/Nikesh Arora at IE Business School in Madrid

Nikesh Arora at IE Business School in Madrid

Video: Nikesh Arora at IE Business School in Madrid

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>>INIGUEZ DE OZONO: Good evening and welcome to the session of IE Business School. As dean of this business school, it is an honor for me to introduce you to Mr. Nikesh Arora who, as you know, is vice president for Europe, Middle East, and Africa of Google. Probably the most innovative company I would say worldwide. As you know, the company that has been ranked by Fortune in the past 2 years as the favorite for MBA students. It is an honor for us to have you hear. Mr.

Arora has a very interesting and brilliant project through curriculum. He graduated in electrical engineering from Varanasi University in India. He later joined an MBA program at Northeastern University in Boston. He earned a CFA in Boston College. Then he started working for Putnam and Fidelity Associates as an analyst. He combined this position with classes at both Boston College and Northeastern University. From there he joined a company, a subsidiary of Deutsche Telekom which was T-Motion first and then T-Mobile in Germany. Some years ago he was offered by Google the position that he currently runs. I read that you had to pass 17 different interviews in order to get the position. This shows actually how seriously you know Google actually takes the enrollment process.

Mr. Arora also combines his responsibilities at Google with something that is less known. He is also a senior advisor at Silver Lake which is a global private investment firm managing 14 billion dollars in assets and specialized in technology. He has a very multifaceted perspective and I am sure that his presentation on the future of the internet will be fascinating for all of us. Again, Mr. Arora, thank you very much for being here with us. You have the floor. >>ARORA: Thank you very much. Thank you very much for being here. I know some of you have come from work. I'm sorry, every time I see a classroom I feel like I have to act like a professor so I'm going to come in the front and do this if you don't mind. Is that okay, if I do this from here? >>INIGUEZ DE OZONO: Excellent, we are going to move to the sides (speaking together) for your presentation. >>ARORA: Whatever you want.

I have slides, I can make a presentation. [pause] Before I make my presentation, I actually want to take a few minutes and ask you guys what it is that you would like to hear about. The topic is the future of the internet. We can talk about Google or we can talk about whatever you would like to talk about. >>MALE AUDIENCE MEMBER: Mobile search. >>ARORA: Mobile search. >>FEMALE AUDIENCE MEMBER: Advertising exchange platforms. >>ARORA: Advertising exchange platforms. >>MALE AUDIENCE MEMBER: Fostering innovation. >>ARORA: Fostering innovation. >>MALE AUDIENCE MEMBER: YouTube Channel. >>ARORA: YouTube Channel. >>MALE AUDIENCE MEMBER: The future of ecommerce. >>ARORA: The future of ecommerce. >>MALE AUDIENCE MEMBERS: Mobile services >>ARORA: Mobile services, mobile, mobile, mobile. Yes? >>MALE AUDIENCE MEMBERS: Android. >>ARORA: Android, mobile. >>MALE AUDIENCE MEMBER: Things that nobody knows about.

[all laugh] >>ARORA: What? >>MALE AUDIENCE MEMBER: New things that nobody knows about. >>ARORA: New things that nobody knows about. [all laugh] >>MALE AUDIENCE MEMBER: The business model of Latitude. >>ARORA: The business model of Latitude, mobile again. >>MALE AUDIENCE MEMBER: Innovation. >>ARORA: Innovation, okay. >>MALE AUDIENCE MEMBER: Open source. >>ARORA: Open source. >>MALE AUDIENCE MEMBER: Google and an operating system. >>ARORA: Google and an operating system. >>MALE AUDIENCE MEMBER: What about copyrights? >>ARORA: Copyrights. >>MALE AUDIENCE MEMBER: How many years are we going to stay together? >>ARORA: How many years…you and me? >>MALE AUDIENCE MEMBER: How many hours are you here? >>ARORA: Stay together, as in stay where? Stay alive? >>MALE AUDIENCE MEMBER: No. >>ARORA: How much time do we have? >>MALE AUDIENCE MEMBER: Yes. >>ARORA: I don't know.

How much time do you have? Yes? >>MALE AUDIENCE MEMBER: Google's greatest challenges and how you plan to overcome them. >>ARORA: Google's greatest challenges and how you plan–then they don't become challenges anymore. [all laugh] The idea of challenges is a new idea. >>MALE AUDIENCE MEMBER: The future of (inaudible). [all laugh] >>ARORA: You are in the wrong classroom. [all laugh] That is the other one. That is the one in there, in the other room. >>FEMALE AUDIENCE MEMBER: Google and the emerging market. >>ARORA: Google and the emerging market. >>MALE AUDIENCE MEMBER: Comparison to Microsoft. >>MALE AUDIENCE MEMBER: The future of Facebook. >>ARORA: The future of Facebook. >>FEMALE AUDIENCE MEMBER: Google as a telecom company. >>ARORA: Google as a telecom company. Sheesh, should I just shut this presentation down? You guys do not want to know about the future of the internet 10 years from now, right. That is not your interest.

Okay, you have 2 choices now. You have to vote. This is how we work in collaborative society, right. In a collaborative society that consumers are in control of; at Facebook, or Obama's election. You have a choice. You can watch me make this presentation of 19 slides with 5 videos which is about the future of the internet. Or I can answer all your questions by telling a story for the next 20-30 minutes. Which one would you prefer? How many people vote for the presentation? >>AUDIENCE: Lets do both. Both. [all laugh] >>ARORA: Alright I guess. How many people would rather me answer all these questions and tell the stories? One person, 2, 3, 4, 5. I think the crowd has voted in favor of the presentation. Some people said both. Sorry? >>MALE AUDIENCE MEMBER: You can send the videos and we will see them later. >>ARORA: They are all on YouTube. [all laugh] And this one will be too. So, let's talk about where we are.

