>> next googles eric schmidt and jonathan rosenberg talk about the lessons they've learned and how the website work today. during the event hosted by the computer history museum in non-view, california, the co-authors of "how google works" are interviewed by marissa mayer, president and ceo of yahoo!. this event is 75 minutes long. speed back our subject tonight

is "how google works." we will examine that question in more than just theory. executive chairman eric schmidt and stabs you are here and they will be discussing their new book by the same title. "how google works" is surprisingly candid and filled with panic notes. most of all, it is an authentic inside look at the culture and practices behind one of the world's most successful companies. what a moderator we have to lead the discussion. president and ceo of yahoo!. the 20th employee. she saw a lot of this from the end died and is now seen it from the office and i can't wait for them to get started. please join me in welcoming eric, jonathan and marissa. [applause] >> i am so delighted to be here

tonight. i will say i have gotten a chance to work with both of these gentlemen for a decade. they are my two longest standing mentors. i really like that because i got two of the best demonstrators and also literally not a day goes by when i don't think about something that each of us have said in a way that shaped me your shape but i do not. jonathan may be the most person i've ever met. in addition, eric may be on the scaling of all forms. >> can we say something about marissa? >> way of an hour. >> we have a lot of abuse for marissa. you asked her views. we look at hair.

>> tonight i am very excited to have this glimpse into more people in scaling and how it works, which obviously there is a meant interest in. so about the book. how you decided to ride it. but with the process like? >> you filled half of this staff. >> you wrote the book. >> you invented it. >> i used to combat them assassinating then i would get work. so i would write down rules that people came up with the cats repetition doesn't spoil the rare. when we got into an argument about something i could get everybody to move a lot more expeditiously and go on to the next point. then i would come to my staff and explain all the rules. in 2009 arthritis sales say we should pass all the tribal wisdom. so i wrote a speech, which you housed the web.

notes for the bestseller i will never publish. people liked it. >> you are so wrong. one, it is a bestseller. two, we did publish it. >> marissa, why are you not a co-author? that's the reason. so tell us about what surprised you about what people as taken from the book, how it has been received. >> well people are very hungry for new ideas. as you know along the way over the decade, google pioneered a whole new set of principles of managing things. whether it is the way we recruited people would make decisions, which is rather bizarre as you know it works and it worked remarkably well. of course the reason without the

book is because we all benefit by making american companies stronger, creating more innovators trying this new model. i was concerned face a huge gap between the world we all live in and the normal companies and this whole generation of people coming out or which the normal countries, the hierarchical are not designed. they are very smart very global very quick and they work into this hierarchical companies is very turgid management systems. >> reading the book i felt like for me there so many things than they are that i hold dear. i was almost going to say if they had spent some of my family. you want to understand my values, read the book. there is so much that defines the culture. one is the hiring of great people. so what do you look for when you hire how important is hiring?

>> hiring is everything you do. we had a set of attributes, which you help us create basic cognitive ability. the main thing that was different once we really looked for passion and we looked for generalists, not specialists. the biggest thing i learned in the first year was technology was changing so quickly that if you put a specialists into a role, they will look at the role based on their specialty. if you put a generalist into that role, they have two roll with the punches and be able to deal with change. the other thing that was fundamentally different was the way we hired with committees which i couldn't stand at the beginning. you and others were largely responsible for. >> you were in charge of this process. >> of us. i couldn't hire my friends, which is a real problem. >> actually it's important you

tell the story. did you actually complain about this? >> about the hiring. >> marissa said you should hire people more like marissa. >> she did. >> which we did. it was the right strategy. do you remember this? >> i remember quite well. >> she created this crazy system. >> go ahead. >> we rated people on a scale of one to four. one is bad and four is good. then she explained for a man this person is so good to your committee that if you have the audacity to turn them down, you need to call me out of whatever i'm doing so i can come into the room and fight to make sure we bring this person into my company. one was the opposite. call me. this person is so bad i don't want this person in my company.

that is how we ended up raiding people for committees. >> the idea is that you take to convince rules that could have positive or the positive or negative. >> now you understand how it actually works. i try to follow her logic. so along the way her actual -- let's take control of this. her most important accomplishment of her many a google is one day she decided we had to rethink the way product management words. at the time there were three product managers who ran large parts of the company. separate discussion. so the question was how to rebuild the model? marissa had the idea that we should hire people who have technical backgrounds and who did not want to be programmers. so her idea was to take these people and they were very very

young. right out of college, never worked in a company, eager to do everything. so she built that. if you look at that group, almost all of the interesting startups in the valley are headed by those people in the major product lines and google are headed by those people. the model worked brilliantly. so jonathan had the idea that we should have work for these people. he created something called the chain gang. members? >> i can tell into johnson. so johnson had been there at google for four months. you want to grow product management in ratio. without one to 10 128. hired eight engineers a week for all eight weeks. jonathan hired two people,

making our total five at the time and gave one person to suzanne and i said why do i get my person to help me with my group? jonathan said when you make revenue. and i said were doing advertisers and susan was doing partnerships and i was doing consumers. but if there's no google.com there is no revenue. jonathan said i don't know. can i higher and grow new product faster than you can hire experienced with? >> telling the whole story. >> there is the moment in my career when i was most upset with you. i was in bill campbell's office. i confess i had been failing. i was trying to hire people like

me and i couldn't find people like me that larry and sergey would approve. >> you are literally on the couch. >> i remember this vividly, too. he was on the couch. >> marissa, i love. i can say that appear. in the appropriate avuncular way, i love you. but i almost strangled due that day. and here is what really happened. i am on bill campbell's cast ready to quit before it even been at google a year which would've ended tragically. i explain to them i can't higher. melissa is outside and it is 2002, so she is -- how old were you? 27. when you give her math questions, think of the answer and then you will beat her to the end. i've learned that, too.

