World. Rose we conclude with Larry Kellerman and Peter Corsell of twenty First Centuryh started my pill grammage in the electric Utility Industry way back when when i started edison company, a industry i have grown up with, an industry i believe has been very transformational since its very founding, well over a century ago. And my belief and my colleague peters belief is that there are technological changes that are occurring in the ecosystem of electric power generation, production and use that makes the utility even more relevant in todays world than it has been in its entire history. Rose eric schmidt on the future of technology, Larry Kellerman and Peter Corsell on the future of regulated utilities, next. Funding for charlie rose is provided by the following and by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rose eric schmidt has been at the center of googles transform hiv rise from Silicon Valley startup to one of the worlds most powerful and influential companies. He was c. E. O. From 2001 to 2011. He is currently executive chairman of alphabet, googles Parent Company which was created last summer. Alphabet encourages ambitious projects or moon shots and believes it can benefit both for the company and for society. Advances in Artificial Intelligence and other groundbreaking technologies have opened the door for revolution in medicine, biology, knowledge and many other areas. I sat down with eric schrid schmidt in new york at the new York Economic Club for a wideranging conversation, here is that dialogue. Let me just begin with a up could elf questions. When you went to google, they said to you we need an adult in the room . Because it was a good day for you. It was a good day for me. The its an honor to be here and thank you guys very much for inviting me, charlie, thank you for doing this as well. Larry and certificate gay decided that they sergei decided they needed someone to run things. They spent 16 months interviewing people. And they made them do things. To become c. E. O. You had to go skiing with them am or you had to go to burning man with them. And very, very few people met the test, apparently. But i was fortunate enough, i told them i wasnt going to spend the weekend with them but we made a long list of things to do. And ten years as c. E. O. What was the most important thing that happened in those then years for you for the company. The sense that people have amazing ideas. In order to build a company of sort of success of a google or facebook or uber, you have to have both a technological idea but you also have to have a significant change in the way the rev you revenue will come in. In our case we invented targeted advertising which is really much better than untargetted advertising. And thats what happened. And we road that really, really hard. That gave us this engine. In the same sense that microsoft was the engine from dos, windows, go back in the 80s, we have had this engine that allowed us to build these systems not necessarily with a particular revenue plan. We have been able to fail at big project was too much of an issue with respect to our shareholders and so forth. Rose so you can risk much. Because of the underlying engine, we can take risks, invest in ideas and do crazy ideas, right. Things which i dont think will work. But they work or they dont, will cancel things as part of the culture. I learned this that is not normal. That most companies, most companies are locked in these quarterly cycles, debt structures and so forth which gives them very few degrees of operating freedom. Its very tough for them. Rose and today what is the roll that you have . Im mostly working on science. I spend a lot of time as you know, on public policy, trying to understand how the world really works and trying to make sure that frankly the governments wouldnt screw this sort of amazing thing that is happening up in the form of the internet. Rose is there risk of that . Of course. Whenever you are affecting communications and information, governments have a role to play. We had to sort of significant battle if you will with china. The democracies are generally okay, as long as you are on the side of informing people and you are reasonably fair and so forth, you can get through that. Will google be back in china . I hope so. We left in 2010 because they have these very, very strict rules about censorship and we just were unable to operate morally from our perspective under the censorship rules. So we keep trying. I spend a fair amount of my time trying to get it reopened. Its really up to the Chinese Government at this point. Rose i want to talk about the issue that i touched on which is very strong for you. Because we want to talk a lot about the future here. The notion of the moonshot. Were looking at it in cancer, as an exam pel which joe biden is heading up by appointment of the president. But what are the possibilities that a moon shot could do for us . Maybe i should say have i come to a sort of obnoxious view that were operating under the sort of zero sum set of assumptions in our society. And im including the western world, not just the u. S and if were not asking enough of our people and enough of what we can do and not trying to build things that are transform tiff. Go back to the interstate highway system which was originally justified by the way so they could move missiles around. So the lack of interstate highway system would cause america not to grow at all. And economic growth, is largely from interconnectedness and innovation. The interinterconnectedness comes from making the world closer, and i mean that intellectually and nrvetionally, physically and Distribution Networks and all the kinds of things that Companies Represented do. And it also, new inventions come along. And every once in a while there are things which we have a consensus, right. And if we would just get behind it. We call these moon shots. As you know, the Vice President did a cancer moon