Vinod (VK) I hate it when people say somebody needs no introduction, then goes on to introduce them, but I do want to start in the realm of what might have been. A few years ago - I think 1997 - Larry and Sergey almost got acquired. Can you tell us a little bit about this? I always wonder how the world might be different if that had, in fact, happened.
Sergey (SB) Well, we had developed this technology we called PageRank - sadly, not BrinRank. But anyway, it probably would've sold better that way. But we had developed this technology that we found was useful for search. By itself, it wasn't really a complete search engine. What we had just searched titles of webpages and ranked them quite well. But we showed it to a bunch of the existing search companies back then. Some of you might remember them - Infoseek, Excite, Lycos. And probably, the greatest interest came from Excite, and actually came from you, Vinod. You were the investor in Excite. We spent a while talking to them, and talking to you, Vinod. You remember that. In the end, I don't think the management team there was quite as excited about it - no pun intended. But I remember, there were four of us at the time - four grad students at Stanford. I remember, we fired off this note to Vinod. It was just a little e-mail that said, "We really don't want to sell, but for $1.6 million, you got a deal." And a few minutes later, we got a reply that said, "That's a lot of dough, but ok we'll do it." That's characteristic Vinod there. So then, ten minutes later, Scott - one of the four of us - comes running in, laughing. Huge grin on his face. He had faked the reply and back then, the ethics around faking emails weren't quite the same. Anyway, so he had that big joke. The deal obviously never came to fruition, and we went our own way to build search.
VK So the way I remember it, we actually agreed on a deal around $350,000.
Larry (LP) What? That's typical of Vinod.
SB Are you trying to renegotiate this now? $350,000.
VK But I had a hard time getting the management team to agree that they should acquire Google.
LP I think he's saying that they were having a hard time going to 1.6 billion, and we were having a hard time changing our number.
VK They felt that they didn't need it. But I start here for one very simple reason. There are many, many instances where things could have gone either way. I'm really glad they didn't acquire, because the world might have been a very, very different place. Looking back in retrospect, I feel like it would have been really, really sad if, in fact, Larry and Sergey had sold the company and not pursued the vision and changed the world the way they have.
LP It's actually an interesting story, because the reason we didn't sell it is not so much the money. I don't know, really. We were grad students eating burritos or whatever, so $1 million was a fair amount. The reason I think we really didn't sell the company was that we talked to all the search companies at the time, and they just weren't interested in what we were doing. It was obvious they didn't want to buy this company that didn't really have anything without the people. So they wanted us, but we were like, "Why are we going to work with this place that doesn't believe in search?" That's not going to cause anything good to happen. So ultimately, we didn't sell for that reason. It was just that they weren't interested in it, which is the same reason they had trouble getting to $1 million. Which I guess, at the time, was a lot of money. But I think ultimately, for me-- search seemed pretty important. It was about actually wanting to do something in that area, and it didn't seem like that was going to happen in these organizations.
VK It's amazing when the business people take over, they get focused on short-term revenue and lose the long-term vision. That's a good place to kick off on a different point. Most companies end up in failure, and I'm not talking about just the start-ups. But if you look at the S&P 500, so many of the very large companies keep going out of business at an increasing rate. People are surprised. What do companies need to do - whether they're small or large - to address these challenges? How do they take a different path, and how is Google taking a different path?
LP When I talk to most companies, I do think their leaders are pretty short-term focused. Imagine you're running Exxon, what do you do? Say you want to do something good with the most valuable company on earth. A lot of people think probably, it's not doing good things - worried about the environment and so on. But if the company has a lot of capabilities--worldwide operations and manufacturing, government relations, probably could do a lot different things, if you took a 20-year view. If you took a four-year view, that's a pretty hard question to answer. What are you doing in the next four years, which I think is about the average tenure of a Fortune 500 CEO. So if you're being measured quarterly-- obviously, it's good to have some pressure so you actually do things, make money and improve things. But I think the four-year horizon for leaders is pretty difficult. It's pretty difficult to solve big problems in four years. I think it's probably pretty easy to do it in 20 years. I think our whole system is setup in a way that makes it difficult for leaders of really big companies. Eventually, what you're doing doesn't makes sense over time, for whatever reasons - environmental or social or whatever it is. I think companies have a big problem making a big transition, so leaders get replaced.
