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On May 28, 1993, a remote and dusty thicket of the Australian outback shook for hundreds of miles around. Deep reverberating explosions could be heard far and wide, the night sky illuminated by sporadic flashes of unexplained light—all this allegedly witnessed by heavy goods drivers, gold prospectors and nomads traipsing the bush. Three truckers even spoke to an Australian geologist about the lights, claiming that they’d seen a “moon-sized fireball” which flew “from south to north with the speed of a jet plane.” They said “it was yellow-orange in colour and had a small blue-white tail, which lit up the sky as it headed immediately west for Banjawarn station.”

The strange event registered just shy of 4.0 on the Richter scale. Its blast could be heard over a radius of 90 square miles. The Australian government later dismissed the mysterious temblor as “probably being natural in origin”. IRIS, the U.S. federal seismology agency, said that the Earth-shaking detonation was “170 times larger than the largest mining explosion ever recorded in that Australian region” and was proven to have the force of a nuclear bomb.

Some scientists speculated that it could’ve been a meteorite. But authorities found no signs of a crater as they searched for one via helicopter. Despite the fact that the epicentre of the ominous blast pointed in all directions to a remote research facility manned by Aum Shinrikyo, the notorious Japanese death-cult noted for its attempts at mining uranium and its grim obsession with alternative weapons technology, the whole event was eventually shrugged off and forgotten about.

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http://blakemasters.tumblr.com/peter-thiels-cs183-startup

This link is to a summary of Peter Thiel's class topics written in superb essay style. It centers entirely around technology, how a new supplier (an entrepreneur) brings it to the people, and how the creative process navigates the modern world.

The words are far-reaching and truly align to the best of humanity and our future potential.

Peter Thiel "gets it"

Purpose and Preamble

We might describe our world as having retail sanity, but wholesale madness. Details are well understood; the big picture remains unclear. A fundamental challenge—in business as in life—is to integrate the micro and macro such that all things make sense.

Humanities majors may well learn a great deal about the world. But they don’t really learn career skills through their studies. Engineering majors, conversely, learn in great technical detail. But they might not learn why, how, or where they should apply their skills in the workforce. The best students, workers, and thinkers will integrate these questions into a cohesive narrative. This course aims to facilitate that process.

I. The History of Technology

For most of recent human history—from the invention of the steam engine in the late 17th century through about the late 1960’s or so— technological process has been tremendous, perhaps even relentless. In most prior human societies, people made money by taking it from others. The industrial revolution wrought a paradigm shift in which people make money through trade, not plunder.

The importance of this shift is hard to overstate. Perhaps 100 billion people have ever lived on earth. Most of them lived in essentially stagnant societies; success involved claiming value, not creating it. So the massive technological acceleration of the past few hundred years is truly incredible.

The zenith of optimism about the future of technology might have been the 1960’s. People believed in the future. They thought about the future. Many were supremely confident that the next 50 years would be a half-century of unprecedented technological progress.

But with the exception of the computer industry, it wasn’t. Per capita incomes are still rising, but that rate is starkly decelerating. Median wages have been stagnant since 1973. People find themselves in an alarming Alice-in-Wonderland-style scenario in which they must run harder and harder—that is, work longer hours—just to stay in the same place. This deceleration is complex, and wage data alone don’t explain it. But they do support the general sense that the rapid progress of the last 200 years is slowing all too quickly.

II. The Case For Computer Science

Computers have been the happy exception to recent tech deceleration. Moore’s/Kryder’s/Wirth’s laws have largely held up, and forecast continued growth. Computer tech, with ever-improving hardware and agile development, is something of a model for other industries. It’s obviously central to the Silicon Valley ecosystem and a key driver of modern technological change. So CS is the logical starting place to recapture the reins of progress.

