. But to give you an example of how naive people were back then I just didn't want to move to California because I'd heard that it was sort of nice and sunny beaches. But of course I went to the wrong part and this is of course before Google Maps. I worked at Bell Labs where Unix which is the basis for much of computing today was invented. I was a junior programmer there and I worked at Xerox Palo Alto Research Center where the workstation and the screens and many of the editors and many of the networking things that we used today were invented as a young programmer. So I was unusually fortunate to be as a young person an assistant to the people doing that kind of research. So from there I went to Sun Microsystems where I was an executive for many years and then from there you were recruited to Novell. Yes and I was at Sun for 14 years Novell for four and now Google for sixteen plus . So as the company became bigger and bigger and dominated the search business it has 90 percent plus of the search world more or less I guess. So why did Google say we want to do other things. We don't want to just be in the search business. You'd began to decide to go on other things. Let's talk about a few of them. I should say that Google's motto was not only search the web it was all the world's information and information is broadly consumed. So the company set out with all of the higher you were able to do and the talent to begin to solve some new problems. You became various to the maps right now do appear on maps hugely successful product line. You bought a company called YouTube today. Incredibly successful in terms of video and other form of information. We built an enterprise business . This has done incredibly well. I can go on in some cases we bought little companies that we grew like Google Earth. In other cases these were technologies that we grew ourselves. But the whole idea was to integrate around information at some point four or five years ago. We became interested in solving other problems not just information problems but problems where digital technology could make a material difference. The most obvious one being self-driving cars and we've been working on that as a research project. You've been in one of these cars and you feel safe on you're. The funny story. So I'm I get on the car on the highway in California and it's driving and I've decided it's following too close. And so I complain to the engineering says no no no we're exactly right. And of course they got it right and gets off the freeway and parks itself and all of us. Another case I'm driving or non driving in the self-driving car. And it turns left and here we have a mother and a child right crossing the street illegally. I'm going oh no this is the movie know that you've seen the car running over the mother and child skids to a stop. Right. So the technology works and it works because there's a very very powerful laser imager on the top of the car which sees more accurately than than we do. So imagine a car that has vision all around it rather than just in front of it. It's more than 32000 people scheduled to die this year in America. We just don't know who they are. Right that's how bad this is. So imagine if we could reduce that by half or a third or a quarter. Most of the accidents are driver induced to one kind or another. We may ultimately be able to make driving a driving accidents are very very rare event. Now you've been involved in Artificial Intelligence better known to some as A.I. Artificial Intelligence. Dangerous for humans or is it going to be helpful to humans. I see it as extraordinarily useful. And let me give you examples today artificial Dow Jones says it is being used to do things which are hard for humans to do because of data. There's a disease called diabetic retinopathy and it's diagnosed by ophthalmologist. We can detect that. Nineteen ninety nine percent of the time the best ophthalmologist do it at 90 percent of the time. Why are we so good at it. Because we see more ise we can train the computer against ise. There's a lot of reasons to think that this kind of intelligence as we say will allow things which are either repetitive or require deep pattern analysis will be much much better. So do you think the United States government is better at cyber terrorism if that's the right word than other governments are against us . The U.S. government has never acknowledged that it plays an active role in cyberspace that is active offensive role although the people who might be are targets have certainly been claiming we've been doing it. The consensus of people who don't know any of the details which includes me is that America is very good at this but other countries are as well. The one that I worry about the most about right now is actually Russia. If you look at their actions in the last few months they've done a number of very publicized invasions attacks and alterations which can only be understood as cyber cyber activity and they're not shy about it. They don't mind people knowing about it. So this must be part of their strategy to keep in our face if you if the Europeans seem to not like Google as much as maybe Americans do have you resolve those issues with Europe. The core issue I think is that the European governance model is not yet set up to build these global companies a few years ago you gave up being position as CEO. You were CEO for how long. For a decade a decade. And now you're the executive chairman of alphabet. In that role you've become a technology advisor to the president ise states to the secretary of defense and a very well known commentator and advisor on technology to many people. You enjoy this role. I do. It's important in life as you get older to not do the same thing your entire life. There are better people now doing the technical work that I used to do and this is something that I can uniquely do because of the background that I have. It's it's always hard to know when to get off the stage and join in the next stage . But from my perspective this was the right time in a decade is a perfectly good amount of time to do so. So you've been an adviser on technology matters to President Obama. Is he personally really understands technology. He does now as president when he started. I don't think he knew very much about technology but he's educated himself a lot. He appointed