The Prof G Pod with Scott Galloway - Win with Innovation

Episode Date: October 8, 2020

Eric Schmidt, the former executive chairman & CEO of Google, joins Scott to discuss artificial intelligence as it relates to businesses and innovation. We also find out what Eric has been up to with Schmidt Futures and New York state as well as his work with the NSCAI. You can find Eric’s podcast, “Reimagine with Eric Schmidt” here and follow him on Twitter, @ericschmidt.  Scott opens with his thoughts on citizenship and discusses what happened to the equity markets during Q3.  Office Hours: telehealth, the future of remote work, and using abandoned commercial real estate to rethink higher education. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Episode 30. The atomic number of zinc is 30. The minimum age to be a U.S. senator is 30. We should have a maximum age for president. I'm sick of watching the fights from the lunch line in the Delray Active Living community. Claudia Conway is the only credible source of information, or specifically her TikTok profile. Take care of yourself, such that you cannot run from president, but be healthy. I look 55. I've worked out four times a week for the last 40 years. Why? Because despite being 55 naked, I look 54 and I've worked out four times a week for the last 40 years. Why? Because despite being 55 naked, I look 54 and seven eights. Come to the dog. Go, go, go.

In today's episode, we speak with Eric Schmidt, the former executive chairman and CEO of Google. We talk COVID-19 and what the future of artificial intelligence and machine learning looks like for businesses, as well as what factors Eric believes are behind multi-trillion dollar companies. Word is he's pretty smart. Yeah, he's a smart guy. Big brain. Big brain, Eric Schmidt. Anyways, what's going on?

What isn't going on? This shit show that is America gets showier and shittier every day. The Republican Party believed, as they should in any heteronormative society of exceptionalism, that they were invincible to COVID-19. And what do you know? Guess what? President Trump ended up in the hospital and at least 13 of his contacts contracted the virus. The new super spreader. By the way, that image of all of those, let me think, fucking idiots sitting shoulder to shoulder with a of fans with. Oh my God, how many, it's just extraordinary how many institutions and people this guy ruins, whether it's a young man being dragged out of his home and tackled on his driveway because he's playing with guns after

running the Trump campaign, Brad Parscale, and that's an interesting one, to people either in jail, either indicted, on the run. And the Walter Reed Medical Center, that association, that brand was one of the best brands of medicine. And what do you know, overnight, they're fucking Joey Bag of Donuts liars with no credibility who are a absolute detriment or, Christ, take off that white fucking coat, for God's sakes. If you're going to get up there and lie and say things like, well, we're not currently giving him oxygen. Okay, boss, you're not Kellyanne Conway.

By the way, how much do we love? How much do we love Claudia? If Claudia ran for president right now as an independent, I got to say, I would think about voting for her. I would definitely vote for her over Kanye. If she had a shot at winning, I think this whole, the whole office of president has been diminished so much. Nobody gets out of this thing alive. of winning. I think this whole, the whole office of president has been diminished so much. Nobody gets out of this thing alive. The DOJ, the FTC, what institution, what individual that Orange Hitler, the kryptonite of leadership doesn't touch, doesn't come away from this thing with

stage four chemotherapy. He's like, he's like literally, he's like Chernobyl 30 years on in terms of after effects. Okay. So what do we have? He returned to the White House after spending three nights at the Walter Reed Medical Center and decided to tweet, don't be afraid of COVID. Don't let it dominate your life. Well, okay. Do I get to go to Walter Reed? Can I try?

Can I have pharmaceutical intervention that no other American has access to? Okay. Before you know, we're going to be at a quarter of a million lives or about double the number of people of souls, U.S. souls we lost in World War I. We're losing eight times the velocity of the number of people we were losing in World War II. And we like to diminish this. We like to put it aside because one death is a tragedy, but millions are a statistic. And we've definitely entered kind of statistical mode. But the reality is no crisis in history has been killing people at this velocity. Again,

I repeat, no crisis in our history has killed people at the velocity of the novel coronavirus. How the markets reacted to Trump's return to the White House, CNBC reported that the Dow jumped 470 points, the S&P rose 2%. But it's sort of moot at this point because it looks like we're going to have a Biden White House. All us progressives are scared to say that because we were saying the same thing, I don't know, before the 2016 surprise. It was the election. But we have just an extraordinarily level of incompetence. I mean, just staggering levels of incompetence.

What is the America Brown right now? Exceptionalism morphed in the form of incompetence. Let's look back. Let's take a look back. Let's reminisce on Q3 with data from Credit Suisse. I just like saying Credit Suisse and discuss what happened to the equity markets. The S&P was up 9%. $136 billion was raised. SPACs raised more money. That is special purpose acquisition companies raised more funds in 2020 year to date than in the previous 10 years combined. SPAC issuance represented 53%. That's right. SPACs are the new IPOs. They're more than half of the IPOs in 2020. Why? There's a supply demand imbalance. The markets want IPOs. All the rich white guys

that control all our money have more capital to put to work than ever before. Meanwhile, huge swaths of the economy can't get public. Try and find a media, a retail, a travel IPO. There aren't any. And everybody loves tech because software is eating the world, right? Hello, bubble inflating and SPACs are just at water. IPO issuances. Snowflake, Snowflake was the biggest US software IPO on record. The company raised nearly three and a half billion dollars from its September IPO, and it's backed by Warren Buffett's Berkshire Hathaway and Salesforce. Actually, truth be told, I think Berkshire Hathaway got in late and did this kind of the white guy, white privilege access,

triple my money in a 90-day investment. But anyways, good for them, Warren. Guy could use some more money. Snowflake currently has a market cap of around $68 billion. We're recording this on Tuesday, October the 6th. Lastly, there was a 10-year record number of IPO filings for July, August, and September combined. Is Snowflake a great company or overvalued? The answer is yes. I think it trades at something like 70 or 80 times revenues, whereas Palantir is just one of those things. Anyways, IPOs outperform direct listings. So IPOs, the traditional form, either a SPAC or a traditional IPO, have outperformed direct listings by 7%. Direct listings have traded up on day one by 32% on average, while IPOs have risen by 39%. In some, it's a fucking cocaine disco party. All right, let's hope the lights

