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Female Speaker: And now, I am pleased to introduce our moderator, Brent Schlender. Brent has had a distinguished career in journalism, spending really just about 30 years having spent 10 years at the Wall Street Journal and then the better part of two decades at Fortune Magazine where he wrote literally dozens of cover stories on the leading companies and business figures of high tech. Among his interesting feats, Brent was actually the first person to persuade Steve Jobs and Bill Gates to appear on the stage for an interview together and this was back in 1982. In the spring of 2008, Brent started a new career. He is a writer and consultant and is currently working on a book called Founders, Keepers, Lessons in leadership from Americas greatest living entrepreneurs. So lets give a very warm Churchill club welcome to Brent Schlender. [Applause] Interviewer: Thats nice to see such a big crowd here. I havent been to the Churchill club in a while in fact; I havent been to really many events like this in quite some time. I need to explain before we get started why I, I guessed I have to say bristling with semi conductors up here. I have, this is not a blue tooth headset for the phone calls that Im expecting to come out my way up here, this is a cochlear implant and its made by advance bionics and so that helps this ear. I have a state of the art phone act auxilium hearing aid here in this one and is connected to a blue tooth receiver here called an icon, these were all brand new things Im really glad that they, that what happened to me happened to me now so that I have a Bill is wearing a really handy toy for me and its called a Lexus, its not made by the car company but its a wireless directional microphone, in that way, I will be able to hear him. The reason I need all this is, you know, some of you might not know this, but I had bad case of meningitis, endocarditis in 2005 and lost, oh virtually, Ive lost my hearing and so, its always been hard for me to do this kind of thing but Im really, you know, how can I say no when Bill asked me to do this and its really good to be back and its nice to see all of these of faces that Ive seen before for so many years and its just nice to be here. So, thanks for having me. [Applause] And also, this is meaningful to me because I have two daughters, ones Fernanda, shes 22 years old, she works for Light Screen Ventures and Greta, my older daughter, 24, works for Hewlett Packard and so they are official Silicon Valley people now. Well see what happens next so. But anyway, Bill here is one of my favorite victims as a journalist. Its always fun to discuss this anything with him. Hes also, the kind of person that surprises you far more than you will surprise him with your questions, hes, to me I think he has the most incisive intellect of anybody in the valley. Every time I talked to him, I come away with some profound insight that I never would have had otherwise. There are many smart people in this valley but, Bill seems to put things together in a way that is a just un-rivaled. I find it just endlessly fun to talk to him just because of what Ive learned. Hes also done things on his own terms and I mean, from the very beginning, which I always admire people to do that piece. When he got tired of the traffic here in Silicon Valley, he moved to Aspen. And of course, whos going to say, no to Bill like he wants to move to Aspen. But then if he got bored there, what happens? He persuades Kleiner Perkins to create a cushy job for him back here so he had come back and what does he do, he moves to Marin, so the traffic is even worse. But he doesnt commute by helicopter, he still drives. So, and hes always done things on his own terms and has put his own distinct stamp on. He also recognizes some of the greatest technological trends when there are really just mere wisps of possibility. He sees things sooner than anybody I have ever met and its. That in itself makes him somebody to follow, at least to follow his mind. Hes not a futurist though. Its not, that he just is satisfied with thinking something new, where recognizing something that could possibly happen. He rolls up his sleeves and he gets down in with into the guts of it, tries to figure out how to make it happen, that happened to software, when he was in college, it happened at Sun Microsystems. Hes the only coder Ive ever met who designed his own dream microprocessor that would be as good as his code is and so thats a, its a remarkable array of skills and talents that he has and hes really unique in that way. Theres really nobody like him here. Im saying all these nice things but what can I say, theres some being a genius like that, he has a few kind of strange ideas too that in my case, Im living proof that they dont make any sense at all. He once told me, I noticed that hed lost about 50 lbs. When was this, like 10 years ago? Interviewee: 2000, yeah, 10 years ago. Interviewer: And I said Bill, how did you lose that weight? And he said, Oh, I got a diet. And whats the diet? And he said, well, every time I get hungry, I drink a cup of coffee. And you know the guys wired, definitely wired all the time. It worked for him, its never worked for me so, well, but, you know, you do have a future of diet consultant too. So anyway, during the next hour, well learn a lot more from Bill, about himself, and well learn a lot about possibilities of this environment we lived in here in Silicon Valley. I have a lot of questions for him and we cover a lot of ground, hopefully were not back too much, were more interested in the future these days because its a challenging time. And I would really appreciate it, for the last half hour, we are going to throw to the crowd, ask questions and be aggressive, ask lots of questions, and ask about the future because you dont often get a guy like this up here who actually make sense of whats going to be coming down the road, so, anyway, thats what were going to do and this is Bill. So, lets get started, one of the first things I wanted to ask you is about the past, and thats related to the famous book, Outliers that Malcolm Gladwell published last fall, I guessed it was, Im not so sure Id buy everything in that book but you were held up as sort of a poster boy of, you and the Beatles, they were another good example of somebody who is a living example of how, if you spend 10000 hours grinding away, trying to learn something, thats what it takes to get good enough, to become a huge success at anything. To