Glenn has a love/hate relationship with technology. He loves the vision of the future and the freedom it gives people. However, the exponential growth of technology also creates the opportunity for giant companies to get so giant that they can crush the life out of you. Glenn isn't sure where he stands on some of these big technology companies. Google, being number one in that category because they do some pretty scary things, but they also do some amazing things. He invited two key Googlers, Executive Chairman Eric Schmidt and advisor and former SVP Jonathan Rosenberg, onto the show to discuss the Google culture and their new book How Google Works.

GLENN: Hi, guys. How are you?

SPEAKER: Hi, Glenn. How are you? It's Eric.

GLENN: Very good.

ROSENBERG: It's Jonathan. Great to be here.

GLENN: Thanks for being here. I want to start with: Really good book. But I want to get into a couple of things and dive right in to Steve Jobs. Steve Jobs is not a guy that liked you or Google at all. And yet, you say some really good things about him in this book. You want to take me through what the philosophy is? I mean, was it not a two-way street with you guys?

ERIC: Well, this is Eric. If you think about the Steve, Steve was perhaps the greatest inventor of my generation. He took a company that he founded that was a near-death situation and invented pretty much the way people use computers today through their phones. So although he was certainly difficult at times, his brilliance meant that many, many smart people flocked with him. In our industry -- and we talk about this in the book -- people help each other out. And so I would help Steve out. He would help me out. And, in fact, I was on the Apple board for three and a half years.

ROSENBERG: Glenn, we also point out in the book that there's a new archetype, a new character that we're defining, that's sort of the hero of our book, which is the smart-creative. And the characteristics of those people are that they combine technical ability, they're business savvy, they're extremely curious and passionate. And we really felt that Steve was a great example of that persona.

GLENN: Well, you say here, the culture stems from the founders, best reflected in the trusted team. You say: You have to ask the team -- and I think this is really, really good. You ask the team several questions.

What do we care about? What do we believe? Who do we want to be? How do we want our company to act and make decisions?

Can you tell me about that list, and what you're driving at here?

ROSENBERG: Sure. This is Jonathan. I think one of the things that we've seen, particularly in the Valley, is that there's a very strong selection bias when you define your culture early. So one of the things that you find is that many founders get that right initially, others kind of just focus on the business and then delegate those values to an HR organization or PR people later in the process.

What we found is that you want to define the culture in the beginning, create a selection bias, so the kind of people that you're looking for and believe your culture come to the company and then you want to allow them to answer the questions in more detail so that that first group of employees define the culture for you.

GLENN: So define the Google culture.

ERIC: Well, it's certainly smart and quick, and it's very reliant on the people that we're describing as smart-creatives, people who sort of have a vision. And we tolerate them. We sort of say: Have a good time. Come up with your ideas. We'll see how far you get.

One of the characteristics of that is, that model is scalable. You can end up with 100 of them and then 1,000 of them. And I've become convinced that these people are the future of America because these are the future inventors. These are the future people who will create jobs and new companies, and they'll spin out of Google to do a startup and so forth.

GLENN: Are we all kind of inventors now? I mean, don't we have the ability to do things that we've never been able to do before?

ERIC: The barrier of entry to start a startup is the lowest it's been.

Let me say, Glenn, that you did this. You set out a strong culture. You set out a five-year plan. And off you went, and look at the success you've achieved. So it works. Right? It takes guts, and it's typically done by young people in small teams that work very, very hard. Very specific type.

GLENN: This is something that I've been wrestling with. I don't trust -- I don't trust a company over 100 people because I just don't think -- there's too many people you have to answer to.

ERIC: This is like, don't trust anybody over 30. You already have more than 100 people.

GLENN: I know. I've got a company of 310 people, and I just -- we can't ever get anything done.

STU: I don't think that's accurate.

GLENN: Okay. Hang on just a second.

