♪ >> from our studios in new york city, this is "charlie rose." charlie: eric schmidt has been at the center of google's rise from silicon valley startup to one of the most powerful and influential companies. he was ceo from 2001 to 2011 and is currently executive chairman of alphabet, google's parent company created last summer. but encourages ambitious projects or moon shots it believes can benefit both the company and society. advances in artificial intelligence and other groundbreaking technologies have to revolutions

in medicine, biology, and many other areas. we were at the new york economic club for a wide-ranging conversation. let me begin with a couple of questions. , theyou went to google said to you, we need an adult in the room. [laughter] because it was a good day for you. eric: it was a good day for me. it is an honor to be here. thank you for inviting me. they had decided that they anded someone to run things have spent 16 months interviewing people and made them do things. ceo, you had to go skiing with them or go to burning man with them. and very few people met the test, apparently.

to -- them i wasn't going charlie: 10 years as ceo. what was the most wonderful thing? my world is full of brilliant ideas that are not monetize a bowl in the sense that people have amazing ideas. in order to build a company of that success my google or r,cebook or cooper, -- or ube you need to have a significant change in the way the revenue will come in. we invented targeted advertising which is really much better than non-targeted advertising. and we wrote that really hard. back in the 80's, we had this engine that has allowed us to build these systems. we have been able to fail at big

projects without too much of an issue. can risk much.u eric: we can take risks, investing ideas, and do crazy things. it's part of the culture. that that's not normal. int companies are mocked these debt structures and so forth. we will give them very few degrees of operating freedom. charlie: and today, what is the role you have? eric: i mostly work with friends. trying tolot of time understand how the world really works. and the governments would not screw this amazing thing that is happening up. charlie: is there risk of that? whenever you're affecting communications and information, government has a role to play.

we had a significant battle with china. is generally ok so long as you're on the side of informing people. there are rules of censorship and i think we will operate. it is really up to the chinese government. we want to talk a lot about the future here. the notion of the moonshot. we are looking at it in cancer. are the possibilities a moonshot can do for us? eric: i have come to a sort of of noxious view that we are operating under this zero-sum

set. we're not trying to build things. go back to the interstate highway system that was originally justified. highway of interstate system would cause america not to grow at all. is largely from interconnectedness and innovation. it comes from making the world closer. physically,lly and all those kinds of things the company will do. and also, new inventions come along. we have a consensus. if we just get behind it. it we called it moon shots. >> to a set of doctors.

it might be a very married -- major cancer breakthrough. the two biggest things that are ,rowing on -- that are going on it's an incredible revolution that is going on. , the cancerof them moonshot is powered because we have these breakthroughs occurring because we are able to marry the analog world and the digital world that i live in. there was the industrial revolution and the information revolution. where are we now? there are two phenomena that will be transformative in the next decade.

health, biology, and knowledge. there has been a breakthrough that is a way of gene editing. it is a tough hammer. a piece of genes they did not think were useful and try to reassemble components. that andnation of doing databases of genes and sequencing and so forth allows us to really probe into the molecular and biological structure. it is certainly true that you will be able to get a body part generated out of stem cells that come out of your blood. it is an extraordinary achievement. and removes it from the political controversies. eric: the politics were a stupid argument anyway. that is life-saving.

this is the real combat. i will get on cars in a second. the combination of all of that. the health-care industry sees new treatment is new sources of revenue and new billion-dollar drugs. venture capitals, that is how it works. google is working very hard on the concept of assistance. it uses all of the knowledge that google has generated.

we understand how language is spoken. those sorts of things to try to help you out. one of the versions is an instant messaging app that can reply for you. it learns what to say. our first foray was an e-mail product that would automatically reply. thing and the most common reply is "i love you." it turned out not to be the correct answer in a corporate setting. [laughter] charlie: let me stop you there one second. the idea of a virtual assistant coming out of artificial intelligence, everybody is trying to do that. amazon already on the market with echo. alexa, what time is it? what is the news?

the major companies are there. i assume the competition will be good for the product. is google behind the curve on that? we just announced a product using different technology. this is how our industry works. we are far more collaborative than competitive. of the matter is, the whole ecosystem moves forward. it is reasonable to expect a majority of interaction will be by voice. 10 years ago, i predicted this would never happen. it shows you how right i am. if you look at the technology gains in voice recognition and alexa being so common in everyone's lives. you see it.