III. The Future For Progress

A. Globalization and Tech: Horizontal vs. Vertical Progress

Progress comes in two flavors: horizontal/extensive and vertical/intensive. Horizontal or extensive progress basically means copying things that work. In one word, it means simply “globalization.” Consider what China will be like in 50 years. The safe bet is it will be a lot like the United States is now. Cities will be copied, cars will be copied, and rail systems will be copied. Maybe some steps will be skipped. But it’s copying all the same.

Vertical or intensive progress, by contrast, means doing new things. The single word for this is “technology.” Intensive progress involves going from 0 to 1 (not simply the 1 to n of globalization). We see much of our vertical progress come from places like California, and specifically Silicon Valley. But there is every reason to question whether we have enough of it. Indeed, most people seem to focus almost entirely on globalization instead of technology; speaking of “developed” versus “developing nations” is implicitly bearish about technology because it implies some convergence to the “developed” status quo. As a society, we seem to believe in a sort of technological end of history, almost by default.

It’s worth noting that globalization and technology do have some interplay; we shouldn’t falsely dichotomize them. Consider resource constraints as a 1 to n subproblem. Maybe not everyone can have a car because that would be environmentally catastrophic. If 1 to n is so blocked, only 0 to 1 solutions can help. Technological development is thus crucially important, even if all we really care about is globalization.

B. The Problems of 0 to 1

Maybe we focus so much on going from 1 to n because that’s easier to do. There’s little doubt that going from 0 to 1 is qualitatively different, and almost always harder, than copying something n times. And even trying to achieve vertical, 0 to 1 progress presents the challenge of exceptionalism; any founder or inventor doing something new must wonder: am I sane? Or am I crazy?

Consider an analogy to politics. The United States is often thought of as an “exceptional” country. At least many Americans believe that it is. So is the U.S. sane? Or is it crazy? Everyone owns guns. No one believes in climate change. And most people weigh 600 pounds. Of course, exceptionalism may cut the other way. America is the land of opportunity. It is the frontier country. It offers new starts, meritocratic promises of riches. Regardless of which version you buy, people must grapple with the problem of exceptionalism. Some 20,000 people, believing themselves uniquely gifted, move to Los Angeles every year to become famous actors. Very few of them, of course, actually become famous actors. The startup world is probably less plagued by the challenge of exceptionalism than Hollywood is. But it probably isn’t immune to it.

C. The Educational and Narrative Challenge

Teaching vertical progress or innovation is almost a contradiction in terms. Education is fundamentally about going from 1 to n. We observe, imitate, and repeat. Infants do not invent new languages; they learn existing ones. From early on, we learn by copying what has worked before.

That is insufficient for startups. Crossing T’s and dotting I’s will get you maybe 30% of the way there. (It’s certainly necessary to get incorporation right, for instance. And one can learn how to pitch VCs.) But at some point you have to go from 0 to 1—you have to do something important and do it right—and that can’t be taught. Channeling Tolstoy’s intro to Anna Karenina, all successful companies are different; they figured out the 0 to 1 problem in different ways. But all failed companies are the same; they botched the 0 to 1 problem.

So case studies about successful businesses are of limited utility. PayPal and Facebook worked. But it’s hard to know what was necessarily path-dependent. The next great company may not be an e-payments or social network company. We mustn’t make too much of any single narrative. Thus the business school case method is more mythical than helpful.

D. Determinism vs. Indeterminism

Among the toughest questions about progress is the question of how we should assess a venture’s probability of success. In the 1 to n paradigm, it’s a statistical question. You can analyze and predict. But in the 0 to 1 paradigm, it’s not a statistical question; the standard deviation with a sample size of 1 is infinite. There can be no statistical analysis; statistically, we’re in the dark.

We tend to think very statistically about the future. And statistics tells us that it’s random. We can’t predict the future; we can only think probabilistically. If the market follows a random walk, there’s no sense trying to out-calculate it.