she comes in and says what is the matter? is that i am failing to hire. bill said maybe marissa has an atf. she is very bubbly and excited and really she has an opportunity. she starts talking about the program. bill says what do you think? i said well i doubt it will work. melissa looks at me and says your problem, jonathan, is your trying to higher people like you and larry and sergey don't like people like you. hire people like me. and that is when we had no cable in between us. otherwise i would've reached over and strangled her. >> ladies and gentlemen, i think we've exhausted this thing. the important thing about the program if it served as the sort of mechanism for building the creativity of the company and it

worked brilliantly. >> thank you. when did we talk about in the book is smart creative. apm stance or associate product manager and we hired people with computer science degrees to do a two-year rotational program. >> she would make them go on these trips in a number of people in the audience with them. they would basically say three people to a room that kind of thing any poor quality foods and go from city to city. and it worked. >> the idea was to go and see our products, meet with advertisers and do all of that. talk about smart creative. what do they bring to a culture? >> they are highly tactical. they are also business happy and creative and passionately curious. they are the kind of people who

don't take no for an answer. they are the kind of people who today can build a demo out of the tools that we have off the shelves that are easy to produce things with. they show you as opposed to tell you what you are going to do. you don't need to actually create bridget product plans. you can create demos and prototypes and test them and see where they go. >> one of the things we figured out in the writing of the book is almost all of the traditional business discussion is around scarcity. how do you manage marketing channels and so forth. the internet has upended all of that. now a global source of funds the internet allows you to brand yourself in any way. new brands are popping off all the time. see uber for example. if you don't have an overwrought location, you are not going to be competitive in such a hyper

competitive world, which is by the kind of people you hire them to focus on culture are so important going forward. i would argue further this is true for the tech industry because it's largely copied by every company here. but it's also true for non-tech companies as well. >> we touched on the interview scale before. one of the claims his interviewing is the most skill for any business leader. talk about that. >> telling managers you out of some of what your people produce. i find it interesting that managers that most companies don't spend the time they should. if you look at the sports team they seem to get it. the players they draft on to their team are really all that matters. we lose sight of that and we delegate recruiting to

recruiters and as soon as you delegate recruiting to recruiters, you go on a downward spiral. you want to make sure all of the individual employees are focused on recruiting. they were used to tell less that we couldn't meet a hiring quote has been hired as quickly as we could. we could just up the lead reporter if every single person hired one person. his mouth was correct. as it always was. >> we did lots of venture seeing things that are nontraditional. one of the more controversial ones was reliance on hiring committees. hiring committees would make us a it gave us a workforce that is

intellectually flexible for the challenges. >> one thing melissa learned from the sales guy you don't want to allow the invasion of the bozos. what was very clear is a can be taught to hire aides. but peace will never hire aides. they are afraid of people that are better than they are. so you really create a positive if you manage to limit the company to just hiring and teach them how to interview you avoid the invasion of bozos. >> so, how do you make sure the great people are created they

are successful and happy aquatic >> many people visit topalov exists because the lawful lamps the free food. >> i like that stuff. on sites that there's at the number of an estates. but there is a secret and the secret is the best people want to work on what they want to work on and they want to work on things they care a lot about and be allowed to be successful. if you could build a coulter which empowers them to do that, you will retain them. if you micromanage them if you don't have the resources they need in this competitive world of labor, they will go somewhere else. >> you can't tell the people had a thing but you can manage the environment in which they think. you can be transparent within information. you can run meetings in a way that allows everybody to participate in you can do what we call in the book limit the hippos. fo is what we call --

>> please define hippo. >> highest-paid person's opinion. >> hippo. >> hippo. a dangerous animal in the savanna. >> they live actually in the water. they do kill people in africa and more good ideas and companies. one of the rules we had which i only figured out late in my tenure at google because i was always tried to get lariat or gag to move to the model where i only had three people working for me. it would've been easy if it was you as you send it instead i had 12 or 15 people working for me and i would try to reorder and they would say you can't be that way. one day a i was in a meeting and there was an engineering amateur who wanted to do the same thing. larry said we can't let them do that. he will be a hippo. if you have too many people working for you, you can't possibly micromanage them.

[laughter] what is the number in your case? >> the number is seven. and if i had a verse is working for me, i could conquer the world. >> you talked about in the book been overworked in a good way happily overworked. tell us a little bit about that. there is always way more work how do you make that a positive thing? >> we have been criticized over this general term because somehow it doesn't sound right. let's explain what they mean. the kind of people who we want to have working in our company and you want in your company by people who will do this because they love it. they worked more or less all the time as best they can when they are doing things they also enjoyed being with her family, raising kids, what have you. in other words, they are intense

people. overworked and a good way as the context we mean it in. if you believe that work should be 95 with a an hour lunch break, you should work for the government. and by the way that is a fine job. but that is not the kind of person we are looking for. we are looking for somebody wakes up in the morning and just a way to solve some new interesting and hard problem whether in sales or policy, legal management, so forth. people who delight in that thing. it is so much easier to manage those people. larry and sergey and i went to warren buffett. he had 14 employees. this is like the highest ratio of leverage of these in the jewels that were assembled. he explained that he only bought companies where the leadership would stay in ways that they would do it whether he bought them or not. so he never worried about it. he just called and talked to them. and it worked.

