Social Media is Web 2.0 – Relationships – New Linchpin for User Value

Mike Arrington weights in with his opinion of social media. He makes a relevant (pun intended) point – content spewing is clutter that creates noise which in turn makes relevance harder to filter. Timing couldn’t have been better with Jeremiah weighing in on what he sees as the big trends in social media.

Let me break this down – participation and interaction is key (as Fred Wilson and Mike Arrington point out). However Chis Saad, Alex van Elsas point out – it’s personal and about motivation of users. It’s about Relationships.

It’s about RELATIONSHIPS in context to the user ‘s behavior.

Web 1.0 – USER paradigm – self service was at the heart of the user experience

    1. search/browse
    3. information
    4. action

    Web 2.0 – USER paradigm – everything remains the same except instead of self service (which is now a full blown user norm) it’s about relationships
    1. search/browse
    3. information
    4. action

    RELATIONSHIPS are at the heart of the user experience.

    Big Trend and Opportunity: the need for the creation of the key utilitiy for users around their relationships (the holy grail for advertisers and new startups). It will be in the form of new filters in the contextual and behaviorial area around relationships and information.

    Just like in Web 1.0 it was in context to the web page and keywords in search. For Web 2.0 we will see a multidimensional approach to context and behavior centered around relationships – to content, people, data, ..etc.

    At the end of the day the value to the user will be the same as Web 1.0 – getting information and taking action. However, instead of self service being the linchpin for context and behavioral value to users, a new linchpin will be based upon relationships.

    Whoever makes the users value proposition of getting information and taking action faster, easiers, and simplier will win.

Podcast: Search 2.0 – From Search to Discover by Yezdi Lashkari

Yezdi Lashkari outlines the origins and limitations of collaborative filtering, the importance of Web 2.0, and how the commoditization of certain specific web technologies will benefit both consumers and businesses alike. He addresses the importance of blending algorithms to effectively harness collective user behavior, and the wisdom of crowds.

Yezdi Lashkari was a co-founder of Firefly Networks (acquired by Microsoft), a pioneering company in the area of collaborative filtering and personalization.  Lashkari recently left Microsoft, where he played a number of senior product leadership roles, the last being a special assignment sponsored directly by CEO Steven Ballmer, focused on researching large scale network-centric computing infrastructures for thousands of hosts.  This work is now driving one of the technical pillars of the post-Vista Windows release.  Lashkari holds numerous patents in collaborative filtering, data protection and user profiling technologies.  He received his M.S. from the MIT Media Laboratory and has three computer science degrees covering research areas ranging from artificial intelligence, databases, to collaborative filtering and personalization.

Enjoy the podcast sponsored by Aggregate Knowledge – Leader in Web 2.0 Discovery Technology

Yezdi and I talk about the big trend in Search or Search 2.0 – and it has nothing to do with search as we know it today.

The full transcript from the Interview is here.

Google CEO Eric Schmidt Interview in NY’s own Maria Bartiromo of CNBC sat down with Google CEO Eric Schmidt for an exclusive interview. Given the scope of the interview and the timing of it – I wanted to provide the entire transcript from the CNBC interview. Commentary will be flying in on this one. Already many are chiming in like SAI.

What strikes me is the humble nature of Eric Schmidt and the magnitude of their plans. SAI says that YouTube will be the secret weapon but it’s clear YouTube doesn’t have a clue on how to monetize it’s video position and audience asset. No offense YouTube, but I haven’t had one intelligent conversation with one YouTube person on monetization. Personally I love YouTube and see huge potential, but the current YouTube team just seems stuck. For example stupid pre roll deals and ackward sponsorships. Enough said, YouTube get on the cluetrain. Maybe Chad or Steve can fix it.

However it’s clear to me what Google’s secret weapon is …it’s intelligent software across their distributed platform – datacenter, communications, and Web. Ok this is not that obvious to most non-computer science folks but think a ‘new kind of’ Artificical Intelligence or AI. While Microsoft rolls out Live Mess opps Live Mesh(note had to get Live Mesh using only my hotmail account – duh), Google has to deliver on a new software model around the ‘new kind of’ AI.