i am very interested in voice recognition with knowledge and understanding. charlie: and the data that google has. eric: the underlying algorithms. you can get on your phone, speaking your language. it comes out in another language. does this really work? yes. is it as good as a human translator? not yet. is a good enough to have a casual conversation? yes. takes your voice, digitizes it, puts it into text. that is done using a neural network. translationfferent neural network that can translate by looking at good language. back in her. it name froms there a industrial to information to the age that we are looking at? of all oformative age

the technology? there is not a consensus name for it but i can define it. there is a game called go which americans don't know anything about. it is infinitely harder than chess. a group called deep mind have been working to develop cognitive intuition. -- theveloped an ability ability to take a game and watch the bits of the screen. they can figure out what the objects of the game are, how to win, and beat all humans. that is pretty interesting. you don't have to tell it what the game is.

so how does it do this? it watches for a while and sees common patterns. it learns against that. this is not human intelligence, yet. charlie: you said yet. eric: right. we don't know how hard. we apply this to the game of go. how to only look at certain positions. we decided to have a game against the best player in the world in korea. and we beat him 4-1. charlie: historic and huge. help us understand. all of these things just talked about.

a friend of years said eric's a lot of artificial intelligence. on one hand you can beat go. on the other hand, you have watson. explain artificial intelligence. hears about it, some people are making deep investments. hedge funds and others. eric: remember the biological world. is a happening because it confluence of a platform, a set of ideas, and a large enough money. in the sense that it is transformative. the two are symmetrical. -- i will give you a couple that are simple. retinopathy.

badauses your eyes to go and you become blind. detected by an ophthalmologist but we take pictures and we can do it better than an ophthalmologist. how is that? we see more eyes. we saw one million eyes. it's hard for an ophthalmologist to see one million eyes. there are a large number of cases were to just let the seeuter do technology and more examples, they have better decisions. so on, using that data, we think we can produce from that. we have good goals.

we think we can develop enough intuition that a physicist or a chemist -- you know how they work? i want to combine the chemical and have the following crazy reaction. it's not going to blowup but i will produce a new substance that will get me a nobel rise. so they do that. they have their subsidiary chemist do it. so they can go home and have dinner. the next morning, they come up with another one. these are incredibly intelligent people. we can ask the computer to go through the combinations and -- these are trillion dollar industries, globally. with respect artificial intelligence, they have a different operating idea than

ibm's watson. explain how they are different and what they are trying to accomplish each on their own. what facebook and eat mind are doing have different provinces. in the case of watson, they use a particular kind of inference , the technical term, that works particularly well with jeopardy and complicated problem solving. forhaving a lot of success complex systems and explaining them. you take it away. that is a generalizable result.

this book has a breakthrough in language understanding. they have made significant progress in detecting hate speech. an underlying platform allows you to do that. flow.called tensor a multidimensional matrix. , wethe underlying systems have given this framework to all of our competitors. it builds the community.

charlie: you bought the mind. someone say that what the mind is trying to do is try to understand how you can build from there. the ibm people say it is man plus machine. mind is interesting because the founders came out of neuroscience. they imagined you could build a computer system that uses the same way we do learning. i won't do a good job of this. how much cognitive time did you

spend figuring out the floor was where you went -- where your feet went. and you had a knife and a fork and everyone was dressed properly. there is evidence that the way our brains work is study is seen and we subset the things that are really important. this is called reinforcement learning in the vernacular. they are going to be a core part of this. interesting to hear in business and the economics of the global economy. facebook.zon, google,

google has made a fortune on search. microsoft made a fortune on software. amazon made a fortune on a whole range of different things. companies, are they in pursuit of a holy grail. eric: the tech companies as a group are highly competitive and seeking -- i want to say it right. think of each of these as a platform company driven by innovation that solves a problem. in some cases, a problem you did not know you had. microsoft being the eldest of them, they saw the problem of interoperable workstations. amazon started off as essentially a virtual bookstore. i wanted aalize bookstore bigger than barnes & noble but now that i do, i think