don't come on. As Jay Palas said, it's going to happen if we don't start getting our heads out of our asses and actually treating COVID-19 as if it's, I don't know, a global pandemic and figure out a way to cauterize this or at least slow it as they have done in other modern economies. This is just such an incredible example of arrogance. And that is we believe that we are exceptional. We believe that if it hasn't affected us, it's not going to affect the mainstream economy. We believe if our stock portfolio is up, that's a reflection on what's happening in the rest of America. No, it's not. You know what's a reflection on the rest of America? income kids have fallen substantially behind in math once they have turned to remote learning. What does that mean? What does that mean? It means we're half as likely to have people find vaccines. It means we're half as likely to find people who can invent apps. It means we're half as likely to have diplomats who can circumvent or possibly stave off conflict and war. We are absolutely shortchanging everything in our society for this belief or this cold comfort that

somehow our stock's going up means that everything is okay. And there's a lack of citizenship that goes well beyond Orange Hitler here. When World War II broke out and word got out that there was a supply shortage of rubber because the Japanese controlled the South China Seas or the islands in the Pacific, Americans implemented a self-imposed 30 mile an hour speed limit to try and reduce the level of wear and tear on tires. We didn't wait around for stimulus checks demanding more stimulus. We expected to give money to the war effort. What has happened to us? Where has our sense of citizenship gone? I watched a movie this weekend, or went to the movies for the first time in about six months, and watched a movie called Spy, a story of mostly female spies who were placed in or snuck behind enemy lines in France

that disrupted supply lines and generally just created havoc and chaos and were considered a key component of the resistance in France. And I did some research on it. And the vast majority of women when asked on the spot to put their lives on the line for their country said yes right away. And it feels as if in America, we spend a lot more time, a lot more time thinking about where is my stimulus check? What's going to happen to my stocks? Should I get into a SaaS-based company? Then thinking about, okay, what is my obligation to wear a mask? What is my obligation to plan my life such that I don't become another node of the geometrical spread such that I don't become like our dear leader, a node of spread here? Think about the amount of death, disease, disability, and just economic harm and idiocy

that has been fomented by that fucking Rose Garden catastrophe, that Rose Garden massacre. It's just so embarrassing. Anyways, hopefully we vote. Hopefully every vote becomes a small component of the stain removal that we need to happen on November the 3rd. Oh my gosh, extra political today. By the way, voting isn't on November the 3rd. Voting ends on November the 3rd. I hope everyone is out there voting. This is just an extraordinary opportunity. Voting has more power than people like to believe. It's clear our institutions can be overrun. Whoever gets an office, whoever you put in office, and there's a small number of states where it could come down to a small number of votes, whoever we put in office can overrun our institution. So actually our vote probably has

more power than it should. So anyways, see above, vote. Anyways, let's move on. We'll be right back after this break. the personnel, and the finances, marketing is the last thing on your mind. But if customers don't know about you, the rest of it doesn't really matter. Luckily, there's Constant Contact. Constant Contact's award-winning marketing platform can help your businesses stand out, stay top of mind, and see big results. Sell more, raise more, and build more genuine relationships with your audience through a suite of digital marketing tools made to fast track your growth with constant contact you can get email marketing that helps you create and send the perfect email to every customer and create

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Welcome back. Here's our conversation with Eric Schmidt, the former executive chairman and CEO of Google. Eric, where does this podcast find you? I'm in New York City, safest place probably in the world as a city right now, shockingly after the terrible things that happened in March and April. Safest city in the world, say more. Well, somehow the New Yorkers are following what is now the emerging best practice. Unfortunately, most of the rest of the country doesn't seem to really take it seriously. But basically, if you wear masks and you socially distant and you eat dinner outside, which is possible today, you can have a reasonable city life. I'm beyond upset that the government, broadly speaking, has not figured out a way to open up the businesses and the schools safely. And I've worked hard to make that a reality. We now know,

for example, that if you did weekly antigen testing with follow-up PCR results, if you get a positive antigen test, we know that we could begin to operate these buildings and begin to recover. There's no plan. It's terrible. Say more about that. Weekly antigen tests and then reopen. Can you bring that down and give us some more color there? Well, the government created a false narrative that you had a choice between health and the economy. You need both. And in order to have the economy, you have to solve the health problem because people will not fundamentally put their children or themselves at risk against such a terrible disease. So you need some form of testing regime. Today, there are broadly available, very quick 15, five-minute, 15-minute tests that are

not as accurate as PCR tests. And there's plenty of evidence that if you did that roughly weekly, given the reproduction rate of the virus, you could spot the outbreaks and sort of keep it under control. Without that, we don't have a plan to get the R0, which is the reproduction rate, below one. And without it getting below one, we're waiting for a vaccine. When the vaccine is authorized, which hopefully will be very soon, there will be a very long number of months before it will be broadly available and will affect the infection rate in a city like New York or wherever you are. So the reality is we have to come up with ways of getting back to the way our world worked while we're waiting for the vaccine to kick in. And not just the announcement of the vaccine, but the broad availability of the vaccine.

We also are beginning to see some very good antivirals come out, which will help for people who are getting the disease because it remains very dangerous. Can you go back and think of two or three fatal errors that we as a society, not just the administration, but we as America and Americans made that got us, that put us in this terrible place? There's a long list, but let's start with, and I understand in the first month of the pandemic, there was great confusion. People tried things. There was confusion as to whether masks were effective or not, but we know the answers to that. And so once we began to know those answers, why did we not have a national program, which is federal and state together? What ultimately happened was we left it to the states. The same thing happened, by the way, in Spain, because they had a relatively weak

government. And guess what? Each of the states in Spain did something different. And as a result, they have a huge outbreak. Because the country is porous, because people move from place to place, the effect of a non-national program is that you end up with outbreak after outbreak after outbreak. The fact of the matter is that at the moment, the number of infections recorded every day seems to be about 40,000, and the number of deaths is roughly 1,000. Those numbers have been true for roughly three months. And how is that okay? It's just not okay. 200,000 deaths with another 100,000 scheduled in the next four months, not okay. But in any model, that level of death and cost requires a national emergency, a national focus, a national integrated plan.

