MS. DIANE REHM 11:06:54
Thanks for joining us. I'm Diane Rehm, so glad to be back with you. Eric Schmidt was chief executive officer at Google for 10 years. Now, executive chairman, Schmidt has lead the internet company from a fledgling search engine to a $55 billion tech giant with offices in more than 40 countries. In a new book, he writes about how Google hires top talent, why the company had to leave China and competing with Facebook on social media.
MS. DIANE REHM 11:07:29
His new book is titled, "How Google Works." Eric Schmidt joins me from a studio at the NPR bureau in New York City. We do invite your questions and comments. Call us on 800-433-8850. Send us an email to
[email protected]. Follow us on Facebook or send us a tweet. And Eric Schmidt, it's so good to meet you.
MR. ERIC SCHMIDT 11:07:59
Thank you, Diane, For having me on.
REHM 11:08:02
My pleasure. You know, I'm wondering what first drew you to Google. I mean, there you were head of Novell. You had a good job there. What was it that got you interested in this tiny little startup company?
SCHMIDT 11:08:19
The story is at least entertaining for me. I was at a political event and John Doerr, who's on the board of Google and also of Sun, my earlier company, said, you should come over and visit Larry and Sergey. And I remember thinking, who would ever need a search engine, what a stupid idea. But nevertheless, John's prodding invited me to come over to an old building, that is an old building that I had had an office in, that now had these new young people in it.
SCHMID T11:08:50
And Larry and Sergey were in a combined office. They had food in front of them and they had my bio, my description from the internet on, and they wanted to debate me. And we spend an hour and a half debating and they decided that the work I was doing at Novell was a terrible idea and I was very offended by these obstreperous 26 year olds, but I realized, as I left, that I'd not had that good a debate in a decade and that's when I joined.
REHM 11:09:21
How old were you when you decided to join these upstart 26 year olds?
SCHMIDT 11:09:31
I was 46.
REHM 11:09:34
46. So 20 years difference. And their attitude, their argumentativeness, their ideas, I presume, finally got through to you?
SCHMIDT 11:09:49
Well, what I discovered when I joined the company was that it was the best collection of new technologists, that is people with new ideas, that I had seen, again, in maybe a decade, but maybe longer. In this little building was this enormous potential and it worked in odd ways. They had long conversations. They didn't have management. They didn't strategic plans. My friend Wayne said it's like the Borg. It just moves forward.
REHM 11:10:18
It just moves.
SCHMIDT 11:10:20
In the book, we tell the story where -- and this is very early on. We were transitioning to a new ad system. And on a Friday afternoon near my office, Larry had put up a list of ads and queries and he wrote, "these ads suck." And he just posted them on the hallway. And I thought, now that's odd. Normally, you would call up the director of advertising and say, the ads suck. But he didn't do that. He posted them for everyone's review.
SCHMIDT 11:10:56
And so nothing happened. And then, Monday morning, over the weekend, a lead engineer and three others who had nothing to do with ads had invented, over the weekend, a completely new advertising system that changed Google and is now worth $30 billion of revenue.
REHM 11:11:13
Now, that's fascinating. I mean, it would seem that posting those ads would have been designed to embarrass the people who...
SCHMIDT 11:11:24
Yes, or humiliate them or something.
REHM 11:11:25
...put them up. But instead, what it did was to spur creativity from a whole other area.
SCHMIDT 11:11:34
And in hindsight, it was because everyone in the company was trying to do something better and it wasn't seen in the Google culture as offensive. It wasn't seen as criticism. It was, is there a better way?
REHM 11:11:49
But there's...
SCHMIDT 11:11:50
So what I learned...
REHM 11:11:51
I'm sorry.
SCHMIDT 11:11:52
...was that your employees have to see themselves with a mission to change the world, right, rather than a "I'm this component," you know, I do this bolt on this wheel of this car.
REHM 11:12:04
Right. So the engineers would be bold enough to step forward and create a new ad which in and of itself is really fascinating. Shortly after you were hard at Google, you faced a major challenge from Microsoft. What was the challenge? How did you deal with it?
SCHMIDT 11:12:32
Well, of course, we knew Microsoft was the incumbent and we were trying to keep Google off the radar. We didn't want people to know what Google was really doing and we certainly didn't want people to know how well we were doing. This is before we were public. So nevertheless, we had to have a plan and one of the board members said, we should have a plan. And in the book, this is called "The Finland Plan."