There is more to be said…Maybe I’ll do more on the new podcast that I’m doing called the Discovery Series

Thanks to CNBC for the interview:

Here is Eric Schmidt interview via the transcript:

Maria’s interview with Google CEO, Dr. Eric Schmidt Tuesday at the Milken Conference in Los Angeles to discuss Google’s growth and U.S. slowdown, the possibility of a Microsoft acquisition of Yahoo!, online advertising growth rates, Google’s European stronghold and Google’s stock, and other topics.

Here is the full, unaltered transcript of that interview:

Maria Bartiromo, host: Eric, thanks so much for joining us.

Dr. Eric Schmidt, Google CEO: Thank you for having me on again.

Bartiromo: Let’s begin with this debate that seems to be brewing on Wall
Street about growth. So the company grew 46 percent in the third quarter, 40
percent in the fourth quarter, 30 percent in the next quarter, and then
sequentially 1 1/2 percent when you look quarter to quarter. How insulated
would you say is Google to the economic slowdown or recession?

Google Headquarters
Paul Sakuma / AP

Schmidt: Well, the numbers you’re using are year over year, quarter over quarter in the US. Globally, of course, we had good growth, and the US numbers are masked by the fact that, a year ago, we had a very strong quarterly growth of that quarter. So the real growth rate in the US is good,
although overall growth rates are slowing, as they have for years. Just because of the scale and size of what we operate. The business has continued to be good.

Bartiromo: OK, because when you get to a certain size, it’s really hard to
sort of grind down more market share when you’ve already got 70 percent or get
that much bigger, given the fact that the company is getting–you’re a large

But we have–we have multiple ways in which we grow. Of
course, more people use the Internet, more people are using electronic
commerce on the Internet, more people are clicking on the ads, and also our ad
technology is getting much, much better. And it’s really any one of those
will push us over the top in any given quarter; sometimes they all come
together. We don’t seem to be very sensitive to macroeconomics, at least
right now. We don’t seem to be very sensitive to things like recession. But
we’re very sensitive to how quickly do we bring in the new product improvement
or something like that.

Bartiromo: The comScore data took everybody’s estimates down, and this whole
debate about whether it was accurate or not. How can you ensure that the
growth occurs, even if people pull in their spending, if perhaps advertisers
slow down on the budgets? I mean, is it fair to say that the hypergrowth of
2004 to ’07 is–has been seen?

Schmidt: Well, as I said, if you think about it over a five- or six- or
seven-year period, growth rates are slowing, as they have to. So I don’t
think it’s a big shift. It’s not, you know, today it was one way and tomorrow
it’s another. In our case, we focus on quality, and we have a very simple
model. If we show fewer ads that are more targeted, those ads are worth more.
So we’re in this strange situation where we show a smaller number of ads and
we make more money because we show better ads. And that’s the secret of

Bartiromo: Yes, that’s what Mary Meeker was saying. She’s saying, `Look, it

could be that they’re actually benefiting from a recession because they’re
monetizing the ads better.’

Schmidt: There’s been–you you know, if you were running a business
today, you would be looking very carefully at where is your marketing spend
going? And we think that you’ll choose to put your marketing spend on the
thing that’s most measurable, the thing that’s most, you know–because you can
always defer a branding campaign that may or may not work, but you want to get
those customers and those leads right now, and that’s what we do.

Bartiromo: Let’s talk about DoubleClick. You acquired the company. How’s
the integration going?

Schmidt: Well, it just started. It started about three weeks ago. And
what we’re doing is we’re taking their products and our products and
integrating them so that people have better tools, advertisers have more,
literally, ads, and publishers have more spots that they can publish
information into. So it’s the combination of all that that we’ve been waiting
for so long, and it’s under way. It takes six months to get all the products

Bartiromo: So you think that the integration process will take about six

Schmidt: It’s on the order of that. And, of course, at Google

Google Inc
574.29 15.82 +2.83%

everything is a try. We try this, we try that, we see what works. The early
indications are that we’ll be largely complete within that period.

Bartiromo: It’s no secret that Google owns search, but what about the display
ads? Is it–is it fair to say that’s sort of up for grabs? You know, you’ve
got DoubleClick, Microsoft

Microsoft Corp
28.52 -0.12 -0.42%

has aQuantis. It’s up for–up for grabs, that part
of the business.