me that kind of trivialize your abilities a little bit to say that you were nearly a product of 10000 hours of programming. But there is some truth there, Im just curious, you know, that 10000 hours got you to the threshold, you know, the threshold of achieving great things. But what took you the rest away to do to rewrite UNIX, to come up with the TCP/IP protocols to make networks functions, still used this protocol today. What was it beyond those 10000 hours that made you special? Interviewee: Well, first of all, thanks for the all too kind introduction. Its definitely the case, I arrived at Berkeley when Ken Thompson whod originally written Unix was there for a sabbatical year from Bell Labs and what Unix was at the time was a system which was very nice but crashed a lot and so I was the person who lived several miles away in Albany and when the machine crashed, Id have to drive to school to bring it back up. So I got really tired of that, and you know, decided to spend my time trying to keep it from crashing and even get it to reboot itself when it crashed and fix its file system which was something I really wasnt done at the time. It was manually fixed. So I guess I spent a lot of time in my career taking other things and working with people whod done great things and helping them perfect them and you know, would do what James Gosling and java was the same thing. James had a really great program as it is but it wasnt fully worked out and so I came in and worked really hard to try to help him to finish it. When I started doing this stuff with Unix, I wasnt a very good programmer, a lot of the things, if I looked back at them, were badly written but spend enough time on them to get them to work well enough to, you know, they had very, very few bugs on them and I think thats the, the thing is, you know, you first that you achieve in your craft the ability to do things so you can build them at a certain level of quality then if youre lucky, what you do, is you get something thats really worth doing that you can apply that too. Because whether youre doing something thats just slightly better than average, youre doing something great. Theres this 99% perspiration that you have to do and I think once youve learned that, that is a skill that you realized how much work it really is to get it right, and you just dont give up that. Then you have a chance if youre given something that can make a difference, that you have a chance to do something great. But its not, you know, luck is opportunity needs preparation, that kind of thing. Interviewer: That was a pivotal piece of work that reached beyond, far beyond you in your academic career. Did you realize the significance of it at the time? Interviewee: Why I think the most pivotal thing was, there was a time in 1980 or so, when, if you went to the scientific literature it said that the TCP/IP protocol wouldnt work and it also said etherternet for a technical reason because of CDMACA, you know , was worst than token ring networks or something, so the two things which we now have nearly ubiquitously, were both being challenged whether they were the right technical underpinnings for the network internet as we know it. But what was wrong with them wasnt the nature of the IP protocol or the nature of internet, what was wrong with them were the implementations of the software and so, since that the software we had, we just started digging into it and figure out whats going on and it got to the point, you have to write this in assembly language and you have to restructure everything and youve just got to stay up all night a whole bunch of times and you really have to work on it because there was no reason that couldnt work. But it was extremely unlikely to work unless you did it right and nobody has ever written down how to do it right, Im not sure anyone had done it right so you just have to figure that out and so that made a big difference because that meant the internet suddenly had an implementation of the protocols that worked. And that was what I always call, it works option, you know, when you buy most things, they dont work really, I mean, they kind of work enough to be sold maybe, but to really make them work, so their really rock solid is, at least 10 times as much work as getting the work at all, and thats the thing most people dont put in, I think, why those protocols have stood up now, is that theyve had that kind of quality of limitation for so many years. Interviewer: Is that a discipline that you still see in Silicon Valley or was it harder back then and so you had to be more disciplined? Interviewee: It was definitely harder in that, there was a hard limit, you know , when we were doing the PDP 11 code, the machine had 64 kilobytes of data and 64 kilobytes of program if youre lucky to have an advance machine and you had to fit in so if you want to add something, you had to take something out or you knew exactly how to write the C codes so it generate the minimum number of bytes, you know, the switch statement with more than three cases was bigger than an if statements so you use if, just to save space in the computer. What happened I think was for programmers when suddenly we had 32 bit machines, some constraining discipline was lost and that really. I think led to a decline in the, people whod programmed before that were better at writing smaller cleaner things and more reliable things and that people who came afterwards. Interviewer: You know, one of the things I want to talk about while were here, is what really is going to be the role of Silicon Valley going forward where, weve been at this sort of phase, I sent you this list of eight different stages that I identified in the Interviewee: I hope this is not a quiz Interviewer: [laughter] Yeah, in the life of Silicon Valley and one is sayonara analog tubes, you know that when Fairchild started the semiconductor business. The next phase was , watch out Boston, this is when memory chips and hard drives began to be developed here, the third phase was with a microprocessor emerged and we began to get a sense that you could build a personal computer, the fourth stage was the actual personal computer revolution taking over the entire IT business, the fifth stage was, add to that the internet and computing becomes a form of communication that sort of, to me marks the half life of Microsoft because it adds dimension that just wasnt anticipated with what Microsoft built, number six was is hard on my business, its web 2.0 and the user generated content and as you