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Social Media Test: Find the Holy Grail. It’s hidden in this video.

For all the social media marketers out there you need watch this video. Why because of all the noise out there in social media this video panel discussion is the most relevevant information for you.

The future of marketing will be impacted by widgets - this is what the Slide CEO Max Levchin didn’t want to say in front of all the people at Web 2.0 conference. This is where the holy grail is.. Sparing me of writing what the holy grail is ..I’ll just post the video and see if you can fish it out..

It’s a kind of social media test…

Key Players:

Hooman Radfar, CEO & Co-founder, Clearspring Technologies
Kevin Freedman, Vice President, Finance & Operations, Slide
Eric Alterman, Chairman, KickApps
Dan Riess, Vice President, Marketing and Ad Solutions, Turner Broadcasting System
Sun Jen Yung, Managing Director, Investment Banking, Oppenheimer & Co., Moderator

My friend and investor Andy Kessler puts out a great Opt-Ed piece today for the WSJ called the War for the Web.

Andy knows a thing or two about technology and big platform trends. He was documenting the PC revolution at Morgan in the 80s and made tons of money for his investors running a hedge fund with many successful investments during the Web 1.0. He nails it with this article.

Andy breaks down the analysis of the Yahoo Microsoft battle (really a War between Google and Microsoft). I see Microsoft’s moves as pure competitive strategy because as Andy points out the battle for the key corners of the ‘future Web’ is unsecured. Expect this War to continue. Advantage Microsoft.

The big fight is for the following core elements that are unsecured by any one vendor: 1) Cloud, 2) Edge, 3) Speed (of new services integration), and 4) platform. At the moment, neither Google nor Microsoft, or anyone else, has nailed down cloud, edge, speed and platform.

Andy goes on to say..”The continuing battle between Microsoft and Google will mean fierce competition – adding features, building data centers, cutting deals and spending money on speed and customer convenience. That’s the way to move technology forward. It’s great to see Microsoft with some fight left in it. Not only hasn’t the Internet yet matured, it’s becoming an ever-more high stakes game.”

Mr. Kessler, a former hedge fund manager, is the author of “How We Got Here” (Collins, 2005).

This memo is very telling about how Microsoft sees their business and the core message to the troop.

Basically I read this as him saying that this won’t be our Vietnam or Iraq. In watching this from the early days (see post here, here, here.. ).

In talking to deep sources on both sides of Microsoft and Yahoo it was clear that there was division within the companies on what to do. This combination would have been Microsoft’s Vietnam or Iraq. The letter is interesting to see how Ballmer positions it to his troops as he calls them back from Silicon Valley.

Here’s the letter. Thanks to Mike Arrington who posted this on Techcrunch.

From: Steve Ballmer
Date: May 3, 2008 5:17:30 PM PDT
To: “Microsoft - All Employees (QBDG)”
Subject: Withdrawal of Offer to Acquire Yahoo!

This afternoon I sent the attached letter [see update 2 here for letter to Yahoo] to Jerry Yang announcing that Microsoft has withdrawn its proposal to acquire Yahoo. We proposed the deal in the belief that a Microsoft-Yahoo merger would create a combined company with the resources and assets to win in the fast-growing market for advertising and online services.

Although the acquisition of Yahoo would have accelerated our ability to deliver on our strategy in advertising and online services, I remain confident that we can achieve our goals without Yahoo. We have a strategy in place to do so and we will continue to expand on this strategy and accelerate our progress.

Our strategy has three components:

· Deliver on the basics. We will continue to improve search relevance and build out our ad platform.

· Change the game through innovation. We will expand investments in engineering and deliver transformative tools and Web experiences.

· Expand our global scale and focus. We will pursue partnerships and investments to realize the competitive advantages that come with scale.

At the heart of our strategy is a commitment to bring the benefits of competition, choice, and innovation to everyone who uses the Internet—from consumers to content creators to advertisers.