Schmidt: Well, it’s fair to say that that Google is not the leader in
display ads, but our customers want to be able to purchase text ads and
display ads and other advertising in one purchasing bundle, and the
combination of the tools that we’re developing, plus the DoubleClick
integration acquisition and so forth, allows us to offer a single product for
those advertisers. So we think that will help us with our display ads
competitiveness. We think our technology is better. And so really now it’s a
question of earning those customers’ respect and knowledge.

Bartiromo: So how do you ensure that that was actually the right acquisition
and not just go it alone, do it on your own?

Bartiromo: Tell me what you’re doing with Yahoo! in terms of testing. On
the earnings call last time, you said you’re setting up ads there. How’s it
going? What’s involved?

Schmidt: Well, the long and short of it is that we did a test for about
two weeks, which has since ended, where Yahoo! took a small percentage of
their ads and replaced them by ours. We did this as part of a commercial
conversation, which I obviously cannot go into, but it’s one of the strategic
options that we believe Yahoo! is considering at this time.

Bartiromo: Now, of course, after that, I guess the Department of Justice
announces that it’s, you know, doing an inquiry about this. Have you heard
from the Department of Justice on this?

Schmidt: Well, again, without going into the specifics, you should
expect that in all of these possible transactions, all of the regulatory
bodies will be reviewing them. If there were an acquisition of Yahoo!, for
example, the Department of Justice would also be doing a review. And the
anti-trust laws allow the government–and I think properly so–to look at both
commercial deals as well as acquisitions.

Bartiromo: What kind of a combination would you like to see with Yahoo!?
What kind of a partnership would you like to see?

Schmidt: Oh, well, we actually enjoyed working with Yahoo!. We also
compete with them. They’re a well run and, I think, impressive company.
We’ve primarily been concerned about the possibility of a Microsoft
acquisition of Yahoo! because of Microsoft’s history and because of the
assets that Yahoo! has are quite valuable. And we actually think that in the
wrong hands, they could be used in the wrong way.

Bartiromo: What do you mean, Microsoft’s history?

Schmidt: I think people are aware of the anti-trust trial from 10 years
ago. Microsoft has a long history in that area.

Bartiromo: Yeah, you can bet, I guess, who tipped off the DOJ about the phone
call that was made, Steve Ballmer or somebody from that side.

So what do we know about Microsoft and Yahoo!? Tell me this. I mean, I know
that, you know, we’re waiting on possible news from Microsoft, possibly, a
hostile–we don’t know what’s going to happen next. But what kind of a
challenge would Microsoft/Yahoo! be for Google?

Schmidt: Well, today we actually do not know what’s going on. We read
in the press that there’s discussions and we’ll see what they decide to do.
If they go ahead and the merger’s ultimately successful, it would be possible
for Microsoft to integrate some of the properties and essentially eliminate
consumer choice, particularly in electronic mail, instant messaging, the
things where they have 80 or 90 percent market share, and that’s a sweet spot
for Microsoft in its ability to eliminate choice.

Bartiromo: Mm-hmm. And, of course, Google has been getting all these new
killer apps, whether it’s Gmail or Maps or, you know, spreadsheets.
Ultimately is the game to compete direct, head on, with Microsoft?

Schmidt: Well, Google is actually trying to be an innovator, and we’re
always concerned about competition. We have found that if we can simply
invent a brand-new product that really solves a problem that really does
matter to you, we can get your business, we can get your attention, we can get
your traffic and your customers or what have you. We’re trying in a new thing
called cloud computing to offer very powerful Web services that do the common
things–e-mail, word processing and so forth–where the data’s kept in the
cloud, it’s kept by somebody else, it’s managed by professionals. You don’t
need to worry about where you keep all that information. We like that model a
lot. We’re getting traction. It is a competitive threat to other companies,
but we think it’s a technological breakthrough.

Bartiromo: How will you respond if Microsoft goes hostile?

Schmidt: Well, a lot will depend on whether their strategy is
successful. In the short term, we have pointed out the possibility of a bad
outcome, but it really depends on what happens in the hostile.

Bartiromo: Do you have any sense of how these things go? I mean, can they go
in the open market, buy the stock, and then just create a proxy battle?

Schmidt: All I know is what I’ve read in the press, which is that
essentially you replace the board and you force–you force the deal.

Bartiromo: Let me ask you about YouTube and MySpace. YouTube has these
phenomenal growth rates. What do you think is behind that?