can tell, were kind of getting closer, getting further away from the rarified air of military electronics and closer to the mainstream of co consumer electronics and so that brings us to number seven, the ipod and Silicon Valley usurps the real design standards for core consumer electronics and you can probably give Silicon Valley credit for HD TV too because the LCD monitor was really what, is a computer in LCD TV is a computer and its, so thats the seventh stage of Silicon Valley. Each one of these touching and transforming another industry, now were at the beginning of something new, and instead of finding better ways to target ads on peoples computers, which to me is not very simulating technology but I suppose it pays the bills but what do you look for in your role at Kleiner Perkins now. What is the role of Silicon Valley, what were going to do with all these IQ, we have more IQ than ever before. Interviewee: Right. Well, I think that what you see in that whole transition from well it transistor being invented through the, these waves of commercialization you know, they just the impact of Moores Law on what kind of devices were affordable and ultimately the application to devices that are radio connected. The people at DARPA saw this in the 50s, they saw that the computer was a communications tool and the implications for the military and did a lot of this work. And what that is, is really the magic of semiconductors, you know, someone, I read something someone saying about how excited people were about super conductors but in the reality, semiconductors are more exciting than superconductors because, look at all the things they do, and weve driven it down to, you know, people are talking about 32 nanometer, 320 angstrom. Were getting close to some limits here but not all the way there. Weve got probably another five to six years, another factor of 20, 30, 50 x, fundamental improvement if we could break through a couple of bottlenecks, which takes us to pretty amazing devices. But thats still within the context of most of those things where information technology but semiconductors are also what we used to convert light to electricity, solar. Semiconductors are also LEDs that make light, semiconductors can take heat to electricity like thermal electric materials. So there are other very directed adjacent applications to energy into the whole green revolution of what weve learned to do in Silicon Valley. Weve also learned how to build things and we can think of ways of repurposing the kind of things we used to pattern and construct these fine structures to do other mechanical devices like NEMS. So the base of being able to use the ability to build things at this scale and to use semiconductor and micro mechanical and radio kinds of things like we do, I think goes beyond the traditional extrapolation that weve really seen which is relatively predictable, you know, its like the web was predictable. Its a question of who have invented but that it would happen was known because it had been envisioned a long time before, what was missing was the computers that were cheap enough and widespread enough and the infrastructure to allow it to naturally emerge, right? And so the same thing is true now. These technologies have their natural application and so are of some of these other things, but theres also going to be some, I think, really remarkable innovations. We looked broadly at green technology which is what I do now. We see physics, we see chemistry and we see biology all applying, the way you get the best adventure opportunities I believe is in the ones that are based on physics, not only because its what we did in the valley and we have this talent pool but because when you can just do more things with solids, you know, you can lock things down in the solid, you can arrange the atoms on a solid, and why is you can on a liquid, certainly within the gas, the gas just wants to mix, I mean, what can you do with the gas? Well, you can create pressure here and less pressure there and you can mess around and you can transform things little bit but you have to so much you can do with solids and semiconductors are of the solids that we know , you know, probably the most interesting, I mean, the next most interesting with carbon nanotubes and some of those are semiconducting and those are probably the more interesting carbon nanotubes but you know, so we see an enormous opportunity with the now fin film and other fine skill technology that have been developed in the valley to apply to fields beyond information technology and to the extent that the valley is central going forward. I think it will be because of that adjacency, we dont have, theres innovation that can be done with batteries but thats electrochemistry. Theres innovation that can be done in engines, thats thermodynamic things you know, and we looked at those ventures as well but they dont tend to have any clustering around the valley because their not as high tech and we just dont have the intellectual community behind those but semiconductors are so important that I think the valley has a real role to play as they become applicable to these new needs, say the opportunities, these are needs for renewable energy and other clean technologies. Interviewer: What about the skills that have been developed, in fact if you looked back in hindsight, it seems all, you know, it makes so much sense the way Moores Law has allowed and triggered the changes that if transformed so many other adjacent industries that through the years the electronic components in better programming skill but its a business to marshall the resources and define a market and make it happen, and then, on top of that, to compete against what exists and overthrow it. Thats basically what happens here, so thats the goal, is to overthrow something with something better and so were talking about these opportunities, is their a universal skill set that Silicon Valley has just by having been through down that road so many times or is it a new kind of world when you stepped aside from the electronics and go into these other adjacent areas. Interviewee: No, I mean it definitely is a skill set because we see it and from trying to build a green tech ventures say in Pittsburgh or in Ohio or something, theirs is not a talent pool of people who built and work in small companies to bring some of a large companies more difficult for them. I mean to the extent that stuff is adjacent is also possible to get the stuff done here and a few other places in the