We are 100 percent focused on executing on this strategy and we have made good progress in a very short time. We’ve improved search relevance dramatically, introduced compelling new search verticals, successfully integrated aQuantive, and added nearly 100 new publishers to our ad platform. In the last couple of months we’ve rolled out new versions of key products including Internet Explorer and Silverlight, and introduced new technologies like Live Mesh. We now have over 430 million active users of our Windows Live services worldwide. And we continue to add new technologies with acquisitions such as YaData, which brings leading-edge behavioral targeting technology, and Caligari, which gives us advanced 3D modeling capabilities that will help us continue to improve Virtual Earth.

Ultimately, our goal is to build the industry-leading business in search, online advertising, media, and social networking.

We are absolutely committed to being the leader in each of these areas. Now is the time to do what we have always done best—be tenacious, focus on the long term, innovate, and keep working hard.

I want to thank all of you for your patience during this process and for your dedication and hard work across all of our businesses. We asked that you remain focused on our goals through these cycles, and you have done this extremely well. We are committed to making the investments that will enable us to compete and, ultimately, lead in the online services and advertising businesses. Together, I know we will succeed.

Today’s Microsoft retreat is a victory for Silicon Valley and all the startups.  Now that the troops are pulling out of Silicon Valley everyone is jumping up and down eager to get down to business - except the bloggers who are all trying to figure out what happened (not including Kara Swisher she was on top of this story from day one).

This outcome was clear to me from day 1 - Yahoo would fight to the death rather than roll over and take it up the butt from Microsoft.  As this chapter of history comes to a close the story is bigger than what the stock number was or one particular issue.  It was bigger than all of that.  As I wrote in February it was the Silicon Valley Poison Pill in action.  The culture in Silicon Valley is deep in tradition and this trophy in Yahoo was not going to Redmond.  Hey I’m a big fan of Microsoft and Dan’l Lewin here in Silicon Valley (except that blogger idiot Mark Ashton), but the culture of Silicon Valley just won out.  This is going to make one great John Markoff story for the NY Times. - go ahead John run with it.

Another story line here is the big win for all those starving Web 2.0 companies looking for a partner - Yes Yahoo will remain free to be a real force in the Web 2.0 community again.  Now with open social (yes reported here first) and with upcoming announcements of Yahoo opening up.  Yahoo is born again.  As we the kids cheer in baseball Yahoo employees are cheering - “2 out rally….2 out rally….2 out rally…2 out rally”.  If this doesn’t wake up the dead at Yahoo nothing will.

This is a win for Web 2.0 and startups around the world but mostly a big win for Silicon Valley.   Yahoooo

Don’t forget how Google is loving this.

(Disclaimer:  I worked for HP from 1988-1997).

Where is HP these days?  While Microsoft and Yahoo battle and the Amazon and Google battle for the cloud, where is HP?   They recently announced that they want to leverage HP Labs (which I’m a big fan of).  They are running advertising campaigns about the PC being personal again and they have dominated the printer business for years.

What is their plan?   We’ll see next week.   Rumor in Silicon Valley is that HP is planning a big organization shakeup in an effort to be more competitive and profitable.

This story is developing … I have some idea on what it is but need to confirm a few things.

Age and startups?  It takes guts to do a startup. It’s easy to hide behind a firewall and lob comments from a big company.  It takes a unique individual to do a startup.  I think that it’s easier for younger but older entrepreneurs are not disadvantaged.  I haven’t run into many entrepreneurs that have 4 kids.

Key to startups is focus and balance.  Focus on the strategic plan not on what people are saying..

Always be shipping, always be closing, always be recruiting.

I never met Joel Spolsky, but I gather that he is regarded as the ‘burning bush’ in some programming circles.  Regarding Live Mesh - Joel just validated my view with this post and probably speaks for other people who have computer science degrees and business savvy.  His post caught my interest because I took heat on my comments from Live Mesh while everyone like Scoble were doing handstands around Mesh.  I read one document and coined the term “Live Mess”.  I took the lumps from guys like Scoble and moved on.  Some folks love it but my impression was the same as Joels.  Will someone other than Microsoft tell me what Live Mesh solves.  I’m open to hearing anything relevant to the computer science, software, or services technology world that we live in today.