SCHMIDT 11:12:54
It was, in fact, we actually called it "The Canada Plan." We, of course, in the book use a code name for the code name for Microsoft 'cause Canada was near Microsoft.
REHM 11:13:01
Okay.
SCHMIDT 11:13:02
And so in any case, we wrote this plan, but what was interesting about it is it didn't look like anything like a normal response or normal business plan. All it was was new product ideas that would literally redefine the conversation and it worked. So, again, what we learned, even early was of the power of the internet, if you have a new product idea, you don't need to worry so much about your brand or your marketing or your budgets or your channels. You just have to build a product that's extraordinarily good and get customers quickly.
SCHMIDT 11:13:38
And if you look today, now a decade later, that's how the internet is working. Every day you see people vying for your attention, some new service or some new product. And when they catch on, they grow very fast.
REHM 11:13:50
So the idea begins with a good idea, but from there, you have to have lots of cooperation rather than competition or is competition part of the cooperation, just presented in somewhat different ways?
SCHMIDT 11:14:18
Very good question. It's find to have external competition. I think that strengthens both companies. You really don't want that kind of internecine competition within a company. It becomes very destabilizing 'cause you're wasting resources. So you're much better off in a company saying, does anyone have a great idea, and then having a process where people can debate that idea and come to it.
SCHMIDT 11:14:41
So I don't know about you, but most companies, they have a decision maker who sits at the end of the table and they have everyone lined up and whatever the decision maker says, this is typically the CEO, everyone just nods. That's not a very good way to run a company. A much better way is for the decision maker to say as little as possible and let the people at the table have a debate.
SCHMIDT 11:15:02
And by the way, you have to call on people who haven't said anything to say something, especially women because women tend to be not the first to answer in these settings. And you've got to get the discussion. You've got to get a robust, you know, argument going on. But the goal is not to get to consensus. It's to come up with the best idea and then get everyone excited about it and that works.
REHM 11:15:21
Now, there's another element involved and that happens to be the physical layout, which in and of itself, may be more conducive to the kind of idea-sharing or presentation you're talking about.
SCHMIDT 11:15:42
So in my history, I had always assumed that the right way to do it was to these engineers, put them in offices by themselves with doors that they could close so they could think deep thoughts. This is a terrible idea. So Google organized the way graduates students work in universities, which is typically three or four graduate students to an office and move them around and change and so forth or open cubes. We call this the Pack Them In Strategy.
SCHMIDT 11:16:10
And the fact of the matter is, as proud and successful as these people are, if you tell them everyone shares an office, they'll share an office, too. I found myself sharing an office. I am, of course, the CEO and one day, I walk in and there's someone in my office who's just moved in 'cause he said, you were never here and the office next door was full of five people and it was too crowded. And I didn't know how to kick him out. We became good friends.
REHM 11:16:36
That’s great. Is it different when you're thinking about millennials? Are they perhaps more open to the kinds of ideas that Google has come to stand for?
SCHMIDT 11:16:54
Certainly, the millennials that we recruit, hire and so forth, in every way, they seem better than my generation. They're better prepared, they're better educated, they're more collaborative than my generation and they're more socially conscious. They don't want to spend their time working for the man in some cog in a wheel doing one task. They want to feel that there's a social purpose to what they're doing, that they're improving the world in some way.
SCHMIDT 11:17:26
And, indeed, you'll look in tech companies, many of them have very sophisticated corporate responsibility programs or branding around trying to help. And that's as much to keep the employees motivated as it is for good customer relationships.
REHM 11:17:40
And you actually provide food, I gather?
SCHMIDT 11:17:45
We provide everything. I was concerned that we provided everything completely. And, in fact, when I joined, we had to establish a rule that you couldn't live at Google. You actually had to have a bed somewhere nearby that you went to for eight or so hours. But everything else, right, breakfast, lunch and dinner, you know, all the other benefits and, of course, we're very pet friendly.
SCHMIDT 11:18:11
We had a very complicated pet policy because, you know, you need to make sure that the pets are managed and arranged.