I will try and answer a lot of your questions. I sort of have an idea what you guys are asking about. If I forget something please remind me. I'm sure you will. Where are we? Ten years ago there were–I said these numbers this morning. There were 70 million people connected to the internet. Today there are 1.4 billion people connected to the internet. Ten years ago there 57 thousand adults connected by broadband. Today there are 400 million connected by broadband. Why don't you come and sit down. It is easier because I will keep watching for when you are going to make the move. [all laugh] I will keep watching. He is going to make a move. When? So come sit down. We have come a long way. We have come a long way in 10 years. We have come to a place where 10 years ago the internet was for early adopters. It was for communication. What could you do with a narrowband connection on the internet? How many of you have a narrowband connection to the internet? Narrowband? I had it.

That is what I was saying, how many of you were young ones. So you all have a broadband connection. Can you imaging going back to a narrowband connection? Can you imagine not having an internet connection? We have already come to a point where as a generation we believe that internet has become a must have. This is a very interesting phenomena, the phenomena of the must have. If I was a consumer company, I would love to be with a product that becomes a must have. If you can think of other products in our lives that have gone from a nice to have to a must have. The moment products go from a nice to have to a must have you have suddenly hit the consumer gold mine. Think of mobile phones. The moment they go from nice to have to must have you know that this is an industry forever. Think about electricity, think about internet connections. It is fascinating. If you are ever going to come up with a new idea, think how an idea can go from a nice to have to a must have. The moment you go from a nice to have to a must have you have just created yourself a brand.

You have just created yourself a business. That is where we have come in 10 years. In 10 years what has happened is–I liken the 1.4 billion people connected to the internet to almost a country in its own right. Why do I call it a country? You can call it many different things. The whole idea of having 1.4 billon people connected and calling them a country in their own right is because they start to exhibit similar behaviors. They have similar social rules. We all know the rules of Facebook, MySpace, and Bebo. They are some of the rules of social networking. All of the people, 1.4 billion people who want to participate in social networking follow the same rules, right. By definition because the rules have been set by Facebook, MySpace, and Bebo.

The rules of consuming entertainment are now defined by the YouTubes and the Hulus and the Juiced and the Metacafes of the world. It is interesting that this country is beginning to form its own rules. Everybody in this new country is trying to manage their own identity. Think about it. Most of you have an email address? Most of you have multiple email addresses. I remember getting my first email address. I didn't quite care what it was called. Actually I preferred not to call it NikeshArora@aol.com. I didn't want to call it that because I wasn't sure what the thing was and why I want it. Now, I promise if every one of you was offered your first name or first name then last name at Gmail or something, you would take it right. You want it to represent your identity. It is interesting that we have evolved from a point where we didn't want it to be associated with us. The same thing has happened with Facebook, by the way. A lot of people–not all of them but a lot of people went to Facebook with identities that they didn't want to disclose.

The actually didn't want to say I am on Facebook. They didn't want to put their name. Suddenly they realized that if I don't put my first name and last name on Facebook my friends can't find me. Suddenly we have actually gone back and recreated our identities on Facebook actually calling ourselves ourselves because we are trying to maintain our identities. What is happening is that this is turning into a sort of a different country of its own. The reason that this country is very interesting is because it represents 17% of world's population. It is as big as China and India, but it is even more economically sound. It probably has the highest GDP in the world because it represents 86% of the world's GDP. Interesting. As a business person it is fascinating for me because suddenly what you have done is you have collected 86% of the world's GDP in one place who I can reach very effectively using a common distribution mechanism. I can start a service today and I can target the 1.

4 billion people, whether you call it Skype, YouTube, MySpace, Bebo, Facebook, or Google. I can actually serve 86% of the world's GDP. That is going to change the shape of business don't you think. If you think about what that has done, it has impacted our lives every where. How do we consume information? The way we consume information is we now go to the web. Ten years ago the way to consume information was you went to a library or you read the morning newspaper. Now, anything you want to look for you go to the web. We have 2 million searches a day. That is a lot. That means everybody searches more than–at least once a day or at least twice a day. Anytime I speak I am pretty sure in this room–how many of you only do 2 searches a day? There are clearly a whole bunch of people sitting, connected to the internet, and not searching.

I will have to find them, but that is my next stop. If you look at how we consume communication–I will tell you, I remember I used to work, as you just heard. I used to work at Putnam investments. I used to manage money. The biggest technological revolution in our business was that I was allowed to send email outside the company. Really, I'm serious. The first IT guy said: Oh my god, this is dangerous. People can send messages outside the company. That is sort of the whole idea of communication, I thought but anyway. IT guys are concerned about security. The other thing we still were concerned about was: So fine, you can send emails but please be careful about attachments. If you download an attachment, it could bring the network down. Do you remember those days? Maybe I am too old here. There was a day when your IT department, if you worked for a company, said please don't download emails. My god, don't play a video. You will bring the entire neighborhood's network down, not just our company's. Those were the days.

That was not long ago, that was 10 years ago. Today, honestly when I got my first Aol account I think I had to call a friend to say can you please send me an email. I want to check if this is working or not. Nobody used to send me emails. That was a problem. I actually got the account canceled for 3 months and then got it again. Today, if you look–I'm sure there are numbers up there, there we go. There are about 100 billion emails, nonspam emails sent a day. One hundred billion. The fascinating part is that people say there is a physical limitation. There are 24 hours in a day. There are only so many times you can communicate. So when I used to work for the mobile phone industry, people said: Wow you have mobile phones now. Earlier there used to be fixed line phones. When mobile phones came, people would stop using the fixed line phones.

The total number of minutes would stay constant. With the advent of the mobile phone, the number of minutes has actually gone up by 60% on a per person basis. Yes, the shift has happened from fixed line to mobile, but we actually end up talking more than we used to talk because more people have phones now. Email is sort of the same way. We end up talking more than we used to. Probably we have more half conversations on email than we used to. Especially when we look at the teenagers who can chat with 6 people, send 2 emails, listen to music, and watch TV at the same time. They have found a way of expanding the day. The way we are going to communicate with the 1.4 billion people in this country is going to be very different. This is no longer going to be snail mail.

