Larry Page on how to change the world

Breakthrough ideas are around the corner, says the Google co-founder. But most of us are failing to take a chance on them.

By Andy Serwer, managing editor

(Fortune Magazine) -- As president of Google, Larry Page has pushed his people to take risks that have led to hot new applications like Gmail and Google Maps. Lately he has been thinking far outside the walls of his company. Page sees a world of opportunity - in areas ranging from energy to safer cars. But he also sees a world of timidity; not enough people, he worries, are willing to place the big bets that could make a difference in meeting humanity's biggest challenges.

In these edited excerpts from an interview with Fortune managing editor Andy Serwer at Google's (GOOG, Fortune 500) headquarters in Mountain View, Calif., Page offers his views on innovation, change, fear - and why he is, all things considered, an optimist.

What are you thinking about these days?

If you ask an economist what's driven economic growth, it's been major advances in things that mattered - the mechanization of farming, mass manufacturing, things like that. The problem is, our society is not organized around doing that. People are not working on things that could have that kind of influence. We forget that it really does matter that we don't have to carry our water; it's not that much fun to walk miles and miles to try to find water and then carry it back under human power. And our ability to generate clean, accessible water is based on basic technologies: Do we have energy? Can we make things? My argument is that people aren't thinking that way.

Instead, it's sort of like "We are captives of the world, and whatever happens, happens." That's not the case at all. It really matters whether people are working on generating clean energy or improving transportation or making the Internet work better and all those things. And small groups of people can have a really huge impact.

How can we increase the number of people doing such work?

There are a number of barriers in place. Let me give an example. In our first founders' letter in 2004, we talked about the risk profile with respect to doing new innovations. We said we would do some things that would have only a 10% chance of making $1 billion over the long term. But we don't put many people on those things; 90% work on everything else. So that's not a big risk. And if you look at where many of our new features come from, it's from these riskier investments.

Even when we started Google, we thought, "Oh, we might fail," and we almost didn't do it. The reason we started is that Stanford said, "You guys can come back and finish your Ph.D.s if you don't succeed." Probably that one decision caused Google to be created. It's not clear we would have done it otherwise. We had all this internal risk we had just invented. It's not that we were going to starve or not get jobs or not have a good life or whatever, but you have this fear of failing and of doing something new, which is very natural. In order to do stuff that matters, you need to overcome that.

Are there mechanisms that society, government, or companies can put into place?

Absolutely - look at Silicon Valley, which has been the premier place in the world to do things like that. There's been a lot of money available and a lot of people encouraging other people to take risks. I don't know that we would have done it had we been in a different environment.

On the one hand you're saying it's a problem. On the other, you're saying it's being done.

I don't think it's black-and-white like that. The question is, How many people are working on things that can move the needle on the economy or on people's quality of life? Look, 40,000 people a year are killed in the U.S. in auto accidents. Who's going to make that number zero or very, very small? There are people working on it.

What are they doing?

Working on making cars automated. You can already see the technology going into some cars. Infiniti just released a car that will kick you back in if you are driving out of the lane, which is a large source of accidents. So you're saving lives, and the technology is not that costly. But the number of people willing to work on stuff like that is very, very, very small.

Why is that?

Honestly, I'm a little baffled. But my own experience within Google is that it's hard to get people to work on those kinds of things because of the personal risk they feel they're taking. Also, people don't have the right training. If you say you want to automate cars and save people's lives, the skills you need for that aren't taught in any particular discipline. I know - I was interested in working on automating cars when I was a Ph.D. student in 1995.

Is the problem that people are risk-averse?

That's part of the problem, but I think that can be overcome with education and environment and infrastructure. My experience is that when people are trying to do ambitious things, they're all worried about failing when they start. But all sorts of interesting things spin out that are of huge economic value. Also, in these kinds of projects, you get to work with the best people and have a very interesting time. They're not really taking a risk, but they feel like they are.

As a public company, you have an obligation to shareholders. How does that come into play when you start designating resources to speculative projects?

In practice that's not an issue. I've told the whole company repeatedly I want people to work on artificial intelligence - so we end up with five people working on it. Guess what? That's not a major expense. There's a reason we talk about 70/20/10, where 70% of our resources are spent in our core business and 10% end up in unrelated projects, like energy or whatever. [The other 20% goes to projects adjacent to the core business.] Actually, it's a struggle to get it to even be 10%. People might think we're wasting money or whatever. But that's where all our new stuff has come from.

Isn't this easier to do at a place like Google than, say, at older Fortune 500 companies?

Many leaders of big organizations, I think, don't believe that change is possible. But if you look at history, things do change, and if your business is static, you're likely to have issues. Look at the auto industry: It took the Japanese to convince people you can have a reliable car. Then they started pushing the product cycles shorter and shorter. Instead of making a car in five years, they made them in one year or two years. That's a big change.

