gary hamel: there are not manypeople in the world who don't need introduction. but certainly eric schmidt isone of those people today. i mean, google is theit company, i guess, at the moment. eric schmidt: as opposedto the it company. gary hamel: yes, as opposedthe it company. it is the it company. and so first, thank youeric for coming.
and i know your days arelong and hectic. and to come and spend some timewith a bunch of us egg heads, and a few peopledoing real work, is very kind of you. i'm going to put a few questionsto him, but i won't be very long. and mostly this is for usto have a conversation. but let me throw out threequestions and then we'll open it up.
i guess the firstquestion is-- obviously google's a web-basedcompany, maybe the first almost purely web-basedcompany. that's where it makesits money. that's its business model. but how is the ethos of theweb, its openness, its transparency, the speed-- how has that shaped the wayyou manage, or google is managed, internally?
how do the internal managementprocesses, the values, the way decisions get made, the wayprojects get approved, the way resources get allocated-- how has that been influencedand shaped by the kind of ethos of the web itself? eric schmidt: first, thankyou guys for having me. i want to make sure everybodyknows, we have two of our most senior executives here inthe audience, right? hal and marissa over there.
so they're going to help meout if i get in trouble. and i think these areinteresting questions. and it's interesting the wayyou asked the question as though there was a list of theanswers to such a question rather than it's somethingthat simply emerged. and i think the first answeris that it emerged. it wasn't planned. and it emerged because peoplestill thought they were in graduate school even thoughthey weren't.
they didn't understand that thecompany was different from university. and so many of the answers tothis question have to do with, if you take an academic cultureand you try to apply it to a business youget these outcomes. so it's much simplerthan it appears. now, the porousness is acharacteristic of high performing organizations todaybecause smart people want to work with other smart people,and they want to be informed.
and i think everybody hereunderstands that the model of governance has gone from hierarchical to more empowered. the problem is in a wholegeneration of managers don't actually want to empoweranybody. so i have the benefitthat no one lets me do anything, right? because they're all busydoing their stuff. and they'll say, well, maybewe will, maybe we won't.
and that's part ofthe culture. we spent for years saying, well,we wanted this product. well, no one wantsto build it. you'd think we'd have somesway around here. gary hamel: you'd think. eric schmidt: and so yousort of give up. and you say, well, the culturethen defines the outcome. and the culture is onearound innovation. and so the culture can beunderstood as a ship and
iterate culture withtransparency for what people are doing. and that model scalespretty well. it's amazing how many smartyoung people there are who just want to keep doing stuff. and we have a hiring processthat really does bring in people who really self-selectinto that group. so it leads to lotsof chaos, right? and that's been wellreported on.
but every once in a while itproduces these amazing, just amazing, achievements. so i think that the culture ofthe web can be seen as this enormously low barrier toentry to providing web services, and so forthand so on. the same dynamic is true. i've always believed thatpeople are the same, regardless of generation,language, race, culture, what have you.
they want the same things. i suspect if you go to a quoteboring old company, they also want to be empowered. but the culture just doesn'tallow them to do it. gary hamel: so you said that, ina way, google is modeled on a university. there's a lot of people who workhere for universities and a little worried to hear yousay that, to me frank. but, so, obviously there's somecore set of values that
have been taken across. that's obviously notthe whole story. but perhaps you could expandon that point a little bit, and then talk maybe about someof the practical mechanisms that tie google togetherinternally. we all know that there's-- the span of control in googleis, i don't know, one to 50, one to 60. but it's something that's almostinconceivable in a
typical organization. so what keeps these thingsfrom spinning out centrifugally? eric schmidt: first place, ifyou have enough direct reports you can't manage them. that was the goal, right? so it's all consistent. let's put it in context and saythat almost all of these decisions were made by theearly founding team.
and the early founding teamliterally came from graduate school and so forth. and they're of thatgeneration. and i remember my first weekcoming in and listening to this and thinking, we werehaving just wonderful academic debate because every issue wasdebated as though it was new. so it's easier to see it as, i'mcoming in as a classically trained executive. there was an executive thati wanted to hire.
and i figured i was a ceo. you could hire an executive. and this particular executivewas very, very talented. didn't know quite whatto do with her. and we had this discussion. and everybody said no. and i remember walking outsideand looking at susan wojcicki, who is one of the foundingproduct managers, and looking at her and say, why can't i getthis fucking hire through?
and she looks at me and shegoes, well, they treat everyone that way. it was as though the borgwas defining me. gary hamel: and youwere used to being everyone, is the problem. eric schmidt: that's right. and so what i realized-- andthe reason i tell you this story is that it tells you thatthe culture drove the behavior, and thati was simply one
of the other players. and i can't now tell you whatvalue i added or subtracted to the culture. but i know that i wasinserted into it. so this cultural notionreally has driven-- wayne rosing, one of theearly executives, used to call it the borg. it just expands, right? so i think as academics, thoseof you who are looking at
this, try to figure out thethings that will scale to arbitrary size. empowerment is one. communication is another. and then a sense of howquickly you can move. i can't characterizeit more than that. it does matter the peoplethat you hire. larry one day said-- we're hiring all these people.
and i said, well, we are hiringall these people. and larry said, well, how doyou know they're any good? and i said, well, i thinkthey're pretty good. and larry goes, well,why don't we inspect all the offers? because hiring is how badorganizations get set, right? those people are hiredone after another. so he established a principlethat we would look at each and every one of the people wehired, which we do today.
which is unheard of for acompany of our scale. and normally, basically,managers hire whoever they want. and they always hiredtheir friends. and you get this decliningvalue curve. another example-- audience: [inaudible] eric schmidt: larry andsergey and i. yeah. every monday we lookat every offer
that goes in the company. it's about-- audience: the ceo levellooks at everyone? eric schmidt: yeah. every offer in the company. we make somewhere between 60and 100 offers a week. we all do them on mondays. you get hired on mondays. you can show up wheneveryou want, but you
get hired on mondays. audience:[unintelligible phrase] individually you'relooking at-- eric schmidt: we do paperworkand so forth. another example was-- again, this is my firstsix months. so before i had shown up, theyhad decided to have management which was a new concept. remember, we're ina university.
so there were five engineeringexecutives who had been promoted. and these were perfectly nicepeople as far as i could tell. so after a few months of havingexecutives, larry and sergey decided thatthey didn't like having executives anymore. so they decided toget rid of them. and i said, first place, theseare wonderful employees, and saying, we need someexecutives.
