Anyone who wants to seriously engage in giving faces two important questions: where can you make the biggest impact, and how do you structure your giving so it’s effective.I grew up in a family where giving back to society—whether through volunteer time or financial resources—was just part of what you did. At the dinner table, both of my parents talked frequently about their volunteer work with non-profits and their advocacy work for children and the less fortunate in our community.
Community service was also an important part of Melinda’s upbringing; so even when we were still just engaged to be married, we talked about our responsibility to give back the great majority of our wealth—even though at that point we didn’t know exactly how or when we’d do it.
Anyone who wants to seriously engage in giving faces two important questions: where can you make the biggest impact, and how do you structure your giving so it’s effective.
Our viewpoint evolved over time, but there was a real turning point when we read an article about rotavirus, a disease that was pretty much a non-event in the United States, but which still killed a half-million children a year in the developing world. It seemed impossible to us that it was receiving so little worldwide attention. And so we dug in, learnt a lot more about the problem, and eventually began a serious effort to reduce childhood mortality worldwide.
Today, the framework that guides our giving is based on the simple premise that everyone deserves the chance to live a healthy, productive life. Given the resources at our disposal, we believed we could make the biggest difference by concentrating in three areas: global health, global development, and in the US, education.
Half our foundation’s funds are spent addressing global health problems, with a focus on malaria, tuberculosis, AIDS, diarrheal and respiratory diseases.
Twenty-five per cent of the foundation’s funds assist the poorest people in the world in ways other than healthcare through development projects. And the other 25% is devoted to improving public education in the US, where, in spite of our nation’s great wealth, our education system continues to fail too many of our children.
A few basic principles guide the way in which we give. Our approach emphasizes partnerships, and looks to foster innovation, often pursuing new technologies or delivery schemes.
We try to apply new thinking and approaches to solving big problems, which sometimes means taking calculated risks on promising ideas. We set goals and are quite serious about measuring our results. Often, this means attempting to be a catalyst by investing in areas where governments can’t or won’t invest, or where there is a vacuum or failure in the marketplace.
Diseases that affect the poor are a great case in point. Rich-world diseases attract research investments that dwarf the money going to problems like rotavirus. (Think of how much more money goes to curing male pattern baldness than malaria!) As a foundation, we have the chance to help address that inequality.
The question of risk is something we think about a lot. Warren Buffett, our good friend and the third trustee of our foundation, reminds us that failure will be part of any bold approach. “You can have a perfect batting average by not doing anything too important. Or you’ll bat something less than that if you take on the really tough problems.”
We’re willing to accept failure at times in the name of trying new things to solve old and difficult problems.
At the end of the day, what draws people to philanthropy is something universal—the connection to other human beings and the desire to make a difference. This is what tugs at people and that makes them want to get involved, to imagine how they can help create a better world.
For me, philanthropy is a responsibility, a passion, and an honor. And so far as I can tell—after being a parent—it’s the most gratifying job on earth.
Monday, August 15, 2011
Bill Gates: The Most Gratifying Job on Earth
Stop Coddling the Super-Rich
Stop Coddling the Super-Rich By WARREN E. BUFFETT
Omaha
OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)
I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.
Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.
Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.
Thursday, August 11, 2011
Michael Lewis: It’s the Economy, Dummkopf!
It’s the Economy, Dummkopf!
With Greece and Ireland in economic shreds, while Portugal, Spain, and perhaps even Italy head south, only one nation can save Europe from financial Armageddon: a highly reluctant Germany. The ironies—like the fact that bankers from Düsseldorf were the ultimate patsies in Wall Street’s con game—pile up quickly as Michael Lewis investigates German attitudes toward money, excrement, and the country’s Nazi past, all of which help explain its peculiar new status.
By the time I arrived in Hamburg the fate of the financial universe seemed to turn on which way the German people jumped. Moody’s was set to downgrade the Portuguese government’s debt to junk-bond status, and Standard & Poor’s had hinted darkly that Italy might be next. Ireland was about to be downgraded to junk status, too, and there was a very real possibility that the newly elected Spanish government might seize the moment to announce that the old Spanish government had miscalculated, and owed foreigners a lot more money than they previously imagined. Then there was Greece. Of the 126 countries with rated debt, Greece now ranked 126th: the Greeks were officially regarded as the least likely people on the planet to repay their debts. As the Germans were not only the biggest creditor of the various deadbeat European nations but their only serious hope for future funding, it was left to Germans to act as moral arbiter, to decide which financial behaviors would be tolerated and which would not. As a senior official at the Bundesbank put it to me, “If we say ‘no,’ it’s ‘no.’ Nothing happens without Germany. This is where the losses come to live.” Just a year ago, when German public figures called Greeks cheaters, and German magazines ran headlines like why don't you sell your islands, you bankrupt greeks?, ordinary Greeks took it as an outrageous insult. In June of this year the Greek government started selling islands or at any rate created a fire-sale list of a thousand properties—golf courses, beaches, airports, farmlands, roads—that they hoped to sell, to help repay their debts. It was safe to say that the idea for doing this had not come from the Greeks.