REHM 11:18:18
Eric Schmidt, he is executive chairman of Google. And we're gonna take a short break. When we come back, we'll talk more, take your calls, stay with us.
REHM
And if you've just joined us, Eric Schmidt is with me. He is the former chief executive officer of Google. He served in that post from 2001 until 2011. He is currently executive chairman of Google. And my question to you is, after just 10 years, why did you vacate your post?
SCHMIDT 11:20:21
I think 10 years is a good term for a CEO. It's the same sort of rough timing of University presidents, look at U.S. presidents. There's something about the decade where it's time for a new generation. But the true thing that happened was I was sitting one day across the table with Larry and Sergey, my closest friends and colleagues. And I've always referred to them as the boys. You know, the boys, the kids, you know, what have you.
REHM 11:20:48
Sure, sure.
SCHMIDT 11:20:49
And one day I realized that they had grown up. That they were no longer these brilliant young men. They were seasoned industry veterans who should naturally have the reins. And I think if you look at the success of Larry and Sergey over the last three years, you see that that was the right decision. Google X, driving largely by Sergey. Look at the quality and depth of the product work that Larry has managed to put in, it's been an exceptional transition and very good for everyone.
REHM 11:21:19
I'm glad. What do you think about a talk-show host who's stayed in the chair for 35 years, who has five female full-time producers, two part-time female producers, all ranging in age from 60 down into their 20s?
SCHMIDT 11:21:46
Well, I -- age certainly does not matter. But I'm very happy to see the promotion of women. One of the issues in our industry is there's an insufficient number of female executives. We have, I think, roughly three women on our board now. Maybe three or four. And we're working hard to address the gender imbalance. There are good, romantic, you know, political reasons, sort of trying to make the world a better place.
REHM 11:22:12
Sure.
SCHMIDT 11:22:12
But the real reason you want gender diversity, is that you want multiple viewpoints.
REHM 11:22:17
And…
SCHMIDT 11:22:18
You just get a better business and product as a result.
REHM 11:22:20
How large is the board in total?
SCHMIDT 11:22:25
It's about nine or ten.
REHM 11:22:26
Nine or ten. So a third. Okay. Now, you've talked about the young people you hire. What are the criteria by which you hire?
SCHMIDT 11:22:42
We look for something -- a term we've used in the book called smart creatives. And I would venture to say that there is a much larger movement afoot. If you go back to what we said about these millennials and their expectations, they're better educated, better trained, more capable of taking on responsibility. But they're going into corporations of the old kind. You know, the corner office, and the traditional hierarchy and so forth. So in Google's case, what we tried to do was to look for people who had -- let's call it sort of three broad characteristics.
SCHMIDT 11:23:16
They were technical in something. It didn't have to be computing, but they had to know something analytically. You know, they were a rocket science or a medical doctor or a physicist or an economist. Right? Or a very technical lawyer. They had to have some business savvy, some business acumen. They had to have a feel for business. And they had to be curious. And the test that we describe in the book -- which is my favorite one -- is we call the LAX Airport test.
SCHMIDT 11:23:43
Which is, if you were struck in the LAX Airport for six hours with this person…
REHM 11:23:48
Six hours, okay.
SCHMIDT 11:23:50
…would you have six hours' worth of things to talk to them about? By the way, this is a very tough test, for those of you that have been at the LAX Airport. And in your case, you're in D.C., let's think about Dulles, JFK.
REHM 11:24:01
Sure, sure.
SCHMIDT 11:24:02
You pick your favorite large airport to take the point. But the fact of the matter is that most people -- if you talk to them for a while, they'll tell you what they're working on. They don't -- they're not very curious. They don't have a lot of new insights. We want those people who have great insights and great ideas, even if they're wrong. And we want them to challenge themselves. We want them to aim much higher than they would in any other corporation.
REHM 11:24:27
So, now, how many young people in that millennial group would you say Google hires each year?
SCHMIDT 11:24:39
It's hard to know the exact number. We'll hire, you know, somewhere between 5,000 and 10,000 employees worldwide this year. So it's a large amount of growing. And what I can tell you is that in every survey that we see, Google is rated the number one place to work for new graduates, PhD programs and MBAs, those sorts of things.
REHM 11:24:59
Do you go out…
SCHMIDT 11:25:01
So we must have hit, we must have hit the ball out of the ballpark.