And we know roughly what it looks like. Require masks. In the countries where they've required masks and they have modest penalties, fines if you don't wear masks, they've seen real effect. The second thing, of course, is getting people back to work in a way where they can measure whether they have the disease or not. We are sending our children to school without knowing if they're going into an infected classroom and the teachers have no way of knowing whether the children are bringing the disease. And in some cases, the elderly teachers have a real fear for their lives. This is just not okay. We could have done better. To me, to be very blunt, this is the end of American exceptionalism. If we can't respond with the resources and the brilliance of Americans,

if we're so disorganized and our political system is so dysfunctional, we should be ashamed of ourselves, collective. Yeah, I agree. It's just not okay. So you're on the advisory board at UC Berkeley. You're a member of the Cornell Tech Board of Overseers. Do you think higher ed, do you think colleges should have reopened? I do, but they have to do it in particular terms. I'm a visiting professor at MIT. And MIT, which is basically very good at math, figured out roughly the following solution. They do, for people who are visiting the campus, they test once a week.

For students that are in dormitories, they test roughly twice a week. These are approximations. And by the way, they tie access to the buildings with your key card to your negative test. And believe it or not, it works great. So I sit here in New York and I look at these tall buildings and I say, and by the way, they're empty. And I think, why could we not do the same thing? These are employers that have plenty of money. The testing can be done in the private sector. The government needs to do it and does not need to do anything in particular. And people can get back to work. If you can't get people back to work, you can't get tax revenues.

I'm part of this reimagined commission for New York State, which I'm very proud to be a member of. And New York State has a multi-billion dollar, something like $50 billion budget shortfall, because the activities of the state are not there to pay the taxes. The city is similarly afflicted. This is true nationwide. And the federal government appears to be able to borrow money with impunity, literally because for various reasons, the constraints about deficit spending in the federal level don't seem to apply at the moment, but they do apply to the states, which are largely bankrupt. So here we have a situation where we've

devolved ownership to the states, but we haven't given them any money and we haven't given them any guidance and they're disorganized. Where is the national plan to get infection rates down and to get us through this? Either Trump or Biden are going to have to do this. And this has to be their biggest priority. We have all of the secondary problems. We have all of these issues about joblessness and businesses going bankrupt and so forth. And we're busy patching it. We're saying, let's give them some money here and let's prevent people's evictions and all sensible things, but they're not addressing the root cause. Yeah. The symptom's not the disease. Let's shift gears to technology. You're currently the chairman of the U.S. National Security Commission for Artificial Intelligence. Can

you give the listeners a kind of a, I'll call it a layman's definition. AI to me means Netflix plays season three, episode four of House of Cards, knowing that if I watched episode three all the way through, I want to see the next one. Other than that, I'm not entirely sure what AI is or how it impacts my life. Can you help us understand it? So the kind of AI that's really in use heavily in businesses now is essentially pattern matching. So you just described pattern matching. And so using AI machine learning, we can spot patterns now that humans don't see because we can sift through a large amount of information. You go, okay, that's no big deal. It's a huge deal for businesses.

That's why there's such a revolution. The first real wins in AI involved essentially imaging, image analysis. And it's fair to say that computers can see more accurately than humans now, which is a surprise. So that leads to a lot of things. So for example, if I go to the doctor, I'd like some tool like an optometrist or whatever, ophthalmologist, I'd like them to use a digital tool that will look and have the computer score what it sees because it's seen far more eyes than the ophthalmologist and then give advice to the ophthalmologist. The next interesting thing that's going to happen in AI is conversational skills. And it looks like the most recent breakthroughs in essentially limited conversation,

there's something called GPT-3, which is a company called OpenAI, where you can get very, very reasonable conversations with essentially inanimate objects. And that's another big breakthrough. So the combination of video, video recognition, video narrative, and so forth, I think sets up the next great explosion in AI. Give us an example of a consumer application for that. Well, the easiest one to understand is misinformation, which I'm obviously not endorsing here. But people are easily fooled by what they see on Twitter and Facebook and so forth and so on. And now computers can do misinformation using technology generally known as GANs to basically build things that look very, very real.

And it's going to be much harder for people to sort out truth versus fiction. You asked a business question, but in practice, to the degree that marketing is involved, you'll be able to do even more effective marketing. Do you think of the algorithm that underpins TikTok? Is that a form of artificial intelligence? It is. And the TikTok story is actually quite interesting. So all of us have been grown up,

and certainly I and Silicon Valley have grown up in the notion of a social graph and your friend's graph. And the typical algorithm looks at all your friends, figures out what they're doing, and makes recommendations. And that's at the basis for social media as we've seen today. The TikTok people did something different. They built an algorithm that is based not on who your friends are, but what your interests are. And they got extremely good at recommending the most popular things that were the catchiest and so forth within their métier, which is 15 second entertainment videos. This algorithm is so good that when the president said Trump has to sell itself, the next day the Chinese banned the export of that algorithm from China. To my knowledge, this is the first time the US has prevented the

import of an application from China and China has banned the export of its technology. This, I think, sets up the narrative that there is a global contest and that global conflict or contest, whatever you want to do, race, is clearly with China. That China has decided that AI is going to be one of the industries that it wants to dominate. They publicly said they want to be the global leader by 2030, and they're putting massive amounts of money in this. Yeah, I think of it, I'm fascinated by TikTok. I just started using it and it just sort of the potential of it scared me. I didn't initially think it was a security threat. Now I believe that the signal liquidity it gets, all the data it gets, it givesical credibility by delaying a vaccine, that they could train, if you will, or motivate the algorithm to start undermining slowly but surely or chipping away at the credibility of a