at google, the key aspect of this competition and resources is that people are just dying to drive harder to make things happen because they care passionately about it. it makes it much easier to decide where the priorities are and so forth. you don't have to worry someone is off the reservation. >> on a related note you have this colorful metaphor in the book of nathan d. baz. >> did you write that? >> no, you did not. >> you've been taking credit for this. the credit goes to alan, are co-authored. invalid here? areas. so can you explain what alan meant? is that we are asking me? >> typically we find that the most successful teams are relatively small. engineering teams in small groups of three or four. one of the things you find when

you have small groups of the dynamic of some built-in social controls. people help modify that behavior in a small bird. the worst thing that can happen is you allow and made into the midst of a small team. i made for someone who applies cheap steals takes credit for someone else's work, spills coffee in the kitchen and doesn't pick it up. you want to help teens exile and get rid of them. if you get to a tipping point nobody wants to come to work. dave density. >> i learned about divas in the book. >> so you want to minimize the number. help the defense. what is a tivo? a diva is a brilliant person who believes that everything should be done in an exceptional way and is often dictatorial,

difficult to work with, but also has great vision and has a better notion of what the world is going and what they do with their product than anyone else. in the small environments, the teams can drive out those people. you need to fight for the divas. the reason you need a cipher of entertainment value in the culture and these are the people who drive the culture foreword. these are the people who say that is not good at. these people jive because not everyone is going to be a diva. push them off to fight harder. these are the people who ultimately become the most famous of the industry. brilliant, brilliant contacts manager. very driven, very strong. look at the impact of people like that. >> i talked in my opening about your thoughts on scale.

i've never seen anyone energy scale is effectively to take google earned 300 people when you join to today 50000. the most remarkable thing and i was told some of the stories and how you scale coal chair, but there is something that happened when your pride. we had way too much work and eric came in and saw our annual plan and said we are going to double under the principle. we are going to go to 400 people this year. eric said no no we are going to have 50 people hired between now and the end of the year. we cut it to a fourth of what we had hoped. you created these little laminated cards called a larry and sergey. every time you try to hire someone you had to turn one and up to 50 laminated cards. it looks like dollar bills what the founders faces. >> i made those at home with my laminator. >> there were very impressive. and they created this whole

black market because you had they needed something built. so talk a little bit about what made you do it. when i look back at the way the scale there was some point to make it grow faster was important to not row that. that was one of the most critical moments because if we had tried to double the company that year, we would ask everything out. it is the equipment to quality and pasting that was so important. >> if you talk to the engineering team, every team needs twice as many engineers as right now. i sent people in the audience are living those. there is a rate at which the organization can hire quality. you can eyeball it. in our case it was the calculation. i said we are going to hire 50 people. again we can hire more but realistically 50 people so let's do it with a quality measure.

so the larry and sergey cars were putting in a management technique which ultimately became quite rigorous. the reason we couldn't use our financial system is we were using quickbooks and we had a five user license on a single pc and it was overloaded and took too long to get the quick hook's report. that is really true. so my position on the company was they needed to build a management team that could scale. i am a strong believer if you can systematically innovate. in other words innovation is not something you do randomly. as a culture, hiring, taken as a fourth. who would figure out our growth land then i would ask larry and sergey and they would take the current growth rate and extrapolate it. one day they were rollerblading and they rollerbladed to the sgi campus. they said we are going to need the campus and now today we are

in the former sgi campus. if you look at the growth rates come you can actually plotted. one of the things in the book if companies don't really have long-term plans. they have plans in the next year. ultimately you need a five-year plan. ultimately what happened is you in a set of other people said this is the growth rates the hiring plan and off we go. >> what is really interesting is the way they were able to scale the culture. in 2002, there was the notion what you said we are at one building company and a one building culture and it's not going to work if we are spread across hopeful buildings. it was like wait, given how we are rolling with 80 square feet per person. hang on, how are you going to get our culture to scale? over some of the insights in terms of how to scale the culture? >> i think at the outset, google

had a mission that was very clear and it created selection early-onset that we got people that really believed and not. when reverted down it was actually the founding people who have the vision that wrote these things down. most companies kind of do the opposite. they get started and they have a little bit of success so they can hire and an h.r. person and the person comes down and says i will write the culture out. this person with no it if they jumped up and bit them. so to build on rival partnerships with our customers through the dedication, hard work, perseverance of our wonderful employees to generate shareholder value. >> either way, i was in that inning. it is what gave birth to don't be evil. >> the one you quoted was from enron.

[laughter] >> enron was respect, integrity communication and axle lengths. this one was lehman brothers. [laughter] ..

>> it was agreed to not move forward. so all of a sudden i understood that one the company was actually serious about this, and it gave this particular engineer sort of a moral question to ask to help guide his or her -- in this case a guy -- his actions. >> yeah. no, i mean there's so many amazing don't be evil stories. my favorite was not kind of ars culture meeting, we were going through brainstorming, they'd pulled a bunch of old-timers. don't be evil, and i think it was, like, number six, and someone said is, well, you can't have a negative corporate value. can you reframe it positively? we were like -- >> only -- >> -- you could. we were like, yeah, do good, it's not as catchy as don't be evil. >> well, we had other ones like you can have fun without wearing a suit. >> yeah. [laughter] >> and the first one was focus on -- >> the user. >> focus on the user. and i think one of the things

that helped, and it's worked -- and we talk a lot about this in the book -- is that when you have a framing principle like that, it helps you a lot. when you look at the challenges a corporation faces today, we ultimately retreat i think successfully, if we're doing it for the end user, we can get through anything. >> i think one of the things i learned from you along the way, very tactical from both of you in different ways, was around meetings. i remember jonathan arriving and organizing all kinds of meetings. it was sort of magical because it was funny i think larry or sergei one night decided, you know jonathan's arrived, and he takes notes. [laughter] and sends a note after the meeting, and then we all know what was said in the meeting and it's magical. then it became this whole culture of organizing a meeting having an agenda sending out notes after ward -- >> jonathan forced having two projectors in the room. one to project the presence and