VK I'd love both of you to comment a little bit on where Google is. What are the couple of things that become really, really critical for Google to do in the next five to 15 years? What areas are going to be critical?
SB I think if there was a couple of areas that were critical, then that would be too vulnerable a spot to be in, in a way. There are many, many opportunities to broadly use technology to impact the world, and to have a successful business. We try to invest, at least, in the places where we see a good fit to our company. But that could be many, many bets, and only a few of them need to pay off. From my perspective - running Google X - that's my job, is to invest in a number of opportunities, each one of which may be a big bet. But I hope-- well, you have a portfolio too. But I hope, across that portfolio, some of them pay off. Some of them are connected to our existing business and some, not so much. If you look at the self-driving cars, for example, I hope that that could really transform transportation around the world, and reduce the need for individual car ownership, the need for parking, road congestion and so forth. If that was successful in its own right, we would be super happy. It's obviously still a big bet. It's got many technical and policy risks. But if you are willing to make a number of bets like that, you've got to hope that some of them will pay off.
VK Larry, any particular areas you think are critical to Google's success the next few years? Areas you don't want to screw up?
LP I think we're pretty excited about Android obviously. I think that we have our traditional businesses obviously, search and things like that. I think one of the things people have been confused about-- people are like, "What is Google? Why are you guys coherent?" And it's really interesting when you look at search. It's really trying to understand everything in the world and make sense of it, organize it for people. We said, "Well, We're doing that. A lot of queries are actually about places, so we need to understand places." Then we said, "A lot of the queries are about content we can't find. We did books, and so on." So, we've been gradually expanding that. If you look at things like Google Now also-- well, maybe you don't want to ask a question. Maybe you want to just have it answered for you before you ask it. That would be better. Originally, the "I'm feeling lucky" button, that was supposed to be-- you should be able to skip the search results, and go directly to the answer. Unfortunately, it didn't work that well. It was kind of an obtuse naming of the feature, but that was the same kind of idea. We feel like right now, computers are still pretty bad. You're just messing around. You're scrolling on your touchscreen phone, and trying to find stuff. You're in a car. It's bouncy, and you can't-- it doesn't really work. I think the actual amount of knowledge you get out of your computer versus the amount of time you spend with it is still pretty bad. So I think our job is to solve that, and most of the things we're doing make sense in that context.
VK Along those lines, one of the areas I know you've both been very interested in is machine learning and AI, as it's been called in the past. In the past, it's never quite reached its potential or speculated potential. How far do you think it is as a technology, and how much of a role do you think it plays going forward?
SB Look, this is our latest model, right here [gestures at Larry]. See, not perfect yet. But doing pretty well. In the machine learning realm, we have several kinds of efforts going on. There's, for example, the brain project, which is really machine learning focused. It takes input, such as vision. In fact, we've been using it for the self-driving cars. It's been helpful there. It's been helpful for a number of Google services. And then, there's more general intelligence, like the DeepMind acquisition that - in theory - we hope will one day be fully reasoning AI. Obviously, computer scientists have been promising that for decades and not at all delivered. So I think it would be foolish of us to make prognoses about that. But we do have lots of proof points that one can create intelligent things in the world because-- all of us around. Therefore, you should presume that someday, we will be able to make machines that can reason, think and do things better than we can.
VK In this group, there are a bunch of people who are addressing the beginnings of the machine-learning revolution. There are people replacing farm workers, so you can weed plants and provide plant-by-plant care. People who are doing machines to make hamburgers automatically, all the way up the chain to people who are replacing law clerks or even doctors, psychiatrists, ENT specialists, you name it. So the whole span, from very simple work to very large work, is being replaced in a way that is a little bit scary. I want to come back before we finish to the social aspects of some of the technology changes. But I do wonder if the vast majority of jobs that we know today, more than 50-percent might be replaced by machines that can do that human judgment piece better.
SB We've been working on the venture investment machine learning. No, I'm just kidding. It's kind of true actually.
VK As long as I can buy one, I'm good.
LP That is what Google Ventures does though.
SB They did. They started that way. I don't know if they're actually doing that. I don't know. They keep hiring partners for whatever reason, so I don't know. It might not be working so well, the algorithm venture.