vaccine. Am I paranoid? Am I right? Or is the answer yes? In the global competition, one of the things you conclude is that we need to win. And so here's a case where the Chinese out-innovated us, which should make us upset. I'd rather answer your question by saying, where are the American innovators? And indeed there are. How are they doing? What do they need? How do we do even better? I want to win the race by innovation. As to the question of Chinese influence in domestic affairs through TikTok, you're also, by the way, repeating the argument that the Europeans made about the social networks from the US. And so it's important to understand that this is a global

market and a global network. I used to think that it would be possible for us to sort of build the equivalent of a Manhattan Project where we put all this incredible AI talent that America has and build things which are unique for America for both our consumer business, but more importantly for national security, which is super important. I've no longer believed that. I believe that the technology diffusion, literally the amount of knowledge, if you look at the conferences and the rate at which things are moving forward in AI, I don't think we can stop it. The only solution I've been able to come up with is more investment in basic research, basic leadership. We have to

remember that America is the bastion of creativity and innovation because of a set of things which I took for granted when I was young. Powerful universities, open immigration, the freedom of speech, a great culture and a great creative culture. Those things are at risk for various reasons. And part of our AI commission, we keep saying to the government, you need to recognize that we have to win. And here's how to win. We have to do it with American values. We have to have large data lakes of information. We have to have a lot more money for research to American universities, which is where much of the research is. We have to keep letting some of the foreign students in, certainly the high-skilled ones. And ideally, we would keep them in America with national security visas. Let's talk a little bit about – so you had a storied career at Google.

I think you joined when it was less than a billion-dollar market cap and shepherded that company, I think, to somewhere around half a trillion. Am I in the ballpark there? That's good enough. Good enough? Okay. So you oversaw the accretion of a half a trillion. It started off with no revenue. No revenue. Okay. Which is a feature, not a bug in today's economy. But anyways, when you look back or when you look at the ecosystem now, if you were to make a series of bets on companies that have the underpinnings of Google back then, are there any companies you look at and think, you know what, that could be the next half a trillion, trillion dollar enterprise? What sectors, and if you're willing to name names,

what companies do you think are just most exciting companies coming on the scene right now? Well, I think your comments about TikTok show that there is still large amounts of innovation for entertainment. TikTok can be understood as the most entertaining 15 seconds of your life over and over and over again. And it's a sorting algorithm that produces that. If you don't like it, then presumably there's TikTok A, B, and C, which are different versions of the same thing to solve your unique set of interests. It's canonical in the venture capital industry over the last few years that all of the big categories were occupied and that valuations were too high. Nobody could actually figure out their exits, that it was the era of the entrepreneur and the venture capitalists were

all going to be sort of kaput. Now we have a pandemic and we have a whole new platform that emerged, which is Zoom. So I think the evidence is that that kind of conventional thinking is completely wrong and that there are large swatches of human activity and so forth, which can be automated and improved using machine learning and AI techniques. I would also say that any solution would have the following property. You would have mobile phone clients. You would use a fast network. You'd have a backend that's on a cloud computing provider, which is one of the three. It would use AI and ML in a way to add value. But there's one other thing. The end users generate the content. The great plays all have the property that they are exchanges.

And in the case of Google, of course, the users generated the product, the content for the web. TikTok, you generate a video. YouTube, Facebook, you get the idea. So what you want to do is you want to look for things which can scale at that level. Those are the multi-trillion dollar opportunities right now. A more general comment is that we're about to enter into an era of tremendous progress in biology. The tools, again, largely AI-based that allow us to go through biological analysis are so profound in terms of insight. What I didn't understand about biology is they still don't really understand what happens in cells. They have RNA and DNA and so forth and so on.

But you can't really build complete digital models of these things for all sorts of complicated reasons. And using techniques from AI, they've been able to approximate things. One way to understand AI is it can be used as an approximation function for a natural system. And using that, we've been able to begin to break through some real hard barriers in computation. That should lead to an incredible explosion in drugs, drug treatment, those sorts of things. And it will be just a renaissance. And what fields do you think that impacts most this soonest? Is it cancer research? Is itest? Is it cancer research?

Is it vaccines? Is it primary care? Where do we start to really register the benefits of that explosion or this great age of biology or research? Well, as a business matter, because I know you're focused on that, all successful businesses are either going to be drug companies, which means they're funded for a decade, or they're going to be device and appliance businesses where they can get approval within 12 to 18 months. And the latter is, I think, where a lot of the action is going to be. So if you go to the sort of wearables, why do I not today have a health watch that completely keeps an eye on me, knows me intimately, I've given it permission, calls the doctor, tells him what's going on, so forth and so on, that technology is beginning to be available. To me, the most interesting one, which is the promise of healthcare,

is I go into a hospital and they say, I don't know what's wrong with me, but they can look up something about who I am genetically and they can say, and my medical record, and they can say, well, Eric is like another thousand people who he doesn't know and we don't know. But we think he's at risk for something that we didn't realize before. So one of the reasons to think that AI is going to be successful in the healthcare industry is that as much as we talk about our differences, we're very, very similar, especially in the medical sense. And so if we, I'll give you another example. If we had a culture where broadly research analysis was allowed for healthcare data, you would have huge breakthroughs on all sorts of diseases, treatments, and so forth. A lot of the knowledge in the healthcare system is in the heads of the doctors, and it as we referenced before, you're involved with my alma mater, UC Berkeley. I'll put forward a thesis, and you respond where I've got this right or wrong, that COVID-19 is an accelerant, and there's going to be this incredible dispersion of the delivery of healthcare and education away from hospitals, doctors, offices, and campuses,

and that ed tech and health tech are going to register the kind of explosion or the reshuffling of value similar to what you were talking about, biology. Do you have any thoughts on ed tech or health tech are going to register the kind of explosion or the reshuffling of value similar to what you were talking about biology. Do you have any thoughts on ed tech or health tech? They both suffer from regulation. So you and I look at a dynamic market, whether it's some of the unrelated parts of the financial market or the creative markets or the tech market, and we apply those principles to industries which don't work on those kinds of timescales because of regulation. And if you look at education, people have been working on the education problems of America for 50 years, and yet the education problems remain. There is a real possibility, in my view, that using machine learning and AI, we can actually discover how people really learn.

