Google Searching For Energy Solutions Because “It’s The Right Thing To Do”

Google CEO Eric Schmidt spoke at length to the Wall Street Journal about why Google is collaborating on a “smart grid,” plug-in cars and making other green-energy investments that seem to be far removed from its core mission. The interview is a glimpse into what I’d call the “pragmatic idealism” that has propelled Google in the past.

Google’s founders reportedly care deeply about energy policy and Google, during the Bush administration, took it upon itself to “step into the leadership gap” and try and advance certain ideas. Here are some excerpts from the interview:

WSJ: The nation may not have a national energy plan, but Google does. Why are you doing it?

ERIC SCHMIDT: Because energy matters. And the way you solve the environment problem is you solve the energy problem. From a Google perspective it’s the right thing to do for the world. It’s also good for our business because we’re in the information business. And a lot of the energy solutions involve a lot of information . . .

WSJ: One of the early speeches you gave on this was in September. I pulled something up off the Web where people were commenting on it. A shareholder says, “I don’t want Eric Schmidt out there talking about green-energy investments. I understand they consume a lot of energy but that doesn’t address the top line, it has a marginal effect on earnings. Don’t do it.” What do you say to shareholders who say this isn’t the way you should be spending your time?

MR. SCHMIDT: The shareholder value in a company is created at the end of everything you do. You create shareholder value by serving your customers, building a great business, and if you do a great job your stock will go up. So they’re not first in the discussion point. What’s really first at Google is about changing the world, in a positive way. Can we make a difference? In our case, we’re huge energy users, so a relatively straightforward solution to our energy costs goes right to the bottom line . . .

The rest of the interview discusses specific proposals and ideas.

Beyond the fact of the proposals and ideas themselves what’s interesting is to see the reemergence of the “old Google” in this interview — not the Google that’s cutting costs and programs, but the Google that did things because they were interesting or cool or useful and said “damn the short term impact.” Of course, as the second question indicates above, Google must be mindful of shareholders. But as the most profitable online advertising company it does have leverage with this finicky and short-sighted group.

Schmidt is also right that, longer term, such investments do build shareholder value.

The other thing is: Google must have initiatives like this to help its image with the public and with regulators. It will help with the former more than the latter but there’s a huge PR angle here. That’s not the reason that Google’s pursuing these programs but it’s a major secondary benefit.