But there’s an alternative math metaphor we might use: calculus. The calculus metaphor asks whether and how we can figure out exactly what’s going to happen. Take NASA and the Apollo missions, for instance. You have to figure out where the moon is going to be, exactly. You have to plan whether a rocket has enough fuel to reach it. And so on. The point is that no one would want to ride in a statistically, probabilistically-informed spaceship.

Startups are like the space program in this sense. Going from 0 to 1 always has to favor determinism over indeterminism. But there is a practical problem with this. We have a word for people who claim to know the future: prophets. And in our society, all prophets are false prophets. Steve Jobs finessed his way about the line between determinism and indeterminism; people sensed he was a visionary, but he didn’t go too far. He probably cut it as close as possible (and succeeded accordingly).

The luck versus skill question is also important. Distinguishing these factors is difficult or impossible. Trying to do so invites ample opportunity for fallacious reasoning. Perhaps the best we can do for now is to flag the question, and suggest that it’s one that entrepreneurs or would-be entrepreneurs should have some handle on.

E. The Future of Intensive Growth

There are four theories about the future of intensive progress. First is convergence; starting with the industrial revolution, we saw a quick rise in progress, but technology will decelerate and growth will become asymptotic.

Second, there is the cyclical theory. Technological progress moves in cycles; advances are made, retrenchments ensue. Repeat. This has probably been true for most of human history in the past. But it’s hard to imagine it remaining true; to think that we could somehow lose all the information and know-how we’ve amassed and be doomed to have to re-discover it strains credulity.

Third is collapse/destruction. Some technological advance will do us in.

Fourth is the singularity where technological development yields some AI or intellectual event horizon.

People tend to overestimate the likelihood or explanatory power of the convergence and cyclical theories. Accordingly, they probably underestimate the destruction and singularity theories.

IV. Why Companies?

If we want technological development, why look to companies to do it? It’s possible, after all, to imagine a society in which everyone works for the government. Or, conversely, one in which everyone is an independent contractor. Why have some intermediate version consisting of at least two people but less than everyone on the planet?

The answer is straightforward application of the Coase Theorem. Companies exist because they optimally address internal and external coordination costs. In general, as an entity grows, so do its internal coordination costs. But its external coordination costs fall. Totalitarian government is entity writ large; external coordination is easy, since those costs are zero. But internal coordination, as Hayek and the Austrians showed, is hard and costly; central planning doesn’t work.

The flipside is that internal coordination costs for independent contractors are zero, but external coordination costs (uniquely contracting with absolutely everybody one deals with) are very high, possibly paralyzingly so. Optimality—firm size—is a matter of finding the right combination.

V. Why Startups?

A. Costs Matter

Size and internal vs. external coordination costs matter a lot. North of 100 people in a company, employees don’t all know each other. Politics become important. Incentives change. Signaling that work is being done may become more important than actually doing work. These costs are almost always underestimated. Yet they are so prevalent that professional investors should and do seriously reconsider before investing in companies that have more than one office. Severe coordination problems may stem from something as seemingly trivial or innocuous as a company having a multi-floor office. Hiring consultants and trying to outsource key development projects are, for similar reasons, serious red flags. While there’s surely been some lessening of these coordination costs in the last 40 years—and that explains the shift to somewhat smaller companies—the tendency is still to underestimate them. Since they remain fairly high, they’re worth thinking hard about.

Path’s limiting its users to 150 “friends” is illustrative of this point. And ancient tribes apparently had a natural size limit that didn’t much exceed that number. Startups are important because they are small; if the size and complexity of a business is something like the square of the number of people in it, then startups are in a unique position to lower interpersonal or internal costs and thus to get stuff done.

The familiar Austrian critique dovetails here as well. Even if a computer could model all the narrowly economic problems a company faces (and, to be clear, none can), it wouldn’t be enough. To model all costs, it would have to model human irrationalities, emotions, feelings, and interactions. Computers help, but we still don’t have all the info. And if we did, we wouldn’t know what to do with it. So, in practice, we end up having companies of a certain size.