If I ask you and I ask anybody else, you'll say, well, this is what I observe. This is what I believe and so forth. There's very little learning science about the optimal learning of each and every one of us. The canonical answer again there is, well, some people learn in eight-minute segments and some people learn in 20-minute segments. Okay, well, let's do some science. Let's do some measurement. So I'm busy through my philanthropy funding a great deal of that. I think it's learning engineering, and getting the data will allow the training.

Remember, in AI, what you do is you have to get the data, and then you have to train against the data. There's very little learning. In the case of healthcare, it's the same argument. You need to get access to the data. Much of the data is stuck in essentially proprietary databases in large healthcare systems or in the federal government. There are standards, which are generally known as FHIR, which allow for interchange, but they don't carry the clinical information with them. So again, you end up having to do it within the context of a healthcare system

and so forth. And then the lawyers of a healthcare system and so forth. And then the lawyers within that healthcare system decide that there's some economic value. We would get much healthier as a country if we had a broad ability to get access to, for purposes of research only, healthcare data. Same thing is we'll make a great deal of progress in education if we have, again, for research purposes and development of products, training data about how people learn. Those are the necessary preconditions. Until that occurs, we're going to be stuck where we are now. But you're going after what I believe is a key component, and that is until the greatest wealth creator or road to the American dream, the American corporation begins offering a different

on-ramp into these organizations other than a degree from an elite institution, it's going to reverse engineer back to what I think is this caste system called higher ed. And you're actually going into the business of kind of micro-certification. Can you talk more about that? Well, I start every day by assuming there's an awful lot of intelligence out there that's sort of not captured for whatever reason. Either because people are being harassed and they don't have time or they're busy or what have you. And because of the acceleration that you pointed out, we can really reach everybody now, or at least most everybody. There are some, by the way, serious issues about broadband access for the very poor. Yeah. And we need to fix that because if you don't have broadband now, you can't participate in education. You can't participate. One person was in a cruel way, joking that in 10 years,

we can predict the crime rate because of what's happening to kids now. And that's just not a good answer. So what I'm interested in is coming up with ways of getting either digital skills or, more importantly, higher level programming skills, cyber skills, and so forth in the training program. In the AI commission, we are pushing very hard the notion of a digital service academy to serve the country. Can you just give us the cliff notes on that? Well, we have these military service academies, and they've produced extraordinary leaders. Why do we not have a digital services academy for civilians for the federal government? I spent lots of time with the federal government in my DOD role, and these are well-meaning people who are not particularly technically trained. They just don't have the education.

They don't have the knowledge. They don't understand when they're being manipulated by the vendor and so forth and so on. They just don't have the depth. We have a talent problem. It's not a surprise, by the way. These are new fields. They have new knowledge. They're hard. They're very hard to understand. AI in particular is hard to understand. So in a philanthropic sense, I thought the best thing to do was to focus on training, education, and talent. Because if you think about it, what's the best investment you can make? And you say, well, it's a building, and it's the school, and it's the highway. No, the best investment is in the people. And the people, furthermore, are relatively dispersed

now. There's people stuck in the middle of nowhere, and people stuck And the people, furthermore, are relatively dispersed now. There's people stuck in the middle of nowhere and people stuck in high rises and so forth. It doesn't really matter where they are if you can get their attention. That's the investment that we collectively need to make. At the moment, everyone is afraid of the virus, getting the virus, a correct fear, and so they're not going about their normal lives. That will eventually get resolved. In order for us to be a global leader and remain a global leader, we're going to have to invest in even more talent for all the reasons that we discussed, especially compared to China.

So this is sort of a loaded question, but you said that a lot of times government officials don't have the training or the education to realize when they're being taken by a vendor. What do you think of Palantir? I don't know enough about Palantir. Oh, come on, Eric. Yes, no, I don't. I get the sense you know a decent amount about everything. Yes, Palantir is controversial. What I will tell you is they did a really good job of early data analysis for companies, in particular for fraud. And again, without commenting on the specific Palantir, because I don't know.

Let's say you wanted to save some money for the federal government, something we talk about periodically, just apply AI to Medicare fraud. The amount of Medicare fraud so overwhelms any cost to any vendor, and it's insane. And so I just picked Medicare fraud, right? And how do you know this? Because we have- Dude, you are so pivoting away from this question. Let me rephrase it another way. Google was profitable after three years. Palantir can't figure it out after 17. What does that tell us about Palantir? Different customer. The government? Isn't the government the best customer in the world for profitability? Not necessarily. The Google model is a pretty good one, by the way. The key thing in Google was we were able to build a system that would scale

very quickly because we were talking to consumers. And the advertising model, in particular, the paid advertising model, ended up being very lucrative because it was based on an auction. So we neither set the prices nor set what the customer was doing. We just ran the exchange. And it was super easy to scale up or scale down. There's a lot of wonderful things to tell about Google. In our remaining time, just a couple of questions, more personal questions. You've ticked a lot of pretty big boxes, right? You're economically secure. You've had a big impact. What do you want to do in 10 years? What boxes are left for you? When you think, I don't know if you're one of these people that writes out your goals, what are you hoping to achieve over the next decade?