it is fantastic. it is sort of the resuscitation of the company. they let the category. leading the platform fight, we have never had that many companies fighting so brutally against each other and also collaborating. where is the collaboration because you're also suing each other? [laughter] eric: pretty normal. there is lots of collaboration. run on microsoft products. and on apple. charlie: last year they announced a partnership with microsoft. eric: traditional model is that

we won't put anything on the platform. on and on. fact, everyone argues with each other. but we as an industry have benefited from globalization. charlie: do we insist on open sources? it is all being discovered -- or are we looking at a world in which each organization is going to be jealously guarding not only what it knows it is learning but also trying to hire away and protect itself from losing the most talented human beings. this is the genius of competition and evidence of real competition. to hire thetally top people to get our products out.

iphone that you use today. how powerful it is. it is 100 million times more powerful than the computer i used when i was in college. and it costs a lot less. there was only one in college and i stayed up all night to use it and get access to it. it is real consumer benefit. the competitive structure, the architecture you described will continue for a while until another one joins us. charlie: one we don't know now. eric: of course. if the next one is uber, which is done remarkable well and full disclosure, google is a large birth -- innew uber. uber has done incredibly well. i wish i had invented it. what a great idea.

at the same time travis and his -- it was invented in paris at the base of the eiffel tower according to travis. at the same time he was inventing uber, i was giving a speech about how there will be amazing companies founded on smartphones, google maps, and gps. next ubel you that the will beew one we talking about in five or 10 years will be built on the machine intelligence platform. it will use a smart phone. charlie: in terms of artificial intelligence and how smart machines are coming, people like gates -- thebill

idea, is there some danger for machines becoming so smart and so human but uncontrollable that they provide a threat to the planet? --rlie: these people have eric: these people have been watching a lot of movies. my colleagues and perhaps backed ups -- elon -- charlie: stephen hawking. up his concerned over this very important issue by investing $1 billion in a competitor. so we will see how that plays out. let's go through what is needed. we're still learning how to do basic intuition and those kinds of things.

there will be breakthroughs and we will get excited about it. that's not intelligence. we hope to be able to assist humans in their daily jobs. ? think doesn't want help of the professionals and so on. we think we can do that. to geteal speculation that kind of human level intelligence, let alone past. intuitiono engine -- is that there is another discovery needed. the human level intelligence is very powerful. it is hard to define what it actually is. intuition is a discovery through which it might occur. and that the robot is let loose in the lab and decided to kill its owners and so forth -- i saw that movie and it was really

good. there are also questions of disruptive technologies. engines will be obsolete? you always worry about the next idea. inevitably, there is always a new team. the young professor and the graduate students. you always worry about that. there are many ways in which what we currently do would be disrupted over time. charlie: big picture. some people worry that there may be, somehow, going back to the 2000 and 2001, you lift through that. some kind of collapse.

eric: the bubble makes you feel like you are god. i remember being at this dinner. these are the leaders of the free world. we sort of got ahead of ourselves. that it crashed and we rebuilt it happily. for the companies that don't have strong profits, they have a strong potential for revenue scale. charlie: they know technology will bring productivity. will it also create problems in terms of people being displaced from the job market? the 1980's, back to

there is a great deal of concern that there would be a loss of jobs. hasamerican economy revealed a large number of jobs. i think the evidence is that the american model does create jobs. fear forhas a right to their own future. the fact of the matter is, the u.s. is running near what economists call full employment. to thet is a testament recovery. try to remember how you felt. city about how strong this and what you all have done is. i am not as worried about this. there is a problem of the loss jobs, the paying

hollowing out of the middle. nor are many economic solutions for that. is moremate answer education, more education, more competitiveness, more entrepreneurs. of them was started by incredibly brilliant entrepreneurs. to avail the state out. would there be a change in the tax structure? >> we have argued for two .ecades that the offshore cash it seems crazy to not let that

cash come and the country. the country's population is growing. we need to spend the money on roads, bridges, airports, you name it. charlie: globally, where is the most competition going to come to the american technological economic engine? china, south korea, somewhere else? eric: the history is that america would invent it, korea would affect it, and china would make it in huge volumes. many people think china would jump one level higher and are following our playbook. they are incredibly intelligent, they have lots of money, and

they are interested in exercising their universes. model will not allow them to get to it. there are arguments that china's economy is slowing down. china is clearly going to be a player. the most interesting country to spend any time and is israel. on a path for pound or person for person -- whatever metaphor you want -- their productivity is the highest in the world. have forcedse they military service and are aggressive in their culture of innovation. that is a repeatable model. charlie: one of the last times i saw you, partnering with cornell? trying to create a silicon valley. in new york. bloomberg.

