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Eric Schmidt’s history lesson in innovation

MM: This would be a great place to reprise you of an interview that I saw with Eric Schmidt on the Charlie Rose Show. It took place, I think, in April or so of 2006.

Charlie Rose asked Eric — the CEO of Google — “What’s next? What’s the next big wave of innovation?”

Eric said, “Well, you know, Charlie — in order to really answer that, we have to quickly reference what’s been. Because largely, ‘what’s next…’ kind of what we’ve been talking about — is a function of what’s been.” He said, “In one perspective, the 1980s were all about hardware. Hardware innovation. Out of that we got Seagate and Maxtor and EMC and Compaq and HP and Dell and Apple and IBM. The PC and the server.”

Then he said, “By the time we got to the 90s, there were no more big breakouts, in terms of hardware.” Of course, they weren’t really talking about the mobile space. That really wasn’t a Silicon Valley thing.

That aside, the 90s were all about enterprise software. Big software. Desktop software. The 90s was the decade that Microsoft really grew into its dominant position. Along with that, we got SAP, Oracle, Peoplesoft, Siebel, Computer Associates and so on.

Then he said, “The first six years of the 2000s were really about internet infrastructure,” or what he called IP infrastructure. Out of that we got Google and Yahoo and eBay and Amazon. Those big Internet service platforms.

He said, “You know, as of 2006, that innovation space has all been used up.” He said, “I can’t tell you, Charlie, with the same 20/20 hindsight of what’s been. But we’re pretty certain that there are two facets, as far as the future.”

On the basis of this, we will see all kinds of new innovative business models, and various — and the next wave of wealth-creation.

He said, “The next wave is really about two things. Small groups of people that produce and consume small chunks of information and content.” They produce and consume information — which you and I would call “user-generated content.”

At some point — after so many turns of pro-sumption content — it hits critical mass and explodes into things like a Skype or Facebook or MySpace and other sorts of social media. Socialized what I will now call “Socialized Assets.”

By the way, Eric and Google have already written close to $4 billion of checks against that idea. When you look at all their acquisitions lately, they almost always entail these social networks or networks of socialized assets.

So the idea is that user-generated content — and the larger framework of social collaboration associated with content creation — is essential and ground zero of this next wave of wealth-creation.

Function as a service

MM: I think that seems to be a great lead-in to what you were beginning to talk about in terms of functions as a service. And how does that affect things like word processing, documents, Excel Spreadsheets, presentations, photo image manipulation and so on?

EH: Yes. I think the trend there… Of course we’re seeing it from Google, with Google Apps and Google Docs and Google Spreadsheets and Google Presentations. And there are other key players – ThinkFree, Zoho, ShareOffice, etc.

We just saw an announcement today from one of the flagship providers of desktop software — Adobe. They bought a company called “Virtual Ubiquity,” which has an online word processor that’s Flash-based now called Buzzword. And Adobe announced a service called “Share,” for online document sharing.

The companies that have traditionally brought us the desktop tools, where you work on your creative content in isolation… They’re starting to make the significant shift to moving that whole process online to the Internet, and — by implication — make the process of creating the content a more collaborative, social process. Adobe recently stated that flavors of Photoshop will be moving online too…

Online word processors from companies such as iNetWord and others — these are tools that we’re starting to see come online which are initially happening for the Online Office space… Next we will see trends for the tools to create assets near and dear to the hearts of DAM practitioners, like PhotoShop and iMovie for example moving online.

The whole process, historically, has been a single-user or small workgroup. In isolation, usually — in a local work mode. I think that that whole model is going to change dramatically.

Not only will it change dramatically from the professional content creators, but I think tying back to Eric Schmidt’s comments from Google — there’s an explosion, of course, in content creation.

We’ve got companies like Yahoo acquiring JumpCut — where people can do online remixing of video with a budget of zero dollars. The accessibility of the tools for content creation, editing and remixing are also being transformed.

You see the work process and the workflow itself is moving online. Becoming more collaborative for the professional content creators. It’s becoming accessible from a user-generated content standpoint, in a way that it’s never been before, for end-users. They’d typically just watch content passively, but they’re now participating in its creation.

Then you’ve got the intersection of these two worlds. Most major media companies now, when they’re planning their presence on the Internet — they no longer think of it as a place where they publish their created digital assets that they worked on, and their traditional enterprise-class DAM systems.

Instead, they’re thinking of it in a dual mode. They’re thinking of it as a world in which the professional content creators who are building their editorial content can publish their media. That’s a meeting place where the end-users — the consumers of their publications — are posting their own content.

These two types of assets are coexisting now on the Internet in a bigger and bigger way. Obviously, the attention is focused largely on YouTube — where a lot of user content is produced and put online. But the reality is, a lot of the traditional media companies are also transforming their own websites and their own online presence, to incorporate this mixture of user-generated content and professionally produced content.

That’s being enabled by a number of technical changes, which you mentioned. This notion of processes as a service, function as a service… We talked earlier about DAM as a service. I like to use the terms, “documents as a service.” Or “content as a service.”

All of these traditional desktop software, enterprise software functions are all being radically deconstructed and reassembled in a new way on the internet, where the internet is the application.

Just to give you some nice ways to think about this… I mentioned previously the industry consortium called OpenSAM. Open Simple Application Mash-up. The core tenets of OpenSam — there are three parts, and it starts with a universal statement. “Connects to all.”

The idea behind OpenSAM is that any application should be able to connect to any other application. Number 1.

Number 2 — any application should be able to easily connect to any collection of content.

Number 3 — individuals or people should be able to more easily connect to applications.

So the simple phrasing of that is apps-to-apps, apps-to-content, and people-to-apps. Well, guess what? What does that enable? What are we trying to do, at the end of the day with those three enablers, which we’ve targeted in this consortium called OpenSAM? It’s about people-to-people. At the end of the day, that’s what we’re seeking to enable.

We’re seeking to enable a flexible Internet infrastructure that allows you to connect applications more easily together, hook up people to those applications, and allow applications to share content.

But at the end of the day, it’s all about making connections from one person to another — one person to many other people — or from many people to many other people, using the Internet as application infrastructure.

I think that’s where we’re headed. I think that’s a very fundamental change from historic DAM systems. I think also it’s emblematic of the end-of-content-as-we-know-it.

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