VK In fact, one of the early Excite employees, Graham Spencer, was working on this project at Google Now.
SB Maybe they just sit around and have parties. Maybe they are using the algorithm. I don't know what goes on in Google Ventures. But I do think that a lot of the things that people do have been - over the past century - replaced by machines and will continue to be.
LP 90-percent of people used to be farmers. So it's happened before. It's not surprising.
VK The vast majority of employment shifted from farming to only needing about 2-percent of the U.S. workforce. That happened between 1900 and the year 2000. I see the beginnings of that happening again with the rapid acceleration the next 10, 15, 20 years.
LP I totally believe we should be living in a time of abundance, like Peter Diamandis' book. If you really think about the things that you need to make yourself happy - housing, security, opportunities for your kids - anthropologists have been identifying these things. It's not that hard for us to provide those things. The amount of resources we need to do that, the amount of work that actually needs to go into that is pretty small. I'm guessing less than 1-percent at the moment. So the idea that everyone needs to work frantically to meet people's needs is just not true. I do think there's a problem that we don't recognize that. I think there's also a social problem that a lot of people aren't happy if they don't have anything to do. So we need to give people things to do. We need to feel like you're needed, wanted and have something productive to do. But I think the mix with that and the industries we actually need and so on are-- there's not a good correspondence. That's why we're busy destroying the environment and other things, maybe we don't need to be doing. So I'm pretty worried. Until we figure that out, we're not going to have a good outcome. One thing, I was talking to Richard Branson about this. They don't have enough jobs in the UK. He's been trying to get people to hire two part-time people instead of one full-time. So at least, the young people can have a half-time job rather than no job. And it's a slightly greater cost for employers. I was thinking, the extension of that is you have global unemployment or widespread unemployment. You just reduce work time. Everyone I've asked-- I've asked a lot of people about this. Maybe not you guys. But most people, if I ask them, 'Would you like an extra week of vacation?' They raise their hands, 100-percent of the people. 'Two weeks vacation, or a four-day work week?' Everyone will raise their hand. Most people like working, but they'd also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, is if you had a coordinated way to just reduce the workweek. And then, if you add slightly less employment, you can adjust and people will still have jobs.
SB I will quibble a little bit. I don't think that in the near term, the need for labor is going away. It gets shifted from one place to another, but people always want more stuff or more entertainment or more creativity or more something.
LP I think it's an imperfect system, so there's no reason that it really will correspond. There's been some economics arguments that, that's not as true now as it has been. But that could lead to other kinds of governance problems and so on. But nobody really knows the answer to that question.
VK Since we went in to the social domain, there's short-term issues like you see in San Francisco. People not appreciating that people who are part of the ideas economy in some way are doing much better than people who aren't.
LP This kind of thing is a really a governance problem, because we're building lots of jobs, lots of office buildings, and no housing. So it's not surprising that caused a lot of issues. You also have a lot of people who are rent controlled, so they don't participate in the economic increase in housing prices. It actually hurts them. It doesn't help them. So I think those problems are more structural and very serious problems. We're not really on a path to fix those problems in this area.
VK But they may be indicators that income distribution will get more lop-sided over time.
LP That's true. That's also a big issue.
VK I fundamentally believe we move from an economy of labor and capital to an economy of ideas. Most economists haven't caught on to this change, that ideas are a disproportionately large part of the growth of the economy, which I won't go too deep there, but it leads to some interesting questions. The Republican/Democratic divide about taxes and income redistribution may become much more critical and much more intense. I don't know if you have any thoughts on that. That seems to be-- we don't have to go there if you—
SB I think ideally, one would try to tax more of the things that we don't want, and either subsidize or encourage the things that we do want. The kinds of things people spend money on that are wasteful, you can imagine having higher taxes on. Or things that are harmful, like carbon, could be taxed at a higher rate. On the one hand, presumably it will slow wasteful spending. But on the other hand, perhaps we could encourage the kinds of investments that we want to be making.
VK Looking 40 years out, I find it hard to imagine why we won't need to support half the population to not work but pursue other interests that are interesting to them. Suddenly, X-games is an entertainment event instead of a sport. Anyway, let me go back to Google. We talked a little bit about self-driving cars. How large a change do you think that can cause to happen in society? Either one of you speculate on how large a change that might mean. It's more than just software.