Schmidt: Video is powerful. And it’s amazing. You know, we started off
with Mentos and the other sort of fun videos, and now people, because they
have so many digital cameras, are essentially uploading everything.
Furthermore, we’re beginning to see glimpses of significant professional
content on YouTube. People are using it–because there’s such a large reach,
they’re learning how to reach that audience. We’re working but have not yet
in my view gotten a breakthrough around monetization. So while we have lots
and lots of traffic and we have lots and lots of interesting and creative
people and all sorts of controversies–we’re blocked in countries, so on and
so on–I don’t think we’ve quite figured out the perfect solution of how to
make money, and we’re working on that. That’s our highest priority this year.

Bartiromo: Which is a huge priority, clearly. A lot of people feel like this
is an amazing opportunity for you. So, as far as monetizing that business on
YouTube, do you think that takes a year? Does it take the next five years?
What’s your time frame on that?

Schmidt: We believe the best products are coming out this year. And
they’re new products. They’re not announced. They’re not just putting
in-line ads in the things that people are trying. But we have a number–and,
of course, Google is an innovative place. The Yahoo! team are trying various
new forms of advertising, ones which are much more participative, much more
creative, much more–much more interesting in and of themselves. Google
believes that advertising itself has value. The ads literally are valuable to
consumers. Not just to the advertisers, but the consumers.

Bartiromo: They want to look at them.

Schmidt: When they’re targeted. When they’re the right ad for what
you’re doing or what you care about.

Bartiromo: Mm-hmm. But, you know, it gets me to MySpace. Some people feel
like, when you look at the MySpace part of the business, that’s really where
people are looking at, or feeling a bit of an economic downturn. Let me ask
you about that. The deal involving revenue promises, is that going to impact
margins in the coming two years?

Schmidt: Not materially in that sense. We have pointed out, and I’ll
repeat again, that the whole social networking space has been harder for us to
monetize–that is, develop advertising businesses again–than some of the
other–than some of the other spaces that we’re in. It has to do what people
are doing. When you think about it, you’re in a social network, you’re
looking at people’s photos, you’re figuring out where your friends are.
You’re not as likely to be purchasing a new car at the same time or purchasing
clothes or purchasing a book or what have–whatever business that you’re in.
So the development of the advertising tools and techniques, literally the
platform, has been more difficult than we have thought. But we’re working on
it, and we’re hopeful

Bartiromo: You’ve got $12 billion in cash right now?

Schmidt: A little more than that.

Bartiromo: What are your plans for that money? A lot of people say, `Look,
the company’s doing well. Growth is still continuing very strongly, global in
particular. Why not pay a dividend out? Why not buy back stock?

Schmidt: We love watching that cash sit in a well-managed bank and not
get lost.

Bartiromo: So you could categorically rule out, no dividend coming?

Schmidt: Well, first this: We never rule anything out. But right now
we’re happy to let the cash accumulate. The cash represents a strategic
option for the future. As you know, we had the luxury of entering the
wireless auction. And we did not win the auction, but our financial resources
allowed us to credibly and seriously enter an auction for 4.65 billion.
Couldn’t have done that without the cash.

Bartiromo: What did you get out of that, though, Eric?

Schmidt: Well, from a corporate perspective, we participated in
something important. From a consumer perspective, we know that our
participation helped in making sure that the networks remained open. So
consumers get choices. What’s better than that?

Bartiromo: Yeah, and the FCC was happy about that.

Mobile. A lot of people say mobility is where it’s at. You’ve said,
actually, I’ve heard you on conference calls saying that this is one of the
big priorities for the company. How do you envision this? Tell me what
you’re looking for.

Schmidt: First place, everyone I know, everyone you know carries a
mobile phone. And it’s true in every country.

Bartiromo: And I’m not carrying my PC, by the way.

Schmidt: And most people in most developed countries have a roughly 100
percent coverage of mobile phones. So it really is a tremendous phenomenon.
Over the next three or four years, there’ll be more than another billion or so
mobile phones added. Eventually our numbers indicate that there’ll be five or
so billion mobile phones in a world of six billion or so. People, this is a
phenomenon. It’s an unprecedented reach, even greater than, for example,
television, or even electricity in some cases. So that’s a platform that we
can exploit. Our mobile phone, both search traffic as well as advertising is
growing very rapidly, and we think people will do more and more interesting
things in mobile phones. And, I mean, small phones, big phones, big screens,
things that don’t look like a phone, things which are mobile.