shot. Sean parker just donated 250 million to a set of doctors who have figured out a way to promote white blood cells and against red cells in a complicated new way that might be a very major cancer breakthrough, right . These things come along. But we dont talk about that. We spend all of our time arguing about political issues which are largely not that important compared to how do we solve these massive problems. All right, and they can be solved. So the two biggest things that are going on, i think in the world that i see are this incredible revolution in medicine and this incredible revolution thats going on in knowledge. And the two of them become the basis, i think, for many of the things that we request do the cancer moon shot is powered because weve had these cancer breakthroughs and they are occurring because we are being able to essentially marry the analog world of cancer and biology and the Digital World that i live in. Rose let me talk about revolutions, there was the industrial revolution, then there was the information revolution. Right. Rose where are we now and whats the next revolution . I mentioned there are two phenomenon that i think are going to be transform tiff in the next dekate decade. The first is in health, biology. I will talk about that in a second, and knowledge. The health and biologies there has been a break through of something called cass ddz crisper nine which is way of gene editing. At the moment a very, very tough hammer. They use a piece of genes that they didnt think were useful, that turned out to be very useful to sort of reassemble components. Its gene editing in its basic form. The combination of that, and then doing databases of genes and is he quenszing and so forth, allows us to really probe into the molecular and biological structure of life. It is certainly true within the next ten or 20 years that you will be able to get a body part generated out of stem cells that come out of your blood, right. It is an extraordinary achievement, right, one i think made in japan. Rose an removes it from the political controversy. Yeah, and politics t was a stupid argument anyway. So the core issue here is, you need a new body part, we can regenerate it from your own cells. Thats lifesaving for people who need transplants, right . So lets go through. This is the real combat. Your friend is dying. This stuff fixes it, why are we not doing more of it. I will give you another one, i will get on with cars in a section. But the core point here is the combination of all of that is current. Now why is it occurring, partly because technology from sciences but also there say great deal of money at stake. Because the Healthcare Industry sees new treatments as new sources of revenue, and new billion dollar drugs, right . So youve got a good alignment now of economic interests, veb ture money, and stuff is risky right, so venture capital, some in the room are really going to some will make a fortune, some will make money, that is how it works. That google has generated. We have something called the knowledge graph. We understand how language is spoken. We have 17 years of quer queries and those sorts of things to help you out. So one of the first versions is we built an instant messaging app. Which can reply for you. And it sort of learns what your what and knows what to say. Our first for rea on this last year was an email product which would automatically reply to your email. I assume everyone here want this product, right . So we launched this thing in its most common reply is i love you. Which turned out not to be the correct answer in a corporate setting. So you know, we have bucks and so forth and so on. But. Rose let me stop you there one second. The idea of a Virtual Assistant coming out of Artificial Intelligence is everybody is trying to do that. Yeah. Rose we have amazon already on the market with eco. And how many get up and say alexa what time is it, alexa what is the news. You have all of the Major Companies are there. I assume that competition will be good for the end product but is google behind the curve on that or are you because you dont have a product on the market. No, i mean we have we Just Announced a product, a different technology. And well see how well idoes. This is how our industry works. But we are far more collaborative than competitive. Everyone wants to focus on apple versus google or whatever. But the fact of the matter is the whole ecosystem moves forward, right. And it is building those platforms and building that knowledge, i think the vast majority of your computer interaction will be by voice, sort of shocking. I by the way, ten years ago i predicted this would never happen. But i think it shows you how right i am. But you look at the technology and the gains in Voice Recognition and alexa which is now common in everyones lives, you see it. Now i am not particularly interested in the Voice Recognition part. Im very interested in the Voice Recognition with knowledge understanding. Rose and to tap into the data that already google has, for example. Or the underlying algorithms. Another example su can use google. We have a product you can get on your phone, speak in your language, it comes out in another phone in another language. Like oh my god. Right . Does this really work . Yes. Is it as good as a human translator. Not yet. Okay. Is it good enough to have a casual conversation, yes. All right. How does it work . Well, it turns out it takes your voice, it digitizes it and puts it into text, that is done using a neuronetwork such which san ai concept t uses a different translation neuronetwork which learned how to translate by looking at good language pairs. It translates it and then translates it back into voice. You have three different translations, you go from voice to voice. Rose back to my question. Is there a name for what the sphr industrial to information to the age that we are looking at now, the transform tiff age of all of the