world and get this stuff done overnight and you can get this done by people who are really highly qualified. The problem is that, we have challenges beyond fin film semiconductor materials and software, those things are tools but laughed in the program for somebodys problems are much larger and so there are skills that dont exist in the valley and there are ventures which dont make sense to be here so the centers, I think their would be multiple centers of innovation. We see one in sort of Pittsburgh, Boston, New York, Atlanta Corridor, theres a lot of technologies there and in Germany as well. Theres a lot of really good science in areas that this turn, not here in the valley. Interviewer: What kinds of. Interviewee: Well, thermodynamics and chemistry are much stronger in Germany say real innovation where you know, their stuff thats in between the sentences and the textbook, you know, they say this and I say that and that theres, you know, something is obvious once you know about it, that would be the chapter in between those two sentences is missing and theres the kind of people who can think of that, given new materials which is really what, I mean its thin film materials for different reasons not because their semiconductors that bring these possibilities to these other disciplines or just out of the box lateral thinking that you know, we have a few ventures or things that could have been done 50 or hundred years ago. The technology isnt new, the opportunities new, maybe there wasnt a market for them but you say, I could have done that a long time ago, because some of these disciplines came from say, statistical mechanics in the 18th century or something, 18th or 19th century. Interviewer: Let me ask your judgment on something that was just in the news yesterday. Its a little bit afield from what weve been talking about but because it involves one of the key companies in the valley, Im just curious what youre take is on this and I remember writing stories, I wrote many stories about Intel over the years and I remember hearing Andy Grove and Craig Barrett, now Paul Otellini saying the same thing, invest in a down turn so that youre ready when you come out of it and they just announced yesterday seven billion dollar capital plans to, I dont think they are going to build new fads but their going to outfit, buy new equipment to drive the feature size ever smaller. Is it different now? Is this a bigger risk than what theyve taken before, what Im basically asking you the macroeconomic question, how bad is it really, from your point of view? Interviewee: I think its probably a smart thing to do. There is probably one extra warning sign right now and that youve probably noticed that the power consumption with chips hasnt gone down very much and because the voltage is now flat and that means that with the growth of the market being mobility, its harder to put those transistors to work because theres a limit to how hot your phone can be on your hand and you can, if it dissipates the power it turns into heat and all it can do is heat up the case and ultimately heat up the air and so these limits and so they dont have a lot of competition and the semiconductors industries in a state over capacity but they can definitely put the hurt to their competitors if theyre at a technology node thats better but you know, the utilization of that, depending on what happens could be very low so its definitely a gutsy move and you know, Im glad to see Silicon Valley moving forward but thats a lot of money but thats Moores second law, the fabs cost exponentially more. That the thing that was going to happen is that, you know, there would be a disruption at some point where theres a technology like the tube guys were replaced by the transistor guys, theres probably a disruption but you know, I personally thing that kind of transistors and semiconductors we do now have at least, probably another five years of good strong progress and then if the curve starts to flatten out, you know, another five years of incremental , weve got probably another decade left before we start hitting some real physical limits and the question really is, if theres a technology that follows it and Ray Kurzweil always talk about this, it just the technology that follows it does it happen before or after youve flatten the curve, I mean , it becomes more imperative if the curve flattens but history has always so kind as to wait for you to have milked every last gross margin dollar out of the incumbent before bringing along the successor but we dont see a lot of plans, I mean, for trying to do something differently still very, very difficult. Its different, difficult to pattern, theres so much investment and the equipment is difficult to pattern things and any other, only biology does, you know, patterns things as, in that skill its you know, find a way. And we dont really know how to apply that to these things, so I think its probably a safe investment as long as interest rates are low, you know, because if they can finance it really low interest rate.. Interviewer: You know, I worked for many years in the print media, the print media is in the same boat right now and it happened so quickly that the music business was in, when the Mp3 came around, I mean, weve seen many, many examples ever since the horseless carriage, you can go back to many, many cases where new technology either render something obsolete of just changes the equation completely. I dont think Im biased because you know, Im one of the 26000 journalist who in the past year decided to leave the business because the jobs just werent there. And we can thank the march of progress for that. You are a technologist, youve been a Cassandra sometimes and complaining about the unforeseen consequences of what we invent, you know, its usually among the lines of computer viruses of bio substances that perhaps couldnt be totally controlled but it also, just the same thing that is wrecking my industry, its made the fact that recorded music is actually of lesser quality now. When you go to a recording studio up to your professional musician you cannot get as good as sound recording now as you could 20 years ago because of the shift to digital and also the fact that the target of the ultimate music product is low fidelity basically so we have all these progress but it comes to the price of losing other things and I just like to hear you hold forth on that because youve always been among the first to say, wait a minute, lets not go down that road blindly. Does that