B. Why Do a Startup?

The easiest answer to “why startups?” is negative: because you can’t develop new technology in existing entities. There’s something wrong with big companies, governments, and non-profits. Perhaps they can’t recognize financial needs; the federal government, hamstrung by its own bureaucracy, obviously overcompensates some while grossly undercompensating others in its employ. Or maybe these entities can’t handle personal needs; you can’t always get recognition, respect, or fame from a huge bureaucracy. Anyone on a mission tends to want to go from 0 to 1. You can only do that if you’re surrounded by others to want to go from 0 to 1. That happens in startups, not huge companies or government.

Doing startups for the money is not a great idea. Research shows that people get happier as they make more and more money, but only up to about $70,000 per year. After that, marginal improvements brought by higher income are more or less offset by other factors (stress, more hours, etc. Plus there is obviously diminishing marginal utility of money even absent offsetting factors).

Perhaps doing startups to be remembered or become famous is a better motive. Perhaps not. Whether being famous or infamous should be as important as most people seem to think it is highly questionable. A better motive still would be a desire to change the world. The U.S. in 1776-79 was a startup of sorts. What were the Founders motivations? There is a large cultural component to the motivation question, too. In Japan, entrepreneurs are seen as reckless risk-takers. The respectable thing to do is become a lifelong employee somewhere. The literary version of this sentiment is “behind every fortune lies a great crime.” Were the Founding Fathers criminals? Are all founders criminals of one sort or another?

C. The Costs of Failure

Startups pay less than bigger companies. So founding or joining one involves some financial loss. These losses are generally thought to be high. In reality, they aren’t that high.

The nonfinancial costs are actually higher. If you do a failed startup, you may not have learned anything useful. You may actually have learned how to fail again. You may become more risk-averse. You aren’t a lottery ticket, so you shouldn’t think of failure as just 1 of n times that you’re going to start a company. The stakes are a bit bigger than that.

A 0 to 1 startup involves low financial costs but low non-financial costs too. You’ll at least learn a lot and probably will be better for the effort. A 1 to n startup, though, has especially low financial costs, but higher non-financial costs. If you try to do Groupon for Madagascar and it fails, it’s not clear where exactly you are. But it’s not good.

VI. Where to Start?

The path from 0 to 1 might start with asking and answering three questions. First, what is valuable? Second, what can I do? And third, what is nobody else doing?

The questions themselves are straightforward. Question one illustrates the difference between business and academia; in academia, the number one sin is plagiarism, not triviality. So much of the innovation is esoteric and not at all useful. No one cares about a firm’s eccentric, non-valuable output. The second question ensures that you can actually execute on a problem; if not, talk is just that. Finally, and often overlooked, is the importance of being novel. Forget that and we’re just copying.

The intellectual rephrasing of these questions is: What important truth do very few people agree with you on?

The business version is: What valuable company is nobody building?

These are tough questions. But you can test your answers; if, as so many people do, one says something like “our educational system is broken and urgently requires repair,” you know that that answer is wrong (it may be a truth, but lots of people agree with it). This may explain why we see so many education non-profits and startups. But query whether most of those are operating in technology mode or globalization mode. You know you’re on the right track when your answer takes the following form:

“Most people believe in X. But the truth is !X.”

Make no mistake; it’s a hard question. Knowing what 0 to 1 endeavor is worth pursuing is incredibly rare, unique, and tricky. But the process, if not the result, can also be richly rewarding.

Creative Commons License

Tags: cs183

This is only the first of 11 sections generously written by Blake Masters, the site's creator.

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Larry Page serious

Larry Page just issued a letter to investors on the state of Google this year.

He unveiled the letter in a post on Google+.

Here's the full letter:

Sergey and I founded Google because we believed that building a great search experience would improve people’s lives and, hopefully, the world.  And in the decade-plus that’s followed, we’ve been constantly delighted by the ways in which people have used our technology—such as making an artificial limb using old designs discovered online.