Furthermore, the telecommunications industry is helping because they’re
deploying billions of dollars of literally excess data capacity so these
things will have fast networks wherever I go. One of the greatest things for
me is whenever I fly somewhere, I open up and I open up my iPhone or my
BlackBerry, and, boom, there’s everything in my world as I’ve landed in a
country I’ve never been in. It’s a remarkable achievement.

Bartiromo: Yeah. What needs to happen before we actually get to that world
that you’re talking about? In other words, do we need to see the providers
create different screens? I mean, do you need a larger screen to access some
of this data? How do we get there?

Schmidt: Well, one of the problems is we haven’t figured out a way to
change finger sizes. We just haven’t…

Bartiromo: Right.

Schmidt: There’s no solution to that.

Bartiromo: Right.

Schmidt: We’d like to, but we haven’t done it. And people don’t like to
kind of go like this. So you need a certain size screen. But there’s other
technology. For example, the processors in the phones have gotten faster.
The batteries have gotten longer last–longer lasting. The screens have
gotten brighter. The whole device has gotten lighter. So all of that has
been happening while people have been talking about this. We know that these
things are working now. We know because we measure it that there’s been a
huge increase in maps, Google Maps, hugely successful. These phones have
GPSes in them. So when I want to go to the equivalent of a Starbucks, I just
type “Starbucks,” it says it’s over there. For me, that’s just a huge–a huge
improvement. And that service is available almost everywhere in the world.

Bartiromo: That’s amazing. Let’s–that transitions right to the rest of the
world. Global has been really the hot spot for Google. Tell me how you keep
that going. Where are the biggest opportunities for Google right now outside
of the United States?

Dr. Schmidt: Well, first place, the Internet is growing faster outside the
United States than in the United States. Also advertising online growth rates
are higher outside the United States than they are in the United States.
You’ve got–and of course you have a weak dollar strategy–because the US has
a very weak dollar–so that also helps. For all of those reasons, revenue
outside of the United States should grow dramatically over the next while, and
that’s great.

In our case, the biggest difference–and, in fact, perhaps the only
difference–between people in the US and other people is language. Other than
that, simple rule: Everybody wants the same thing. They want fashion, they
want information, they want products, they want e-commerce, they want it now,
they want to have fun, they want to use credit cards or debit cards. So we
work very hard to make that true globally. I think most of the large,
successful US corporations, the ones that you certainly cover all day, all are
going to see that kind of growth if they’ll well positioned internationally.

Bartiromo: So when you look around the world, what’s the most important, sort
of richest area for you right here?

Schmidt: Well, for us, of course, Europe has been our stronghold for a
long time. And Europe is just very, very strong for Google. They have
relatively higher market share, they’re very sophisticated consumers, and a
very mature advertising rate. If you look at the global advertising market,
it’s the United States, Japan, China, Britain, France and Europe–and Great
Britain. Those are the sort of the big five or six. Well, of course, we’re
doing very well in Europe, we’re doing well in Japan, and we’ve been in the
process of entering China for a while, and we’re growing there nicely.

Bartiromo: What’s happening there, though? You’re number one in every market
except a handful in Asia. How do you break in, and really with a solid

Schmidt: Well, in each case, they’re different. In China, of course,
there’s all the issues of regulation and censorship. We delayed our entry for
good reasons, and as a result we’re not number one there. In some of the
other countries, it’s because we didn’t get the language right. It turns out
Asian languages often have what you and I would think of are nonsensical ways
in which words are put together. So, for example, all the words in Thai are
put into one very long sentence. They don’t have word breaks. So developing
the technology to do that right and then search and index against it took us a
little while longer. We’ve now addressed that, so we think we should do well

Bartiromo: Fascinating. So what’s the biggest challenge that you’re facing

Schmidt: In Google’s case, I think it’s internal. It’s the ability to
manage the creative process, deal with the complexity in what is a relatively
large company, in terms of people, who’s doing what. We have 50 development
centers all around the world, people in different time zones, `Are you doing
that? Are you doing that? Do I work with you? How do I check in my code?’
Those sorts of things.

Bartiromo: And for a long time, people were saying, `Look, you know, Google
has this incredible campus, and, you know, spending money, and really
showering employees, making sure that people are happy there.’ Are you
beginning a new process of managing employee growth right now and managing
expenses more aggressively than you have in the past?