SB I hope it can be a really dramatic change. Off the bat, of course, there are the many people who currently cannot get around if they're too old, too young, disabled and so forth. But that's still just a fraction of the population. I think the bigger changes can come to the community, the lifestyle, the land use. So much of our land in most cities, about 30 to 50-percent is parking, which is a tremendous waste. Also, the roads themselves, which are both congested and take a lot of space are just unpleasant. So with self-driving cars, you don't really need much in the way of parking, because you don't need one car per person. They just come and get you when you need them. You can also make much more efficient road use, if you-- and this is not something we've developed yet, but it's certainly been simulated by many. They can form trains. They can go at high speed, perhaps much higher than our highway speeds here. Fundamentally, they can just make much more efficient use of the space and therefore, people's time. So I think that can be really transformative.
VK Real quickly. I love the car, because it's such a radical transformation economically. The way I look at it, it costs $300 a month to lease a car or hiring a driver is $300 a day. A driverless car is a 97-percent cost reduction in the cost of a driven car, making it cheaper than a car you own probably. So it completely changes economics. But the traditional auto companies aren't going to want a large reduction in the number of cars.
LP Depends if they have a five-year view or a 20-year view.
SB It also depends if they're the ones producing them. Any individual company might be happy as long as they're the ones making those cars.
VK Do you think Google gets into the business of making cars potentially? Not that I'm asking you to announce what you're doing, but speculate 10 years from now.
SB Well, I'm very excited about the technology that we're building, but it's still in its early stages. I think eventually, in the future, there might be multiple partners or companies that we work with that-- some of them can be manufacturers and some might be service providers. This is all pretty speculative. Right now, we're working hard to just get the basics so the technology working. But the ideal self-driven car is not one that's-- we've experimented, where we convert the Lexuses and the Priuses. But it's also really nice to not have a steering wheel, not have pedals; maybe the seats should face each other, things like that. I'm not sure that the traditional car designs are ideal for self-driving.
VK Let me go back to Larry. As CEO of Google, a lot of these guys have board members who keep saying, Focus on a few things. Self-driving cars is one. You've done some things in health and others. How do you decide what's focused and what's unfocused?
LP I've been thinking about this change quite a bit over the years. I think it sounds stupid if you have this big company, and you can only do five things. I think it's also not very good for the employees. Because then, you have 30,000 employees and they're all doing the same thing, which isn't very exciting for them. So I think, ideally, the company would scale the number of things it does with the number of people in a linear fashion. As far as I can tell, that never happens. It's logarithmic with the number of people, if that. I would always have this debate actually, with Steve Jobs. He'd be like, 'You guys are doing too much stuff.' And I'd be like, 'Yeah that's true.' And he was right, in some sense. But I think the answer to that - which I only came to recently, as we were talking about this stuff - is that if you're doing things that are highly interrelated, then there is some complexity limits. It's all going to escalate to the CEO, because you have things that are interrelated. At some point, they have to get integrated. A lot of our Internet stuff is like that. The user experience needs to make sense. It needs to feel like you're using Google, not that you're using something else. So I think there is a limit on how much we can do there, and we have to think carefully about it. Everything about the automated cars is like-- Sergey can do that, and I don't have to talk to him. I like talking to him. But I don't really have to talk to him about that, because there's almost zero impact on the rest of our business. Although it does use some great engineers who we have on mapping and other things. Naturally, they move to that project, but that's a scalable process. I don't have to talk to those engineers. They just move magically. So I do think companies usually try to do very adjacent things. They figure, "We're going to know exactly how to do something that's very similar to what we already do." The problem with that is that causes a management burden. Whereas, if you did something a little less related, you can actually handle more things.
SB For Google X, I created a set of rules for our projects that, by design, keep us farther away from Google. For example, we focus on atoms not bits. What we do involves a lot of software, but it always has a key non-software component, like obviously, the cars, even though they have a lot of software.
LP Balloons.
SB The balloons. The Internet project, Balloon. We have Internet via high altitude balloons. We have the kite-based power, the flying wind turbines. All these things are pretty physical and that's by design. In fact, when I focused on Google X, I shifted out a few projects, which seemed closer to Google's core.
