Eric Schmidt thinks getting sued is actually part of Uber’s business strategy

Written as editor of the New Statesman’s NS Tech and first published here.

A quick Google for ‘Uber lawsuit’ reveals just how many pages and pages have been written about the company’s apparent fight for its users against heavy-handed regulators.

“That had to be a component of their business strategy,” Eric Schmidt said of a startup his company is heavily invested induring a chat at Startup Grind in London today.

“Focus on product, focus on product, focus on product,” he advised companies. “You can always deal with the policy issues later as long as you’re following the law.”

Although not exactly a risk-free strategy, he even admitted it “wasn’t until we [Google] had pretty big scale that we had to start to worry a lot about regulation of information”.

Emphasising just how far the company has come, Schmidt highlighted that Gmail now has 1bn individual and enterprise users worldwide, while assuring the crowd: “If you have something that’s secure, you want to keep to yourself, by far the safest place to keep it is Gmail.”

In fairness, despite its size, Google has so far avoided making headlines on getting hacked, although its business model has for a long time relied on monetising the information you share.

Operating under the ‘new startup, happy users’ guise, it can’t go unnoticed that the early avoidance of regulators gives a competitive advantage to new entrants.

And it certainly makes the press squeal.

But 17-year-old Alphabet, once Google, is no longer a spring chicken as we enter our ‘fourth industrial revolution’.

From Google to Alphabet

Alphabet chairman Schmidt knows exactly what it’s like to go through a big restructure.

The 57,000-strong company formerly known as Google is still refining its transformation from a search business with a few bolt-ons, to an alphabetised behemoth of which ads are just one part.

Now operating under the name Alphabet, Schmidt admitted during the chat that the process started by its co-founder Larry Page last year was “announced without deciding all the finer details”.

“The problem with big companies is that they tend to want to do this but they’re also not willing to take the risks of doing so.

“I’d been CEO for a decade, then Larry for four or five years, before he said ‘there’s something wrong with the mission statement, our goals and our structure’.”

The company’s motto, for example, was rather famously ‘don’t be evil’, but that’s been dropped for the company at large in favour of the, perhaps even more relative, ‘do the right thing’.

Are business units just apps?

Schmidt described the challenges faced by big business as simply as being able to identify your different business units as if they were apps on your homescreen.

“It’s very difficult in a large companies to identify those icons and then organise around them. That’s a perpetual problem of any large company.

“… At the end of the day – it’s your product, plus your people – today, the product has to be superb, and global competition is fierce, and the people have to be very good.”

Schmidt doesn’t believe today’s web challenges are much different from the technical quandaries that have come in earlier innovation spurts during his 45 year career.

“You have to understand the power of platforms because they define both the applications, as well as the restraints on what you can build.”

Acknowledging today’s almost unbeatable duopoly of iOS and Android (while noting that the operating system his company built is the largest across the world), Schmidt suggested that, at least in the short term, most new ideas will be powered by one of these, backed by a fast network and open to other products via APIs.

Machine learning in the cloud

Machine learning, not least Google’s own new TensorFlow open source software library, which is very much available for use by competitors, is where Schmidt sees the next wave really blasting off.

“The platform just gets stronger and stronger and that’s what the cloud is about. Cloud computing is a very small component of that [IT] today. It’s 4 per cent, 5 per cent. For the next five to 10 years all of the older systems, the ones that I sold in my previous companies, will get replaced by these cloud systems, and our market share from very low today to much higher.”

He mooted that the next wave of “billion dollar” companies will be those who crowdsource data, which you learn something more from, then sell on in some way.

“This is about building a service [for people] that is better than their knowledge.”

He used this ‘forecast’ as an opportunity to plug the company’s upcoming  AI assistant app Allo, as well as London’s DeepMind AI startup, bought by Google in 2014.

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