But we’re always impatient to do better for our users.  Excellence matters, and technology advances so fast that the potential for improvement is tremendous. So, since becoming CEO again, I’ve pushed hard to increase our velocity, improve our execution, and focus on the big bets that will make a difference in the world.  Google is a large company now, but we will achieve more, and do it faster, if we approach life with the passion and soul of a start-up.

Last April, I began by reorganizing the management team around our core products to improve responsibility and accountability across Google.  I also kicked off a big clean-up.  Google has so many opportunities that, unless we make some hard choices, we end up spreading ourselves too thin and don’t have the impact we want. So we have closed or combined over 30 products, including projects like Knol and Sidewiki. In addition, we gave many of our products, such as Google Search, a visual refresh, and they now have a cleaner, more consistent, and beautiful look.

A beautifully simple experience across Google

Creating a simpler, more intuitive experience across Google has been another important focus. I have always believed that technology should do the hard work—discovery, organization, communication—so users can do what makes them happiest: living and loving, not messing with annoying computers! That means making our products work together seamlessly. People shouldn’t have to navigate Google to get stuff done. It should just happen. As Sergey said in the memorable way only he can, “We've let a thousand flowers bloom; now we want to put together a coherent bouquet.”

Think about basic actions like sharing or recommendations. When you find a great article, you want to share that knowledge with people who will find it interesting, too. If you see a great movie, you want to recommend it to friends. Google+ makes sharing super easy by creating a social layer across all our products so users connect with the people who matter to them.

When you sign up for Google+, you can use Circles to group people into different categories, such as “Friends,” “Family,” or “Rocket Scientists,” and then engage with them just like in real life. You can recommend great news articles, websites, and videos to specific Circles, or share photos with “Family” straight from your Android device. And the photos are even uploaded for you automatically! To follow people with shared interests, such as photography, just add them to your Circles. And you can share your own ideas with the world, or a smaller group, via the Google+ Stream and have others respond.

It’s still early days, and we have a long way to go. But these are tremendously important changes, and with over 120 Google+ integrations to date (including Google Search, YouTube and Android), we are on the right track. Well over 100 million users are active on Google+, and we’re seeing a positive impact across the Web, with Google users being able to recommend search results and videos they like—a goal we’ve had ever since we started the company.

Activity on the Google+ Stream itself is increasing too. We’re excited about the tremendous speed with which some people have amassed over one million followers, as well as the depth of the discussions taking place among happy, passionate users—all evidence that we’re generating genuine engagement. When I post publicly I get a ton of high quality comments, which makes me happy and encourages me to keep posting. I strongly encourage all of you to follow me on Google+—I love having this new way to communicate and share with all of you!

Next-generation search

Understanding identity and relationships can also help us improve search. Today, most search results are generic, so two strangers sitting next to each other in a café will get very similar answers. Yet everyone’s life experiences are unique. We are all knowledgeable about different things; we have different interests and our preferences—for music, food, vacations, sports, movies, TV shows, and especially people—vary enormously.

Imagine how much better search would be if we added… you. Say you’ve been studying computer science for awhile like me, then the information you need won’t be that helpful to a relative novice and vice versa. If you’re searching for a particular person, you want the results for that person—not everyone else with the same name. These are hard problems to solve without knowing your identity, your interests, or the people you care about.

We have an old-time Googler called Ben Smith, who is a good friend of mine. It turns out that he isn’t the only Ben Smith in the world! Today, it’s tough for Google to find the right Ben for me. Many people share only their public profiles, not their posts, photos, or connections. And privacy considerations certainly limit the information that can be shared between platforms—even if the third parties hosting it were willing to work with Google, which hasn’t always been the case.