make sense? Interviewee: Yeah, I mean, we dont have television in our house, okay, because I just do this turn it off and my kids are on the internet so during the election cycle my 15 year old son was following the election very closely and from the site 538.com, and he knows more about the demographics of the America voter than probably any newspaper reader every learned because he would look all these, hes learning statistics you know, by learning through that site so I think , you know, theres a bunch of sites that are on the web where you can get that kind of information where its very specialized or very..you know, really interest to somebody who cares to be interested in it but the really, its really scary what you see happening to institutions like the New York Times, I mean, not that they havent had their share of management problems, but where are we going to have a paper or record something we can believe you know, but, you go to the web, you can get lots of information. Why should you believe it but times has had their own problems with this but I think thats the what, its really nice to something like Wikipedia, thats the shining example of being able to construct something which you know, you have confidence, I used it as a research tool in the work I do, you know, generally I can say , it I want to learn about, because I didnt know anything about thermoelectrics, I can just type thermolelectrics and there is a, its like a Britannic of quality article on thermoelectrics but its up to date with footnotes and cross references so at that level, we dont have, I dont know how were going to get the good quality, whos going to do the good quality reporting of the things that are happening in real time because its just easy to write, to scribble about anything and whos going to pay for real journalism, I didnt expect the internet to have this negative, I knew it would hurt the classified ads you know, that was before ebay and we didnt, I showed it to Will Hoechst and we talked about it but we didnt think of starting ebay but I mean, we knew that would hurt the newspapers but I didnt think that send, Im from Detroit, my hometown newspaper is only on the web. We only had Sunday or something, I didnt expect it to have that big of a footprint, so quickly at least. Clearly, once we all had, sort of digital books or you know, the Kindles with the nice bigger flatter, the ultimate Kindle, that would be better than a newspaper, but we dont have that device and yet, you know, the newsprint seems to go away, so its distressing because I think were going to lose access to the quality but if people are willing to pay for the quality, how do you get it back? I dont know. Maybe this have to be non-profits, kind of NPR like to get the basic news out. Interview: Well, I had a couple of questions here that I dont want to glum here, heres something Id like to ask you about, did you get your Phd? Did you ever get it? Interviewee: Honorary Phd. I never graduated. Interviewer: So, at any rate, I think it be pretty easy to quantify that there are, you could even probably even ask to made, how many more Phds and well educated people in the areas of technology and hard sciences engineering than never before. The cumulative IQ in this valley is greater by far than it has ever been. Is this place making an efficient use of that? Interviewee: I think it depends on disruption, I mean, if you saw the valley pre 1994, 95 when the web came out the amount of software innovation had declined dramatically, Microsoft in the sense had kind of killed it by I dont think they managed their ecosystem very well and so all the profits went to a few companies and what the web did is it disrupted it and allowed almost anybody to create an experience in the website and you know its taken a little longer, we thought we had java based browser that could do what my Google docs does now where we had that in the late 90s but we went to you know we didnt bring that technology into widespread use until recently but that is allowing all sorts of innovation but you know and I think we need similar disruptions you know like the iPhone ecosystem is probably the next example of a disruption so then you have got about fifteen thousand applications in what is it six months or eight months or I dont know what the number is and there is unleashing of creativity there I think you know the device is still kind of limited in its battery life and the number of people that have it but you can start to see there is a new opportunities for ideas to flourish, I think I have seen this net book phenomenon become the you know becomes more of a tablet kind of computer with very tactile, the very tactile kind of interfacial see it at an equal flourishing after all at some point you want the computers to be thinner and the keyboard becomes the thickest thing so obviously the best thing is to just get rid of the keyboard travel and just go to a touch screen and maybe some voice and that will allow a much more whole new set of applications to be developed and a lot of educational materials as well you know so I think you know that the candle too pope are marching along towards those things are getting to be, its still too expensive four hundred dollars but you know that cost should come down and the display and everything is still too expensive. Interviewer: Well I am going to ask you one more question and I think we will probably open it up to the crowd for some questions because I am sure there are lot of them out there but I want to ask you to put your Cassandra hat on, just for a moment -. Interviewee: So whatever I say will be ignored, before I say I guess thats -. Interviewer: When we talked about doing this session a few weeks ago we were talking a lot about, with their Silicon Valley and with their innovation and what's Silicon Valley is how prominent will it be and vis-a-vis the rest of the economy and I said something to you about the fact that well that motivating force between Silicon Valley up until now is mainly been greed you know its just to make money to I mean there is a lot of idea whereas a lot of you know technological idealism here but the fact the matter is its a mill for money its created in such vast wealth so quickly and you said to me that you didnt think thats what is going to motivate the next wave of history of this place and of the you know the innovative industries that its going to be more defensive. Interviewee: I also dont think it works very well, I think what I find is that you know when