the other to project the notes so you could see what the presenter was saying so he could say, no, i didn't say that. >> i had been a master in my previous job what i thought project management was sitting in the room writing everything down and defining the action items after everybody else left so you could say what they had said they agreed to. [laughter] and so when i put the second projectors in the room i decided i shouldn't be allowed -- i wasn't going to allow all the project managers who worked for me to do that they were actually going to follow everything's principle and leave -- eric's principle and leave the meeting with buy-in about what they were supposed to be doing. >> and i remember eric i think people thought about meetings as something that took time out of your day and you always had this phrase i work through meetings, that's how i get things done. >> managers spend their time in meetings, and having -- figuring out what the rules are about your meeting turned out to be very important. when i was at novell, we had the novell nod and everyone would

agree in the meeting, and after the meeting was over they'd do whatever they wanted. [laughter] it was highly effective, as you can see. [laughter] so when i show showed up at google, we had this new idea that we should have a different model, we should try to figure out the best outcome the best idea in the following process. we would sit around, and then somebody would make a proposal, and then we would try to have a debate. and we'd try to have every person in the room have an opinion. now, there's always two or three people usually the guys that talk a lot, and they'll dominate the conversation. so i learned to call on the people who don't normally say and try to get a spark of opposition. maybe that's not such a good idea maybe there's a different way to do it. and all of a sudden you have a debate. now, you need to have a time limit. so i found that my role was to stimulate the debate and have a time limit. if you don't have a time limit you have a university. they just argue all the time, right? [laughter] but if you have a debate and a decision, then everybody can

move forward, and everyone participated in the decision. and in the book we actually go through the china decision as an example not of the china issues which have been well covered but rather that we followed our process thoroughly and fully in that particular and very important decision for the company. >> jonathan, i -- how do you feel meetings shaped the culture of google differently than other places? >> well, you were in my weekly staff meeting. >> i was. i learned all kinds of things. >> so our staff meeting we actually had one of the apms assigned to do chain gang tasks each week, and his job or her job was to assemble all of the information so that instead of everybody coming into the meeting and getting updated we actually had all of the information go out the day before and then we would come in and after everybody got really good at sort of reciting their information, i would insist that we go around the table and force everyone to

articulate what is it that they need from their peers, the other people in the room, to be more efficient. and that was how we started. that was how we actually ran my staff meetings which eventually, you got very good at. you would come in with your list ahead of time. >> and one of the principles and we talk about it in this book, is why don't you start your management meetings with actual data? [laughter] what a shock. so marisa would show up, and she drove this on her own and she would have a complete study -- because she was in charge of the users, most important thing in the company -- showing what the users were what the trends were on each of our property, and the moment she put that slide up, we would have an argument right? is this right, where are the priorities, so forth and so on. but you start with the data. >> i mean i learned that from jonathan. you start with the dashboard of data. >> if we have data, let's look at the data. if all we have are opinions, we will go with mine. [laughter] that's what we call a hippo.

[laughter] >> so we talked a lot about people and culture but, obviously, one of the most important things companies build are products, products and services. and you talk in the book about how important it is that basically, every great product has a key technical insight. why is that so important? what drives -- how do you define technical insight? >> so a technical insight is the kind of thing that could end up in a journal article. it's the kind of thing that typically a researcher, a scientist is going to come up with. you think about google and you make a list of all of our great products, there's a technical insight behind them. so why is search so great? page rank. why are ads so great. >> price times click-through rate, the notion of quality of the ads. why is chrome so great? it's secure and it's fast. why is maps so great? i think, actually, you said that one, because it's a virtual mirror of the world right? and if you look at other products, you look at, you know,

salesforce.com they realized that you could use the cloud for contact and relationship management or pixar, you can tell stories with compute ors. the -- computers. the great products when technology is changing very quickly, leverage some insight about how technology works to usurp an existing set of products that make the product better by a factor of ten. >> and a current example for the audience has to do with cloud computing. the fact of the matter is with these smartphones these are well enough connected now that you can be connected to a server bank that can do incredibly powerful calculations; speech recognition, those things off phone. and send the answer back fast enough, the user thinks that the phone did it but, in fact, there's a supercompute per literally a million computers that helped answer this question. that's another example of a technical insight intloo.

looking to the future, what are some of the insights that aren't being capitalized on today, some of the trends you see that are going to define product, services five years out and what are the technical insights and trends that are appearing today that can drive that? >> the one that is the most profound, the development of a new category of artificial intelligence. and you say i don't really use a.i. you do it every day, and you do it in the kinds of search rankings google does, in any form of voice recognition. all of those use incredibly sophisticated algorithms that again, are often server-based to do this. we're very close to being able to do highly accurate speech recognition, image recognition and text recognition. and it means that we'll begin to start learning really profound things. you say wasn't that used before? imagine an assistant that helps you figure out, you know, do you have to get up now, can you stay asleep? is your plane going to be late?

do i need to go to the dentist did i forget? all the things that are annoyances to the average person's life that a computer can help you with. so where are we with that? two years ago google built a neural network which is a form of a.i. with no programming in it whatsoever. and not thinking what else to do we had the neural network start to watch youtube. and it watched 31,000 -- 11,000 hours of youtube. [laughter] what did it discover? two things. it discovered the human face; eyes, nose and mouth. and it discovered cats. [laughter] now, and i mean the whole concept of a cat the tail the furriness, the running around, the purring, all that kind of stuff. now, i wish i could report that this seminal moment in the history of humanity we had discovered aristotle or plato or something like that -- [laughter] but that's what we discovered.