Google+ helps solve this problem for us because it enables Google to understand people and their connections. So when I search for Ben Smith, I get the real Ben Smith (for me), right there in my search box, complete with his picture. Previously, the search box would just have had the series of letters I had typed, with no real understanding that I was looking for a unique person. This is a huge and important change, and there’s a ton more work to do.  But this kind of next-generation search in which Google understands real-world entities—things, not strings—will help improve our results in exciting new ways. It’s about building genuine knowledge into our search engine.

Taking actions

In the early days of Google you would type in a query, we’d return ten blue links, and you would move on fairly happily. Today you want more. If you search for “weather san Francisco”, chances are you want… the weather in San Francisco right there on the results page, not another click or two away. So that’s what we now provide. In fact, before you’ve even finished typing “weather” into the search box we give you the weather because we’ve learned that’s most likely what you’re looking for.

Truly great search is all about turning your needs into actions in the blink of an eye. There is a huge amount of data in the world that isn’t publicly available today.  Showing it in our results involves deep partnerships across different industries in many countries. It’s very similar to the work we did to get Google Maps off the ground.

Last year, for example, we welcomed ITA Software to the Google family. They have strong relationships with the airline industry, and using that data we can now provide more relevant results for travel queries. This means that if you search for “flights from Chicago to los Angeles”, you get a list of the most relevant flights with prices, and you can book directly with the airline—or click on an ad for an online travel agency. We’re also experimenting with a feature called Hotel Finder, which enables you to compare prices and book a hotel room right from the results page. It’s all about speeding things up so users can get on with the things that matter in their lives.

From desktop to mobiles and tablets, oh my

Getting from needs to actions lightning fast is especially important on smaller devices like mobile phones, where screen size is limited and context really matters.  That’s why I’m so excited about Android. Take Google Maps, one of our best-loved services.  With it, you can search for something, perhaps the nearest bookstore, find it, and be shown the way straight there.  And you can now turn your phone into a wallet using... Google Wallet.  So you can tap, pay, and save while you shop.  No more claiming you left your credit card at home when your friend asks you to pay for lunch!

It wasn’t always that easy. I remember first meeting Andy Rubin, the creator of Android, back in 2004. At the time, developing apps for mobile devices was incredibly painful. We had a closet full of over 100 phones, and we were building our software pretty much one device at a time. Andy believed that aligning standards around an open source operating system would drive innovation across the mobile industry. At the time, most people thought he was nuts.

Fast forward to today. Android is on fire, and the pace of mobile innovation has never been greater. Over 850,000 devices are activated daily through a network of 55 manufacturers and more than 300 carriers. Android is a tremendous example of the power of partnership, and it just gets better with each version. The latest update, Ice Cream Sandwich, has a beautiful interface that adapts to the form of the device.  Whether it’s on a phone or tablet, the software works seamlessly.

As devices multiply and usage changes (many users coming online today may never use a desktop machine), it becomes more and more important to ensure that people can access all of their stuff anywhere.  Constant downloading is a terrible experience, so I am excited about products like Gmail and Google Docs that work well across Android and desktop. With Chrome now recently available on Android, switching devices becomes painless, too, because all of your tabs are just there across your desktop and Android.  You can even click the back button on a different device, and it just works! And with Google Play, movies, books, apps, and games are all accessible from the Web or an Android device—no cables, downloading, or syncing required. I think there is a theme here!

In August, we announced plans to acquire Motorola Mobility, a company that bet big on Android very early on. We are excited about the opportunities to build great devices capitalizing on the tremendous success and growth of Android and Motorola’s long history of technological innovation. But it’s important to reiterate that openness and investment by many hardware partners have contributed to Android’s success. So we look forward to working with all of them in the future to deliver outstanding user experiences. Android was built as an open ecosystem, and we have no plans to change that.

Long-term focus

We have always tried to concentrate on the long term, and to place bets on technology we believe will have a significant impact over time. It’s hard to imagine now, but when we started Google most people thought search was a solved problem and that there was no money to be made apart from some banner advertising.  We felt the exact opposite: that search quality was very poor, and that awesome user experiences would clearly make money.