a huge canvas with a combination of cornell and the tech of israel. silicon valley needs a competitor. i love this project. beijing comes to mind. it is largely because kings cross has a line that goes to cambridge. the people in cambridge had a lot laying around the university and allowed the construction of business partners. excuse the comment, but it is roughly true. they were clever enough and owned a lot of land that was unoccupied. they had on the order of 1000

some point,t at they have to move to a city. model. is a pretty good charlie: what about the model of silicon valley? they're both graduate schools. of themrelationship doing whatever they want to do, does it create opportunities? eric: stanford is the best example of this but there is no secret here. stanford is organized around graduate students. they have a lot of funding. they are encouraged to write interesting things. seems like an enormous amount of money.

they move into some dumpy house and palo alto that cost too much. six or seven cycles. it is highly repeatable. charlie: if you were starting over today, would you going to biology rather than computer science and engineering? eric: both are having a renaissance. it's interesting you ask that question. i spend a fair amount of time with computer scientists working in biology because they are right at that intersection. the number of proteins holding. was solvingnetics this.

it changes as a result of environmental factors. mine for thegold problems that people like myself are interested in. charlie: he has been at the forefront, loggerheads between the fbi on one hand and national security issues, and at the same time, encryption. in termsyou come down of the national interest on both sides finding a solution to this? unitedhe industry is saying that the government forcing us to weaken encryption is a bad idea. towe are forced by law weaken encryption, it will be just a government that has access to your information.

it will also be the bad guys. the computer can't tell the difference between the good guys and the bad guys. it's even more important in countries like china. we have taken a position that they need to be other solutions rather than forcing a weakening or a backdoor. because encryption is getting stronger. it's important to understand what happened. we read, the things, to survey the united states citizens. data.e encrypted the private, theo be best place is gmail. seriously. it is encrypted, it is very

strong. ifrlie: what would happen the fbi director came and said we know this person is suspected ng serious and we think there is a next of information through gmail. please give us access. america has a great law. it's called the pfizer court. a legal proceeding. a terrorist is a horrific thing. the fbi director would not call us. they would go to this three-judge panel and the three-judge panel would order us to give information and we would give it just like that. charlie: most of the time, they have. it's a public number. weston 50,000 times a year we are asked this. it is a relatively rare event.

now, the10 years from world will be dramatically different because of what we do? think about the information you have now that you didn't have a decade ago. company's youe talk about today that did not exist 10 years ago. one a 10-year-old, get loaned to you. watch this 10-year-old on his or her ipad or iphone. and you will see the future. it is a good future. a lot of this is due to the interconnectedness. charlie: a 13-year-old is

working at that because my 10-year-old is at play. thank you very much. thank you all. [applause]

century what he first utilities was founded to reinvent the business model. the mission is to drive the

adoption of clean, low-cost energy producing and energy-saving technologies. it owns and operates moderate size and access to low-cost capital. the managing partners of 21st century utilities. i am pleased to have them both. >> way back when, the company. my believe and my colleagues believe is that there are technological changes that are occurring in the ecosystem of electric power generation production and use that makes the utility even more relevant.

charlie: you believe that you can take the regulated utilities today and make them energy-efficient? objective of athe well functioning utility in today's world? . yes. so much of the technological innovation is on the customer side in homes and businesses. solar,ermostats, rooftop energy assistance, tesla cars and power walls. utilityrequires that move beyond the meter and embrace the customer as a true customer and give that customer a choice to embrace the new energy efficiency and clean energy technologies as part of the integrated system. charlie: how does it do that? >> we had the million rate pace model. all utility vestments go to the substations, power plants,

transmission lines. utilities will give customers their own individual rates. they can buy power from the grid or can buy rooftop solar, tesla, and electric cars themselves in their individual rate base. charlie: what part of that are you providing? >> there is so much talk about the need for a green bank to finance the growth of clean energy. the utility is nothing. it is not a bank. it is a steward of infrastructure assets. we are offering customers the chance to buy these technologies at the lowest conceivable cost at no extra profit margin. the ability to have on bill financing. they can pay for these technologies over time.