Schmidt: Well, certainly not our benefits, per se. Every day I turn
around, there’s some new benefit that we’ve come up with for our employees.
It’s part of our culture; we’re happy to do that. And, of course, we have
gross margins to afford it. So higher gross margins is one of the
explanations. We have slowed our head count growth for a couple of reasons,
but the biggest reason is it began to feel like we really didn’t have a good
sense of what people were doing. The systems in the company, literally who’s
doing what, what are they doing, seemed to lag our ability to hire these great
people. So we slowed it a little bit. But we’re still going to hire some
number of thousand people this year.

Bartiromo: Let me–let me go back to something on the DoubleClick
acquisition. Are you seeing any pushback from some of the advertisers who
say, `Look’–the ad agencies who say, `We’re already spending a ton of money
on Google. Why do we need to spend more on all this other stuff away from
search?’ How are you going to get them to devote more money to display, to
audio, to print and TV ventures, which are–and everything else you’re–and
the display ads, obviously.

Schmidt: Because we earn it. Because you can measure it. We never want
people to give us–give us money that we don’t earn and that we can’t prove
that they–that they–that it really provides value. That’s not a good
business for us. So as we enter these markets, we hope to say, `We have the
tools that can show you that if you put this display ad out there, you really
will get the sale.’ And we have ideas, we have new research in how to do that
in a closed loop way that is phenomenal. So our innovation model is in very
category of ads, not just text ads, to show real return, real sales, and we
think we can do that. And if we do that, we’ll get the business. And if we
can’t do it, we shouldn’t get the business.

Bartiromo: Right, because it’s so measurable. That’s why you don’t really
see a real dry up in the advertising during a recession.

Schmidt: Which is…

Bartiromo: Would you agree with that?

Schmidt: That’s our hope. Our hope is that, again, in a recession,
people would say, `Look, I’m going to put my money where I know my money’s
being well spent.’ Now, we don’t know that we’re in a recession, but if we
were, we hope that’s what will happen.

Bartiromo: Now, earlier you said, `Look, growth levels have to slow,
obviously.’ What’s appropriate then? I mean, when you say–I mean, investors
are saying, `Look, is this company insulated? Is it not insulated?’ So you
say of course growth levels have to slow. To what?

Schmidt: Well, we don’t know, but obviously, we don’t plan to a growth
level, we plan to an innovation level. Our idea is you just keep inventing
new stuff, and it grows as quickly as it can. And there’s some capacity with
which we can deliver these to customers and that they can adopt them. And, of
course, they have to do work. They have to learn how to use new tools, we
have to talk to them, there’s a lot of selling and marketing involved. It
just doesn’t happen automatically. Here’s a new idea. People have to be
comfortable with it. But once they are, we’ve found that growth rate is

Bartiromo: As a steward of technology and innovation your entire career, what
would you say is the most innovative thing out there? What’s the next big
thing, from your standpoint?

Schmidt: I’ve always thought that the scariest piece of innovation is
knowledge understanding and language translation. I don’t understand how it
works, but to watch a computer–literally watch it–read something in English,
dissect what it’s about, translate it into a language that I don’t speak and
having that other person say, `Wow, that’s incredible,’ to me, that’s magic.
And it isn’t magic, it’s just very good computer science, very good artificial
intelligence, very good physics. And that’s where we are. So the things that
are most impressive to me are the things where the computer does something
that nobody could do, literally translate things 100 language in parallel,
summarize something for me, take me to something which I didn’t know I was
interested in but knows that I cared about it. And we’re right on the cusp of

Bartiromo: Eric, your stock went from $750 to $450 in a very short period of
time. What do you think happened?

Schmidt: I don’t know. We don’t really focus on short-term movement of
the stock price. We said, since the company went public, that we’re in this
for the long term, and we want shareholders to be with us. These short-term
fluctuations in outlook and so forth are not something that we focus on. We
don’t talk about it. We’re really focused on this huge opportunity before us,
which is automating the trillion-dollar industry that is advertising. We
won’t get all of that, for sure, but we should be able to get a significant
part of that over the lifetime, certainly of my service to the company. And
our goal is to build this into an institution that lasts for many, many years
and is the greatest innovator in technology in this space.

Bartiromo: So the biggest priorities right now, continuing to access that
potential huge, huge advertising market. What else?