Today it feels like we’re watching the same movie in slow motion over again. We have tremendous new products that were seen as crazy at launch yet now have phenomenal usage. They easily pass the toothbrush test: they are important enough that millions of people use them at least once or twice a day. Take Chrome, for example. In 2008, people asked whether the world really needed another browser. Today Chrome has over 200 million users and is growing fast, thanks to its speed, simplicity, and security. If you don’t use Chrome, just try it out, you’ll never go back! I promise it won’t take too long to install, and if it does you probably need a new computer.

We are seeing phenomenal usage of our Web-based applications, too. When we launched Gmail in 2004, most people thought webmail was a toy, but its accessibility—all your email from anywhere, on any device—and insane storage have made it a winner with more than 350 million people. And our enterprise customers love it too. Over 5,000 new businesses and educational establishments now sign up every day.

In 2006, when Google acquired YouTube, we faced a lot of skepticism. Today, YouTube has over 800 million monthly users uploading over an hour of video per second. It enables an activist in Syria to broadcast globally or a young star to build an entertainment network from scratch. YouTube channels have real potential to entertain and educate, as well as to help organize all the amazing videos that are available. So I’m excited we have a new effort working with media powerhouses such as Jay-Z, the Wall Street Journal, and Disney to create channels that appeal to every interest.

People rightly ask how we’ll make money from these big bets. We understand the need to balance our short- and longer-term needs because our revenue is the engine that funds all our innovation. But over time, our emerging high-usage products will likely generate significant new revenue streams for Google as well as for our partners, just as search does today. For example, we’re seeing a hugely positive revenue impact from mobile advertising, which grew to a run rate of over $2.5 billion by the third quarter of 2011—two and a half times more than at the same point in 2010. Our goal is long-term growth in revenue and absolute profit—so we invest aggressively in future innovation while tightly managing our short-term costs.

Love and trust

We have always wanted Google to be a company that is deserving of great love. But we recognize this is an ambitious goal because most large companies are not well-loved, or even seemingly set up with that in mind. We’re lucky to have a very direct relationship with our users, which creates a strong incentive for us to do the right thing. For every magic moment we create—like the ability to drop a photo into Google and search by image—we have a very happy user.  And when our products don’t work or we make mistakes, it’s easy for users to go elsewhere because our competition is only a click away.

Users place a lot of trust in Google when they store data, like emails and documents, on our systems. And we need to be responsible stewards of that information. It’s why we invest a lot of effort in security and related tools for users, like 2-step verification and encryption, which help prevent unauthorized access to information. The recent changes we made to our privacy policies generated a lot of interest. But they will enable us to create a much better, more intuitive experience across Google—our key focus for the year.

We have always believed that it’s possible to make money without being evil. In fact, healthy revenue is essential if we are to change the world through innovation, and hire (and retain) great people. As a child I remember reading about Nikola Tesla, a genius whose impact was severely limited by his failure to make money from his inventions. It was a good lesson. Today, most of our revenue comes from advertising. We take pains to make sure that users know when something is paid for, and we work hard to make these advertisements relevant for users.  Better ads are better for everyone—better information or offers for users, growth for businesses, and increased revenue for publishers to fund better content.

Over one million businesses now use Google’s advertising products and we’re delighted with the ways in which we have helped other companies (both large and small) succeed. I recently heard about a Thai dressmaker whose store was destroyed by floods. To start rebuilding her business, she invested $5 a day in Google AdWords and doubled her revenue. Today over 80 percent of her orders come from the Web. Taylor’s Bike Shop in Utah, a family-run store, saw increase in sales of over 50 percent when they started using AdWords. Today they maintain a staff of eight people on a steady basis.