LP I was just going to say, for startups, maybe. You need to get one thing done well, or else you don't have permission to do anything else. But for big companies, I think it's a little different.
VK That leads to another strategy question. Can you imagine, given your interests-- you've had some interest in health. There's some radical stuff there. Android is a natural platform for health. Mobile is, and health needs to be distributed and highly accessible - broadly, not just at the hospital. Can you imagine Google becoming a health company? Maybe a larger business than the search business or the media business?
SB I think it's, for sure, a larger business. In fact, Google X - for example - we do have the glucose reading contact lenses.
LP Which are very cool.
SB I don't wear them. Well, I don't wear contacts, so I don't have the need to measure my glucose. But they should be coming along pretty well. I'm very excited about that. Generally, health is just so heavily regulated. It's just a painful business to be in. It's just not necessarily how I want to spend my time. Even though we do have some health projects, and we'll be doing that to a certain extent. But I think the regulatory burden in the U.S. is so high that think it would dissuade a lot of entrepreneurs.
LP We have Calico, obviously, we did that with Art Levinson, which is pretty independent effort. Focuses on health and longevity. I'm really excited about that. I am really excited about the possibility of data also, to improve health. But that's-- I think what Sergey's saying, it's so heavily regulated. It's a difficult area. I can give you an example. Imagine you had the ability to search people's medical records in the U.S.. Any medical researcher can do it. Maybe they have the names removed. Maybe when the medical researcher searches your data, you get to see which researcher searched it and why. I imagine that would save 10,000 lives in the first year. Just that. That's almost impossible to do because of HIPPA. I do worry that we regulate ourselves out of some really great possibilities that are certainly on the data-mining end.
VK Two or three years ago, I wrote a blog called, "Do We Need Doctors?" And I speculated Doctor Algorithm will do most of the work. Amol (the CEO) from Ginger.io is here. They introduced their psychiatric monitoring app at Kaiser—
LP I was talking to them about that last night. It was cool.
VK In the first week, Kaiser believes they saved three suicides, because the app alerted the nurse that the patient was in a suicidal state. That's just the big outcome. But that feels like a software business, mostly. Delivered mostly through mobile, and it's more needed in the least regulated areas - India, Africa, places like that. Go ahead.
LP I was going to say, in the U.S., I think diabetes and heart disease are both about 3 or $400 billion dollars a year in expense. That's of the 1.3 trillion, so that's a pretty big chunk. So definitely, just making a dent in those would be a big deal for people.
VK In fact, most people may not know this, but the first mobile app got approved as a pharmaceutical because it's directly competitive with metformin, which is the principle drug for blood sugar reduction. So it has the same effect, and the FDA approved it. Of course, with the funny caveat that it has to be refilled every three months, and it's priced at $182 a month.
LP Do you want to take any questions from the audience?
VK I'm going to have one question for you, Larry. You lost your voice last year. You've talked a little bit about what you've learned from that.
LP Sergey encouraged me to make all the details public. That was really great, to get a lot of feedback, information, things like that. As a good example, we're talking about medicine, a lot of the angst people have about their medical records is related to insurance. Which if we could just fix insurance-- the point of insurance is to cover medical issues. We somehow worked ourselves into a state around that. Obviously, I don't care very much about that, so I don't have that issue. Anyway, I don't think my voice is likely to get much worse, so I'm happy about that. I can get my job done fine.
VK Why don't we open it up to a few questions from the audience?
Audience Member 1 Hi. I'm Vivek. Co-founders are super important for building a company, and you guys are doing great for 15 years. Have you fundamentally disagreed on something at all over the last 15 years, and how do you resolve?
SB Where do I start?
LP No.
SB What's he talking about? We disagree all the time.
LP Not fundamentally.
SB No, no. We really disagree.
VK They're fundamentally disagreeing on whether they disagree.
SB I think if you get to know somebody over a long period of time-- we're working together for so long, and we are committed to doing that. You don't get agitated about one little thing or another. We work through it. Also, generally, we've gotten to think remarkably alike, which scares some people around us.
LP The other thing, we know enough that when we're disagreeing-- you make a lot of calls that aren't obvious. So if you're disagreeing, it's probably that it's not obvious what to do.
SB Let's see. Whoever has the mic, ask the question. Eric? Yeah.