And then there are things like Moore's Law [that the number of transistors on a chip will double about every two years]. People think Moore's Law is a description of what happened. But Moore's Law actually caused people to do the right thing. Everyone was organized about it - making things better quickly.

So if there were Moore's Laws applicable to other businesses or products, people would organize to fulfill that point?

Yes, yes. Different things get solved for different reasons. Obviously you're not going to get Moore's Law performance for cars - you're not just moving information around. With cars, you have physical constraints.

Do you have other examples where innovative leadership could move the needle?

I think there are a lot of areas. You can be a bit of a detective and ask, What are the industries where things haven't changed much in 50 years? We've been looking a little at geothermal power. And you start thinking about it, and you say, Well, a couple of miles under this spot or almost any other place in the world, it's pretty darn hot. How hard should it be to dig a really deep hole? We've been drilling for a long time, mostly for oil - and oil's expensive. If you want to move heat around, you need bigger holes. The technology just hasn't been developed for extracting heat. I imagine there's pretty good odds that's possible.

Solar thermal's another area we've been working on; the numbers there are just astounding. In Southern California or Nevada, on a day with an average amount of sun, you can generate 800 megawatts on one square mile. And 800 megawatts is actually a lot. A nuclear plant is about 2,000 megawatts.

The amount of land that's required to power the entire U.S. with electricity is something like 100 miles by 100 miles. So you say, "What do I need to do to generate that power?" You could buy solar cells. The problem is, at today's solar prices you'd need trillions of dollars to generate all the electricity in the U.S. Then you say, "Well, how much do mirrors cost?" And it turns out you can buy pieces of glass and a mirror and you can cover those areas for not that much money. Somehow the world is not doing a good job of making this stuff available. As a society, on the larger questions we have, we're not making reasonable progress.

So you think that geothermal and solar thermal could solve our energy problems?

Yeah, probably either one could generate all the energy we need. There's no discipline to actually do this stuff, and you can also see this vested interest, risk-averse behavior, plus a lack of creativity. It sort of conspires. It's also a timeliness thing; everyone said Sam Walton was crazy to build big stores in small towns. Almost everyone who has had an idea that's somewhat revolutionary or wildly successful was first told they're insane.

Whose obligation is it to make this kind of change happen? Is it Google's? The government's? Stanford's? Kleiner Perkins'?

I think it's everybody who cares about making progress in the world. Let's say there are 10,000 people working on these things. If we make that 100,000, we'll probably get 10 times the progress.

And then you compare it with the number of engineers at Exxon (XOM, Fortune 500) and Chevron (CVX, Fortune 500) and ConocoPhillips (COP, Fortune 500) who are trying to squeeze the last drop of oil out of somewhere, and all the science brainpower that's going to that. It's totally disproportionate to the return that they could get elsewhere.

What kind of background do you think is required to push these kinds of changes?

I think you need an engineering education where you can evaluate the alternatives. For example, are fuel cells a reasonable way to go or not? For that, you need a pretty general engineering and scientific education, which is not traditionally what happens. That's not how I was trained. I was trained as a computer engineer. So I understand how to build computers, how to make software. I've learned on my own a lot of other things. If you look at the people who have high impact, they have pretty general knowledge. They don't have a really narrowly focused education.

You also need some leadership skills. You don't want to be Tesla. He was one of the greatest inventors, but it's a sad, sad story. He couldn't commercialize anything, he could barely fund his own research. You'd want to be more like Edison. If you invent something, that doesn't necessarily help anybody. You've got to actually get it into the world; you've got to produce, make money doing it so you can fund it.

Are you consciously hiring people who can look at these issues?

Those people don't really exist. You can't hire them. People usually have careers where they stay in pretty fixed areas.

Some of the VCs are forced to be a little more general in how they evaluate things, and that's been good. But they still go wrong. Look at VC investment in clean energy. What caused that to happen was two things: the price of oil going up and global warning. It's mostly the price of oil going up.

But think about it. Most of the money is going into companies that will produce electricity - and the price of electricity is based on the price of coal, which hasn't changed. So the question is, Why didn't we do all this investment 10 years ago? That was a huge mistake. It's obviously easier if oil's more expensive, but there's no particularly good reason we didn't do a lot of it sooner.

Are you more or less optimistic about the future than you were three years ago?

I'm hugely more optimistic because now we have a conceptualization of the problems that makes some degree of sense to a fair number of people. Look at the things we worry about - poverty, global warming, people dying in accidents. And look at the things that drive people's basic level of happiness - safety and opportunity for their kids, plus basic things like health and shelter. I think our ability to achieve these things on a large scale for many people in the world is improving.

Jia Lynn Yang contributed to this article.