This is going to be communication instantly. I am actually told email has also become what people used to do yesterday. Now you just change your status on Facebook and tell each other what you are doing, but I don't. Entertainment: The way we consumed entertainment 10 years ago was we went to the movie theater. I grew up in India and we had 1 television channel that was now 10, maybe 15 or 18 years ago. We had 1 television channel. If you wanted to watch it, you could watch it. Your choices were limited to 1 television channel. The entire country knew what was going to be happening at that time. You could pretty much guess if there was cricket match showing at a certain point in India. The traffic in the streets would just go down. Everybody would be at home watching television because they had one channel and we all knew what was going on. It was a wonderful world for advertising companies and media buying companies. I have a wonderful choice for you to buy media, it is 1 television channel.

There is one price. The problem now is you have 500 in every country and that becomes a problem. The way we are consuming entertainment now–I won't ask this question and embarrass you. I am sure all of you have watched video on the web in the last week. Yes? Two years ago if you asked that question it would be impossible. A lot of you would have said: Maybe, maybe not, or I watched one a month ago, or I watched one 2 months ago. It has come to a point where–at least I, if there is some video content I believe it is somewhere on the web. I just haven't been able to find it. It has come to that, sort of, it exists on the web. That is sort of what happened with Google. Now that people think about–if you remember the early days of the internet. You went to a party and you were talking about the internet and finding information.

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Then someone would say: I found this really cool thing on the internet. We would say: Let me know what website. You would take out a pen and you would write down the website because he told me the website. Today: I found this cure on the internet. I know and I'm sure I can find it. This is a really good website. Should I tell you…no I'm sure if it there I will Google it–or whatever you do; Microsoft it or Yahoo it. [all laugh] I'm sure that there are people in this room who do those things as well which is good. It is good. It is important. That is how we work right. Now we believe that here is video content on web, and we are going to consume it. I think the biggest revolution in our times that should be very visible will be the change in the entertainment industry. The way talent is discovered. The way talent is represented.

The way talent is shared. The way people sort of create new content, create new programming. The way advertising is attached to it. It is all going to change. We will talk a bit more about that. Commerce, somebody asked about ecommerce. The global ecommerce market this year 2008 was 440 billion dollars and 152 billion dollars in Europe. That is a nice number, 152 billion dollars is real money. More importantly, over 70% of the transactions in the developed world over 1000 dollars are impacted by the web. People may not buy it on the web, but they actually research it on the web. If you were going to buy something that was more than 1000 euros, would you not spend some time researching it? We do. You wake up in the middle of the night, or wake up in the morning, or whenever you do this. You actually research it on the web and you walk up and say: I found it in 3 different places.

Then you go and try and buy it. The bigger the price becomes, the more research you do. The bigger the price becomes then it goes for research to fantasy, but that is okay. Eventually we will all get there. We will all look at bigger and bigger things. It is interesting that that 70% number which is influenced. It is just a matter of time. After a point in time when we start getting more and more comfortable, that we will understand the quality of the goods and the quality of the service. I actually don't want to physically go get it myself because if you ask my wife she considers commerce as entertainment as opposed to entertainment. That is okay. For me commerce is about convenience. I want to get something. I would much rather be able to get it on the web and not actually have to physically go there, wait for a shop person to talk to me, and of course there is the whole process of explaining, do the transaction, give my credit card, come back and find I have spent 1 hour trying to buy 5 shirts.

I would much rather–I know what I want, I can look for it, I can pay for it, and it will show up at my house tomorrow morning and I will be at work. There is an interesting convenience factor. Every time you tell the story, people will tell you: Yeah, but you realize the ability to go there and touch and feel something is so important. I stopped touching tomatoes and touching cucumbers to buy them, honestly. I buy 2 more, they will come to my house, and if one of them is bad I will use the other one. It is okay. I would much rather have the convenience. It goes back to my point about the transition generation. We are the transition generation. We know how life was without the internet. We know what life is with the internet. Our kids are not going to know what life was without the internet. They will not know that option existed. It is sort of–I probably get–this is on video somewhere right? Are you recording this? >>INIGUEZ DE OZONO: We are actually broadcasting.

>>ARORA: Where is the camera? >>INIGUEZ DE OZONO: There is one. >>ARORA: Ah, be careful whatever you say. [all laugh] You guys I am telling you I have to be very careful, my wife could be watching right. I was going to say she talks about let's go camping. Every time she says let's go camping I say when they discovered houses, they never went back to the cave to say let's go spend 2 weeks in the cave. It is really fun without the electricity, the water, and everything else. It is sort like that. Let's go back to the age before the internet. I don't think there are going to be tourist trips of kids going back to the age before the internet. It is not going to happen. What that means is that what we believe today is that both forms are going to exist.

It may actually go away at some point in time. I have told this story before. This is the problem of having videos on YouTube. I will tell this story again and people say: Oh my god, he tells the same stories. I will tell it again anyway because I like it. When I moved to the UK, I bought myself a DVD player. I had a VCR from the US. I plugged it into the wrong power and wrong frequency and it blew up, surprise, surprise. When I went to the store, the guy said: Don't buy a VCR, buy a DVD player. So I bought a DVD player. I went to rent a DVD and I found out that the store only had tapes. There was a small section of DVDs where I could choose from 100 DVDs and they were all classics. They somehow believed that the classics have sustained themselves from an economic perspective for so long that people will still watch them so they can make some money. There is no way they are going to make money with DVDs of new movies because not enough people have DVD players.