a very strong group of science advisors of which I'm one and he spends a lot of time listening to the science and listening to the impact of technology and he's also become very successful and popular in the new forms of social media. Remember that today the five most valuable companies on the American Stock Exchange are technology companies. So it's not just an interesting curiosity that technology is America's heartland and Heartland America's strength if you will. It's a core source of economic growth. Share share value growth financial growth and so forth in our country. Well these five companies I assume are Apple Google Facebook Microsoft Amazon that's great. OK it seems as if every day when you pick up the paper they all want to be in the business that somebody else is in. That's called competition time but everybody wants to have driverless cars . Everybody wants to have cloud businesses and so forth. Do you expect them all to try to be in everybody else's business. What I love about that question is this is how it's supposed to work right. People are supposed to identify business opportunities and they're supposed to go in there and produce a better product . Now I believe our products and our key spaces are better than our competitors but our competitors keep trying. And I can assure you in areas where we're not quite as strong and market share we have a new idea. We have a new approach. We want to solve a problem in a new way in the tech industry. You can't do the exact same product as somebody else who's already there because why would people switch the switching cost is too high . So what you have to do is you have to come up with a new idea a new approach for us. We've decided that that new idea is the use of machine intelligence that is a I to be an assistant so everything we're doing will make you smarter because it anticipates and helps you and make suggestions. Larry says that this is going from search to suggest we want to go from use telling us what you're searching for to making suggestions for what you're interested in. You've been the visible spokesman and lead person for google around the world. There's so many issues. Let's talk about Europe for a moment. The Europeans seem to not like Google as much as maybe Americans do. Because it's an American company. Have you resolve those issues with Europe. We have not been able to resolve the issues that are broadly held within Europe. We have more than 10000 employees in Europe. We love Europeans. We hire their people incredibly smart incredibly capable. Many of the products you use in America are were in fact developed partially or completely in Europe. And the core issue I think is that the European governance model the way the universities are set up the venture capital is not yet set up right. It is not yet set up to build these global companies because they have every piece of tool that they need. They have the people they have the discipline they have the educational systems but somehow they've not congealed it together. We have furthermore funded a number of innovation banks. We're also doing our own venture capital trying to help this. We need Europe to be more competitive against the American companies. So one of the effects of building a very successful company with Sergei and Larry is that you've made a fair amount of money by any normal human standard . But it's hard to spend that amount of money in your lifetime . So what have you decided to do with it. I'm most interested in climate change in science and science of course has got what got us to this point. And so my philanthropy has been focused on the underlying issues around environmental causes philanthropy and oceanography oceanography is quite interesting because there are almost no private philanthropy in it. And yet there's this mass extinction going on in the ocean today. We're losing most of the current life forms again. We 70 percent of the world's humans are dependent on fish for daily food. It's the majority carbon sink for all of the carbon that we're putting in the air goes into the ocean. So even small changes in how the ocean works could have debilitating impact on human society what would you like to do with the next 10 years and what would you hold to me like they have is your legacy. Well hopefully I don't have to answer the legacy question anytime soon. But from my perspective what I'm doing now is the most interesting. I don't want to work in any government. I've been seeing government up close enough to know that I'm not a government person but I'd like to make sure that the governments around the world promote technology promote innovation and make the world a better place . I'm very concerned that this is all happening so quickly that governments which are designed to move slowly and do indeed move slowly will either miss out on opportunities or worse pass laws that prevent things from happening and every once well we'll have a near miss. So I like working on that. I personally believe that the machine learning and A.I. technology is going to be transformative in far deeper ways in good ways. You're obviously a leader in science and technology world and in the corporate world. You think leaders are born or are they made or educated. Leadership is a little bit of both. You have to have some innate skills but it can certainly be learned. I also believe that as leaders you need to do something very well . That sort of stereotype of a general manager is not really how the world works today. Now the managers are there uniquely good at something and then they learn other things. And I don't think it matters where you start but I think you needed to be incredibly good at that one thing and then you broaden your skills discipline hard work and loving what you do will get you very far .

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The David Rubenstein Show: Eric Schmidt

"The David Rubenstein Show: Peer-to-Peer Conversations" explores successful leadership through the personal and professional choices of the most influential people in business. Renowned financier and philanthropist David Rubenstein travels the country talking to leaders to uncover their stories and their path to success. The fifth episode features Alphabet Executive Chairman Eric Schmidt. (Source: Bloomberg)

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