said, no, no. we don't. so they did what is called thedisorg, where they literally got rid of the management. and everyone then reported flatto one individual, which is about 150 people. because their standard was sohigh that they thought that they weren't going to endup with this sort of-- because they picked the peoplewho had some management
experience. that was an interestingexperience. from then on, we hired peoplenot based on any management experience whatsoever becausewe figured it was [? peasant. ?] so the experience was negative,not positive. because if you came in withexperience, you would apply it to a cold models to newproblems. so lots of stories like that.
by the way, it takes founders,it takes courage, and it takes youth to be very blunt. gary hamel: and maybe a blanksheet of paper in some sense. and today, those arenot reproducible. but they were at the time. gary hamel: so let me just come back to that one question. so now, given that very broadspan of control, given that sense that-- kind of liketalking to the dean, they let
you make decisions when theywant to and everybody has a pocket veto, what allowsthat to work? i mean, where does thecoherence come from? where does this sense ofresponsibility come from? how do the key decisionsget made? eric schmidt: there area number of benefits. one is that the laws do apply toevery human, and so they do have to self-organize aroundlegal activities. and i say that because you canimagine a situation which just
randomness occurred. there's a set of thingspeople can't do. they can't violate the law. they have to be properly--and so forth. and we tell them that. and that seems obvious butit's worth stating. another thing has to do with thefact that there's a strong shared vision. and that strong shared visionis really about
innovation in the web. and that's celebrated. and that, i think,helps a lot. and then the other thing,frankly, is we have executives who've grown up inthe company. so they form that internalculture. those are the normal answers. i think what is most interestingabout google is the way in which the culture isexpressed is very difficult
to describe it. but when you're in it, youknow exactly what it is. and it's very strong. people talk about it as,don't do any evil. and you can be serious withouta suit and so forth. but there's a very specificmodel that works. here's another example. so marissa comes in and says,we have too many projects. and i go, what do you propose?
and so she says, well,we'll have a top 100. and so i said, perfect. it's a good idea. so she does an analysis andwe have 250 projects. but we call it the top 100 list. [laughter] eric schmidt: it's fine. it's the top 100 listwith 250 projects. so i say, well, how wouldyou propose to do this?
and she says, well, what we'lldo is we'll rank them five through one. so we have too muchstuff going on. i said, ok, well, thisis interesting. so i said, why don't you guysrun off and rank everything? so they managed to rankeverything except one project, which i then artfully splitin two and put in the two different ranking points. so that scale, the top 100process, worked for a while
because everyone said, well,clearly we should have a priority list. and clearly,we should share that. so after a while,that broke down. so i said to larry, ineed the tablets. you need to go tothe mountain. you need to bring backthe tablets. and you need to present them. and he said basically,no, he's busy. like, doing what, right?
gary hamel: as a 767. come on. eric schmidt: what, areyou busy, right? so a week or two later,he stays up all night. and he writes the tablets,which is a very interesting talk. and i didn't care whatthe talk would be. i just wanted a talk. so i said, present it and thencall for self-organization.
so a combination of a prioritylist and a call for self-organization becausepeople want to serve the company. worked pretty well. another example. we didn't have a strategybecause, again, the borg is moving forward. it's just innovation, smartpeople, and so forth. so i said, we shouldhave a strategy.
we had no product road maps. and i'm used to, as anexecutive, having multi-year products shipped. but i had no idea whatwe're going to ship. but it was fine. it was working just fine. don't complain, right? so we should have a strategy. i'm in larry and sergey'soffice at the time.
and sergey has to runoff to dinner. and he's up to something. so i said, sergey, you onlyhave five minutes. tell me the strategy. he writes down the fivethings, right? and runs out. and larry and i look atthese five things. we say these are brilliant. we then spend an hourevolving them.
and then there are things like,that we'll only work on problems that affectmany, many people. large numbers of people. that our advertising system isself-organizing in that it's reasonably resistant tocompetitive attack because it's an auction-based model. things like that. developers are key because wewant to change the way in which people buildfor the web.
and so then larry then fillsin all of the details. sergey, meanwhile, shows up afterwards and says, beautiful. and then we're done. that's how strategy is done. so we wrote that. and so we had the combination ofthe tablets from larry, and the strategy document. and that's what wecommunicated.
this works to a point. i think it probably does notwork now because the company is simply too large. and i'm not sure whatwe do next. gary hamel: and ultimately, notknowing google's case-- but, ultimately, foundersrun out of vision. it happened to scott mcnealy. it happened to michael dell,it happened, you could arguably, to bill gates.
so-- eric schmidt: they'renot done yet. gary hamel: all right. we'll take your word on that. hey, last question before i-- we just-- eric schmidt: they walkedin one day. and i said, ok guys, we'rekind of bored. what's going on?
and they said, well,we decided we have to enter a new business. i said, ok, that's-- they'realways interesting. they always have interestingideas. what is it? manufacturing. i said, we're goingto manufacture computers or something? he said, no, no, no.
we're going to manufacturerefrigerators. [laughter] eric schmidt: and i said, i'mnot aware of any particular strategic thing. well, we've been talked aboutusing refrigerators and general machinery, andconnecting it to the internet. and i said, well, ok. and this went on forabout 10 minutes. and then i realized that theyhad spent the whole day
planning this as a joke. eric schmidt: so, youhave to have a sense of humor about this. the good news is we'redoing refrigerators. gary hamel: now, there's beena lot of conversation today about the role of the ceo. one ceo here said, we reallyneed to blow up the office of the ceo. i think by which he means thatimperial sense of, here are
the tablets. here's where the[unintelligible]. i mean, what is your rolelike as a ceo of google? how is it different than perhapsmany of your peers in other large companies? eric schmidt: the goodnews is it works. the first thing to know is thati largely share power with larry and sergey. and we decided to just saythat rather than sneak
around about it. they own a third ofthe company, ok? if you were the ceo and the twofounders own a third of the company, do you work forthem or do they work for you? let's go through thisa little bit, ok? any rational person walking intothat, just be honest, ok? much better to be upfront,so we did that. and the management team, as idescribed, has worked together for a long time.
and everybody's used to a modelwhich is pretty much the wisdom of the crowds model. and it goes somethinglike this. every issue is debated. there is no issue so smallthat you can't have a debate about it. and we'll debate itinfinitely, ok? now, if you look at wisdom ofcrowds, the basic thesis is that when you see a meeting,like we're sitting at this
table, and you're the personrunning the meeting-- a bit of background. at novell, we had this-- was called the cultureof fear. and i didn't invent this. and basically what would happenis, everyone would sit around the table and theywould go, yes, right? and then they would immediatelyleave the room, and they would backstabeach other.