That is fine. That was the logic 9 years ago. Today that place is not a tape store, it is a DVD store. They don't even have tapes. Had I walked up to you in this room and said 10 years from now there will be no VCRs and no tapes. You would have said: No, no, wait I'm sure that is a good idea. I'm sure a lot of people have DVDs, but some people will still have VCRs, maybe 20% or maybe 30%. It is gone. How many of you have a camera. All of you have a camera. How many of you have the camera where you put the reel in, you put it on the other side, and then you take pictures. Remember that one? I'm sure you all had one. I have 3. Do you have one of those? How many of you have those? Do you even know what that is? She doesn't know what that is. You know the camera I'm talking about where you put a reel in the (inaudible). Is there a Spanish way of saying this? You know what I am talking about.

You have one of those. No you don't, very good. How many people have one of those in their house? Wow, when in the last time you used it? [all laugh] Come on, tell me, and be honest. >>FEMALE AUDIENCE MEMBER: I don't remember. >>ARORA: I don't remember. Five years ago if I had told you those cameras are going to be useless. You won't be able to sell them for 1 euro. You need a digital camera and that is what life is going to be about. Would you have believed me? Would you? Five years ago would you have believed me? You will not be able to buy those little–what do call them–rolls, right. You won't be able to buy those rolls. Imagine taking a picture, going to the photo shop, getting them to develop it, coming back home and saying: Oh my god, look I was looking away in that picture. Oh my god, look my eyes look red in that picture. It was washed out.

All of these are washed out. I have no memories of my vacation. Remember those times? Even then when people would show digital cameras, they would say: No, no this is precious. This is so good. You can focus better and it does all these things. You remember those around. Could you have predicted 5 years ago that this was going to happen? The question to you is what are you watching now that is going to make something vanish in 5 years or 10 years from now that we all believe is going to stay for longer? It is so much easier to go back and look and say: Look at that, it is pretty cool. I understand that used to happen 10 years ago. What can you think of now that is going to vanish in 5 to 10 years from now? Any ideas? >>MALE AUDIENCE MEMBER: Desktops. >>ARORA: Desktops.

>>MALE AUDIENCE MEMBER: Newspapers. [all laugh] >>ARORA: Wrong building. Yes? >>MALE AUDIENCE MEMBER: SMSs. >>ARORA: SMSs. >>MALE AUDIENCE MEMBER: Mobile phones. [laughter] >>ARORA: For all those guys talking about mobiles, talk to him. [all laugh] That is in that category of nobody knows that. I think you should talk to him. I think you should come up here and talk now. That is a much more interesting speech than mine. >>MALE AUDIENCE MEMBER: Stand alone TVs. >>ARORA: Stand alone TVs, as opposed to stand with somebody TVs? [all laugh] >>MALE AUDIENCE MEMBER: Normal TVs as opposed to (inaudible). The TV receivers. >>ARORA: So those things will go away. I am sure some people have laughed when somebody said the SLR cameras are going to go away. The more you laugh, the more likely he is right. That is it? We have a limited imagination. This is the problem with too much education.

It restricts our ability to think. >>MALE AUDIENCE MEMBER: Hard disks. >>ARORA: Hard disks will go away. >>MALE AUDIENCE MEMBER: Land line phones. >>ARORA: Land line phones, CDs. Interesting. Possibly. Maybe we will just carry a USB around. Instead of carrying your mobile phone, can you just put it on my device as opposed to putting it on a CD. Yes? >>MALE AUDIENCE MEMBER: (inaudible) >>ARORA: Well given the financial the crisis it is going away anyway. The 100 billion dollars moves faster than anything else. >>MALE AUDIENCE MEMBER: Keyboards and mice. >>ARORA: Keyboards and mice. Interesting. I don't know the answer. I wish I did, but all of these are valid suggestions. It is more for you guys to decide which of these are going to vanish. What are these 1.

4 billion people doing? They are forming communities. Of the 175 million people on Facebook, 18 million change their status every day. Do 18 million change their status every hour or so? Eighteen million change their status every hour on Facebook. These are these 1.4 billion people in this new country. This is how they behave. What is fascinating is that we have gone to these self forming communities. They form for a particular topic and then they go away. They form, they help elect Barak Obama, and then they go away. They focus on something else. They focus on education, they focus on health. They get together and they talk about an artist. They get together in a separate community and talk about one of their political passions. It is fascinating. This is how this country behaves. They don't do sampling like Nielsen. Remember those? Any of you work in the television industry? Yes? How do you do research? You put 5000 people with bright lights and put a little box in their house.

You said because these 5000 people did this, 160 million people must be doing the same thing. Sort of, I am simplifying for effect but you understand what I mean. That is not what this country does. Why don't you ask the entire 1.4 billion people and then 300,000 people react one way and 5 million people react the other way? That becomes life, right? Suddenly these communities are forming. That is how they form public opinion. This is Ray Amara who actually sort of is telling my DVD story, my digital camera story, your television story, your mice and keyboard story, and your desktop story. He is basically saying we tend to overestimate the short term and underestimate the long term. It is like me and my boss. He says: When will you get this done? I say: I will get it done next week. I am always wrong.

When I say in 10 years this is going to vanish, it actually vanishes in 5 years. That is chronic. Everybody knows this, but we still do it. Maybe that is how our brains are programmed. This is my view of how things are going to be 2019. Maybe a lot more different things will happen. Probably most of these things may not happen because very often– Somebody said there is only a need for 5 PCs and 5 mainframes in the world, and something like the number of PCs. In that same way: What is going to happen? Sort of serves your comment of the hard disks going away. You made a comment that hard disks will go away. This is in that line. I believe we will be living in the cloud. I don't have a phone…that is not mine. Somebody…it is your Blackberry. [all laugh] I think we will be living in the cloud. What I mean by the cloud is that everybody will have a broadband connection. When you have broadband connection, a lot of your data is stored on the web.