Schmidt: Well, our number one priority is end-user–end-user happiness.
Literally, are people happy with the results that they get using Google
search? So it’s literally search, and every day we bring out new improvements
and indices that are–taxonomies that are understanding of language, more
content, bigger–all of the things that make Google such a great search
experience. That’s our number-one priority, even more important, for example,
than advertising. The way we pay for it, of course, is by improving our
advertising solutions, as you described. That’s what we do in the core.

Our next big play is in this applications phase, where we think people spend a
lot of time online with information, and we can help them, whether it’s their
e-mail, which is an easy one to understand, but what about their personal
data? What about their spreadsheets and their calendar, keeping it all there?
And we can help them search. We can solve the problem of `how do I live in
this digital lifestyle?’ If we do that right, they can do it on mobile phones
as well as at home, in their office and on a Mac and on a PC, and it all works

Bartiromo: This is all fantastic for the consumer. It’s free, they’ve got
access to all this stuff, they don’t have to pay for it. What about…

Schmidt: It’s a pretty good model.

Bartiromo: Yeah.

Schmidt: It works pretty well.

Bartiromo: What about the corporate customer? I understand that there are
tests going on right now. What are you hearing from that customer?

Schmidt: We’re working with the corporate customers to do the same thing
inside their networks as we do with consumers. Now, corporate customers are
not the same thing as consumer customers. Corporate customers have a much
higher need for reliability, so we’ll sign an agreement that guarantees a
certain level of service. But then we charge for it. So that’s a case where
people are willing to pay for something which is free without the level of
reliability. They also have other needs. They need greater security, for all
the obvious reasons. And they also need better integration with all of the
other services that their companies have. This is a long process. It’s not a
fast process. But it’s very deeply valuable. And those customers we will
have for 20 or 30 or 40 years as they build into our model. We like that
model. It’s an enterprise play. It’s a business that I’ve been in for a long
time, and one which will ultimately be very, very lucrative through Google.

Bartiromo: Do you ever look back and think about what has happened to the
company? I mean, you, for a long time, have been really one of the most
admired companies out there, and then one of the sexy, sort of big growers out
there. And then as the company got bigger and bigger, people started to get
afraid of Google, they way they were afraid of Microsoft at one point as well.
Do you worry that that’s the perception or that perception could take hold at
some point?

Schmidt: We do worry about perception because we want to make sure that
we are–that our perception is consistent with the way we way we behave.
Google runs on a set of principles, and every company has their own
principles. Ours are about doing no evil, it’s about trying to serve the end
user. Larry Page, our–one of our founders, wrote a very thoughtful memo
about what it’s like to be a big company. So, for example, he authored the
rule that we’ll never trap people’s data. So if you become dissatisfied with
us, we will make it easy for you to go to our competitor. Most companies
don’t do that. So we’re trying to find that balance between the structure of
a company and the need for predictability and so forth with our real mission,
which is to serve you as an end user. And if you’re not happy with us,
keeping you trapped, that’s a mistake. We want you to have another choice.

Bartiromo: Final question. Eric, let’s face it. Microsoft wants Yahoo!.
How much of a disadvantage do you think Google is at if these two players get
together, what…(unintelligible)…two and third player in the market?

Schmidt: Well, a lot of people debate this. There’s a big debate within
the company. People say, on the one hand, that we stay focused, which, of
course, we’re very focused, while they’re doing their maneuver. On the other
hand, people are concerned about the history, as I mentioned, and the
possibility of merger. So I don’t think we really know yet. We debate it all
the time.

Bartiromo: Eric, would you like to add anything else?

Schmidt: No, I’m fine. Thank you very much.

Thanks to CNBC for providing a great interview and content from Eric. Here is the original story.

Are Ad Agencies Dying?

It is clear that social media or new online advertising isn’t easy for traditional agencies. Recently an adage article came out and basically said the same thing.. What is the effectiveness of online advertising?

It is clear that advertisers are more in control and the role of the agency is become less relevant in social media. The new web 2.0 trend is presenting opportunities for new web services platforms to be agencies that replace the middleman agency.

Here is my equation for successful marketing or advertising in today’s web 2.0:

Advertising 2.0 = (Social Media + Social Networks) + Social Commerce

I’ve been involved in successful social media campaigns and one consistent observation is that content is very important to influence social networks which in turn creates a ‘conversion’ or social commerce dynamic.