REHM 11:25:05
Do you go out to recruit them or do they come…
SCHMIDT 11:25:08
Of course.
REHM 11:25:09
…to you?
SCHMIDT 11:25:11
We do both. And we have recruiting programs. But often the best referrals are colleagues or someone one year younger than you in a University. We do other things. So, for example, we'll fund University's to do research. And as a result we'll get to know the faculty. Then the top students will have a natural interaction. And it becomes obvious. In my case, then I decided to leave Novell I only interviewed at one place. It was at Google and I knew I would be there because it was such an obvious fit for me, personally and culturally.
SCHMIDT 11:25:42
We want it to be a no-brainer. I always tell people, if I have to explain to you why you want at Google, you want to work at Google, we're having the wrong conversation. You better want to work here and we better want you. And then we'll figure out if it works.
REHM 11:25:55
I have heard that messy desks at Google are a good thing. Tell me about that.
SCHMIDT11:26:04
Yes. Well, our argument is we want people who are busy, the concept of work/life balance, and, you know, you come in at 9:00, you leave at 5:00 and everything -- which isn't how the world really works. The world changes because people are passionate. You've done this job for long because you're passionate about it. You like it.
REHM 11:26:23
You bet.
SCHMIDT 11:26:24
It's what you do. It has your identity. No one has to call you up in the morning and say, get to work, you're late. You know, that conversation has not occurred in 30 years. Right?
REHM 11:26:34
Right.
SCHMIDT 11:26:35
You do this. This is your identity.
REHM 11:26:36
Right.
SCHMIDT 11:26:38
Right. That's what you want in a job. It's not a job, it's a calling. Warren Buffett, we met -- visited him early in Google's career to talk to him about this. And he said, "Look, I only buy companies where the chief executives and the executives are passionate about their business because then I can buy and then they keep doing what they were going to do anyway. They don't need me. I need them. The key to managing smart creative is to let them be passionate around the context of the company and to invent its future.
SCHMIDT 11:27:09
They'll figure it out, if you let them. Now, if you're always telling them, do this, do this, they're going to quick and they're going to go work for a startup or another company which can more tolerate their intelligence and their ideas.
REHM 11:27:21
Now, tell me whether you wrote this book, along with Jonathan Rosenberg, in order to encourage other companies to try the Google model? Or did you just want to talk about how well it's worked for Google? Do you think it could work as well for other organizations?
SCHMIDT 11:27:53
Well, in fact, many of the story of Google success has already been written, but there was no compendium, there was no book, that you read it you could figure out how to apply this to your world. And we'll venture to say that the principles of our book apply to not only every tech startup, which they obviously apply to, but to other businesses, as well. So a classic example, large businesses tend to only operate with a one-year time frame.
SCHMIDT 11:28:19
And if you ask them about disruption and new technologies and so forth, they'll give you a marketing answer or a generic answer. And they're not prepared in two or three years when the rug gets pulled out from under them. And in every industry, medicine, transportation, technology, there are always new ideas coming along. You have to figure out how are you going to deal in the competitive threat, the new innovation, what are your new ideas over the next five years. And we say very clearly that the CEO now needs to be the chief innovation officer.
SCHMIDT 11:28:59
Literally, in every company, if you're not reinventing yourself, you know, there are plenty of examples. Right. The old rule of the railroad companies thought -- discovered that they were in the railroad business when they should really have been in the transportation business. There are all sorts of examples in history, right, of this. That the postal service, as letters decreased, needs to move to parcels, because parcels can't be sent electronically.
SCHMIDT 11:29:26
There's just example after example in every industry of these transitions. And the characteristic that's different now is they happen faster, so people are even less prepared. And, by the way, it applies to Google as well.
REHM 11:29:38
Well, that's an interesting point to raise. How is Google -- because I assume Google is thinking, not one year ahead, as you said, but five years ahead.
SCHMIDT 11:29:57
Well, one metaphor that you can look it is some years ago I called four companies, the four horsemen. And they were Apple, Google, Facebook and Amazon. Each of what -- each of which has done very well. And each of which does things quite differently from the other. And we've never in our -- in the tech industry had four platform companies that were big, powerful, well regarded, strong audiences, well-funded, growing as fast as those four.