What is interesting if you think about innovation– People talked about innovation. Innovation actually used to happen for corporate in the past. Companies would innovate, and we would innovate products for companies. The PC came and companies bought lots of PCs. Software came and companies bought a lot of software. For the first time what this is doing is actually innovation is coming for the consumer. Everybody has an email account right, a personal email account? Where is the data stored? It is not on your hard disk. It is actually stored on the web. Where is your Facebook information stored? It is stored on the web. Where are YouTube videos stored? They are on the web. Where are your Flicker photographs or your Picasa photographs stored? They are all stored on the web. Guess what, our consumer lives are actually moving to the cloud.

It is a matter of time till our professional work lives are also going to move to the cloud. It is much cheaper to maintain the cloud as opposed to everybody's laptop. People's laptops get stolen and information gets stolen. It is a matter of time until entire corporate databases will move to the cloud so that you can basically mobile where ever you are. Once everything is in cloud, you can access it where ever you want. It is extremely inconvenient for us to be carrying our laptops everywhere. Let me get my laptop…oh my god, I forgot it at home. Oh my god, my laptop's broken I can't show you information. My Word document is on my PC. Or 3 million records of individuals in the UK are on somebody's PC and it gets stolen, then it is in the hands of the wrong people. All those things will go away. We will be living in the cloud. When you live in the cloud it has huge impact on the software industry, huge impact on life, and a huge impact on technology. I think we will be. You guys can work out what that means for our businesses and our lives. We have a notion of creative collaboration.

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Suddenly–somebody talked about Android and the notion of open source. I think the idea of hiding 3000 people, putting them in a warehouse, and getting them to program for 5 years. Then coming out and saying Voila, I have an operating system. Voila, I have new software for you. This is arcane. At Google we are always running what we call a 1% experiment. That means we are always trying something with 1% of users differently to see if that is more effective than what is going on with the 99%. If it works then we introduce it to the 99% by the evening. That is how product development is done now. You start in the morning, you have an idea, you program it for 1% of the people, and you look at the feedback. If it works, you put it to the other 99% tomorrow morning. If it doesn't work, you go back and try something else. As opposed to designing 47.9 million features of which we are not even sure what people want.

It is going to be interesting. As you go along you are going to see that there are going to be tremendous amounts of creative collaboration. The way it is going work is like with Android, you put the entire source code on the web. You can actually program using the code. Now hundreds of thousands of developers can over time program against that code and create applications. Applications even we couldn't have thought of. That is how you do creative collaboration. By the way, that is not restricted to the software world. I will show you a video of Paulo Coelho, who I'm sure all of you know. He actually tried creative collaboration in creating movies. There is a creative collaboration project where there is a woman called June McGonigal who started a game called I Love Bees. The game has 600,000 people registered. The way it works is there are no leaders there is only the game.

The one thing she had which was interesting was that they actually said to all of the people who registered that we are going to call one thousand– they had identified 1000 foreign phone boxes around the world, one thousand physical phone boxes. Now we are going to call a phone box at random. Random out of the 1000, and say 5 words to whoever answers the phone. A few minutes later we will call the next random phone box. The person who picks up the phone must be able to say the 5 words, and we will tell them 5 new words. Then we will call a third random phone box. That was the game and the users won. There was no leader, there were no rules defined, and there were 600,000 people registered in the community that figured out themselves how to solve this problem.

What they are doing now–she is actually doing a new game. The new game is about trying to predict he scenarios of the world. The new game is how we would live if there was no oil. They are looking to find a way that 600,000 people will come up with different ideas and try to paint the picture of the world. There are going to be many such scenarios and games that are going to happen. This is again the process of creative collaboration. I was saying earlier to you that a few companies have started and gotten together. There is a website called Innocenter where they have taken all of their academics and researchers and pooled them. They said it is okay if you running into a problem in doing pharmaceutical research or biological research. We can put our problem on this website and 70,000 academics out in the world can help solve the problem. It is okay, we are comfortable sharing our problem to get a solution.

We would much rather solve the problem than only have 500 or 300 researchers trying to solve it because somebody else could have a brilliant idea. These 1.4 billion people are going to live in a very different world in the way they do creations and they do creativity. Here is a video. >>VIDEO (COELHO): My computer and I just conjured up a new tale. In it I tell the story of a woman named Athena, but I want you to help me bring her to life. >>VIDEO (FEMALE VOICE): I see her as a tall young woman. Not that young and beautiful. Maybe I will do the actor/director thing and cast myself. It should feel nudey. Let's shoot it in black and white in the city. >>VIDEO (MALE VOICE): I see the music like this. No, it needs to be way more dramatic. Let's bring it down a little bit. It needs a piano. >>VIDEO (COELHO): Beautiful, I never would have seen it that way. >>VIDEO (MALE VOICE): Be a part of Paulo Coelho's experimental witch film competition and submit your film at hp.

com/personal. >>ARORA: I think there numbers a few thousand people that directed different chapters of his book and submitted their videos to be part of his movie. He mentioned he went and watched all of them. Then he decided which ones were relevant to the way he had thought about writing the book. He put them together into a 3 hour movie with a few thousand directors. He chose the 16 most interesting ones, put them into a 3 hour movie, and I think it was at the Berlinale film festival. It is a different way of doing it. This is a different concept of creative collaboration. Heinz did an ad for the Super Bowl where they actually had a website where they asked creative people around the world to submit an ad. They were going give a 54,000 dollar reward to anybody who submitted the best ad. For those of you who work in the advertising industry, that 54,000 is a lot less than what normally you would charge as an ad agency to create a piece of work for the middle of the Super Bowl.

A bit of it is scary as well. They got a few thousand entries and they chose the top 15 and put them on their website. They chose 1 which they showed in the middle of the Super Bowl. Then they started another one. Again, a different way of doing creativity; a different way of collaborating around creativity. So, we talk about mobile. We are going to be able to do smart research because there is lots and lots of stuff about us which is getting more and more available. Lots and lots of our preferences are getting understood. The ability to sense what we want and be able to present what we want is going to be interesting. Just so that you understand, in 2003 the University of California did a study and figured out there were 5 Exabytes of information in the world.