Joel says “the incredible amount of bombast; the heroic, utopian grandiloquence; the boastfulness; the complete lack of reality. And people buy it! The business press goes wild!” The hallmark of an architecture astronaut is that they don’t solve an actual problem… they solve something that appears to be the template of a lot of problems. Or at least, they try.”

Here are my tweets from the day of the announcment…

	Furrier @scobleizer first impression of under the covers is too complex - it’s an OS and not clear to me what it’s purpose is..seems bloated 10:10 PM April 22, 2008 from web in reply to Scobleizer
	Furrier Microsoft launches new product - Live Mess 10:05 PM April 22, 2008 from web
	Furrier microsoft marketing-make things as complex as possible - oh thats the product strategy as well..first impression of mess-too complex for ?? 10:04 PM April 22, 2008 from web

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.

Furrier.org’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?

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
business.

Schmidt: 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
Google.

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
together.

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

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

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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

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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
foothold.

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
now.

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

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
quite…(unintelligible).

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
that.

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
great.

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.

Eric Eldon is reporting that Twitter traffic rising not falling.  Kara Swisher challenged everyone yesterday and posed the question will Twitter fail.  That got the elite in the blogosphere talking.  I believe that I was the only one who took the bold position that twitter will FAIL.

I immediately got twitters from folks like Danny Sullivan and others like Danny who know what they are talking about.  Fact is my prediction is this:  Twitter the company will fail but not Twitter the paradigm.  Why do I say this?  Because Twitter’s innovation (product gurus) could be their downfall.  They need to think like infrastructure or operating systems people not AJAX developers - meaning get some core IP defined and owned it fast otherwise the core asset runs out of control.

Some may disagree with me and that’s fine.  I’d love to debate it anytime here at 654 High Street, Palo Alto, CA - the new home of the Social MediaHaus or on Twitter: @Furrier

Bold Prediction:  Twitter will fail.

Kara Swisher asks for a prediction on Twitter.

I love twitter and use it daily but what strikes me is the lack of ‘technical competitive strategy’.  Twitter runs the risk of being so open that it might not ever make money.  Ok so everyone is talking about monetization, but my take is different.  If I worked at Twitter I could have that business at $100m fast - it just seems an easy thing to do.  The key to their success is the platform and the concept called ‘value leakage’.

Everyday when a new twitter clients comes out Twitter loses value.  This may seem counterproductive but in a systems business the main vendor needs a ‘core’.  It seems that Twitter might just lose their core value if it  doesn’t implement some technical competitive strategy - meaning lock in a value core and build on it.  Twitter to me just seems to be a runaway success and out of control from both a scale and sustainable perspective.

I love Twitter but their braintrust needs to jam on a value core to build on their openness.

I’m at Web 2.0 Expo blogging and twittering the event.  A great event that is trying to encapsulate the web 2.0 world for business people.  One of the problems with Web 2.0 Expo so far is that it’s to geared to developers.  In fact most attendees are normal business people who are trying to harness web 2.0 for their business.

Tomorrow should be a great day when the event kicks off.  I’m here talking to potential companies for my new startup.

If anyone from corporations, media companies, or ad agenciesis interested in social media marketing and/or social media advertising I am available to chat.   I am currently in private beta for my new social media ad product.

New formula for social media marketing and advertising:  Social Networks + Social Media = Social Commerce

Rob Hof of Businessweek calls out Yahoo and Google in what he calls “moves so transparent that you have to wonder how effective they are.”

Yahoo knows exactly how good Google ads so this ‘trial’ for one week is work bit is complete bull - as Rob Hof points out.  Lets just call a spade a spade - the Google deal is good for Yahoo but it will never happen.  This bs about certain search regions is mess.  For Yahoo to sell the Google integration to the the market is fantasy. 

Yahoo should just face the fact that Google is no option and yield to Microsoft.  It’s time to say “Uncle”

I’ve been following the Social Media Release story on Techmeme (the home of social media releases via blogs). This is my area and I have a big opinion. For the past 4 years I’ve been at the center of social media, social networks, social graphs,,bla bla bla. Social Media is the real deal. Here are some of my opinions that I’ve posted here before. Social Everything. Social Media New Standard for Online Advertising. Vertical Media New Online Advertising Model. Are Ad Agencies Dying?