and there's a lot of evidence that that will now establish a very broad set of new applications and not just in what we do, but also in medicine and so forth. >> i think probably the biggest and most exciting ones are in health care. you know, there are certainly lots of opportunities in terms of genetic research and data and designer drugs, but i think the other really exciting thing is just this notion of wearable devices and longitudinallying being able to track information about physiological information you get about people. today we're sort of seeing these nascent, you know fitbit-type devices and staying fit types of things but that's all going to move to really measuring things about you that matter, right? you could give information for an at-risk teenager from their cell phone to a psychologist, and it's going to tell you a lot more about the state of that kid's depression or anxiety than when you ask a teenager how they're doing and they sort of

give you some monosyllabic type of answer. imagine what your permission and that stuff what a phone could do in that situation. and there are all sorts of other potential opportunities with anything that you can track longitudinally over large numbers of people. >> i'm going to open it up to the audience questions in just a minute, but i have a few more. the buzzword of the day is millennials. i think one of the interesting things to think about in the context of how google works is the products you just talked about are going to be used in the future by millennials. how do you think their expectations about products, technology are going to shape things? how are they going to interact in a way that's different than the way we would, and i'm also going to ask the question about how will they be in the work force and how do you think google works -- >> well, my observations of millennials consists of the following; what do millennials do? text, text text, picture of themselves, text text, text picture of their friends -- [laughter] text text text, picture of the food they're eating.

[laughter] occasionally they use important and powerful apps, and they change the world. [laughter] so what do you learn from this? you learn that they're highly, highly interactive. they're highly verbal in a text way, right? they're communicating all the time. and they're very much valvar than i was at -- valvar than i was at the age. they're on supercharge all the time. frankly, if you have a child, your child is online all the time. and if they wake up at night they're online when they walk up, and then they go -- wake up, and then they go back to sleep. >> jonathan? thoughts? >> clearly, eric is more insightful about the state of millennials than i could ever hope to be. i would ask the apms who you hired for me as opposed to going in and tell them how to develop

products for these millennials. i think we're certainly seeing a big transition to apps on mobile devices. i have not yet figured out what their preferred form of communication is. i just wrote a book with eric -- or alan did -- and we wrote our rules of e-mail and near as i can tell, they don't answer my e-mail. [laughter] i have yet to figure out what the best way to communicate -- >> but that's sort of their parenteds' activity. and -- parents' activity. and there's clearly a new hyperactive form of communication that will emerge out of those because these are communication-centric people. what's interesting is if you look at how does news spread among that generation, it's link to link to link, this is an interesting story, take a look at this. the majority of youtube viewing, by the way, is from people watching links that other people send to them and that they encounter on social networks. >> i think one thing that defines millennials for me is they feel very entitled to information. i think it's one of the things

that's causing there to be a lot more transparency government transparency in products and services and transparency in company culturings. one of the great things about google through the years was this real commitment to all hands, right? no matter how big the company got, the to other was this access to information. that's going to be my last question, talk about the effect that has on cultures. is it important, is it not important? what role does it play? >> yeah. so i think it's hugely important, and we -- larry and sergei really modeled that from the beginning. i think it went beyond the tgif meeting, it went to all aspects of pretty much all information. erik would get up quarter withly -- eric would get up quarterly, and we would produce the board slides which lots of you would help me with, and he would literally present the same slides to all of the employees that were presented to the entire board. so it was very clear to all of these smart creatives that they understood not only the mission but they understood the metrics

by which we were running the company, the metrics by which we were measuring the company. they had access to the all this information. they also had access to all this information on the company's intranet. and i think if you have the expectation that the ideas are going to percolate up from the smart creatives, you have to be completely transparent about how you're sharing the information with them. >> cool. okay, so in the spirit one of the things that always happens at google is there's a gig q&a -- big q&a session from the audience. we'll try to go through them rapid fire so everyone has a chance to ask their question. the first is what opportunities are there for google in the sharing economy? many. >> well, we're a big investor in uber to start with. [laughter] i think a lot of it depends on where our future products end up. it's one of the discussions that people have had about the self-driving cars is that plans in the future -- perhaps in the

future they'll literally show up, you'll get in it in an uber-like model you'll get out of it, it'll pick up someone else. so we have the opportunity with these new technologies to really rethink the ownership model. one of the interesting statistics about cities is that 9 to % of the you are -- 9% of the urban landscape is devoted to parking. imagine if you could get that back somehow the 'em pact in terms of the ability -- impact in terms of the ability to build buildings, getting people together -- >> i think our role is probably in the middle because what google does is help reduce information costs and, with payments if we could also help people reduce transaction cost, then any asset in the sharing economy that at any moment is going to go fallow, we can get the synapse firing between the person who would sell that asset and the person who might want to buy that asset. and that can apply to air b&b type assets or any other good and service.

it could be your car sitting idle, it could be at home, it could be the dress you wore this week that you're knot going to wear next week. >> one of the things google and other companies are trying to do is make the entire business transaction friction-free. we get it to you and, boom. that velocity, increasing the velocity of that transaction benefits the entire ecosystem of payers, credit card processers obviously, the advertiser, obviously, the ultimate manufacturer and hopefully, the consumer. >> very cool. are there any aspects of google's culture when you look back you wish had been different or you would do differently the next time around? >> well for me i think all of the errors that we've made the core error was in taking too long to do something or allowing something to go on for too long. you'll remember wave right? a team of ours brought out wave,