people are about to leave and I would have an exit interview with them and talk to them about where they were thinking about going, if they were going some place for just for money I try to talk them out of it because if you go just for money and you fail you got nothing but if you go for something because you really are passionate about it and you fail at least you still have the idea of the passion and if it succeeds you have got both so it seems to me there will be a looser, a loosing proposition to make a decision based on the dream of this great wealth to go to a start up and I just dont, I just dont believe that thats I mean I dont have any taken a survey but I just dont believe that the people who did really outstanding things in the valley were motivated that kind of been a motivation is too hard to get these things to success too much work, you know I just dont think thats it so I think going forward there is these incredible needs we have now its not just opportunity you know and clean energy in dealing with the environment and dealing with peoples legitimate aspirations in the carbon footprint and health the oceans and all these kinds of things that we are working on and the people are really passionate, the entrepreneurs we see are really, really passionate about how they have role changing ideas and you know they need money to do it, they want to be treated fairly I mean its you know the last digit is the percentage of their ownership or the company isnt the decision that we decision is how can we make this dream come alive and we got to get a lot of people to help to make the dream come alive and we got to spread the economic benefits and bring enough, especially bring just kind of bring enough investors to the table to really who are patient enough to stick with the things because the things take a really long time I mean there are energy investments more of the life cycle of probably the life science investments that we have historically done. The IT investments at the internet especially we had such quick returns but if you are making a drug treated disease and you got to go through all the trials or you are building some new solar kind of thing and you got to build the manufacturing line and you really got to take that manufacturing to scale, you know the missing part of our economy now the financial does in a way they we got to bring our manufacturing base back thats a lot of work, it takes time to put a line together and if you get involved in one of this interest to do that you are going to have to have some patience and there maybe big rewards but there is just a hell of lot of work to make it work and its very rewarding when you see it and it actually makes something or does something, you get that kind of jollies from writing software but I dont personally as much as I use to write I would much rather work with people that are trying to build something that will make a difference so I dont buy that greed thing I am sure there are people who do that and maybe some of them even succeeded where I think its a dangerous, you have to take yourself down. Interviewer: What about fear I mean do we have a lot to fear that we have to innovate solutions to what we are afraid of? Interviewee: Well I think we are I think we should legitimately be worried about some of the environmental consequences I mean Al Gore spends time at our partnership and you know the things he brings on often very happy news you know but their truth but you know he is working with us on solutions too so we sit down and look at you know impact equals population times you know dot, dot, dot times technology right so thats the one thing we have the most control over right so but how much better would the technology have to be with a steady state population we want to reach with the environmental impact we think we can have then it is to date a letter everyone writes to a you know not try to hold the poor people in the world down, it has to be at least ten time better achieved all right and thats just my simple back of the envelop math so that means the problem is if we have to make everything ten times better we make ninety percent of it ten times better, the other ten percent is half of what's left okay so in some sense we have to achieve a net of ten X better we probably have to start with a gross of twenty X better and to do twenty times better than what we do today and some cases isnt possible. You know like if you do, if you just took the engine in the car its converting you know twenty or say twenty percent of the energy to usable energy, the energy in the chemicals to usable energy, the rest of it goes to heat, a lot of that is a function of you know car you know you have pay delta T over T and you cant run the temperature up to get delta T to be high because when you get oxides and nitrogen all of these other problems so at best you could four times better and in practice you maybe can do only two times better well then you have to change the problem right you have to make the car lighter or you have to us video conferencing, Amory taught me if you cant solve a problem you make the problem bigger because if you draw a bigger circle and you start to see several systems that you can work on it ones maybe you can learn, you can solve the problem if the hardware is too slow get a better algorithm. In the last fifty years the software has improved on hard problems as much as the hardware has, in fact the software is improved and the hardest problem is more than the hardware has despite Moores law so but to go and achieve you know sort of a twenty X footprint reduction in what we do as the human community is a big task but that you know so what I do at KP is we look for I look for ten Xs and say can I find something important where I have a shot on goal to be ten times better and if its one on three, one on four channels we will put money on our seed stage idea a lateral often lateral thinking idea to try to do that ten X expecting say three times our of four to lose the money and you know maybe we will find some other opportunity that isnt a ten X shot on goal in looking at that but if we are not trying to do if we are not trying to go get that ten Xs, if we settle for ten and twenty percent there is no chance we are going to achieve I think what we need to achieve say in the next twenty to thirty years we have all the people you know here in the valley but fortunately Chinese and the people in India are training lots of engineers and scientists more than we are in fact and