and this was part of thepathology of the company. so, clearly a bad model. so, in our model, we want to geteverything on the table. so you have to basically, as anexecutive, you have to wait until nobody is talking. and then you have to findsomebody who's a dissident. and, inevitably, if you find oneperson who's a dissident, there'll be another person whowill join them and so forth. you don't get a good decisionuntil you get to that point.
so a part of my job isto get to that point. so, one model that says is thatthe first thing is you have to make sure youget disagreements. now, if that's all you do, youend up with a university. gary hamel: back wherewe started. exactly. eric schmidt: and so, you haveto do one other thing, which is you have to havea deadline. so i have two jobs.
one way to think about my job isi have two jobs, two roles. the first is to make sure thatevery issue that's important is really debated to find, notthe common outcome, but the best decision. which eventually smart peoplewill get to after a lot of give and take. and the second thing is, to putpressure to make it happen quick because businessis speed. so i think if you think of it inthat context then all these
other arguments people make,and i've read them in management books, they don'treally matter very much. as long as that's how it feels,you're going to get the best ideas. people are going to really bepassionate about-- or they're going to get out, right? and we'll go from there. gary hamel: alright. let's have some questions.
audience: eric, i teachat a business school. if you would be ableto [? encompass ?] [unintelligible] year-- eric schmidt: and by the way,so do i. so i actually like business school. audience: and we use google asa case study to teach about different aspects of newstyles of management, innovation, and whatnot. and i found that when i teacha case about google to,
especially, executives from moretraditional companies and industries, the immediatepushback i get is, that's interesting. there's really nothingthere for us. this company is just toofundamentally different, dna industry, youth, whatever,from us. and i have, up until now, triedto push back very hard on that argument. the more i listen to you, themore i'm convinced that
they're right and i'm wrong. eric schmidt: but even ifthey're right, it doesn't mean you shouldn't try to teachthem to do better. almost all of these people arestruggling in cultures which are dysfunctional. almost all of these people arein situations where the vast majority of ideas arenot surfaced and no one listens to them. and their employees quitand come work for us.
audience: are you optimisticthat they can get closer to where you are? eric schmidt: of course. audience: ok. eric schmidt: it startswith listening. it has to do with curiosity. and there is a stylethat's involved. and i think it can be learned. and i think you guysare some of the top
teachers in the world. you should be ableto teach this. i mean, if necessary itshould be remedial. let's work on listening. you learn more by listeningthan by talking. it's a shock. yeah. stuff like that. audience: eric, thanks verymuch for coming out.
we really all appreciate it. i was in a conversation withsomeone last week. actually, a son-in-lawwho works for adobe. and he said that google isfacing a real challenge in that it will only growas the years go on. and that's a brain drain withpeople that you all have trained and brought upto a certain level. and then they go off to someother start up, or they start their own company,or so forth.
and of course this happenedto microsoft. huge, huge brain drain. what are you all doing to try tokeep these employees who've really learned on your time andmoney and et cetera, and where they've now-- becausethey've cashed in their options, money's not reallydriving them. they're looking for the nextwhatever to conquer. what are you doing to helppreserve your staff? eric schmidt: i'd like toquibble with the first half of
your question ratherbrutally, if i may. when i was at stanford businessschool and they were teaching me how to teach, one ofthe examples they used was andy grove. and andy grove-- you can't basically put up oneslide without him attacking every single premise. and he starts at the-- gary hamel: we have people likethat here, by the way.
but keep going. eric schmidt: and by the way-- and he's very rough. and it works because it forcespeople to really surface their hidden assumptions. i was very impressed withthis technique. although i was glad i was notsubjected to it when i was that young. and one of the things that wedo at google that, again,
these are things that can beeasily copied, is everything has to be based on some fact. so we don't have an argumentthe way you phrased it. we start with, what'sour turnover? now, there is no question thatthere's a brain drain. but what you said, your premiseof your question, was completely false. it's mathematically not true. it's just not true, right?
the number of incomingfar exceeds the number of people leaving. the people who are coming inhave higher or equal academic credentials to the peoplewho are joining. they're at the same age aswe hired and so forth. they're better trained. they're just as motivated. in other words, if youthink of it in that context, it's not true.
now, so i think a way of-- the question that i would askin replacement is, i think that's what you were trying toget to, is how do you deal with these challenges? because there issome turnover. the answer is that,fundamentally, people stay in companies because they wantto have an impact. so every person who leaves thecompany either does so because they made too much money--
and those people have largely,i think, left. and i understand that. they want to retireat the age of 30. it makes no sense to me,but that's their life. or the more common case is thatthey're being mistreated by management. and let me give you an exampleof mistreatment. if you go to a small start-up,you could do whatever you want.
whereas at google, you haveto deal with me, right? so, am i the problem, right? is the culture the problem? remember, these are people whoselected into the culture. so it's probably not that. it's probably somethingpretty local. so every time we see somebodyleave we say to ourselves, what is the thing that they'reable to do that they care about that they can't do now?
there's a tremendous arrogancein business about the power of executives over individuals. and in high tech, and ithink many of you-- i know steve knows this verywell because of the venture firm she runs. we treat the people as thoughwe have the only asset. other companies say that. but i deal with all thesebusiness people, especially in private equity.
some of you have spent some timewith that group, and they don't think of the peopleas the asset. they think of the business orthe cash flow or so forth. whereas we understand that in aninnovation model, it's only about the people and it's onlyabout the innovation engine. so i'm not sure i'm answeringyour question. but i think it was importantto say that whatever the answer to your question is, itwill be determined by whether the innovative culturedoes scale.
there are many benefits to beingin a large company with a lot of money over a start-upthat's going bankrupt. and it may very well be thatthis web 2.0 bubble that we're in now will draw some peopleout of the company. but bubbles eventually end. and in any case, we've not seena significant increase in turnover ever. so i don't know whether it's thefree food, the culture, or the smiling pictures of thefounders, or whatever.
but people are staying. audience: i'm keith sawyer. i'm a professor and the authorof a recent book called group genius. i was at a conference at harvardin december where kim malone scott was speakingabout the lack of management at google. eric schmidt: she is themanagement at google. audience: and she said thereis no one in charge of
internet search. but marissa was introducedearlier today as being in charge of internet search. so i wonder to what extentthere is or is not eric schmidt: i'd say that ifthere's a person in charge of internet search, itwould be marissa. eric schmidt: what ismarissa's response? i have a meeting once a weekwith marissa where she talks about internet search.