we launch it, every month the product goes down and down and down. the traffic get going down and down and down. and during that time it was going down, the real opportunity cost was taking that team and not putting them on something which was more likely to go straight up. so businesses are not -- the highest costs and sergei used to say this, the highest cost of our business -- which i thought was taxes, by way mathematically -- is opportunity costs. >> cool. um, going back to smart creatives, how do you tell the smart creatives from the crazy ones? [laughter] >> well i tend to interview for passion, so i actually get them off talking about the things that they've rehearsed and get them on to talking about the things that they're passionate about, and i think that's when you kind of see people let their guard down. and the farther they go in the interview and the more they tell

you, the crazier they are, the more likely they're to be a diva-like personality and the better. i would rather err on the side of bringing in more of the people that are actually crazy than having -- then having to figure out how to manage them than err on the side of not allowing some of those crazy people in the door. >> very cool. the next question goes to, it's around hp and in my own personal -- i have a son who's 2. we live in the neighborhood of the hp garage and one of my great moments of pride is when i taught my son to recognize it. i'll say mcallister, what's that? he says, "hp garage." [laughter] this person asked how much would you ascribe the cultural success of google to the example set by bill and dave? >> wow. so i worked at hp briefly for a summer. i actually read the hp way. it surprises me that most people go into companies, and they don't read these documents.

think there really was a time at hp where management was by walking around. and i think that senior managers at google once they kind of come in and figure out that they haven't been brought in to be dictators, they've been brought in to be aggregators of viewpoints and they've been brought in to help get synapses firing across teams then they're finally able to be successful. and i really hi that that is -- think that that is the kind of management style that bill and dave's spozzed. >> can a googler be highly successful and have time and energy left over for a family? [laughter] >> yes. we have a number of googlers here on the stage who managed -- >> and we also have a lot of our family members -- >> and a lot of our family members are here. the most important thing to say is it's easier to sort of net it out. think about diversity and think about trying to get the very best people and think about

trying to have professional women who are, of course, fantastically talented people. you've got to solve the childcare problem. so you've got to solve it in a way that works for them. so after a lengthy conversation, we ultimately decided to purchase three closed schools and with created three slightly different daycare centers. and, again the employees have a co-pay and so forth. that's an example of the kind of stuff you have to do, you have to solve the problem on their terms. just using that as a specific example, but one that everyone can understand. you've got to find a way. we talk in the book about how as sort of middle-aged white men we would notice that the women that we worked with would disappear for a few hours right? presumably, taking care of the kids or whatever they were up to and then they would come back afterwards late at night working very very, very hard late into the night. and, obviously by their choice. and you got to find -- you've got to find a way to let them get both done. so we learned don't encroach on that time.

you're encroaching on their family time which is just as important not more important than time with eric and jonathan. >> this question says i think start-ups in silicon valley are crazy again at this point. do you think they're overvalued, and if i'm a ceo of a start-up should i keep hiring aggressively now or secure funding and spend it more wisely, slowly and carefully over time? [laughter] >> well -- >> true question, word for word. >> you always want to spend money wisely, but i i think the question is asking are we in a tech bubble? actually, i think the answer is, no. i used to circulate regularly mary meeker's slide, she was at morgan stanley before. and if you go back and look at the bubble in 2000 and the nasdaq's still lower -- >> wait a minute nasdaq is not quite at the bubble level of 2000. bring it back by the way. those were great times. [laughter] >> but go to those slides and just as a proxy for the value of

the set of these companies, look at e-commerce. the amount of e-commerce has grown enormously, and we are moving to this model which eric mentioned earlier of eliminating friction. if you eliminate friction between people it's seamless to create a transaction the combinations and permutations of transactions that you're going to get go through the roof exponentially. and i think the other thing you need to add into that equation is cell phones are getting much cheaper, we've got 2.5 billion new people in the next five years from all corners of the globe that are going to join the online medium, and they're going to be able to access information on the internet, access health care information and engage in commerce. so the number of opportunities that we have are huge, and e-commerce is already far greater than it was at the beginning of -- >> the reason it feels like a bubble is because what happened was the mezzanine rounds in the financing hierarchy of venture

all of a sudden went way up and they went up because these companies had a product and you could see a path to modernization over a billion people. so all of a sudden if you have a successful product, you have a much greater likelihood of success. so to answer the second part of the question, it depends on where you are in the sort of company stage. if you're still building your technical team, you want to be careful to hire very carefully very high quality people work very very hard, classic start-up model. if you have revenue right, you want to be careful to understand what the revenue growth rate is. and so depending on whether you have revenue or not you get a different answer. >> next question is, what is a chain gang? i guess we neglected to define that well. [laughter] >> so the chain gang was actually a simple list that we could create and any manager could define a task. larry actually once defined a task which was for a chain gang member to help him figure out by

project where the resources and the engineers of the company were being allocated so that we could actually figure out what all of the people were doing. so it was basically, you know, jonathan's fun euphemism, it's the guy who was popping balloons and torturing the ap ms who came in. and it was just a list of random tasks that management needed some kid right out of school to do. and to be fair to marissa what she told them was -- she recruited them, and she said you're going to get, like, really big and grand projects straight out of school. and she gave brian gmail. and to accompany that i gave him all these crappy little chain gang tasks that he had to do -- >> that's where the name came from actually, because what happened was jonathan was like i want to give them all these little tasks and i said, okay you know look, you're managing gmail. by the way, brian also went on to be the product manager for chrome which many people don't realize the same person did

both. tremendously talented guy. he got this list of tasks so i said okay, you're going to do jonathan's tasks, and he said, i'm being enslaved. so he created this little wiki page. so on the top of it, jonathan's chain gang and that's where it came from. [laughter] >> so the serious point of this is imagine a situation where you have these incredibly smart people that you can apply to questions about your business. we ultimately figured ott that what we -- out that what we really needed were some physicists, and i put them in the office next to mine. and susan you'll remember, her father was a physicist, and she would talk about the physics of flow of our revenue. and we would actually go and analyze these and say how can we make it better, how can we make it stronger? how does the company really work? and we would use these as internal sort of checks and balances, and they would discover very interesting things. even asking the question would cause an interesting outcome. >> you called it the physics of