we need their brains because we you know its going to take a lot of lateral and disruptive thinking and a lot of really hard straight forward work on I think its mostly going to come from physics just broadly but also from chemistry and in the area of health especially from biology and you know we thats a total we havent had that much change in most of these disciplines for a very, very long time so there is a lot of great but we can find a lot of them, we havent found enough and so that makes me worried that we havent found enough but that we found enough to keep us busy if not enough to solve the problem thats all we can do as you know as long as we have enough of these sufficiently disruptive things to keep us busy and partnerships can only go so large than we are doing our part so -. Interviewer: I think we will open it up and let the crowd ask questions they will be carrying microphones around and I think Bill will -. Interviewer: I will repeat the question if they cant hear them. Mernol: Yeah hi my name is Mernol and this is a question with reference to the discussion both of you had and I would love to get comments on it about the newspaper industry and the destruction, I love my Wall Street journal print that I get in the paper you know in the morning cover to cover I read it everyday and just for second I would love to get your perspective of the devils advocate around it is what do you think about you know Josephs Schumpeters Creative Destruction Concept where you know a lot of people argue that thats what Silicon Valley thrives on and thats what brings it out so I would love to hear that because I love my newspaper again too so and the print version so do you guys think its good eventually for it to go that way or that this is not a good thing thats happening? Interviewee: So the question is about has creative destruction has witnessed in the destruction of some of these publications like the Wall Street journal what do we think of that. It seems inevitable I mean that the newspapers will not be printed on paper I men I enjoy flipping the especially when they tell you can you have any electronic devices on the airplane I have no trouble reaching into my carryon bag and finding something on paper a magazine or something but you know its, you know I use to love the thump of the New York Times when they went national twenty years ago against my door in San Francisco so I could read it before I went to bed I mean that was a really exciting thing because I couldnt find time in any other time of the day but it just you know I dont think there is any chance that papers will for any length time be printed on paper the way they are so I take hope and you know my fifteen year old son one morning I thought he was sleeping in you know when its in a snow storm, I think it was snow day they didnt have any school and I went up to his room and found him in bed with his laptop and he was reading the New York Times on his laptop you know and I mean that maybe not typical for his age but he has access to this information so I dont know how the economics is going to work but you know the Israeli election was just today or yesterday whatever and I was reading Haaretz you know I am reading an Israeli newspaper to read about the Israeli election I think thats really cool that I can read the financial times and these other things I mean I would be happy to pay for them I mean I agree with Walter Isaacs and I would be happy to pay for each page of that newspaper and there should be a system where we can pay one cent every time, we can volunteer to pay one cent every time we read these publications just let me do it voluntarily its like a pledge drive but I mean I dont any other way to thats my only contribution it was a penny a page you know I think that would be a great campaign. Susan Kuchinskas: Hi Susan Kuchinskas, can you what would be the best role for Sun Microsystems in this new green innovative world? Interviewee: So the question is about what would Sun do in this new green world. Well when I was at Sun, I left Sun in 2001 or 02 I dont know 2002 I dont remember five to six years ago and I havent followed the company really since I left but when I was there we were working on these highly threaded microprocessors that were much more energy efficient and I know the percentage of power in the country thats going through data centers and stuff is quite staggering so I know Sun had some good research in that area and certainly building lower datacenters which are much more energy efficient, they seem to have a lead and I know some of the things I was working on before I left still havent been shipped yet because there were chip developments that take a very long time. So I hope they take advantage of some of that technology to reduce the amount of electricity that these cloud computing farms use because the amount of CO2 we are belching out, where we are doing our Google searches and everything its quite substantial. Shannon: Hi I am Shannon, looking at the problem of water as a problem of oil that you alerted too earlier have you seen any headway made into the problem of conserving water looking at for instance I have seen systems that take sewage turn it into water just which is not palatable but or desalinization water conservation, water systems, storage systems any type of technologies in that to preserve and purify water. Interviewee: Well if I could draw this, take that circle and draw it bigger in the Amory Lovins style I think the problem really is the bigger problem is sustainability of our agriculture you know its available the kind of fertilizers we use and the consequences of those, the fact that we are likely to have a shortage of phosphorus to make these fertilizers I guess Morocco will be the Saudi Arabia of phosphorus this is what I have been told I mean we really cant continue to mind the top soil and use water that we it becomes unreliable so we have to find a way to make our agriculture much more sustainable and thats a you know why cant we accrete carbon at the soil and at the top soil build up is suppose to stripping it away well you know people looking at the stuff called biochar which is what the Aztecs did to make the soil in the jungle in South America or productive as you basically paralyze biomass and you end up with not completely combusting and you put it in the soil like a , its like a charcoal brick but a little less carbonic and you create like a community of organisms in the soil and now you have now you have actually sequestered carbon