so are you in charge? marissa mayer: as much as i[? know what that is. ?] eric schmidt: marissa's actuallya very good example. marissa is particularly good. she has a number of exceptionalskills. but one of them is she's very,very good at getting people right out of your universitiesand getting them to be very, very talented technicalproduct managers. she did this even whenshe was at stanford
as a graduate student. so it's a model that shepioneered in the company. so she has this group of peoplethat she invented that she commands. and they run around, and shereports on their activities. and then we pontificate onwhether we like them or not. and within reason, then shegoes back and shapes what they're doing. is that a rough description?
marissa mayer: yes. eric schmidt: it'sa huge amount of human management, right? and they're very young people. but the product decisions areoften made by a 22 year old, which is a little frightening. but they're the best choice. gary hamel:[unintelligible phrase] and then we'll come back over.
audience: so while i havethe mike, i'm going to ask you two questions. and both of them relate to yourinnovation portfolio, the top 100 and however many yousqueeze into that 100. it's 250 or more. so question one-- and this goes back to aconversation i was having with hal yesterday. i think of the top 100.
at least from the outside, itseems like one out of the entire portfolio is the bigrevenue generator for google. eric schmidt: no. audience: so as i said-- eric schmidt: butthat's not true. audience: --from the outside. so i just wanted the insideperspective on how you think about-- eric schmidt: what's interestingthat she and i did
the top 100, and i tryto think what is-- because i'm still trying tobehave like a normal executive in this culture. so i thought, how would iarticulate is the four or five goals of the company? what's the number onegoal of the company? it's end user happinesswith search. ok? so what's the number two goal?
it's end user happinesswith advertising. what's the number three goal? the construction of the googlenetwork of partners to effectuate the first two, ok? what's the number four goal? to grow and scale the businessnaturally as it grows. so i announce this. and everybody at googlesaid, brilliant. and then i realized that,what's the job of a ceo?
maximize shareholder value,maximize revenue, right? none of the things that i'msupposed to be doing are the goals of company. so i came up with an excuse,which is i have the head and the tail of the dog. and who's waggingwhich, right? so, i now explain myselfby saying that you will eventually get extraordinaryreturns for your shareholders and maximize advertiserhappiness if all
those things happen. i'll give you another example. there's a lot of businessexecutives who get confused on what the goal is. and they think that shareholdervalue is the goal. shareholder value is aconsequence of the goal. a very good example of apositive example of this is rupert murdoch, whopeople say-- and he's a very, veryclever fellow.
and i had dinner with him,talk to him all the time. he actually has a sense forwhat people want to read. so everyone is consumed with hisbusiness practices, and he did this, whatever. but the guy knows what hisaudiences want, right? he figures everythingelse will follow. so why aren't all businessesrun that way? because many businesses arenot very consumer focused. but if you're in a consumerbusiness, you should be
focused on your consumers. put another way, you're inthe magazine business. it really doesn't matterwhether your advertisers are happy. it matters a lot whetheryou have readers. it's not a hard argument. so the reason i repeatthis is this seems so obvious when i say it. but if you put a little test inyour brain, and when you're
watching a business askyourself, are they in fact maximizing the right thing? in almost all cases, now that iapply this little test, i'm pretty convinced thatthey're not. eric schmidt: scalingthe business. so it used to be scaling$100 million business. then it was growing and scalinga $1 billion business. then it was growing and scaling a $10 billion business.
the question of the size ofgoogle is an interesting one. so we had one off-site. companies like tohave off-sites. so we had one, and i hadto have an off-site. i had to schedule one. i was the new ceo. we had it at quadrus. a few locals knowwhere that is. and it was near my home.
and we scheduled it at10:00 because we don't start too early. and the management atthe time shows up. larry shows up roughlyon time. sergey shows up latebecause he's rollerblading into the meeting. so the young founders of thetime sit there and they listen to all of this. and we have a relativelynormal off-site.
and then at 3 o'clockor so i said, well, what do you guys think? so larry says, i've been workingon my presentation. and i said, what is yourpresentation about? and he said, oh, it's thefuture of the company. and i said, oh that's nice. why don't you share it to us? so he goes, ok. and he said, well, our goalis to be a $100 billion
corporation. now remember, this is a timewhen the company has no revenue, is near is nearbankrupt, and all that. and i go, do you mean revenueor valuation? and he goes, doesn't matter. eric schmidt: i thought there,and i go, i really made a mistake joining this company. the two founders don't know thedifference between a $100 billion valuation, which couldbe a very small revenue
company that's highly hyped,versus a $100 billion corporation with real revenue. so larry presents a strategywhich can be roughly summarized as, the space thatwe're going to be in, that we're in, is goingto be very large. there will be at least onecompany that will be a large company in it. and the size of a large companyin that space will equal $100 billion of eitherrevenue or valuation.
at the end i said, well, idon't think you guys-- and i got on the whiteboardand i wrote down the difference between p/e multipleand so forth. and sergey looks at larry andsays, should we tell him we were kidding? of course they understood it. you had another question? audience: so, at the risk ofabusing my ownership of the mike, let me ask asecond question.
and this has to do with-- i mean, i like practicallyeverybody else in the room. i absolutely love google. and there are many, many partsof the google site which i think are fantastic. they're cool. but i'm not quite sure that theyintrinsically make the world a better place. for instance, the streetlevel view of my house.
i think it's fine. i really enjoy seeing it. here's the aside. i'm part of a group called thegene partnership project up in boston, where you're trying toessentially create a database of personalized health recordsfor the future of personalized medicine. now, if i think about onecompany that could potentially make that happen in the privatesector, it's yours.
eric schmidt: by the way,marissa's actually doing that. audience: yeah. and i was aware of-- [interposing voices] eric schmidt: --shift herresources from street view to that project? audience: yeah, exactly. so i was wondering, how youthink about allocating resources for streetview, which is a
very difficult project. eric schmidt: marissa, whatis your response? marissa mayer: one, we are doingthe health record piece. so we launched itjust last week. and you can actually put yourmedical records online. and we actually thinkthat it's, really-- our mission is to organize theworld's information and make it universally accessibleand useful. and i think that bothhealth and street
view fill those goals. health is really-- i mean, it's absurd. i mean, i don't know how manypeople here have actually had a chance to touch their doctor'schart on them. has anyone? right. and i'm going on atrip this summer. i needed to call around andfigure out if i'm due for a
tetanus shot. took calls to fourdoctor's offices. and i'm a healthyperson, right? it was just inordinatelyinconvenient. so, i mean, i really thinkthat it's important to-- in this day of information,it's unthinkable that this information that'd be so usefulto you, and could have such an amount of good for youor for your family members, lays outside of your reach.