Audience Member 2 So back to the original question of the alternative universe where you sold to Excite. You were grad students. You could imagine that, that happened, right? Maybe it was $10 million. Maybe it was $100 million. There's some price that might have made that happen. What do you think you would've done next after working at Excite for a couple of years?
LP I think we would've been very happy. We'd have a nice house—
SB I don't know. Do you remember the Founder's Dungeon?
LP No.
SB When we toured Excite, this was one of the things about it. They toured us around. It was actually-- I think it was Terabella or something. It's one of the buildings we now occupy. Here's these offices, so we go downstairs, and they locked away this one founder. I don't remember which one it was. He's in a little closet downstairs. He goes, "I'm so happy down here.” He's just in this little janitor's closet. It was a little dungeon. I don't know. It's hard to say. I don't know how long I would've stayed, to be honest. I don't know if it would've been a good acquisition for them, to be honest. I don't know that we would've been so passionate or productive or what not.
LP I think that's true.
Audience Member 3 You mentioned the limitations of four-year outlook verses a 20-year outlook. I'm wondering your thoughts on governments and their limitations in having these limited terms. What would be government 2.0 in your mind?
LP That's a really big topic, which I don't know very much about. But I do worry that when I look at the government-- our interactions with governments around things we get interested in - spectrum or whatever - that it becomes pretty illogical. The reasons aren't that the people aren't good, and they're trying to do good things. Most people you talk to in government are there for the right reasons. They're not there for the pay typically. They're there because they want to make the world better. But I think the set of rules that we have-- one thing that I would observe is that the complexity of government increases over time. So, just looking at all our democracies around the world, n modern regulation and in law, we have increases without bounds. I was trying to reduce the complexity in Google. I was thinking, "We're getting to be a bigger company. Let's take our rules and regulations. Let's make sure they stay at 50 pages, so people can actually read it." But the problem that I discovered about that was that by reference, we include the entire law and regulation of the entire world, because we're a multinational company. We operate everywhere. Our employees, what they do affects everything. In some sense, we'd have to read the hundred million pages of law and regulation that are out there. It's probably something like that. I don't know how much it is, but it's very big and getting bigger. One thing I propose is that-- I was talking to some government leaders. I said—actually to the President of South Korea. It was great. I said, "Hey, why don't you just limit your laws and regulations to some set of pages? And when you add a page, you have to take one away.” She actually wrote this down. She's great.
SB Is that one of the pages now?
LP No, it's only one sentence. But I do think that-- otherwise, I think the government's likely to collapse under its own weight, despite people being good and well-meaning, just because of that one issue of complexity increasing. I just don't think it's reasonable. When we went public, laws were from 60 years ago. If you took a random law professor, locked them in a room, told them to rewrite those rules, you'd have something much better come out. But we're not doing that.
VK Larry, we—
SB How do you know that? You don't know about the dungeons, filled with law professors. That's the other Google X project I have.
LP I'm glad to hear that.
VK We've got to finish up. But there's one question I want you to just to grasp, because a lot of founders deal with this. You started off as CEO, got Eric as CEO for a while, took back over. Can you just speak to how the experience was retrospectively? Was it the good way to do it? A bad way to do it? How would you have done it different, or would you do it the same? It's something everybody here struggles with-- or a lot of people struggle with.
LP I think it turned out pretty well, so that's really good. Eric's a great leader, and I think we learned a tremendous amount from him. I think we ran pretty effectively also as a team for a long time on those things. I think these are very personal decisions, and there's probably no right answer. If you have a really long time period, obviously, you can probably learn the things you need to know about management or not. Like I said, it's a personal decision. I think running a company - a start-up - is a really big commitment. It takes a lot out of you, out of your life to do well, I think. I'm sure the same is true for companies as they get bigger. So I'm not sure that's for everyone. Some people are good at starting things, not good at finishing things. And I think organizations have trouble recognizing that, too, and those are difficult transitions for people. In general, if you have a project or company and it can have stable leadership over 20 years, that's better than not.
VK Well, thank you. It's been a treat to have both of you here. Really appreciate the time to have you two drive here. In Sergey's case, to kite-board here. He didn't quite make it.
SB I only made it halfway, which is the worst distance to actually make it. But I turned around and went back. There wasn't wind on the side of the bridge.
VK Well, thank you.