Matthew Ingram breaks this down for the average Joe and Mary - put freakin links in your releases. Thanks Matthew.

Seriously Mr. Ingram is right on, and I’ll go on to say that SMNR are a good thing . Press releases have to change and are changing. Companies like Cisco and Intel are doing it right. Other leaders are moving in the social media direction as well.

Two big problems with the above examples: 1) It’s just not about PR any more it’s about message distribution and rich media - hello integrated marketing and advertising groups - It’s not just PR anymore; 2) most of the examples mentioned above particularly Cisco are flawed in that their media isn’t social. Putting links in a release doesn’t make it social. Cisco is putting in links but the content is all about their walled garden site - that ain’t social that’s ‘jail’.

My Take: PR is now an integrated process that has it’s own value chain. It’s not about throwing a release out over the wall and it’s over. It’s a recursive process that requires resources both people and machines. This is where Tom Foremski is so brilliant. He has always talked about machine media working in tandem with people - thats social and that’s social media.

My advice: produce media in the Social Media Release and make it social. Sometimes that will require resources (people and money). This has been the biggest issue for PR departments - they are underfunded for this activity yet it is becoming a critical success factor for their business. The lines between PR and online advertising is bluring.

The Social Media Integrated PR Value Chain

Thanks to Tom Foremski for starting this conversation. Here is a picture of me Tom and one of the fathers of blogging Doc Searls. Social Media Releases are the future of PR - now they just need to be social.

War! What is it good for! Absolutely nothing! - Say it again!

Are wars really good for business? Is tech entrepreneurship in recession heading toward depression? The battle between Microsoft and Yahoo is reaching it’s climax (if not already). However, there are some very interesting and unique perspectives come from two blog posts that jumped out at me - Kara Swisher and Fred Wilson. Kara has the funniest headline saying “Jesus is coming” with the storyline about the inside scoop on the ‘dance’ between the two. What strikes me with Kara’s post is that Yahoo might already be defeated in the ‘braindrain’ that they have been experiencing. Even if Yahoo survives is it already dead on the vine?

Fred Wilson only draws a reference to the battle in his post about liquidity - saying that with no IPO market we are in trouble and worse the tech giants are playing with assets like toys. I think that Fred is on to something with no liquidity (other than M&A by big firms). Is this really a robust market for innovation where the big guys are doing all the acquiring? Is this the ecosystem that produces good entrepreneurship?

What ties both these posts together is the trend that acquisitions might not be the best for innovation - Kara bluntly states that AOL’s acquisitions aren’t doing well. While Fred says it’s great to get the cash but Yahoo hasn’t done well with their acquisitions. Meanwhile the capital markets are a mess.

As an entrepreneur with four kids I’m concerned about the prospects for all entrepreneurs in this current environment. Maybe I’m just not feeling good today. Startups should have some friction, but not outright frustration. I’ve been doing early stage startups for 10+ years and never seen this much frustration since 2002-03. We are in a tech recession or at least a grinding halt.

I’m one of the most optimistic guys (all entrepreneurs are), but my mood on this startup market: Bear

Just breaking. Kevin Delaney is breaking a story about Google doing a deal with Yahoo.

Yahoo is in talks to carry search ads from Google, as part of a test that is designed to evaluate the revenue potential of a broader outsourcing arrangement.

As Yahoo fights for it’s life it is now going to bed with Google. In an attempt to fend of Microsoft Yahoo is going to use Google ads as a test to see if it can sustain itself.

This is the Silicon Valley Poison Pill in action.

The short-term test, involving a very limited percentage of Yahoo’s Web search queries, is designed for the two sides to evaluate the revenue potential of a broader search ad outsourcing arrangement. They have been discussing such an arrangement as part of Yahoo’s pursuit of alternatives to Microsoft Corp.’s unsolicited acquisition offer, according to people familiar with the matter.

Update: This is not getting steam in the blogosphere but it is clearly a test. No doubt it’s a scenario analysis to either block msft or run comparable numbers to justify a counter number that Yahoo may be looking for.