so this is really about gettingthat information, putting it in the user's handswhere they can control it. they can direct it. they can get better health. so we're really interestedin that space. and, again, it fits squarelyinto google's mission. and street view, from ourperspective, is really fundamental. it is, how do you physicallyfind something, when you think
about what it couldactually mean? we had one of our pr executiveswho said-- last week she was lateto a meeting. it was raining out. and she knew it'sthe restaurant with a yellow awning. she didn't have to get out ofthe block and go running down the street, making her evenlater and showing up soaking wet, right?
so you can actually physicallyknow where you're going. and now we're starting to seethings like, what can street view do for drivingdirections? what if you could actually bedriven there on your computer so you'd know exactly, i'mlooking for a corner that looks like this. i'm going to take a right. what if you do that? street view's a profound way ofjust finding something in
the physical world. eric schmidt: i forgot to tellyou about the autonomous cars that we're building thatdon't have drivers. and they need street view. gary hamel: with therefrigerators. eric schmidt: by the way, weactually are building the autonomous cars thing. i'm not so sure i'mhappy with that. but you never know.
with android, there's a demowhere street view is actually integrated with the gps and theaccelerometer in android. so you can actually see areplica of your world in front of you using street view. and it is the exact vision thatmarissa just described. we don't know where it'llgo, but it is-- she just gave the keynoteat our developer conference this morning. and we now have published apisfor people to use the street
view data to do interestingapps. we have no idea what people willdo with that information. it's clearly very powerful. some more questions. this lady here, andthis gentleman. yes. audience: i don't know if it'sa matter of semantics, or if the culture of google-- but each person from google,yourself included, when
they've described it havedescribed it as chaos. i'm interested on how oneachieves such incredible superior performancefrom chaos? eric schmidt: because youhave smart people. i mean, chaos is possiblein every organization. eric schmidt: i mean, it reallydoes matter who you have working for you. and what happens is the hrpeople always write, we value our employees and soforth and so on.
it's all crap, right? basically, it's all about howdo you go about bringing and attracting and motivatingthe top talent? and the top people wantto work in creative organizations. it's true in many industries. and they know wherethey want to work. yes, ma'am. audience: hi, eric.
my name is shouldshoshana zuboff. i wrote a book called thesupport economy: why corporations are failingindividuals and the next episode of capitalism. that's that. important thing. i went upstairs before you werecoming, and to call home and talk to my kids. and my daughter goton the phone.
she's 15. she's a genius. she's an environmental activist.and the first thing was not, how are you or what? mama, have you meteric schmidt yet? i really don't believe she knowsthe name of a single executive in any company onthe planet except yours. and when i was describing thismeeting to her and what i was coming to, and why wasschlepping across the country
and all of that, it was when imentioned you that the light bulb went on. and say, ok mom, you shoulddefinitely go. so why is this? because she sits down-- eric schmidt: i'm lookingforward to meeting her. audience: she's a perfectemployee for you. but she's only 15. she sits down at ourkitchen counter.
her goal is to solvethe climate crisis. and within a few hours, usinggoogle, she has done literally dozens of pages of research onhow to make the climate crisis the defining issue ofher generation. she has created a blog. she's got all kinds ofentries on the blog. before she's done in that day,she's got people from all over the school, the community, andthe country writing on the blog with her.
and she's created a website. and again, before she went tobed that night, there was something posted onthe website from a student in denmark. all using google. i'm telling you this becauseyou are an intimate part of our family. you are in our lives. you're not only empowering thepeople who work for your
company and all the wonderfulinspiring ways that you're telling us about, but as youwell know, you and marissa and everyone else, you're empoweringmillions of people on this planet to do thingsthat they never could have dreamt of doing. not just the search, butall these other things. ok. now, you're a publiclytraded company now. you inhabit the 20th centurycorporate form that is not
well known for wonderfultreatment of its end users. in fact-- and especially over the last30 and especially over the last, say, 15 years-- it's more widely known forignoring, abandoning, and betraying its end users and itscustomers, its consumers. all those labels. so when i think about google, ithink about a revolutionary capability that is transformingat an intimate
level the lives of so manypeople on our planet. but this revolutionarycapability now colonizing an old form, a form that has a lotof problems. a form that some of us would argue, i'd beamong them, is in demise, and that has become part of theproblem not part of the solution, for people like mydaughter and other people on this planet who are hungry forempowerment and to be able to live their life the waythey want to live it. gary hamel: can i turnthat into a question?
audience: i'm going to turnit into a question. gary hamel: because we aregoing to run out of-- audience: i'm going to turn itinto a question, but i have to have the preamble. so the question is, how doyou think about this? is this on your radar screenas a conflict? google going forth five years,10 years, 15 years, we don't know that larry and sergey arealways going to be there. we don't know that you arealways going to be there.
can you imagine yourselfbetraying these people? how do you reinvent the formso that that's not a possibility? eric schmidt: the good news isthat i have a relatively straightforward answer. we understood the questionthat you asked, i think, remarkably well. and as part of our going public,we created a two class stock system.
and the early employees, whichobviously include the founders, these executives, anda few others, have super voting control over the companyover any issue, not just mergers and acquisitions,which is unusual. in fact, it's not done anywhereelse except for a couple media companies. and this has the effect that thecurrent clowns running the company can run the companywithout regard to street pressure and without regard to,for example, what's going
on today with yahoo. and we put that in placeprecisely because we saw ourselves in a 10 or15 year time frame. and there's a tremendous concernthat the quarterly pressures that are on companiesis in fact causing them to make short term ratherthan long term comments. so we did incite that. i'll give you one storyabout inspiration. so every day, i get aninteresting email or story
from somebody about theimpact on google. here's today's, ok? just randomly today. we have an employee namedvincent who is in a wheelchair. he was injured, spinal cordaccident, was tragic things 28 years ago. so it turns out that he decidedto have the google video people, who are veryclever, do a video of him
using his wheelchair. because people, when they'reinjured, often don't know how to effectively usea wheelchair. and he is an engineer. so you have to use yourwheelchair optimally if you live in it. and so he put it on youtube. and he measured it. and he has 100% of hisaudience watching it.
he is the star of the wheelchairgeneration. and for him, that's the mostimportant thing that's ever happened to him. it's more important thanworking at google, more important than his businesssuccess, because he has lived through the grief andthen the recovery. and it's very hard tovalue that more highly that he would. so anyway.