For those of you who don't know what an Exabyte is, if you were watching 1 Exabyte as television programming it would take you 40,000 years. There were 5 Exabytes created until 2003. In 2008, 273 Exabytes were created. Just think about the amount of content out there. Some viewed, some good, some bad, some useful, some useless, but that is the amount of content out there. One of the challenges that we are going have as we continue to get into more of this 1.4 billion going to 6 billion digital society. We are going to have so much information that the whole idea, the whole ability for us to find what we are looking for is going to become more and more important. This is not an ad for our existence. This is just that there is going to be too much information in the world. We are going to have figure out ways of trying to find the right information and present to the people as ads when they are looking for it as opposed to us trying to search for it. >>VIDEO (FEMALE VOICE): Since people matter in your pictures, now Picasa web albums also has a new feature called Name Tags. It can help you quickly and easily identify who the people are in your photos.

Name Tags works by using our new clustering technology that automatically groups pictures containing similar faces. Instead of trying to tag your entire photo collection one picture at a time, now you can use Name Tags to label many photos at once. You can enter a new name or select from one of your existing contacts. You can also add Name Tags to your photos individually. >>ARORA: This is interesting. The reason I showed you this is that there is a lot more information technology that is going to get developed. It will start creating sort of a clustering of the right kinds of information. The point of this video was that we are beginning to work on facial recognition. If you have a photo album of 6000 pictures it actually figures out which pictures have your mother in all of them. You can search and say: Which pictures is my mother in? Once you have identified your mother, it then will look for all of the photographs to decide which one is your mother.

It will be interesting to see who else looks like your mother. [All laugh] People tell my daughter she looks like me, so we will see. We will find out if this technology can distinguish between me and her. The point I am trying to make is that lots of different technologies are going to come into play. This will allow us to become smarter and smarter about searching for things. That is just 1 concept, but I think Flicker is coming up with a technology where if you had a picture of the Eiffel Tower, it will go through all the pictures in their database and tell you where you had a picture of the Eiffel Tower. There is a combination of both my tagging as well as global tagging, which allows us to start getting things from a visual information perspective.

There are going to be tremendous amounts of advances in visualization. I want to go to–How many of you guys have seen Street View at Google? You have seen it right. This is, again, a whole different way of thinking about maps and thinking about local information. I remember years just finding–looking at those in the UK A to Zed maps and all those little yellow lines and blue lines. Sometimes I would never know there is a new–if you go somewhere and say a whole new locality has been created but it is not in the A to Zed. Once in a while I will suddenly come to a dead end and the map has nothing. I can see a road but I don't see it on the map. I have had those situations in life, but now I drive around. I go to California and I drive around with my Blackberry looking at how to find my way around.

Sometimes I go to Street View to see it looks like I am on the right road but I can't see any signs. It looks as though, I don't see this building so I must be on the wrong road. There is this whole visualization that is going to become more and more important in the next 10 years. We are going to start thinking of information differently. This whole notion of tagging, the whole notion of visualization that I am talking about is because there is so much information that we have to find ways of parsing it and making it more intelligent for us to consume as users. >>VIDEO (ROSLING): Data is often better than you think. The whole pattern here of the world which is more or less like this. If we look at it, how it looks to the world in 1960. It starts to move in 1960.

This is Mao Zedong, he brought health to China. Then he died. Then Deng Xiaoping came and brought money to China and brought them into the mainstream again. We have seen how countries move in different directions like this. It is sort of difficult to get an example country which shows the pattern of the world. I would like to bring you back to about here at 1960. If we move back again here and we put on trails on them like this, you can see again that the speed of development is very different. The countries are moving more or less in the same rate as money and health. It seems you can move much faster if you are healthy first than if you are wealthy first. >>ARORA: The reason I showed you this video is this is Hans Rosling. He has done this amazing work where he takes thousands and thousands of data points and combines them and does this visualization technology that makes it easier for us to understand. You can see the same information in lots and lots of charts and lots and lots of data but you would not understand this and would not be able to visualize this.

He has created these tools which create this visualization which makes it more and more possible to consume data. One of my personal favorites is perhaps real translation will become a reality in 10 years from now. Have you ever tried to translate something on the web? It is pretty crappy, isn't it? The current translation mechanism is word for word. I know a word, I translate it, and that word has to be translated. That doesn't work because we don't speak in words, we speak in sentences. One thing that is now possible with technology because so many books in the world are getting digitized, instead of looking for a word for word translation we can actually look at the same sentence in 40 different books. These are written in English and in Spanish and we can see how the sentence is translated.

We say: Wow, if the sentence is translated the same way 80% of the time therefore it must be the sentence that means this. If you take that further there are tremendous amounts of development in voice technology. My favorite example is: I could be calling you on my phone and I speak in English. My phone transfers that to text, it understands the sentence, and it converts the sentence on the web into the real Spanish sentence. Then voice technology converts that Spanish sentence back to Spanish. You pick up your phone and it actually speaks to you in Spanish. You are going to laugh like you were laughing at his TV. It is possible. The whole idea and reason development happens is because we believe something is possible. If you don't believe it is possible, then why don't we go home? The important part is that if you believe something is possible then we are going to give it a shot. It is never–you know the people who become innovators and the people who become thinkers are the people who believe at the edge of the standard deviation curves. Not in the center. It is the 5% here and the 5% here who become really successful.