Well, I'm interested in new ideas, and I'm super ambitious about this. Because I was so fortunate at Google, I have to actually give away a whole bunch of money. And what I want to do is give it away in ways that are consistent with the values that you and I have discussed. What I particularly want to do is advantage American innovation. I want to advantage American science and Western science. And in particular, I want to fund and develop products that are real breakthroughs in chemistry, climate change, biology, astrophysics, and so forth. So I think of it as a company in the sense that one thing I know how to do is review products. And we've been able to put money into lots of things that have made a big difference.

David Baker's lab, for example, in Seattle is one of the key synthetic biology labs that is involved with understanding how the biology of this disease works. A great deal of MIT work has gone into both the sentinel systems, understanding how the disease goes and that sort of thing. I'm frankly enjoying it because I learned at Google how to do this at scale. And there are so many interesting problems that once you get a technology platform that's interesting, you can really scale up what you're doing. Advice to your 25-year-old self. Biology. Biology.

If I were 25, I would be a PhD student in machine learning and AI working on some abstruse part of the mathematics, which is very impossible to understand. What I should be a PhD student in machine learning and AI working on some abstruse part of the mathematics, which is very impossible to understand. What I should be doing instead is working on the same thing but applying it to biology and biology broadly. Pick an area that makes sense. I'm funding – I'm on the board of the Broad Institute, which is an incredible research institute in Boston. And what I've learned from them is that the breakthroughs that are going to be possible because of the application of AI and machine learning in biology and in associated places where we've never been able to see the microscope, we've never been able to see what was going on, will trump everything else

because they scale. Eric Schmidt is an accomplished technologist, entrepreneur, and philanthropist. He's the former executive chairman and CEO of Google. And in 2017, Eric co-founded Schmidt Futures with his wife, Wendy. His podcast, Reimagine with Eric Schmidt is out now. He joins us from the safest city in the world, New York. Eric, stay safe.

Thank you very much. See you soon. We'll be right back. Hey, it's Scott Galloway. And on our podcast, Pivot, we are bringing you a special series about the basics of artificial intelligence. We're answering all your questions. What should you use it for? What tools are right for you? And what privacy issues should you ultimately watch out for? And to help us out, we are joined by Kylie Robeson, the senior AI reporter for The Verge, to give you a primer on how to integrate AI into your life. So tune into AI Basics, How and When to Use AI, a special series from Pivot sponsored by, whatever else is on your mind.

If you'd like to submit a question, please email a voice recording to officehours at section4.com. By the way, I used to read much faster and think much faster than I do, but wouldn't it be great if Alzheimer's victims started getting or collecting other people's memories as they get old? That's a statement from George Carlin. It's stuck in my mind. Anyways, first question. Hey, Scott. My name is Nathan Liu. I'm an entrepreneur based in Los Angeles. I want to get your thoughts on online learning, specifically at the university level, and how we kind of solve for the compromise

that comes with an online first kind of learning environment, namely you don't get the social benefits of being on campus with fellow students, and you also don't get to learn in any kind of group, in a group setting, in a classroom. I'm wondering if there's an opportunity to access all of the commercial real estate, which is losing a ton of tenants because people are going to be increasingly working from home, and actually turning those into basically distributed classrooms where effectively you

have one professor teaching a class through online teaching software to a thousand students, 20 people to an office space at 50 different WeWork locations across the country. Nathan from LA, thanks for the kind words and thanks for the thoughtful questions. So a couple things. We have a tendency, the fastest way to process information is binary, the zeros or ones. And the conversation around education is either fully in person, kind of leafy football game, college experience, dead poet society, or all online where you're sitting in a Zoom class. And the reality is the majority of education moving forward is going to be a hybrid where we say, okay, what is the primary regulator? What is the friction in the tragedy that has become higher education where

administrates have gone down and expenses have exploded is because we like to think or tenured faculty and administrators alike scarcity, which decreases their accountability and increases our compensation, like the filter or the artificial constraint or governor of supply that is the campus and specifically not even the campus, but classes and classrooms taught by tenured faculty. And it's pretty basic. The 50% of our classes could go online without much of an erosion, especially specific types of classes that are more lecture than interaction, could go online with very little or marginal erosion of quality. The social stuff, the spilling into adulthood, the chance to socialize, the chance to find your mate or at least practice mating, the chance to demonstrate leadership, sports, that stuff scales really well. Young people are very good at scaling that.

And if you let 50,000 people into Michigan or University of Wisconsin-Madison or University of California, San Diego, they would figure out a way to scale that. We need to scale the learning. That's going to come from a hybrid mix of offline and online. I love, Nathan, your idea about converting some of the millions of square feet of commercial real estate that is about to become totally obsolete. My first job was at 1251 Avenue in the Americas from Morgan Stanley. They track how many people are in that building every day now. It's got an average of 500 people in that building every day. What was it pre-COVID? 8,500.

So does it go back to 3,000? Does it go back to 4,000? Yeah, but it's not going back to 8,500. There are going to be entire enormous skyscrapers in Midtown that will be obsolete. And I love the idea of a Cornell Tech or an NYU or a Columbia saying, you know what? We're going to open up our first year of name the program, and we're going to teach 10,000 students, not 400. And we're going to dramatically lower the cost. Every professor gets a floor for three hours. One floor is a place where you all meet and co-mingle and have speakers and drink cool IPA beer and meet each other and network and all that good stuff. There is some networking online that can take place, but you're right.

It doesn't replace the actual human touch, if you will. So I love the idea of taking fallow real estate or fallow assets and turning them into the scaled education or higher that we should have instead of pretending we're luxury brands. So I like your idea. But again, the conversation around online learning isn't an either or, it's an and. Thanks for your question, Nathan. Next question. Hey, Scott. I'm Joel, current grad student at UCLA studying healthcare management. I've been loving your discussions on healthcare's intersection with tech. I highly agree with your observations about the great dispersion away from hospitals to a more remote form of patient care even after the pandemic. I know you've mentioned that Amazon and Apple are some of the closest organizations to solidifying this reality, especially with Amazon's acquisition of PillPack and Apple's capacity for telemedicine.