clicks. >> physics of clicks. >> this person is very fond of picasa. how does picasa fit into google's priorities? >> did you acquire picasa? >> i was -- it wasn't my acquisition. >> picasa was a fantastic product. and for of the -- those of you who don't know what it is, it's a fantastic photo manager and most of the usage has been shifts over to the cloud-based photo services. i happen to still be a huge picasa user. >> by the way my quick story about our photo service, remember when i came back from africa and i had all of these beautiful pictures, and i made you guys look at all of my pictures? it was 2007. so i then went to eric's staff meeting and tried to show them the pictures, and larry pooh-poohed my pictures and said, well, you know, you missed all sorts of stuff. and he said in seven eight nine ten years you won't need to take pictures like this, you'll put a camera on your

head and when you come back, software will figure out all of the best pictures for you. and, like, he's almost right right? today you can put a camera on your head, and you can come back and google stories could practically say this is the best the is stuff -- >> this is an example of a recent innovation where an algorithm within google will actually pick what it believes are the best pictures of the ones you've given it in the photo stream. that's a.i. it's also very useful. >> very cool. next question is would management principles that worked at google culture, hiring, decision making work for other start-ups and other places and other cultures? >> i would argue in the first place the principles we talk about in the book will work very well in any tech start-up anywhere in the world. i think that's quite clear. and i say this with conviction because many of them have copied all of this right? many of the people came from our culture, you know etc. to me the question is -- clearly correct for tech -- what

happens for existing companies? now, here they are regulated in a different way, they have different problems. how would you attack it? the first question is look at their hiring. it turns out that large existing companies will hire 5-10% of their work force every year through normal aation. so right -- attrition. so right there you can massively change the corpus of people in your corporation by adopting hiring principles which the two of you pioneered and which are contained in this book and the upcoming book which is an even more detailed version of all of this. so i think that's step one. the second is in this book there are two pages which i actually wrote which are on -- >> that's the strategy pages. >> thank you, thank you. and they are whichever pages. anyway every -- the largest companies that i deal with have, they don't really have five-year strategies. what happens is they haven't figured out what to do when

their model is disrupted. old media and new media old kind of companies, new kind of companies. change is afoot. now, if you belief as i do that that -- believe as i do that the growth of america are all these entrepreneurs and entrepreneurs are the most important thing we can mentor in our country, we should support them so forth and so on, educate them, etc., then the right answer is over a five-year period each and every company should organize itself around the disrupt they'll face from new entrants. and almost no company can answer that question in a coherent way. examples, the obvious one is uber versus a taxi industry, everyone gets that. what about tesla? tesla invented a new e way of thinking about -- a new way of thinking about a car. i can give you example after example. >> yeah. i think i remember when someone said if i had drawn up a five-year plan, i would have missed every great thing that happened. sometimes you can't see everything to actually plan that far.

>> my point is you have to have a vision. what do you think will be true in five years? let's start with smartphones. we're all going to have them, they're all going to be faster, you're still going to sleep with them next to your bed. they're still going to have powerful apps. what's going to happen with the back end? huge new services of one kind or another. the friction of transactions will be much less. you start making those assumptions, right and then you can begin to say, well how am i going to do? what's going to happen for my product? how will i make my revenue and how will i transition to that new model? >> jonathan, your responsibility of this? >> i think that i would sort of shorten what eric said into culture is very hard to change if you're a start-up and you're on the wrong trajectory. i guess my decision would be start over. everything in the fluent way

where strategy is the foundation, it's not literally a documented dictated plan applies to all of these companies. i think all of the principles in decision making about how to run meetings, how to structure decisions around data, how to eliminate hippos everything in communication, repetition not spoiling the prayer sharing everything and a lot of the principles and innovation focusing on the user and thinking big. all of those things apply to any company in any industry. >> how do senior executives make consistently good decisions in rapidly-changing circumstances begin that they have far less information than they need to make decisions? >> well, first place, you do make mistakes. and it's important to acknowledge that little companies make mistakes big companies make mistakes executives and individuals make mistakes. so part of it is you want to make the culture where you fail quickly, and you admit your failures and move forward. we've made plenty along the way, but somehow we got enough ones right that it produced a good success. and i think that's sort of

principle number one. i think principle number two is that with the new aspects of technology that we can all use, you can extend the value and reach of an executive far and wide. start with the data, right? read and answer your e-mail. know what's going on. i'm a big fan of actually holding ceos and senior executives accountable for what they do. and you'll hear this oh, there's all this bureaucracy. well fix it! our products suck. fix it. right? there is actually someone or a team in charge. right? unlike other things, like the government. [laughter] >> i disagree with the premise that there's less information available to management today particularly in web-based businesses. practically all of the decisions that we made in the early years related to our products were done on the basis of ab testing and data and statistics that told us what was going on. the same thing was also true in terms of inventories in existing

buzzes right? walmart and target and bed bath and beyond know way more about what's going on in their business than they did ten years ago. >> so in 1987, so this'll date me i was working at sun and i was young. i didn't know very much. >> marissa was 12. [laughter] >> you know, we had a crisis. we had a transition in computer manufacturing, and we nearly ran out of cash. and it involved inventory planning and so forth. and scotty neilly, the ceo of the time, was justifiably worried, and so he ordered all of us, the entire management to spend four out of every five days per week in the factory working on this. and this was simply as a management team to answer the question how many machines had we manufactured and how many did we have in place. so you want to understand the difference between, you know there and today. when i first went to google, i was shocked that we knew our