It is never here. If everybody who was successful was in the median, was in the center then I don't know what the world is going to look like. That would not be the center, and then the graph would change. I'm sure there are much more smart people here. I will just show you an example of how this works on Gmail for now. [typing sounds] [jet plane sound and music] [typing sounds] [jet plane sound] [typing sounds] [jet plane sound and music] This is possible today. You can actually now have online conversations in your instant messengers where you can translate languages and communicate with people around the world. Don't underestimate the impact of that. For the first time what we have also done is 1.4 billion people can actually understand each other in their own languages. I knew there was a reason that I did not learn many languages when I was young.

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[all laugh] I just found out. People will think they should send their kids to China and make them learn Chinese or send them to India and make them learn Hindi. You might have to look at this demo and start thinking perhaps all this translation is going to make all of that unnecessary. The last thing which I am going to say is that the whole world–somebody talked about advertising, somebody talked about creating content, and all this stuff. Life is going to become a lot more personal. It is going to become a lot more personal. I have a very interesting example because I very rarely forward things that come to me by email. I had this interesting video sent to me and I couldn't quite understand what was going on. I forwarded it on to our marketing people. I will show you what it was. It was… >>VIDEO (REPORTER): US elections are always close, but the nation was shocked Tuesday night to see John McCain defeat Barak Obama by a single vote.

>>VIDEO (MCCAIN): We sure showed them what a come back looks like. >>VIDEO (REPORTER): For many shock soon turned to outrage as the New York Times revealed the identity of the particular non-voter responsible for Obama's loss. In just a few short days this private citizen has become a national pariah. Fearing retribution, local police took the nonvoter into protective custody yesterday at City Hall. [all laugh] Disgruntled citizens (inaudible) ever since. >>VIDEO (MALE): We were supposed to Barak the vote. What happened? The vote didn't even get Baraked. >>VIDEO (FEMALE): I waited in line 5 hours to vote with an arthritic hip, and this mother (bleep) [all laugh] couldn't get out of bed in time to vote. >>VIDEO (REPORTER): International reaction has been just as intense, even in some of the most remote locations. >>VIDEO (MALE VOICE): (Foreign language) [all laugh] >>VIDEO (REPORTER) This man has become a hero to a small sliver of the population.

>>VIDEO (BUSH): I thank you for your service. I thank you for what you have done for the United States of American. [all laugh] >>VIDEO (O'REILLY): I think that guy is a Factor viewer. He is also a patriot. >>VIDEO (REPORTER): Coming up, how long until we nuke Iran? Experts say it could be as early as Saturday around lunchtime. >>ARORA: That was a piece of personalized viral marketing. It was actually funded by the Obama campaign and sent to people. At the end of this email I could put 6 people's names and it automatically generated this video and created it for those 6 people. Do you realize the power of this? It made me laugh. This is the only thing I have ever forwarded in the last many years which has come to me on the internet because it was personalized. >>MALE AUDIENCE MEMBER: (inaudible) They are doing these kinds of things. >>ARORA: That certainly–I am getting a lot more of these.

Lots of people have figured this out and I am getting a lot more personalized stuff. What is interesting is suddenly this whole interactive medium, this 1.4 billion people, all these people together with the advent of Facebook, YouTube, Google, etc. Suddenly it is no longer about talking to the masses. It is talking to the individual. Again, this is going to change a lot of stuff in the way we deal with today. Whether it is broadcasting, whether it is advertising, there is a whole bunch of stuff. The other reason I am bringing these things up is because I am trying to open your minds and show you the art of the possible today and what that art of the possible means for us in the next ten years.

What are right now small examples of 1 person, or 5 people, or 1 company, or 2 companies doing it. The question is how long before this becomes the way we operate and the current ways we operate are no longer in fashion or become redundant? My conclusion is: "A great wind is blowing and it gives you either imagination or a headache." I'm not sure if the last 30 minutes gave you more to go back home and think about, or you guys are saying let me get out of here I have had a long day. That is the end of my presentation, thank you. [applause] I haven't answered all of your questions, I know. I am conscious of time and conscious of the need to get done. If you invite me back, I will probably answer those questions and not take a presentation next time. >>INIGUEZ DE OZONO: Would you like to have a seat? Maybe we have time for some questions.

>>ARORA: Okay, well then you can ask me your questions again and I will try and answer them. How is that? If people have to leave, feel free to leave. I will not be offended. >>MALE AUDIENCE MEMBER: You said that we will in the future someday–information is going to be stored on the internet. I believe at least (inaudible). My worry is that it is good until nobody can control it. If there is someone that has the control over this information, maybe (inaudible). What do you think about that? >>ARORA: It is good if nobody can control it. If somebody can control it, it is bad. >>MALE AUDIENCE MEMBER: If there is one that can control it. The power that it would provide is so big. >>ARORA: You know, I am a bit more relaxed about it because I just have this long term view. If you create the structures right in the world, if you create society in the right way, people will organize towards protecting us from these adverse situations from happening. Most recently, one social networking business chose to try and change its terms and conditions. People organized against it and protested.

They made them change it back. We get feedback for users and we do things which users ask us to. Don't forget these 1.4 billion people are very opinionated and they are very active. Whilst the internet in business has been around only for, in mass market terms, 5 or 6 years. What is very important is to build the long term trust of the user and the consumer. The day you don't trust Google, or the day you don't trust the service that you use, you will leave. There are actually many alternatives. I think over time what is going to happen is a bit of Darwinism will happen. It sort of happens in every industry, right. If somebody produces crappy products, you can't survive for too long. Consumers figure it out and move to somebody who produces a better product and provides a longer term trust. By the way, we all went to business school. It is actually in the long term interest and in the long term commercial interest for you to maintain your brand and maintain some trust in the consumer. Otherwise it is a slippery road down that path.