technology and what it is doing for us . R it but i can define it aname little bit. So another example, there is a game called go which americans typically dont know anything about. And its infinitely harder than chess. And a group of alphabet, called deep mind had been working for a long time to try to develop the con september intuition am and they developed an able to take a game in the form of bits, literally they can watch the bits of the screen and with enough work they request, can, and playing enough games they can figure out what the objects of the game are, how to win it and then beat all the humans. Thats pretty interesting. Now what is interesting technologically is that you dont have tell to tell it what the game is. Right . So how does this do this . Well, you know, it sort of watches for awhile and it seems common patterns and it begins to develop a base of knowledge. And then it learns against that base of knowledge. You know, this is not a human intelligence yet, right, so were not making that argument. Rose but carefully you said yes. Yes. We dont know how hard it will be to get there. But what we do know is this is something which has never been done before. So then we applied this to the game of go which is thought to be unexeultable. And what it did was it learned uncomputable. It learned how to look at only certain positions by the same rough training method. And we decided to have a game against the best player in the world, in korea, a perfectly nice human being. And we beat him 41. Which was historic. Rose historic and huge. Everybody looked at that. Help us understand, we are now talking about Artificial Intelligence. All of these things we just talked about. Artificial intelligence. And a friend of yours said to me recently, eric is thinking a lot about Artificial Intelligence. On the one hand you have deep mind which is able to beat go that say huge thing. On the other hand you have watson which began with chess and then won jeopardy and they are working on it explain Artificial Intelligence for the folks here because in this audience and elsewhere, everybody, hears about it, some people are making deep investments in it. Hedge funds and others. But remember what i said about the biological world, its happening cause there is a confluence of a platform, a set of ideas and a large amount of money and a lot of investing, a lot of people coming out of school that are working on it. And a sense that its transform tiff to everyones lives. The same thing, the two are sim et rick. So can respect to, ai, the current ai use, i will give you a coup theal are simple. If you are familiar with a disease called diabetic retino pathy. But the diabetes tragedy is taking over the world. It causes your eyes to go bad. You become blind. It can be detected by a good ophthalmologist. We did a test where we take pictures of your retina and we can do it better than an ophthalmologist. It turns out we see more eyes, we saw a million eyes, very hard for the ophthalmologist as hard as they work to see a million eyes. So in situations, there is a large number of cases where if you just let the computer and technology see more examples, they can am could up with better decisions. Another example there is some, we believe that you can apply this to oil gas Distribution Networks. There is a great deal of leakage and sort of decisions that are made about flow and storage and so forth and so on. By using that data, we think we can reduce the emissions, from this that. By the way the emissions are costly to the industry. You have the real question is how far does this go . We think we can develop enough intuition, will use that term carefully, that a physicist or a chemist could say you know how they work, right, they wake up in the morning and they say i want to combine the i3 chemical with the z2 chemical and i will have the following crazy react. Its not going to blow up, instead i will produce a new substance which will get me a nobel prize and get me a promotion at work. So they do that, right that is at 9 00 in the morning. 11 00 they do it. They have their chemist do it and at 3 00 it fails socker they go home and have dinner. The negotiation morning they come up with anher one. That show it really works, right. And these are incredibly intelligent people. But that process can be onerous. We can is the computer to go through all the imingszs and give you a probability. Does that matter . These are trillion Dollar Industries globally around chemistry, chemicals, synthetics, drugs of one kind or another. Rose with respect to our vision of intelligence, on the one hand deep mind has a different operating idea than what ibms watson. Explain how they are different and what theyre trying to accomplish each on their own. Each of watson and facebook and deep mind are doing, have completely different sort of providences, in the case of watson, they use a particular kind of nrches model, a technical term, which worked particularly well for jeopardy and for complicated problem solving. And theyre having a lot of success applying this to complex systems and explaining them. So think of them as there is a complicated system. They can read it, literally and tell you what is in it, right . So this is sort of lawyers had complexity, you take it away or whatever model you have, how it all works. You take all the contracts, read all of them and give it an answer. That is a generalizable result, a powerful one for them. Facebook Just Announced this week that they vay breakthrough in language understanding around communications, sort of what they do. And they have said that they have made significant progress in detecting hate speech. So thats clearly a good thing. In our case we took the position that we wanted to build an underlying platform that allowed you to do all this stuff. We built a network, sorry to describe it technically but its called tenser flow. Tense certificate a multidimensional matrix and the unde