SCHMIDT 11:30:30
I would argue that the competition among those four -- which is brutal, I might add -- is really producing tremendous consumer behavior. Not unlike the competition that you saw in the '40s and '50s in the auto industry. Right. Which ultimately produced the large and -- for quite some time -- very well-regarded American firms. So out of that cauldron of competition, you get these outcomes. In our industry, the other challenge you have are the two people in the garage.
SCHMIDT 11:31:00
And new entrants, right, somebody comes up with a new, amazing app on Android and the iPhone, they could really change the game. Right. And we tell the book -- the story in the book of two very young product managers who, for some reason, we decided not to promote, who then left to found Instagram, which was just acquired by Facebook.
REHM 11:31:29
So if you had promoted them, perhaps, in fact, they would have come up with Instagram within Google.
SCHMIDT 11:31:42
That's correct. And it's important that our firm be able to accommodate that kind of creativity. We now have this thing called Google X, which is a new division for completely new ideas. Right. And, again, people want to work on things. So if you want to think about a new form of energy or a new form of transportation or something new in medicine, there's a place where you can at least come to have a hearing about your ideas by other people of like minds, who are very smart and very tough. And, again, that internal possibility, helps our brand, helps our recruiting. And many of these things are beginning to work. It's very exciting.
REHM 11:32:24
Eric Schmidt. He's executive chairman of Google. His new book, written with Jonathan Rosenberg, is titled, "How Google Works." And you're listening to "The Diane Rehm Show." As I speak with you, Eric, you seem as though you have a very sort of calming approach to what you do and the tone of voice you use is also one that perhaps engenders peaceful confidence. Is that something you've had to work on or is that something that was there in you innately?
SCHMIDT 11:33:17
I think it helps to have had children that went through the teenage years.
REHM 11:33:21
Yeah, I know what you mean.
SCHMIDT 11:33:23
And so working with people of a younger age in a firm, you get to the point where you say, that's great. We love Brittney Spears. She's fantastic. And then we look her up. Or isn't that a wonderful idea. Why don't you pursue that? So if you think of it as -- as long as it's safe, and as long as you're encouraging innovation and so forth, it's fine. Because you're better off taking the bets than missing them. You're better off trying and failing.
SCHMIDT 11:33:56
If you build a culture where everybody is, "No, you can't do that." And, "How did you not hit 100 percent?" And so forth -- by the way, which is how our political system works.
REHM 11:34:04
Yeah.
SCHMIDT 11:34:04
You're much, much better off saying, "What's the moon-shot idea? How do we build an amazing product that changes the world?" And by the way, even if we do half of that, it's seriously better than anyone else has. And then that buys us time to finish the mission.
REHM 11:34:19
So, Eric, you've mentioned our political system. How would you, applying what you've learned and what you've incorporated at Google, how would you apply that to the way our political system operates today?
SCHMIDT 11:34:40
Well, if you look at our political system, it's best to understand how the incentives work. So in a corporation, at the end of the day, Larry and Sergey and myself, we all have the same objective. We had shares of the company. We had large control over the company because of the voting structure. We're in it for the very long term. Right. So I like to say different circus, same clowns. Right. You know, it's the same people over and over again. Right. Trying, trying hard.
SCHMIDT 11:35:10
And I mean that. In the political system, because of the way our system has evolved, the combination of gerrymandering, where the districts are all safe and the fact that a very large amount of money has to be raised in order to run for office, it's really tilted the political system to extremes or special interests or so forth, on all sides. And I think everyone has commented on this. My own view is that we would be better off -- you can't -- I don't know how we would ever do this -- with more of the British system as currently implemented.
SCHMIDT 11:35:42
Where, you need a constitution, which they don't have. But imagine a five-year program, where at the end of the five years, you could do quite a bit of what you want in that five years, subject to the constitution, but at the end of the five years you get a real up or down vote as to whether you stay in office or not. And so some of those systems look to me to promote more accountability. And on the American system, everyone has deniability.
SCHMIDT 11:36:07
Everyone can say, well, I didn't -- I wasn't proposing that. And then they go raise more money from whoever they're trying to raise money from. It perverts that system of ownership and accountability.
REHM 11:36:17
So are you talking about a single five-year term for both the president and members of Congress?