>>MALE AUDIENCE MEMBER: It was stated recently that kind of one complaint of the Facebook people who have walked the streets over in New York. Speaking about the future, I imagine that the scale with this (inaudible). I can imagine the effect of the IT construction of the (inaudible). What does Google think about it? >>ARORA: Let me answer the question at multiple levels. I think it is a valid concern. At one level we are trying to build the most efficient data centers in the world. If you pay attention to some of our literature on data centers where we put them near power sources because Larry rightfully has pointed out that 40% of power is lost from the point of generation to the point of distribution. When you plug your charger into your home, actually 40% more needs to be produced for you to have that electricity because of the infrastructure and the way it gets lost. What we do is we move our data centers to the point of generation.

We actually try and save 40% of the cost. That is not enough of an answer right. We also do lots of stuff to try and reduce the carbon footprints and a whole bunch of stuff. The one thing which I think also gets lost in this process is–we talked about ecommerce, we talked about various things, we talked about libraries. Also, please try and compare the amount of carbon footprint you reduce by the fact that I don't have to get in my car, drive to the grocery store, wait in line, wait for the person to serve me, and all the different things. There is a bit of shifting going on between how we spent our lives versus how we are going to spend our lives. I think some of that carbon footprint will equate there. I think the biggest challenge obviously is that as society we are getting more and more automated and doing more and more consumption of power and energy from different things that we do. We have to find ways of consciously watching out for that across the board.

Hopefully when you turn off your TV and use your computer you would be averaging the power. Those TVs go away, right. >>MALE AUDIENCE MEMBER: We have been seeing a lot of Facebook and YouTube. I was wondering what is the (inaudible). >>ARORA: Last I checked Facebook was a self-standing independent business and we are not responsible for their business model. [laughter] I understand your question though. From a Facebook and YouTube perspective, I think as I said earlier, I think the biggest revolution that we are going to see– at least I believe personally we are going to see is the way people consume entertainment. YouTube or sites like that whether it is Juiced, Hulu, or the BBC iPlayer or Sky Player in the UK, they are all mechanisms of consuming entertainment. If you think about it in this online world, what happens is a tremendous amount of users are created so there is critical mass.

Once you have critical mass, then you start working on different ways of monetizing it, whether it is advertising or subscription. I think those needs will be applied. There is a lot of work going on in finding ways of monetizing that sort of user interest and that user behavior. To be fair, some will succeed and some will not. Those that don't succeed will sort of reinvent themselves in a different way and find a different way to do this. It is much easier being in an industry where there is tremendous consumer demand. You have to find a way of creating the right value balance for them. As opposed to an industry where consumer demand is declining and is struggling to find the right balance. >>INIGUEZ DE OZONO: One final question. You have one; we have to move to the other meeting. Anyway… >>FEMALE AUDIENCE MEMBER: Now that we are talking now about the future of the internet, being now in this economic downturn right now, will you foresee– Do you have an opinion on in which way that downturn will impact the internet and its features.

Do you foresee any problem in that? >>ARORA: Economic downturns are part of cyclicality that have happened in society for a long time. There are clearly pros and cons of this. The bad effect is that is seriously impacting consumers. There are GDP declines around the world. Consumers are getting concerned. We are seeing a tremendous amount of consumer and user behavior where people are concerned. This means that they will buy fewer goods and services over the shorter term until people get more confidence and the world comes back to a different economic path. Clearly there is going to be a different consumer demand which impacts lots of businesses around the world. This impacts advertising and this impacts how some of this stuff is funded on the internet.

That is one part of the answer. On the other side, a lot of responsible governments are trying to figure out how to strike the right balance by trying to figure out how we can invest in infrastructure in the timeframe to try and regenerate economies and try and create more jobs. That sort of increased focus on infrastructure is actually going to accelerate some of the developments in terms of providing access to people for broadband or access to people for some of this stuff. I think it is sort of a balance. On one hand it is going to be less advertising revenues across the board and across various industries. On the other hand there will renewed focus on infrastructure. I haven't stopped my number of searches in a day, or my number of visits to various parts of the internet because of the economic crisis. Have you? Your behavior might have changed.

>>FEMALE AUDIENCE MEMBER: It depends. I'm home and I don't have access to the internet (inaudible). We are talking about innovation also. >>ARORA: I think it is a tough balance and there are going to be both of those effects. As it becomes clearer how long and when this crisis is going to revert itself, it will become a bit easier. I think that is a larger problem generally for the world economy, as opposed to specifically for the internet. >>GUEST: Since 1817, we are using the same keyboard and the same layout, QWERTY. Hundreds of new innovations are coming in and we are still with a keyboard. When I see the keyboard go, then I will think that we have made the biggest breakthrough probably in more than 140 years. How do you see that going forward? (speaking together) It is unbelievable that we are still with QWERTY being used for 140 years. >>ARORA: You know why the QWERTY keyboard was designed? It was designed to slow down so that the mechanical typewriters could actually work. They are actually designed to slow down our typing.

We all go and teach our kids. My daughter has learned it much faster than I did. So you are right. There are alternative keyboards out there, but for some reason they have not– because this whole problem of legacy and this whole problem of compatibility have caused the fact that we are not evolving to that. I agree with you. I wish I could find a better answer. >>GUEST: Do you see that talking to your machine, talking to the mobile can really type and say anything? >>ARORA: You can. With my Google phone, I can speak to it and do a Google search. Especially useful when I am driving or when I am tired and I don't want to type on the keyboard. Again, this evolution of voice technology is going to come. As it becomes more and more relevant, then we are going to figure it out. The one big thing which, and you were saying we have talked about this for a long time, so why has it not come.

The one big thing that has happened is that most of the computing side and the storage side. It has become a lot more efficient and a lot cheaper in the last few years. It is exponentially better. As you can have huge databases of people's voices from which to access and recognize, it becomes a lot easier for my phone to recognize 20 different accents and voices. As opposed to earlier you have to say it in a special way. The way that you say my name and it finds me a search for no cash as opposed to my name. [laughter] >>INIGUEZ DE OZONO: Thanks very much again Mr. Arora. A fascinating presentation. Will you join me in applause again? [applause].