But my question is, where do you think this leaves doctors and other healthcare workers? Do you think we might see them move in a direction where they help deliver these services with these large tech companies? Or will the innovations that these companies provide create an incentive to leave hospitals and create a form of what existed in the early 1900s known as prepaid group practices or PGPs, where patients pay doctors directly rather than insurance companies? I know there were a lot of inefficiencies in that system, but I'd love to hear your thoughts on the topic. Keep up the great work. Okay, Joel, grad student at UCLA. It is good to be you. UCLA grad student named Joel, Los Angeles healthcare. It's just awesome to be you. So congratulations on all that is you. So if you think about a sector, all right, I'm in Cabo San Lucas and the metaphor I'm using is I'm going to go surfing this afternoon and I can actually pretend

to surf because there's something about the architecture of the shore here and the way the waves are created offshore that manufactures these perfect waves. And I always tell kids, you want to get to where the waves are perfect because you can pretend you're a good surfer. And then I'll go back to Florida and realize I don't know how to surf. But you want to get where the marketplace. So market dynamics trump individual performance. That's a big theme of this show. Market dynamics trump individual performance. Or put another way, your success or your failure isn't entirely your fault.

So you want to get to where the waves are manufactured perfectly. And where there are going to be the best waves in the world, healthcare. 17% of the U.S. economy and tremendously, tremendously woeful NPS customer satisfaction scores. So you have explosion in costs and consumer satisfaction going down, which just means consumers are like, there's got to be a better way. And that better way is going to happen at a much faster pace because regulations have come crumbling down. Ninety-nine percent of people contracted, endured, and developed the antibodies for the novel coronavirus never entered a doctor's office, much less a hospital. So you're really well positioned. Now, as it relates to telemedicine or remote health, I do think that the opportunity lies in the Android

market. What do I mean by that? The majority of healthcare concepts have largely been funded by VCs trying to solve their own problems that don't like having to do what the rest of America does and wait in a doctor's office with bad furniture and then have somebody ask them to fill out paperwork for the 11th time and then see their doctor only for 15 minutes. And the concierge, kind of the concierging of healthcare, if you will, is really well served, as is usually the case with wealthy people. The biggest opportunity though is in the Android part, and is, I am investing, full disclosure, I haven't done it yet, but I'm about to invest in a company called 98.6. And what they do is they use phones to deliver primary care medicine. They ask you a series of questions using AI to try and zero in on what is likely wrong with

you and what doctor should be on the other end and speak to you over text messaging. And there's some crazy stats. 10% of the people who reach out to 98.6 with a problem are texting in the midst of a meeting. So the idea of creating a fluid dialogue around primary care and playing offense instead of defense, being proactive instead of reactive in terms of healthcare is probably the greatest shift in mindset that would result in the greatest decrease in cost. Because once someone's in the emergency room or their infection becomes a full-blown malady, you're talking about an exponential increase in cost. So if we can get ahead of the curve and start delivering primary care and then prescribe

someone the medicine that gets them there that afternoon, early intervention, strong diagnosis or correct diagnosis, correct treatment, get out ahead of that in terms of productivity or lost productivity that won't be lost, in terms of mental health, in terms of figuring out a way to, I think a lot of shame or embarrassment stops people from going to the doctor as soon as they should, as evidenced by the president who seems much more focused on his image and his actual health or the health of the rest of America. But that's another talk show. That's another talk show. You asked about what happens to doctors. I think doctors' leverage goes up, but I don't think the net state will be an increase in compensation. If you ever want to

really, really plant yourself in the middle of a total full-blown bitch fest, invite six doctors over for dinner and listen to how horrible and awful things have gone for them. Because many of them have parents who are in medicine, who used to work three days a week, had the biggest house, a Lexus, and play golf every Wednesday. Well, guess what? That shit's over and it probably should be over. But it's gotten to the point where a lot of sectors of healthcare just are terrible paying jobs for the people delivering the healthcare.

Who in the system has figured out a way to garner outsized returns? Pharmaceutical companies, insurance companies. We talk a lot about breaking up big tech, but the reality is the concentration of power among big pharma and big insurance is equally devastating, equally concentration of, or an unhealthy, equally unhealthy concentration of power among a small few players. And the healthcare delivery providers have been on the wrong end of that. So what do I think happens? I don't think your compensation goes up across the board. What I think happens is your non-economic compensation goes up. And that is, for example, at 98.6, they have about 90 doctors who get to work on their own more flexible schedule.

So being able to take people who want flexibility, specifically working mothers, such that you can give them the ability to apply their incredible domain expertise, the benefit of their education, the benefit of their empathy, the benefit of their intellect in a flexible format with remote or telemedicine. I think that opens up all sorts of opportunities. Back to the net of your question, I think it ends up being a better world for doctors, but because they have more flexibility and more time with their families, if not more compensation. Thank you for the question. Good to be Joel in healthcare at UCLA.

Go Bruins. Next question. it hard to believe that any company will remain strict with these policies in the months and years to come. While I have no interest in permanently relocating, I am inclined to take the job knowing that in a few months, I may be required to move, hoping that my performance in that time speaks for itself. Is that bad business? Do I instead politely decline and ask them to keep me in mind for future remote opportunities? Not sure how to tread these newly formed waters and appreciate your perspective. So Sydney, just with respect to your specific question, I think that truth has a nice ring to it. And I would be very transparent about your end state goal because what you don't want to do is show up to a job expecting that they'll have a change of mindset that will foot to your desires. And you might find that they are more flexible than maybe their initial complexion. But I'm not trying to be righteous here, but I find that when you kick