SCHMIDT 11:36:28
Where they would be held accountable for the commitments that they had made. If you look at the rhetoric from the party logic, the platforms, what the politicians say, it's designed to get you to vote for them. The system is relatively inefficient in remembering what they said and what they promised and holding them accountable. Again, it's true of all of our political leaders.
REHM 11:36:55
Have you ever thought about running for office?
SCHMIDT 11:36:59
I actually decided not to, having spent a great deal of time in Washington now, and also in Europe and in Asia, I've very much happier working on innovation in a company.
REHM 11:37:10
And that is Eric Schmidt, who I on the line with us from the NPR studios in New York. I can see him on Skype. His new book it titled, "How Google Works." Short break. We'll be right back.
REHM 11:39:52
And, oh boy, did I make a mistake when I said I was looking at Eric Schmidt on Skype. In fact we are on Google Hangout. So forgive me, Eric Schmidt for...
SCHMIDT 11:40:08
Well, what's -- it's actually good because Google Hangout is an example of a team looking at Skype and doing a product which we think much better, must more scalable, much higher quality. We're trying it out today.
REHM 11:40:21
And it's working quite well, thank you very much. Here's an email from Gretchen who wants to know, "How many African American or Hispanic board members and staff do you have? Do you make special efforts to recruit creative people from minority communities?"
SCHMIDT 11:40:46
We do make a special effort. There is a hug crisis in tech that there are relatively few Hispanic and African American background. We have special programs in universities that have a preponderance of such people who work with the high schools and so forth. It's a very deep problem which I suspect is a societal problem, that the people who have that kind of talent in their teenage years are not getting access to the teachers, the computers, the knowledge. And we need to fix that.
REHM 11:41:18
All right. Let's -- following up on that, let's go to Myersville, Md. Noel, let's take your call. You're on the air.
NOEL 11:41:30
Hello, Diane. Thank you for taking my call.
REHM 11:41:32
Certainly.
NOEL 11:41:33
Eric, I am wondering what type of education paradigm you would like to see in our grammar schools even, and our high schools, that would perhaps groom these smart creatives that you're speaking of.
SCHMIDT 11:41:51
Well, I should say at the beginning that I'm on the board of something called the Khan Academy. And the Khan Academy provides a different way of learning for students in that age group. And the idea is instead of doing homework at home, you do homework in the classroom and you do the learning on videos and so forth at home And there's evidence that it's working especially for underprivileged students.
SCHMIDT 11:42:17
So I think we've been locked into this model of people in seats for 100 years but we're beginning to get these new online tools that can assist a teacher in making the student more effective. I think the truth is, if I had children that age today what I would do is I would try to figure out if I have choices. In other words, is there a charter school nearby which I could evaluate against the public school? And in any case I'd want to supplement my schools -- my students' knowledge by having them use something like the Khan Academy or the gamification of learning.
SCHMIDT 11:42:51
It looks to us, from a scientific perspective, that students, especially younger students learn better when it's a game or a contest or something fun. And they don't learn so well sitting in a seat being told to sit there. Indeed, there are many people who believe that the sort of current over-diagnosis of ADHD is related to the fact that students, in particular boys, have an awful lot of trouble sitting there for hours and hours in the industrial model of education.
REHM 11:43:20
Thanks for your call, Noel. And as I recall, we did have the leader of the Khan Academy on this program and I was most impressed. Let's take a caller in Pittsburgh, Pa. Lori, you're on the air.
LORI 11:43:43
Good morning, Diane. Good morning, Eric. I'm about Eric's age and I spent a lot of public school reading the encyclopedia. So when search engines came around I loved them. I spent a lot of time on them. And for a few months in 1996 I worked for a search engine company, not Google obviously. A lot of us would kick around ideas and make suggestions.
LORI 11:44:05
This company was owned by a marketing group. And as a result, no one ever looked at any of our suggestions. So I gave up and left after about six months. It's been interesting during the early 2000s that Google later went on to do almost everything that we had told the other search company to do back in 1996.
SCHMIDT 11:44:27
So one of the interesting things about technological booms is the ideas are present for a very long time. So cloud computing, web-based email, modern browsers, these ideas have been around for 20 years. Why was Google able to ride this so hard? We would say in the book it wasn't because our vision was right. It was because our people were right, right. That we got the right people and we got enough of them that we could move the ball forward.