revenue down to the second. today we know it down to the nanosecond. that's a huge change over a 25-year period. >> i want to bridge from mistakes to sort of a sense of humor, sort of the next question is about. which i remember one of the things that eric asked me to do along the way was he was giving the keynote at a big conference, he needed an opening fizzle reel, and he turned to me and said, you know, marissa you're funny, why don't you create a reel. so i was hugely complimented. i went and hired some writers, and we put together a little skit and a video, and i got the video back, and it was awful. like so awful i spent two hours on the phone with eric's admin talking through how bad it was and i went to eric and i said it's bad, it's not usable. and he said, oh, oh, it can't possibly -- he watched it and said yeah, i use -- i can't use

it. [laughter] and i was really grateful as i watched my career and my compliment of being funny that you had a sense of humor in that moment. how important is a sense of humor as an exi-- executive? [laughter] >> you know, there's a simple rule which is at the end of the day if people can leave your office smiling just a little bit, you're going to get more work out of them. so it's just human nature that people want to be thanked a little bit they want to be respected a little bit, and offer they go. i don't know if you know this story, we were all over in building 41 at the time and there was a review of this, a proposal that an engineer had to go wire up san francisco. and we subsequently did it in a different way. and this gentleman was very proud of his proposal. we had a new executive who came in who started asking questions and this engineer knew, did not know the answer to any single

question. and you could watch right, this -- did not know very well was very proud of it. you could watch their mood to be ecstatic to presenting to this august board which was us, right, to be about to kill themselves. they were, they had actually just -- they were literally just distraught. so the question is what do you do at that point? and the answer is you go up to the engineer, and you say your idea was brilliant, and i want you to spend some time, and i want you to come back and i want you to tell us how you're going to address it. and if you don't to that -- do that, you're not going to get any productivity out of that. that engineer then went back, incorporated all the feedback and came back with a product that again, helped make the internet happen. >> what we really do at google for fun, as you know, with these online things is we make fun of the most senior people in

management. [laughter] so eric i know you'd probably like everyone to believe that you learned most of your management techniques from michael porter and peter drucker and tom peters. you just mentioned the when you leave my office, i want to touch your heart, i want you to smile rule. what -- who is the brilliant management writer and personality who you learned that from? [laughter] oprah. [laughter] it's true. >> oprah's a very gifted woman, and she said, for example, if you want to change human behavior, you have to change people's hearts not their heads. it's true. recall that in the book, "the oprah principle." it's true. >> to that note, i mean i think both the heart and the head thing, you talk about in the book that being googley is

required to be successful at google. what does that mean? >> fun witty quick, laugh at my jokes -- [laughter] >> i think it's like marissa. [laughter] >> there we go. the ultimate smart creative and the founder of bag toliness. [applause] >> our time has gone way too fast, but i have one last question. there's a special young man in the audience whose dream it has been to ask eric a question. so here is our final question for the night, and it's from avi. >> all right, come on up. >> you're coming all the way -- [laughter] just jump. here.

>> give him your mic. don't kill him. [laughter] >> so what's your name? >> avi. i wanted to know how google is trying to deliver internet coverage to people in remote areas, because i heard all these google x projects, and i wanted to know how they're delivering internet coverage to them. >> wow. [laughter] [applause] he has another question. >> hold on. >> and i also warrant -- want to know about google in china, is google willing to accept internet censorship? [laughter] [applause] >> okay. stay right here and answer your question. >> you can debate right now. you can invoke debate. >> is this my future of the

hardest questions out of the mouths of babes? >> well, first place we, you know -- you understand how balloons work, and we invented a balloon that would sit in the stratosphere and -- >> i think i've heard of that before. >> give him the mic. clip it on him. so what happened was the key breakthrough was that we figured out a way to make a transponder on the balloon that could talk to existing smartphones. in the had never been done before. i figured it would never work. not only did it work but it works fabulously. so the people you're talking about, people in very remote areas, they'll take their normal phone, and they'll be able to talk to, literally, balloons in the sky at 60,000 feet all around the southern and northern hemisphere. it's really cool. and they steer by moving up and down. it's the neatest thing ever. you question about china -- ask the question again. >> is google willing to accept

internet censorship to enter china? >> actually, no. [laughter] [applause] >> but china has the most people in the world. shouldn't most companies be willing to accept almost any terms to get that market open? [laughter] [applause] >> so we debated this a long time and we talked about this in the book, which you've clearly read. [laughter] >> i haven't read it. >> you haven't read it? >> yes i haven't heard -- >> okay, well, here's my copy. [laughter] [applause] so anyway, what happened in china is we just decided the level of censorship was counter to google's principles and we decided that we would not operate in china as long as that was part of their plan. it was a historic decision and a decision that most other companies would not have made. >> oh. laugh.

>> good answer. [laughter] >> thank you very avi. [applause] thank you. >> thank you avi. [applause] >> so, ladies and gentlemen that is how google works and a real life example of debate. it's been sup an honor -- >> so when are you applying to work for us? [laughter] >> i want to run for u.s. secretary of state. >> he wants to run for u.s. secretary of state. you heard it here first. remember him! [laughter] we are a supporter of you as a politician. [laughter] okay. thank you very much. >> thank you. >> thank you. [applause] >> thanks so much. >> thank you. >> eric, thank you. >> thank you john. >> thanks.

all right everyone, thanks so much for coming tonight. i hope to see you next tuesday for walter isaacson. have a great evening. [inaudible conversations] >> is will a nonfiction author or book you'd like to see featured on booktv? send us an e-mail to booktv@c-span.org, tweet us @booktv or post on our wall facebook.com/booktv. >> next booktv speaks with gary segura about his recent