off a relationship with an employer, you do want to be very transparent around where it is you expect to be, including where you expect to work from. Work from home is just, it's going to be one of these huge cultural shifts. And loosely speaking, you can tell how people feel about it by how old they are. If you're my age or what it sounds like your age, Sydney, we've kind of arrived in the sense that we have our kids, we have a decent home, we have the primary relationships, a spouse and kids that we want out of our lives. We've orchestrated or hopefully architected a decent base of friends, maybe near our parents. But if you're under the age of 35 or 40, and you're in a situation where you're looking to develop your interpersonal skills, you're looking to establish relationships at work, you're looking to meet a mate, a third of marriages, a third of people who get married, it was someone they met at work. You're looking to meet a mate, a third of marriages, a third of people who get married. It was someone they met at work. You're looking to establish long-term friendships,

professional friendships with people. You're looking for that buzz and that intensity and that culture, which is hugely rewarding at a great corporation. So it's just an entirely different gig for a 25-year-old. And if you're willing to live in a high-cost area, you're willing to put on a suit or a dress or some reasonable facsimile of both of those things, you're willing to figure out a way to play nice with others. You're willing to figure out a way to develop EQ. Those people should receive additional compensation. And it's a fantastic training for young people. And it's also fun to go to work at Google and go to the cafeteria. It's fun to go to Friday lunch and

learns at work. It's fun to grab a coffee with your friend and complain about your boss or get help or get advice and establish mentorship roles with people above and below you. This is all very rewarding. Work can all very rewarding. Work can be very rewarding and it's a fantastic training. And it's like trying to go train to be a Navy SEAL and then try to do it remotely. It's just not going to work as well. Also, there's a dark side to remote work. You think Mark Zuckerberg telling people they can work remotely isn't a function of his desire to just cut costs? Because if your job can be moved to Denver, guess what? It can keep moving

east. And at some point, your job is going to be moved to Delhi. I think there's a lot of second order effects here. I don't think it's as simple as we're all going to work from home and it's going to be a remote culture. There's certain creativity. There is a certain electricity. There are certain benefit to ideas having sex that only happens when people are bumping into each other. Also, there's just a certain level of Zoom fatigue, a certain inability to read the room, a certain inability to make decisions remotely. So we're going to find that that office space becomes a feature, not a bug for the most talented young people in the world. And the reality is the greatest ROI on any asset in the world isn't Bitcoin, isn't the NASDAQ. The greatest ROI on any asset in the world is a talented person

under the age of 30. They typically don't have to cost that much. They typically have low healthcare costs because they're not having babies yet or they're not getting sick. They typically are willing to work 18 hours a day because no one's calling them and bothering them to get home for dinner or they're so stupid they don't recognize that life is short so they're willing to work 18 hours a day. And they are better skilled, better trained, and better educated than my generation. So this is the most productive asset in the world. And what do they want? They want to be in an office. Thanks for the question. Algebra of happiness. My co-host on Pivot, Kara Swisher, got married this past weekend and a couple of things struck me. First is that if there was ever a reason to have a celebration where you take some risks and have some people not masking and maybe in close proximity to one

another, it would be a wedding. And if you look at a picture or the images from what I'm referring to as the Rose Garden Massacre that the Trump administration held in celebration of the new Supreme Court nominee, that looks like what logically would be a wedding. And I thought about Cara and the president are both citizens, but one of them demonstrates citizenship. And despite this being a very important day for her and her spouse, Amanda, they decided to mask up and do something that was fairly kind of Zoom oriented and have a very small number of people. And I thought about, of course, I like to bring everything back to me. I have been asked to be in several weddings,

which is always a wonderful thing. I like weddings. I think they're a ton of fun. Very optimistic. Typically open bar, typically open bar for the dog. So I enjoy weddings. Also, by the way, by the way, what is the best gift you can give anybody, anybody at a wedding? The best gift you can give anybody at a wedding is to get fucked up, not obnoxiously, aggressively fucked up, but you know, fun fucked up and dance and have a great time. That's all anybody wants when they have an event is they know, fun fucked up and dance and have a great time. That's all anybody wants when they have an event is they want you to show up and celebrate how happy they are and to demonstrate the occasion and have a great time. And that's what the dog does. The dog has

a great time. He starts dancing. I look like Ichabod Crane having an epileptic seizure when I dance, but you know who thinks I have rhythm? Vodka. That's right, that joke never gets sold. But that's not what this algebra of happiness is about. My algebra of happiness is about the toast I give at weddings when I'm asked. Sometimes I give the toast even when I'm not asked. And I specifically have three points of advice for people who are married. And obviously, it's oftentimes focused on the dude because that's typically who's invited me to the wedding. So I apologize if this seems male centered, but I think the same applies to both parties. The first piece of advice, first piece of advice, never let your spouse be cold or hungry. I know how stupid that sounds, but if you look back across

the course of a relationship at the really ugly fights where permanent damage was done and things should have been not said, it's because one of the parties was cold or hungry. Always have a gigantic pashmina that looks like a blanket and power bars. You're welcome. Number two, don't keep score. I went into most relationships and I think it's natural to think of most relationships as a transaction. Are you getting enough out of your employees or getting more out of your employees than you're paying them? Are you getting more from a friend than you are providing? We think of things as a transaction. When your in-laws come over for the weekend, don't you feel or do you feel that your wife or your husband should endure and be open to your parents coming over for the weekend? Well,

we spent the last holidays with your pain in the ass parents. Now we get to spend it with my parents. Don't keep score. Why? Because you will naturally inflate your own contribution to the relationship and accidentally diminish or minimize their contribution. And it will be constantly disappointed

and constantly reminding the relationship and injecting the relationship with this very unproductive scorekeeping that results in friction and antagonism. Third and finally, always express or constantly express affection and desire. Sex identifies your relationship as singular. It says, I choose you. And every time you feel fond of your mate, every time you have desire for your mate, hold their hand, initiate affection, initiate sex. We all want to be desired. We all want to be appreciated. We all want to feel as if we are the one, that we are that person chooses. I choose you.

Our producers are Caroline Chagrin and Drew Burrows. If you like what you heard, please follow, download, and subscribe. Thank you for listening. We'll catch you next week with another episode of The Prof G Show from Section 4 and the Westwood One Podcast Network.