Twitter conversations are suggesting that agencies will still be around.  Maybe a better title for this post would be:  Traditional Ad Agencies are Dying – Make Room for the New Modern Agency.

For example GM, Intel, Microsoft, and leading bellweathers in advertising are all doubling down every year online advertising at the expense of other areas like TV and print.  If you believe that TV, print, radio, newspapers are declining then the firms servicing them will disappear.

Here is a graph in today’s adage that shows the spend trends in the automotive sector.


TED Anti-Web 2.0: TED is Irrelevant

Businessweek has a great post on TED. All this TED stuff makes me think that TED is irrelevant in today’s world. Their elite model doesn’t work with the web 2.0 movement.  Closed events are so passe.

I’m one of those guys who used to go to all the elite conferences. I don’t get invitations to Foo Camp, TED, or anything – do I care. No. It’s not that I can’t contribute and grok at an intellectual, technical, policy, or society level – I can. It’s their core values and their principle that convince me that TED is irrelevant. 10 years ago I would have disagreed. However, in today’s highly connected web closed doesn’t work. Instead, ideas thrive – they “have legs” and they run far when open. These same ideas die if closed.

The Internet kills the elite conference model. The conference business models are changing. Closed conferences don’t work. The fact is TED doesn’t interest me. Sorry TED guys you just have to convince me that you’re relevant.

Twitter is the Ultimate SmartMob – The Money is in the Collaboration

It’s no surprise that Howard Rheingold loves and is addicted to Twitter.  I have been at the center of social networking and social media from day one and have seen tools come and go.  Twitter is the real deal. 

Many people don’t get it and will never get it.  Where’s the business model – they cry.  Many see Twitter as a geek utility – a low cost to run utility.   It is clearly a solid communication utility. 

Where’s the Beef people ask?   Two Areas: 

1)  Communication and Coordination:    At PodTech we did many social media experiments and one of them was implementing Twitter mobs to drive brand awareness – we used as a communication tool to create an engaged “smart mob”.  Did it work.  It sure did. 

2)  Smart Collaboration:   Another area that Twitter rules is what I call the “smart collaborative mob”.   This is the Web 2.0 “holy grail”.   

Let me give some examples:  I have been personally using it this way for sometime in vetting out my next venture.  Also, more publically take a look at Seesmic and Loic Lemur.  He is actively using Twitter as a collaboration tool to build his business – I love that about Seesmic.  Just this weekend Loic Lemur was going through 900 feature ideas from the community – talk about smart mobbing for collaboration.  It’s open source entrepreneurship – high quality, efficient and low cost.

Twitter is one major component for Social Media but it can’t be used unless it has a community.  

Where’s the big business model in Twitter? 

Answer:  “Smart Collaboration”

Who owns it:?  Everyone

Who makes money:?  Everyone and Twitter

Yahoo Please Join OpenSocial: Hey Jerry Yang – Go Social and Get Open Now; It’s all Jelly

Jerry:  It’s time to join Open Social.  Now is the time to change the game.  

I’ve been posting a lot on Yahoo recently first on Yahoo at CES and then on their stock performance.  I believe that Yahoo can be a big player in web 2.0 and social networks.  Yahoo can be competitive and might just have the answer in being the next Google-like performing company.  Specifically, Yahoo has already helped pioneer RSS and widgets (with Konfabulator).  Now it’s time for Yahoo to join open social.  Yahoo has the assets to make a difference in web 2.0.

The three things that I would do right now if I were Yahoo:

1) Join OpenSocial immediately – like tomorrow

2) Do a major stock repurchase – joining OpenSocial and going open will cause some stock performance in the short term so it’s no better a time to do a stock buyback. Show everyone you’re in it for the long haul.  Don’t sell.

3) Port all your products to be web 2.0 enabled including social networking environments and data portability.

These three things can propell Yahoo to the front of the line in term of being competitive while delivering user value.   

My prediction:  Yahoo will join OpenSocial.  By joining OpenSocial Yahoo can take advantage of their huge subscribe base, lead the open data movement, and leverage the user behavior trend in social networking and widgets.

It’s the bread and jelly that Yahoo needs. It already has the peanut butter. 

Jerry Yang took over as CEO this past June and announced it here on his blog.