gary hamel: another question? terri and then james. audience: so my question is--we have probably a similar challenge that you do of hurtingthe cats, where you've got all this passion, allthis smart people. and they also are verypassionate about their ideas. and so how they're told theirproject isn't going to be funded and how you decide what'sgoing to be selected is a huge issue froman empowerment--
so i'm curious how you'vemanaged that, and not made it top-down versus there is someunderstanding in the organization that all projectsare not going to be funded. and we have resourceconstraints in any organization. eric schmidt: of course, we havethe same problems. we do very, very tough productreviews. and this is something that welearned from microsoft. and there are a few things thatmicrosoft did well, and
that's one of them. and we really, really getto the bottom of, is this a great product? and the typical cycle will beto be a product strategy process and a meeting. the technical executives arethere, some of the key technical people. and they're very,very detailed. is this really going to work?
and they're often rejected basedon the fact that they're just not good enough. it's rare that wecancel anything. it's interesting. marissa's one of the people who,when she took over one particular project working withme, said, this is not going to work. and she had the couragein the company to-- we seldom cancel anything,but it's rare.
and she's done it a few times. gary hamel: jamesand then jeff. james. alright, either way. alright. audience: so, obviously, i'mvery interested in everything you're saying about wisdom ofcrowds, personally, and the bottom-up stuff. but i'm also struck by the--
and i'm not surprised by thisbecause i think one of the reasons why it seems to workrelatively well-- the empowerment bottom-up model,call it that short hand-- is because google is fullof smart people. so you assume that everyone atthe table, when you're trying to draw out the dissidentopinions, is smart. eric schmidt: can i just-- a principle at carnegie mellonused, that i put in place, called the reasonableperson principle.
it's a simple rule. the other person in the companyhas to be assumed by you to be a reasonable personeven though you hate them at the moment. audience: right. my question, i guess, is-- and you were talking abouthow important it is to hire smart people. do you have any thoughts abouthow or whether you could make
this model work, the model thatyou use, in a company where you're not hiring from thetalent pool that wants to work at google? i mean, let's just assume thatthe vast majority of people aren't smart in the way thatgoogle employees are. but we still want to createorganizations that get the most out of those people andthat actually tap the knowledge that people have. i'mjust sort of wondering-- eric schmidt: in the firstplace, i don't want to sound
so arrogant that i think thatthe organization will be successful full of the smartestand the brightest. the fact of the matter is wehave organizations that have every kind of person. but everybody wantsthe same thing. they want to be heard. so let's start with the factthat-- a typical example. when i was a young executiveat sun, we did a deal with at&t. a series of deals.
and the executive that was atthe time a very powerful executive came to visit. i was 30 years oldor something. and we're sitting around theroom, and he basically stands up-- and he's meeting with us. and he gives us ashort speech. and his speech wasso clear that he didn't ask any questions. it was further obviously thathe didn't want any answers.
so we saw no particular reason,because we're arrogant ourselves, to bother givinghim any feedback. so he got nothing out of thetransaction because he couldn't listen. so independent of the specificsthat we're talking about, about the googlemanagement culture, why don't you simply work on listening? there's this myth, andit's unfortunately-- the particular diseaseis the us presidency.
we want a president who isall-knowing and all-seeing and goes to the mountaintopand makes a decision. it's derived from our modelof kings, right? if you look at the math, andmany of you have looked at this, it producesbad outcomes. you're much better off havinga partnership, because the partnership is forced to atleast mediate each other. jeff, then lenny. audience: jeffrey hollenderfrom seventh generation.
as you know, and i thinkeveryone in the room knows, the impact and potentialof the company. i've always felt, and it'sjust my opinion, that the notion do no evil falls shortperhaps significantly so of the potential and aspirationof the company. and i'm just wondering, havinglived with that for some time, your reflection on that. is it right? is it--
eric schmidt: it can beunderstood as forcing a conversation. two examples. if we have a policy of do noevil, then if somebody thinks evil is occurring it forcesa conversation. now, it's possible thatyour view of evil and mine might disagree. in which case, we'llhave an argument. and our argument willbe followed in
the way that i described. it'll be everybody in a room. there'll be a big argument,some kind of a deadline. hopefully we'll getthe right answer. and in those discussions,everybody's appear. again, these are allthings that can be copied in other companies. another example is 20% time. we have a rule, widelypublicize, that engineers get
to do 20% of whateverthey want. now, the good news about theseengineers is they're not that interesting, right? they don't go offand climb mt. everest as well. their interests arepretty narrow. and so the 20% time, they tendto work in stuff that's in their area of expertise. and they invent stuff thatwe hadn't thought about.
so that's good. but that's not the real reason20% time exists. the real reason is because itforces a conversation with a manager who's over-managing. so i come to you and i say,the project is late. you guys have screwed up. i'm my classic oldmanagement style. and you can sit there and youcan say, you know eric, i'm going to give you everythingi've got 80% of the time.
eric schmidt: forcesthe dialogue. it serves as a check and balanceon this command and control management that alot of companies have. audience: so justas a follow up. five, 10 years from now whathope do you have, or what aspiration do you have, for theeffect that google has had on the world? eric schmidt: first place,i hope it's positive. information is powerful.
and the technology platform thatthe web has provided for information is unprecedented. we have example after exampleafter example. and all of you, andwe, work in the information economy, right? a reasonable scenario overfive or 10 years-- first place, i hope the companydoes well. and i hope that i serve itwell in my role, and the founders do, and theexecutives, and
so forth and on. but the fact of the matteris, it's a system. it's a system of innovationaround this web information model. and what i hope will happen isthat a set of new uses of information will just naturallycreep in your lives. and all of a sudden,we'll always know the answer to questions. what you'd like to be able withgoogle is you'd like to
be able to say, what shouldi do tomorrow? a reasonable question. i'm always confused whati should do tomorrow. and google should be ableto at least give me some suggestions. seems reasonable, right? another one. i've always wanted aproduct called the paper lengthening product.
submit a paper, make it longer. eric schmidt: and it'srecursive, ok? another product i've alwayswanted is the product which-- and the code name we useinternally is serendipity. basically, i'm typing and thenit says what i should be typing, ok? and these are simple ideas. why don't computers dothat stuff for me? i mean, marissa outlinedthe health vision.
there are so many examples wherethe digital revolution, the ubiquitous nation ofinformation, the notion of gps, geolocation, these newplatforms, really do create a new set of apps. couple more. gary hamel: kevin,and then lenny. i'm sorry, lenny. eric schmidt: we keepforgetting lenny. gary hamel: kevin and--
audience: oh, i'm sorry. well, lenny. gary hamel: do you have themicrophone there, lenny? yeah, i'm sorry. go ahead. audience: i have a question foryou on what you think the future of the media that hasany intelligent discourses, and the role that googleplays in that. i'm a complete news junkie.