Love Rob Hof’s translation in his story on TechBeat (businessweek.com).  Rob has a great view with quotes from Yahoo and Microsoft.

And here’s Microsoft’s response, from general counsel Brad Smith:

Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.

Here is Businessweek’s Rob Hof translating Microsoft’s stance:  “In other words: You’re not fooling us, Yahoo. The deal stands, until you come to the table on our terms.”

Tom Foremski writes a great story on the new editor in chief at Cnet - Dan Farber.  Tom lists the changes that Dan is making at Cnet. 

Cnet has a big advantage over everyone else right now for three reasons:  1) Dan knows the business both old school and new school (blogging), 2) they have the infrastructure, and 3) they know how to put out massive amounts of content.

I talked with Dan last week about some of the changes at Cnet - he said that the big goal is to just coordinate the systems -hmmmm …. translation: cnet will keep pumping out good content in volume and will start cross linking;  What does this mean … Look for cnet to parlay their strong reporting and analysis capabilities with blogging infrastructure.  Look for Cnet to become the new leader on the Techmeme Leaderboard. 

Maybe the line “There is a new sheriff in town” applies here and his name is Dan Farber.

Here are some highlights on the changes at Cnet under the leadership of Dan Farber (source Tom Foremski):

-Different CNET departments now publish using the same template.

- Publish a story as quickly as possible, edit it later.

- Stories are updated constantly.

- Adding the right keywords and tags to make stories discoverable by search engines. About 40 per cent of CNET traffic comes from search engines.

- Use Internet standards whenever possible.

- There is no end to the work day, you are always on call.

- Everybody blogs.

- Create synergies between news, reviews, analysis, and blogs.

- Getting journalists to put in web links to non-CNET publications. “It’s about being part of the web and not separate from it,” he says.

- Carrying a pad of paper and pencil is not enough. Journalists also take photos, videos, and make podcasts.

I’m using the new WordPress.com interface.  Didn’t hear anything about it or I’m just wondering if I had too much cough medicine today.

Not sure how I like it yet.  It’s like trying on a new pair of pants.  Feels weird.

Gavin at Mediapost today says that Influencers pose less clout.    Big miss by Mediapost here.  One flaw in this article and the study is that Mediapost and the company doing the survey don’t understand what Influence means.  In an age where engagement is the new metric influence is about distribution of content, ideas, and opinions with group based validation.  It’s true that people value information from trusted sources, but what is missing here in the analysis is that influencers create conversations which in turn drive information based output - meaning group work together to form opinions and analysis.  This peer production is enabled by influencers in a distribution system (web 2.0 viral) that rewards connections.  One way to look at this is think - influencers = access to distribution of social graphs + group peer production + SEO + redistribution of group approved information and analysis.I like Mediapost but this is a big miss by Gavin.   

I woke up this morning to the announcement of TC conference for startups. I have been to Demo since 1997 and Demo has been a consistent and credible player for years. Suddenly Techcrunch arrives on the scene and punches Demo in the mouth and competes directly with Demo’s franchise.

Lets call a spade a spade - this is all about money PERIOD. We have two franchises fighting for the title of best startup friendly conference. Mike and Jason both believe and profit from helping startups and Chris runs a ‘machine’ of an event that has stood the test of time.

What I don’t understand is why Techcrunch has an global anticollaboration mindset - web 2.0 is about sharing isn’t it. Recently, Mike Arrington has been talking about wars, gangs, and getting bloody. Kara Swisher draws the Godfather references to Mike’s approach. There has been tons of talk lately that Techcrunch is drawing too many battle lines in its growth strategy. As Techcrunch continues to look for financing or a rollup - their strategy might in fact pose a big risk or increase the risk factors to potential investors and partners. Certainly, it will drive page views.

Given Techcrunch’s funding level that they might not want to take a ‘frontal’ approach to competitive strategy. One thing that I did learn in business school is ‘don’t take an offense frontal approach to competitors when your under resourced..’ .

Mike should rethink his competitive strategy - try reading the ‘Art of War’ not by watching the Godfather.

Stowe Boyd a social media veteran has a unique perspective on this.  Stowe has been around the block both in social media and the conference business.