and that becomes a much more say kind of organic in a more generic sense way of growing things as you dont need as much fertilizer it substitutes for fertilizer but thats a you know that less water it changes to kind of thing you plant all those kind of stuff that requires farmers who are pretty conservative who are pretty conservative to change their practices but if not I dont think the water is going to stretch front up so I think we have to change the agricultural practices in order to stretch the water supply and do other things like you know drip irrigation rather than other kinds of irrigation but these things are very difficult like residential energy conservation are very difficult to get deployed and so but they have as much potential I think as probably more potential changing these kinds of practices and bio engineered crops but its easier to make money up seed than to make money of getting someone to change their agricultural practice so we do see ventures, we do see ventures that have aspects of what I just described so there is hope I mean I think people are thinking about these things and trying to find ways to build ventures that will bring them to market but its a water is an incredibly important problem and a difficult one to find you know we took from the Google netscape and amazons of water I have trouble finding them and so. Male Speaker: But do you do, how can a client at Perkins help facilitate that when its not even an area of expertise that any of you there have ever really engaged in as business people. Interviewee: So yes what we do is we use Google, we decided that water is one of the twenty sixth things in our list and we stick with the search engine and we Google around and find interesting, we find a conference and you try to first you try to find an interesting conference then you try to find the papers of the conference and then you look at which papers you think are the interesting papers and then you look at another conference and you suddenly notice that these three guys that seem to write interesting papers and you call them on the phone and you just talk to them and there begins your journey you know its the I mean I have newspapers but we can have fun, we can call them on Skype and it doesnt even cost you anything you know and no on ever calls them so that they are happy to talk to you so they go and now you can learn about, you dont have to leave your house you can learn all sorts of things and you can read wikipedia and get a you know so you have some idea what vocabularies they dont think you are complete idiot when you talk to them. Male Speaker: So you are giving these heads the elevator pitch rather than vise versa in other words you are telling them what kind of business they could start rather than them coming to you and saying give us this? Interviewee: In some cases we do recall lab calls we will go to a university and we will we try not to go through the industrialist on program because what we do is we actually go to their website, we dont want the poster, we want to see the ones that we think are interesting because we have built a map and we looked at all these conferences and what's mundane because if ten people are doing it then its not by definition its not interesting because we wont effect the outcome all right because one of them will probably succeed and who knows which one and it doesnt really matter anyways but if there is this person with this really strange idea which seems to have some level of lateral thinking and its interesting you know then we will go talk to them and occasionally you just stumble upon things that are worth seed funding. I have four or five of those that we stumbled upon in the last couple of years that are very active right now and they would just dont roughly how I I have an associate who is one of the worlds best person at typing Google queries because the secret is not to type the common words, its to type the words that pull the fish that you want out of the search right so you have to learn the vocabulary of the discipline and then the words that are the interesting words and the papers you find are interesting and you have to type those back into Google so its a multi its a human computer interaction and then that will dredge up, if you get the right few words in the query it will give you this little beautifully full fishing net of interesting things that will keep you busy at the rest of the afternoon you know -. Male Speaker: And your investors are happy with this? Interviewee: Yeah, well you know we havent had much liquidity so far but neither has anyone else so we look okay on a relative basis for whatever that worth but I mean its amazing, its just amazing what's, how much stuff there is in that big you know internet basket today and how much stuff you can learn you know and so remember we dont have to learn the old we would only have to be able to find this market we dont, then we have to get the experts to talk to them, we dont have to understand everything they say, we just have to understand that what they are saying is interesting its a lower standard all right and we can tell this by the way they talk and pattern matching you know the entrepreneurialness and that the level of pizzazz in their area of -. Male Speaker: I just think its fascinating but instead of you exercising your ship detector from the people that come to you instead -. Interviewee: Right well so -. Male Speaker: The ones that actually have to be in a way judged by them. Interviewee: The other hard part then is to you know even if the invent something then you got to turn into a business right I mean. Male Speaker: Yeah. Interviewee: But you are not going to the ten X things arent just going to walk through the door because these people arent they dont have the Silicon Valley entrepreneurial gene in them right, they are just in some department somewhere maybe from Lithuania I mean you know honestly they got these people all over the world and you just you know you would just find them in this strange way and you know there is an awful lot of looking, a lot of like a lot of frog kissing in this process but if you believe the ideas are out there and I ones said you know innovation occurs elsewhere right most of the people dont work for you no matter who you are so we really believe this in what we are out looking for, we are out looking for that innovation and its really hard work but we are excited we have got more than enough interesting things to work on that we can find in this process.