and i may be the last personon the planet who actually reads newspapers and enjoyspicking up a paper magazine. but everyone i know in each ofthose businesses says their business is completely deadwith the exception of tom stewart at the harvardbusiness review. and i'm curious what your viewis about how is that going to evolve in a way that plays theimportant role that media does in encouraging an intelligentconversation. eric schmidt: this isa crucial issue.
and here's an example whereyou have a confluence of business models where theconsumer goal is not necessarily the same thingsas the business school. let me observe that peopleare consuming more information now than ever. and they're paying for itless than ever, ok? simple, easy to understand. things like the harvardbusiness review, the economist, magazines that aremonthly, seem to be doing
generally quite wellunless they're-- the more specializedthe better. there's something about thatmodality that works. they can monetize. they have good advertising. the hardest hit as we all knoware regional newspapers, who lost both the value ofadvertising as well as classifieds. now let me ask a question.
anybody here read a newspaperthis morning? show your hands. can somebody describe some ofthe ads in those newspapers that you read this morning? anyone? eric schmidt: what's anadd that you saw? audience: bra ads. for some reason, thenew york times-- gary hamel: yeah, yeah, kevin.
audience: then whywere you looking? eric schmidt: and by the way,i don't ask too personal a question, but are you orare you not in the market for a bra? audience: i am not. eric schmidt: thank you. this is a perfect example of anadvertising having wasted his or her money selling you aproduct which doesn't look like you need.
i mean, therein yousee the problem. and it's a very difficultproblem. i think the future ofnewspapers, which has been widely discussed and i'vebeen to a series of [? conferences-- ?] it's really mixed. most of the newspapers seem toultimately being merged into larger brand companies. washington post, that's true.
the wall street journal isnow really part of a larger brand company. and it may very well be that thebrand, the consumer brand, has such value that eventhough they're not very profitable, so forth. but things like the otherregional newspapers, it's not obvious where they'regoing to end up. audience: would youmourn their loss? eric schmidt: of course, becauseyou always mourn the
loss of creative content. audience: what about theintelligent discourse [unintelligible phrase] ? eric schmidt: the problemis that we-- because everybody here iseducated and, excuse the term, relatively elitist in our views,it's very disturbing to discover that, for example,huffington post, which has actually got a lot of variousvoices, makes all of its money from britney spears, right?
the average person is actuallymore concerned about her than they are about the kinds ofthings that we care about. and newspapers are alwaysin approximation between those two goals. but with the internet,you can actually sub-specialize, right? and the fact of the matter isthat this is a tension in society and somethingwhich is not good. so the fact of the matter isthat this is a negative
outcome from the internet. but i think the business outcomewill be that there's a value of the brand, even ifit's not monetizable. and those valued brands thatare not monetizable. will be combined withgood businesses. the organizations that have noparticular value of the brand and have high production costsand relatively little money will go out of business. and it's a terrible outcome.
gary hamel: ok, kevin. and then i think that'll be-- i'll ask one more. audience: so, in your discourseand history of google's management style, youmade it very clear that there's been a historicalevolution, that the things that you were doing originallyjust ad hoc by the founders has changed over time. you're doing things differentlyas it scaled up,
and also as the environmentchanged. and so what i'm wondering is ifthe rest of the way google does its actual products isvery, essentially, engineered. a lot of data testing. a lot of a/b tests. a lot of experimentalapproach. and so as you are headed intomaybe your third phase of growth, into a new environment,into a new scale of operation, are you doingexperiments in terms of
management styles? or is it still you're justmaking up and doing whatever opportunistic thing happens? and where are youbeing inspired? eric schmidt: i wish i had abetter answer than saying we don't really know. google has neverhad a strategic plan on these questions. what hal did is, hal came inand serves as our chief
economist. and what's funnyabout hal is that he's got all of these young people who-- it's like having graduatestudents, except they're working on the businessproblems of scale of the company. so that's an example wherewe went from just roughly thinking it's going towork to the science behind running the business. and so it turns out that there'sall these incredibly
brilliant mathematicallyinclined phds in economics who are busy working onthese questions. so that's an example of anevolution of the model. it's still basically hal and menext to each other having these conversations. but the difference is nowwe have more rigor. there are many, many exampleswhere the company would do stuff ad hoc wherethere are now teams that do it correctly.
but the culture, thestructure of the company, has not changed. i worry that we have to changeit because we're now 20 something thousand people. and there are issues aroundscaling human organizations, even with such an attractivemodel. audience: so, everyone looksto google as a model. is there any other place, otherorganization or company, that you look to for suggestionsand inspiration?
eric schmidt: mostly tonegative examples. there's not been a company thatgrew as quickly in the human side and expansion sideas we have, to my knowledge, in us history at the rate interms of head count and globalization. maybe you know onesthat i don't know. one way to think aboutgoogle is we faced every management problem. we just face it faster.
and i can repeat the ten ofthem: employees vesting out, management topping out, andthe people that need to be promoted, motivational thing,people having other personal crises, lack of coherence, lackof time zone issues, lack of communication, cross-productissues, platform issues, platforms don't scale,shareholder issues, so forth. and so we just facethem all at once. but we still face them. so one way to answer yourquestion is to say that the
future is ambiguous, and thatthe way you want to deal with such ambiguity is to havethe smartest people working with you. so what i try to do is i try to,to the degree that i can, i try to anticipate theproblem we're having. and i try to say,ok, you guys. you think you're so smart. ok, what are we goingto do about this? and then that provokesthe internal debate.
gary hamel: so maybelast question. john. one last, and i'll follow up. audience: you guys havebeen an up and comer. you've had wonderful mediacoverage, and of course has been contrasted with microsoftas the villain. eric schmidt: so what'swrong with this? audience: nothing. but i sense that it's beginningto change, that i'm
beginning to see moreand more negative articles about google. and do you guys have a strategyor proactive way to deal with that? envy begins to seepin as you begin. you're getting on top. and as you get on top,you begin to get attacked, and the negative-- eric schmidt: that's actuallybeen true for a long time.
we were fortunate that when wewere not public, we could hide because nobody knew how well wewere doing, although people suspected it. but once we went public and withall the attendant hype, the secret was out. one way of thinking aboutthe press is the press starts here. it's the clock model,basically. you're up and coming.
you're exciting. you're incredibly interesting. you're dominate. you're arrogant. you're a disaster. you're all screwed up. then there's an opportunityfor resurgence, ok? audience: where areyou on the clock? eric schmidt: well, we believewe are between 6:00 and 7:00.