Do you guys ever feel that way that you get to a point -- I mean, you talk about the two-pizza theory, which I think is absolutely rock solid, and it's kind of where I'm at where, just break everything up into teams because one person cannot handle such a bureaucracy, and the bigger it gets, the more people that have sign off on crap and you never get anything done. You spend all your time in meetings.

So explain the two-pizza theory. And then, how do you build off of that?

ROSENBERG: Sure, Glenn. This is Jonathan. The two-pizza theory we actually got from Jeff Bezos, which says that you don't want to allow any teams to grow beyond the point where you can't feed them with two pizzas. And there's always been, in sort of the history of software, this notion of the mythical man month, which basically says, as you start adding people to a programming project, it becomes much, much less efficient.

So our focus has always been to keep people in very small teams, keep those teams in small groups working together, and then as we scale, we're constantly trying to break the projects down into smaller teams. The other things that we're seeing is, it's getting much easier to standardize products so that one product can build on another, and that allows us to keep teams much smaller.

GLENN: Explain the -- because you guys are -- you're into everything. Absolutely everything. Oh, yes. You're controlling my thermostat. You're driving cars now on the highway. I mean, you're into absolutely everything. How do you keep the teams working in the same general direction? How does that work?

And beyond that, explain the diagram. You have a Venn diagram, and you say how you -- you know, how you choose ideas. Big ideas. So explain, A, how do you keep the teams all generally going in the same direction? How do you know what's a Google thing and what's not? How do you do that?

ERIC: We make a list, and then we sort of go through it. We used to have a list called the Top 100, which had 300 things on it. We could never get it down to 100. And we would sit there and say, well, which of these are more important. And through that process of discussion, we would end up prioritizing.

And the key thing about the management meetings is they can't be consensus. They have to be looking for the best idea. And they're different. In a consensus, everybody kind of fights to the median.

Whereas, in our case, we say, what's the better idea? Does anybody have a better idea than what we're currently doing? Then we have this big argument internally. Eventually someone says, well, why don't we try this? And the job of the leader, in this case you, is to say, okay, let's go after that. And come back in a day and tell me what to do.

ROSENBERG: Yeah, Glenn. You asked about the Venn diagram, and that really relates to starting from the premise of how large is the opportunity. Many companies kind of focus on what they see as greenfield markets, which are usually green for a reason. There's not a great opportunity there.

So, for us, the number one thing is: What is the scope and opportunity of this market?

And the next thing that we then look at is: Can we use technology in some unique way to fundamentally improve the products in that space?

And where those two things match, we then conclude that there's a big opportunity.

GLENN: So do you guys start with, I want to change the world, or do you start with, we need to make money?

ERIC: Well, a little bit of both. One of the secrets of Google is that the search business has been highly profitable in the sense of the ads work really, really well. And that money gives us, if you will, the rope to try things. Maybe other companies that don't have such high gross margins are unable to or they can't get the financing.

But the core principle is actually not about money at all. It's about users. And one of the sort of key slogans of the company is: Put the user first.

So if the nest thermostat makes the user happier, which indeed it does, that's an improvement. If the car, the self-driving improves people's lives and, in particular, allows them to stay alive, that's much better. We don't worry about what the prices of these things are. We'll figure that out later.

GLENN: I think there's -- and I could be wrong. I think there's a change in Silicon Valley. I think there are a lot of people in Silicon Valley that maybe thought that they were wildly liberal and had found themselves to be more Libertarian because a lot of these guys are, you know, 25 years old, and they started something in their basement. And now they're like, holy cow, look at what I'm building. And they know they don't need the government, and now the government is starting to knock on their door and say, hey, hey, you can't do that.

And I think people that are 20-something years old are not used to somebody coming in and saying, you can't do that. And now they're finding themselves saying, you know, government is a necessary evil, but we don't need to have all of this government. You guys, on the other hand, are deeply in bed with the government. You got what is it, 25 -- the self-driving cars. There were 29 permits issued for the state of California; 25 of them went to you guys.