SCHMIDT 11:44:59
We were also obviously lucky in the sense that the internet was much more powerful than it was in 1996 when you were proposing these ideas. And so think about the dial-up nature of the internet in 1996 versus the internet today. You couldn't imagine the apps and the iPhone and Android phone activities 20 years ago. It wouldn't have worked.
REHM 11:45:24
All right. Thanks for your call, Lori. I know that Google is famous for your don't-do-evil mantra. Number one, where did that come from? Number two, why is it so important to the success of your company?
SCHMIDT 11:45:50
Well, it's interesting that I -- when I joined the company people were talking about don't be evil, and I thought it was a marketing joke. I thought it was one of those things that companies say that everyone ignores. And then in one of the first meetings we were sitting around this small table and we were having a discussion about whether a particular ad product should be combined with search or not. And one of the engineers named Ron pounded his fist on the table and said, that's evil. It's a terrible idea.
SCHMIDT 11:46:21
And the whole conversation stopped and then there was this huge debate as to whether it was evil or not. And I don't actually know if it was evil or not. I was too new. And we actually canceled that project and tried something very different. And I realized at that point that this don't-be-evil had the same function in the Kanban system of manufacturing that the Japanese had invented in the '90s or the '80s where any employee could pull the ripcord and stop the assembly line if they thought that there was a product problem on the line. Is was the shared responsibility.
SCHMIDT 11:46:56
So I learned that this don't-be-evil was very real. And you don't see the evil stuff because the evil stuff is elided out of the system by judgment. So since there isn't a manual that says how to implement your favorite religious text about evil in technical terms, we have to discuss it. We have to say, is that evil or is it not? But if the consensus is it's evil, we stop.
REHM 11:47:22
What about the flipside, let us be altruistic?
SCHMIDT 11:47:31
In what sense do you mean?
REHM 11:47:34
In terms of the outlook and the behavior of the company and each individual.
SCHMIDT 11:47:43
One of the things that you learn is that people are, in fact, optimistic and they want a bright future. So altruism and optimism become part of your management approach. Today if you found a company, you found it for a social purpose, something that we're trying to do. We're trying to improve transportation, improve cars, improve human lives, extend human lives, improve communications, right. We don't have the other aspects.
SCHMIDT 11:48:11
So starting with that as a premise, most of the tech companies I know of are now copying the Google generosity with respect to foundations and philanthropy and 1 percent of earnings and so forth. And partly we do it because it's the right thing. But the other reason we do it is because it makes our employees happier. And a happier employee is a harder-working employee.
REHM 11:48:30
But now think about the flipside of that. Think about GM. Think about the executives who knew early on that there was a flaw in the product that apparently was going to cause trouble. I'm sure they didn't presume there would be deaths involved but is that what you mean about don't do evil?
SCHMIDT 11:49:03
I'm not familiar with the specifics there but I think the general point applies. In a big company there's always somebody who knows something ahead of you as the leader. Your job is to make sure if it's something that you're going to have to deal with, you get a heads up in about one second. So the culture has to include all sorts of whistleblowers but also sort of heads ups.
SCHMIDT 11:49:27
And the other part of the bias is that there are times when the lawyers or the PR people will say, don't talk about this. You get a more robust company if you confess early, right, as a general principle.
REHM 11:49:42
You bet.
SCHMIDT 11:49:43
Let people know what you're doing, write it down. You're going to get criticized but it's always ultimately the cover-up that's worse than getting the facts out now. And we see this over and over in business.
REHM 11:49:56
We have an email from Mary who says, "Google is working on a self-driving automobile." In fact, I think you've got one out on the road in California. She says, let's see, "Are you working on traffic flow with GPS-controlled technology? Every time I sit at a traffic light and traffic is not moving in any direction, I say, is Google working on this?"
SCHMIDT 11:50:36
Well, we're working on parts of that. We're very excited about the autonomous vehicle self-driving cars. I've been in that car and let me tell you that after calming down and letting it drive me with the steering wheel working, I discovered that it follows closer than I do, right.
REHM 11:50:52
Really.
SCHMIDT 11:50:52
And it changes lanes -- yes, and I thought, wow.
REHM 11:50:54
Really.