At the heart of our business model has always been the belief that we’re better off if we can create a larger pie for our partners. We started with AdSense, and Google has paid out over $30 billion to support content on the Web since its launch over a decade ago. That is a mighty big check (actually lots of smaller checks!) and I’m delighted we’ve been able to support our partners with that much resource. The same is true for our newer technologies like DoubleClick for online publishers and AdMob for mobile developers. YouTube also generates healthy revenue for Google and our content partners—in fact, partner ad revenue has more than doubled for the fourth year in a row. One thing I've learned is that if you keep doubling things, it really adds up fast!

All that said, we recognize that we don’t get everything right—and that the changes we make, like our recent visual refresh, can initially upset some users (even if they later come to love them). But we don’t operate in a static industry, and technology changes so fast that we need to innovate and iterate. Of course, when we do make mistakes we try to fix them as quickly as possible and, if necessary, change the way we do things to prevent problems from arising again. And we work hard to explain what we are doing—and why—because with size comes responsibility.

Googlers

People are a crucial part of Google’s long-term success, since companies are no greater than the efforts and ingenuity of their employees. Our goal is to hire the best at every level and keep them.  In our experience your working environment is enormously important because people want to feel part of a family in the office, just as they do at home. So we invest in great food, high quality medical care, gyms, and other fitness facilities, as well as cool work spaces that bring people together.

Most important of all, however, we believe that work should be challenging. People are more motivated and have more fun when they work on important projects. Take Google Translate, which we started eight years ago and now enables anyone to translate text in an instant between any two of 64 languages—including Hindi, Arabic and Chinese. That's actually 4032 different pairs of languages you can translate! In fact, by combining it with our voice recognition technology, we’ve turned mobile phones into pocket translators for millions of users globally. When you work on projects of this magnitude, it’s impossible not to wake up excited about work; the chance to make a difference is the greatest motivation anyone can have.

Happiness is a healthy disregard for the impossible

When I was a student at the University of Michigan, I went on a summer leadership course. The slogan was “a healthy disregard for the impossible,” and it’s an idea that has stayed with me ever since. It may sound nuts, but I’ve found that it’s easier to make progress on mega-ambitious goals than on less risky projects. Few people are crazy enough to try, and the best people always want to work on the biggest challenges. We've also found that “failed” ambitious projects often yield other dividends. Believe it or not, the technological innovation behind AdSense, which, as I mentioned earlier, has paid out over $30 billion to partners, was the result of a “failed” more ambitious project to understand the Web. The team failed at understanding the Web, mostly, I think, because they were distracted by their work making advertisements amazingly relevant.

Last year, the Google+ team decided to integrate multi-person video into their efforts. They had a small committed team that was crazy enough to believe this was possible, and Google+ Hangouts was born. You can now video chat with anyone, anywhere, even from the Great Barrier Reef. It was the same with driver-less cars, which we started on in 2008. Today we have driven over 200,000 miles, and Steve Mahan, who is legally blind, recently took a drive in one of them. So the one-sentence summary of how to change the world… work on something that is uncomfortably exciting!

Today the opportunities are greater than ever. Things we used to think were magic, we now take for granted: the ability to get a map instantly, to find information quickly and easily, to choose any video from millions on YouTube rather than just a few TV channels. People are buying more devices and using them more because technology is playing an increasingly important role in our lives. I believe that by producing innovative technology products that touch people deeply, we will enable you to do truly amazing things that change the world.  It’s a very exciting time to be at Google, and I take the responsibility I have to all of you very seriously.

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Today is Valentine's Day, a day set aside for expressions of love and affection. The traditional western holiday has spread to many countries around the globe, despite some efforts by religious and cultural groups to fight its adoption. Valentine's Day spending in the U.S. this year is expected to reach nearly $15 billion -- $2 billion of it on flowers alone. Ninety percent of the flowers Americans will give to their sweethearts are imported, and nearly all of those imports originate in Colombia and Ecuador. Included in today's posting is an 18-photo series depicting the voyage of the roses from South American farm to florists worldwide. [37 photos]

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