charlie: where is your competition? do you worry about people that have tons of disposable money that have it sitting in their banks? people like silicon valley companies that say, why don't we go here? a huge amount of funds to finance the most modern of utilities. >> in order to embrace that model and ethic, you have to be in the industry. we believe they will work it -- look at the utility business model. they partner with environmental and consumer advocacy groups in a way that other industries, it does not exist.

because those groups are interested and our partners in the evolution of a public service. utilities provide a public service. silicon valley technology companies do not view them selves as popular experience companies but entrepreneurial ventures. utilities have always been and continue to be public service enterprises. it's very interesting you raised silicon valley. i started a smart grid company. silicon valley spent a lot of money and they change the power system from the outside. concluded, it was that you need to change the industry from the inside out. these utilities have a mandate affordable power to

everyone. silicon valley has a huge role to play. the utility industry has its role to play to get this technology deployed at scale in the homes of wealthy people. what are those utilities that represent the future? they are not concentrated in one place or another. green mountain energy and green mountain power, i think they are doing the best job of any pushing the envelope and embracing that. they are doing many of the things that we are going to do. we want utilities to be cities on a hill and he in the related by others. you have a territory and someone next-door has a territory. team is doing a really brilliant forward-looking job to

the people of vermont? t. charlie: what about the dramatic need for an energy miracle? >> will have tremendous respect for bill gates. i think we need an energy revolution. , if you look at the price of solar power, it is much less extensive than other conventional means. the market signals are there. playoff the solar example, the most recent long-term contract for solar power which was entered into by the dubai electricity and water authority was an 800 megawatt contract at 2.9 nine cents per kilowatt hour. that is cheaper than coal. it is cheaper than natural gas. it is cheaper than wind. yes, it is dubai. but there is no 30% itc in

dubai. that is all price of the solar power. they argue it has not only taken place but it has continued to evolve and drive down the cost of these transformational technologies. what is dramatically needed is market conditions that are price competitive? >> we want to put our foot on the accelerator of market conditions taking place. we want to create a cleaner and environmentfective to be utilized throughout all segments of society. charlie: does this country have an energy policy? >> i don't think so. no. not to me, no. pass the carter administration when james/injure was the first head of the department, there was a coherent and actionable

energy policy back in the late 70's and early 80's. since then, in our opinion, we have not had an energy policy and argued all of the above is not an energy policy. you have to make choices. all of the above is you don't have to make choices. we believe you do have to make choices to consciously evolve the system in a thoughtful manner to where it is today. charlie: what is the role of coal and what is the role of nuclear? data out ofrecent , the energy information administration from march of 2016 showed coal at less than half of the percentage that they were in 2001. 24%. made up by natural gas and made up significantly by shale gas.

and also made up significantly by renewables. believe coalon, we , from an economic perspective, the math is going to result in it being phased out over time. coal's share of the market has been -- nuclear. the interesting observations and data points of last week is that one of the largest nuclear operators in the country, exxon, it operates to nuclear plants in illinois. one is called the clinton plant, the other is quad cities. excellently,ating two of the best operating plants in the system. they are voluntarily shutting them down in 2017 and 2018.

in this economic environment, even in existing plant that has all of the capital completely paid for his no longer cost-effective. it underscores the changing of the nature of competition. charlie: when do you expect it to be operational and have plants online seat can demonstrate what you're selling? >> i think within a year to a year and a half. tohink we have been able demonstrate a shift and our first electric utility. there is a whole regulatory approval process. charlie: you think you will be operational with a plan in place? >> yes. charlie: thank you for coming. the company is called 21st century utilities. thank you for joining us. see you next time. ♪

mike: i am mike barnicle. john: and i'm john heilemann. and with all due respect to donny deutsch, this is one good-looking co-host. the game is afoot. welcome to what is effectively the first day of the other general election. we have a lot to cover, but let's begin with the day's dueling speeches between donald j. trump, billionaire, and hillary r. clinton, multimillionaire. both the delivered formal