and we furthermore believewe will be there, essentially, forever. and the reason is actuallyvery simple. as long as we're gaining share,which we are globally, we become too powerful. and one of the roles of thepress is to keep people from becoming too powerful. and that's a very legitimaterole for the press. i'm not criticizing it.
it's a reason why our countryworks and the fourth estate exists. and i admire it and i'm happyto be part of it. so we understand thatthat's the cycle. they also get tired of writingarticles about the food. you just literally gettired of writing the nice pleasant articles. there must be something wrongwith the company. and there certainlyare examples.
the question is whetherit matters. remember the fourthings i said? end user satisfaction, end usersatisfaction with ads, building the google network,and growing and scaling the it clearly affects me, ok? so, an example would bethat we went public. and we had had generallygood and mild press. and during the time when wewent public, we were not allowed to talk to the pressunder this various quiet
period rules, from aprilto august in 2004. and we had the worst presswe'd ever seen. articles about the idiotsthat we were. and literally just namecalling and so forth and so on. and i was very worried that thiswould affect our brand. and we tracked user traffic. and user traffic exploded,went straight up. audience: as long as theyspell your name right?
so it does appear that thereis, within some limits and obviously there's some thingsthat you shouldn't do, that the criticism of the incumbentcan in fact making the incumbent stronger. it certainly helps us understandhow we're viewed. another example, sinceyou were kind enough to mention microsoft. it's always a good example forme because i've competed with them so many years.
their high point or low point,depending on your view, with in 1997 prior to the trial. and during the trial they lostsomething which is very hard to get back, which isthis sense of the american success story. and if you remember tom brokaw'sinterview with bill gates in the early-- 1994, 1995, wandering around,talking about the king of this enormous enterprise andso forth and so on.
the press was largely fawning. if you go back and youreconstruct the errors that they made, and i obviouslybelieve that there were many which ultimately resulted in aconviction, there were signs all along the way. and i lived there. and there were many subtlethings that they could have done differently, which in sum,in my view, would have avoided the loss of somethingwhich is very, very important,
which is the imageof the brand. so one of the things that i doworry about, to try to give you as crisp and honest ananswer, is, are those signs out there now and arewe listening? and we can debate that. but that's what we talk about. gary hamel: so maybe-- audience: so you'reconscious of it. so your conscious is probablyless of a problem.
eric schmidt: well, wehave to act too. gary hamel: so i guess maybethe last question is-- we hope you have a long andcontinued career at google. but if for some reason-- eric schmidt: i have16 years to go. gary hamel: 16 years to go. if for some reason tomorrow youended up running boeing or running motorola or runninga company that faces a difference--
i mean, very complicatedproducts, highly interdependent, suppliersall over the world. eric schmidt: so, wehave all of that. gary hamel: so what part of the google model would translate? i mean, what would be the firstthing you'd do in your first 100 days as a ceo if youwere a much more traditional company with all the legacythat they have? eric schmidt: well, the first.it's easier to talk about it
from my experience at novell. i went to novell thinking novellwas a growth company. and i was wrong. it was not a growth company. it was a differentkind of company. and i did all the things thatyou do in a growth company. and it didn't grow because itwasn't a growth company. it was a mature business. so the first question i wouldalways ask if i were
parachuted into another company,aside from why did i leave, is, what is the natureof the business? is it really growing? how do we really makemoney here? and i think the role of a ceois to be honest with that. many of the large businessesare really relationship businesses with thegovernment. it's really about hiring peoplewho are connected to the government.
and that's, on the margin,how you get your revenue. other businesses are not reallyabout innovation. they're about capitalmanagement. and the airlines businessis a hopeless business. i have no idea howto solve that. it's always my worst example. what you want to do is you wantto figure out, are you in a business that fundamentallyhas high capital costs and high increasing costs, and lesstherefore profits, or do
you have a business where youcan get economies of scale from capital investment? so you start going throughthose sorts of questions. and you have to be honest.and i can tell you in my experience, having parachutedin, the people who you work with won't tell you the truthbecause they don't know. so the single most importantthing that you can do, and i suspect those of you who areable to do consulting and so forth are probably in thesituation, is try to
understand how the businessactually works as opposed to what the people aretelling you. and google, for example, we havea wonderful sales force. and we say it's the greatestsales force in the world. by the way, every company saysit has greatest sales force in the world. i can tell you the way we makeour quarter is we control the dials on our advertisingsystem. sales guys have relativelylittle to do
with making the quarter. they're very important becausethey cause the order book to be filled. but we can decide whatevernumbers we want per quarter just by changing the dials ofour advertising system. it's very importantto know that. 97% of our revenue comesfrom text ads. i love text ads, right? if 97% of your businessis in a business, you
better love it, right? when i was going to become ceoof novell, i wandered around and asked for ceo trainingbecause i figured all these people know something. and everyone was very kind. so bill gates told me, youshould spend 80% of your time on 80% of your revenue, right? perfectly reasonable. see, it's very easy, it'svery, very easy as an
executive to get confused. like this press question. does it really matter, right? now, it obviouslymatters to me. but does it really matter? because the way you lose yourjob as a ceo is revenue and earnings growth. audience: it can demoralizeyour organization. eric schmidt: but it's fineto have a demoralized
organization as long as you havea high stock price and make a lot of money. my point is that it'svery, very easy. everybody always has allof these arguments. the easiest way to lose yourjob as a ceo is to have revenue going the wrong way. so when i started at googlei said, we have a very simple rule here. we're going to have absoluteprofits are going to increase
every quarter. i'm not talking aboutgrowth rate. i'm talking about absoluteprofits. very simple. we'll figure out away to do that. go work on that. because it seems to me that aslong as absolute profits are growing, it's veryhard to complain. all we're arguing aboutthen is growth rate.
because i've been onthe other side. and so i think wheni think about-- i'm trying to givea sense of color. the businesses that you'redescribing are either growing or not. they either have capitalavailable for them to invest or they don't. they either have thesestructural impediments or they don't.
they often waste a lot of moneyon things that aren't very important compared to thethings that i said first. and i think the most important jobof a ceo is to know the answer to that question. and then the test of you asa ceo is whether you can maneuver through the culture. at novell, i had an employeemeeting in utah. and this very nice lady came upand introduced herself and said, i was just [? in ?]
[? the ?] [? company ?]. what do you do? oh, i'm the fleet manager. and i said, oh, wehave a fleet. a fleet of what? cars. again, it's amazingwhat you learn. we got rid of the cars, but--
audience:[unintelligible phrase] is you shouldn't have introducedyourself. eric schmidt: anyway,you get the idea. thanks, eric, very much.
No comments:
Post a Comment