ERIC: We're not in bed with them. We're regulated by them.

What you're saying is something that's been true for many, many decades. Right? The tech industry is famously liberal on social issues and famously conservative on financial issues. The saying of the industry is: Government out of the boardroom, government out of the bedroom.

And I think that's roughly what you're feeling. This libertarian streak has been there for a very long time, for the reasons that you say. Exactly right.

And the problem, of course, is that we're inventing things that really do affect traditional agreements with governments. So Google is in the information business. Well, there's nothing more important than information. So if you're a political leader or a government or especially a restrictive government, a dictatorship, you want to control information. You don't want freedom of expression for your citizens.

GLENN: How do you guys view the world -- with the world changing as much as it is and driving cars, how long before the driving car is -- we're all being driven to work?

ERIC: It's completely dependent upon the regulatory process. The technology works. It was invented literally in 2004 and 2005. And the reason this is serious is there are roughly 31,000 people who die on American highways every year. So those are your family. Those are your friends. Those are our citizens. So the quicker we can move this stuff out, the better. We don't know how long it's going to take, but we're sure it will happen over a long enough period of time. It's valuable.

GLENN: See, isn't that an amazing thing? That talks about the problem I think with -- with the way our system is. Our government is not run with a two-pizza rule. And that's kind of the problem.

You're saying the system works. It can all go in. But the regulatory process -- and you know that's going to be a bloodbath of just payoffs and all kinds of problems -- isn't that -- I mean, wouldn't we be much better off to be able to, now that we have the technology to do some of these things -- we're not living in the 1950s anymore. The entire world has changed. How do we break down these walls to start moving a little faster without government interference?

ERIC: A lot of the cases, the regulations have been written by existing incumbents or the industry. And the best kind of regulation says, what we want to do is we want to get more people to their destinations safer, faster, and in a more comfortable way. If the law just said that, then it would be a lot easier. But it ends up being very complicated. And Google has literally thousands of people worldwide who works on these sorts of issues. And I think this is normal for American corporations. I don't Google is unusual.

GLENN: Explain the 70/20/10 approach that's in the book.

ROSENBERG: Yeah, Glenn, this is Jonathan. So 70/20/10 was basically an algorithm that Sergey Brin derived, and it stemmed from looking at the set of the companies top 100 priorities when we were much smaller, and Sergey Brin basically observed that the company felt about right at that scale, and 70 percent of the resources were going into the core efforts, 20 percent into emerging, and then 10 percent into kind of the wacky crazy ideas.

So we decided we would institutionalize that and try to keep that framework as sort of the broad -- as we grew over time. One of the nice things about 10 percent is that it's enough that you can actually kick things off and get them started, but it's not so much resource devoted around one thing that the company gets so invested in it that we can't kill it if it's failing.

STU: We're actually doing a version of that, but it's 1/5/94 is our current...

GLENN: I've been trying to talk to some of the guys in my own company and said, I really like your -- what is it -- your 70/30, work for the company 70 percent of your time -- or is it 80/20. Where that extra 20 or 30 percent of your week is kind of on the things you want to pursue. Can you explain that? Are you still doing that in the first place? Do you know what I'm talking about?

SPEAKER: Yes. We've always in the company a rule that employees could spend 20 percent of their time on whatever they wanted to do rather than what their manager wanted to do. So -- is our 20 percent project. We have other duties as well. And it exists because it's a way of being creative without putting too much at risk. Because if you just have one person spending one-fifth of their time and wasting their time, you don't have a huge risk, and you might have some great idea. And so what happens is, many of the great ideas that we hear started off at 20 percent times.

GLENN: I think what you guys are creating is the future, and I hope that as -- Eric, as I've said to you before, I hope the don't be evil, actually remains in place. Because of the amazing power of Google. But I really appreciate it. The name of the book is How Google Works. Hope to have you guys on again. Thank you so much.