SCHMIDT 11:50:55
And it's because it has a laser that can see better than my eyes or your eyes can. The laser is that fast so it literally can see things faster than a human. So my simple question to you is, do you want to address this horrific problem of more than 30,000 deaths in American highways every year? Think of the loss of lives and the impact on society of the loss of these amazing human beings. If there's a way using this technology, either as driver assist or auto pilots or safety vehicles or self-driving cars, we want to work on that.
SCHMIDT 11:51:29
Now with respect to the traffic density, remember there's no reason why the traffic lights can't talk to the cars. And the traffic lights and the cars can figure out that maybe we should have the light be red longer or green longer. Or this person is just obstreperous and we're going to call the police.
REHM 11:51:46
How long do you think it's going to be before that self-driving automobile is truly the majority on the road?
SCHMIDT 11:51:57
Well, the technology works now and cars are replaced every six or seven years. But it will be a long time before a majority of cars -- because there's simply so many cars in the -- there are more than 10 million or so cars made, you know, per year in the U.S. There's all sorts of reasons why it just takes a long time for cars to turn over.
SCHMIDT 11:52:22
A more reasonable prediction is to say that you're likely in your lifetime to end up in an electric car that has very good driver assist so that it has the equivalent of an auto pilot. But you're still going to be there and there's going to be a disconnect button if you're happy. And we don't really know because it'll be determined by the regulators and they have an important job to do. We're talking to them now.
REHM 11:52:47
And you're listening to "The Diane Rehm Show." I know that many of our callers are interested in privacy concerns. Can users of your search engine be sure that they are not being directed to advertisers who pay more to appear in results?
SCHMIDT 11:53:17
They can be because we do not allow the advertising results to affect the ranking of what are called our natural search listings. That principle, by the way, was established by Larry and Sergey upon the founding of the company. It's never varied and it's always been true. And it's part of the secret why Google was so successful. Our competitors didn't have that rule. so I can assure you that the results you're seeing are not affected by the advertising being business around it.
REHM 11:53:44
And what about the announcement from Apple CEO Tim Cook that a privacy section of its system that assures consumers it's not building a profile of users based on email content or browsing habits? Is Google going to create a similar policy on its site?
SCHMIDT 11:54:13
Yeah, I was actually confused by his message because we're not doing what he's talking about. And indeed they are late to the party on the privacy side. We've had the kind of encryption and so forth that they're now adopting for a couple of years. We've been the leader there. So perhaps there's miscommunication.
REHM 11:54:30
So Google does not read people's emails on Gmail in order to target ads?
SCHMIDT 11:54:40
Well, actually we do in the following sense. The term profile is what bothered me. It has always been the case that a computer has the ability -- Gmail is free -- to show ads against the subject of its email. And of course you're free to click on those ads or not. But we don't do anything with that information. That's been true for a decade.
REHM 11:55:00
Okay. And I think we have time for one last caller. Let's go to Kristen in Syracuse, N.Y. Quick question, Kristen.
KRISTEN 11:55:16
Hi, yes. Thank you so much for taking my call, Diane.
REHM 11:55:18
Sure.
KRISTEN 11:55:19
I'm curious to know if Google is still supporting ALEC, which is that fund lobbyist in D.C. that are funding climate change deniers.
SCHMIDT 11:55:30
We funded them as part of a political game for something unrelated. I think the consensus within the company was that that was sort of a mistake. And so we're trying to not do that in the future.
REHM 11:55:42
And how did you get involved with them in the first place? And were you then disappointed in what you saw?
SCHMIDT 11:55:52
Well, the company has a very strong view that we should make decisions in politics based on facts. What a shock. And the facts of climate change are not in question anymore. Everyone understands climate change is occurring. And the people who oppose it are really hurting our children and our grandchildren and making the world a much worse place. And so we should not be aligned with such people. They're just literally lying.
REHM 11:56:19
Eric Schmidt. He's executive chairman of Google. He's former chief executive officer of Google from 2001 through 2011. His new book is titled how Google works. Eric Schmidt, it was a pleasure to talk with you. And maybe we'll talk again.
SCHMIDT 11:56:46
Thank you very much, Diane.
REHM 11:56:47
My pleasure. And thanks for listening all. I'm Diane Rehm.