To no one but a German is Hamburg an obvious place to spend a vacation, but it happened to be a German holiday, and Hamburg was overrun by German tourists. When I asked the hotel concierge what there was to see in his city, he had to think for a few seconds before he said, “Most people just go to the Reeperbahn.” The Reeperbahn is Hamburg’s red-light district, the largest red-light district in Europe, according to one guidebook, though you have to wonder how anyone figured that out. And the Reeperbahn, as it happens, was why I was there.
Perhaps because they have such a gift for creating difficulties with non-Germans, the Germans have been on the receiving end of many scholarly attempts to understand their collective behavior. In this vast and growing enterprise, a small book with a funny title towers over many larger, more ponderous ones. Published in 1984 by a distinguished anthropologist named Alan Dundes, Life Is Like a Chicken Coop Ladder set out to describe the German character through the stories that ordinary Germans liked to tell one another. Dundes specialized in folklore, and in German folklore, as he put it, “one finds an inordinate number of texts concerned with anality. Scheisse (shit), Dreck (dirt), Mist (manure), Arsch (ass).… Folksongs, folktales, proverbs, riddles, folk speech—all attest to the Germans’ longstanding special interest in this area of human activity.”
He then proceeded to pile up a shockingly high stack of evidence to support his theory. There’s a popular German folk character called der Dukatenscheisser (“The Money Shitter”), who is commonly depicted crapping coins from his rear end. Europe’s only museum devoted exclusively to toilets was built in Munich. The German word for “shit” performs a vast number of bizarre linguistic duties—for instance, a common German term of endearment was once “my little shit bag.” The first thing Gutenberg sought to publish, after the Bible, was a laxative timetable he called a “Purgation-Calendar.” Then there are the astonishing number of anal German folk sayings: “As the fish lives in water, so does the shit stick to the asshole!,” to select but one of the seemingly endless examples.
Dundes caused a bit of a stir, for an anthropologist, by tracking this single low national character trait into the most important moments in German history. The fiercely scatological Martin Luther (“I am like ripe shit, and the world is a gigantic asshole,” Luther once explained) had the idea that launched the Protestant Reformation while sitting on the john. Mozart’s letters revealed a mind, as Dundes put it, whose “indulgence in fecal imagery may be virtually unmatched.” One of Hitler’s favorite words was Scheisskerl (“shithead”): he apparently used it to describe not only other people but himself as well. After the war, Hitler’s doctors told U.S. intelligence officers that their patient had devoted surprising energy to examining his own feces, and there was pretty strong evidence that one of his favorite things to do with women was to have them poop on him. Perhaps Hitler was so persuasive to Germans, Dundes suggested, because he shared their quintessential trait, a public abhorrence of filth that masked a private obsession. “The combination of clean and dirty: clean exterior-dirty interior, or clean form and dirty content—is very much a part of the German national character,” he wrote.
The anthropologist confined himself mainly to a study of low German culture. (For those hoping to examine coprophilia in German high culture he recommended another book, by a pair of German scholars, entitled The Call of Human Nature: The Role of Scatology in Modern German Literature.) Still, it was hard to come away from his treatise without the strong sense that all Germans, high and low, were a bit different from you and me—a point he made in the introduction to the paperback version of his book. “The American wife of a German-born colleague confessed to me that she understood her husband much better after reading the book,” he wrote. “Prior to that time, she had wrongly assumed that he must have some kind of peculiar psychological hang-up inasmuch as he insisted upon discussing at great length the state of his latest bowel movements.”
The Hamburg red-light district had caught Dundes’s eye because the locals made such a big deal of mud-wrestling. Naked women fought in a metaphorical ring of filth while the spectators wore plastic caps, a sort of head condom, to avoid being splattered. “Thus,” wrote Dundes, “the audience can remain clean while enjoying dirt!” Germans longed to be near the shit, but not in it. This, as it turns out, was an excellent description of their role in the current financial crisis.
The Scheisse Hits the Fan
Aweek or so earlier, in Berlin, I had gone to see Germany’s deputy minister of finance, a 44-year-old career government official named Jörg Asmussen. The Germans are now in possession of the only Finance Ministry in the big-time developed world whose leaders don’t need to worry whether their economy will collapse the moment investors stop buying their bonds. As unemployment in Greece climbs to the highest on record (16.2 percent at last count), it falls in Germany to 20-year lows (6.9 percent). Germany appears to have experienced a financial crisis without economic consequences. They’d donned head condoms in the presence of their bankers, and so they had avoided being splattered by their mud. As a result, for the past year or so the financial markets have been trying and failing to get a bead on the German people: they can probably afford to pay off the debts of their fellow Europeans, but will they actually do it? Are they now Europeans, or are they still Germans? Any utterance or gesture by any German official anywhere near this decision for the past 18 months has been a market-moving headline, and there have been plenty, most of them echoing German public opinion, and expressing incomprehension and outrage that other peoples can behave so irresponsibly. Asmussen is one of the Germans now being obsessively watched. He and his boss, Wolfgang Schäuble, are the two German officials present in every conversation between the German government and the deadbeats.
The Finance Ministry, built in the mid-1930s, is a monument to both the Nazis’ ambition and their taste. A faceless butte, it is so big that if you circle it in the wrong direction it can take you 20 minutes to find the front door. I circle it in the wrong direction, then sweat and huff to make up for lost time, all the while wondering if provincial Nazis in from the sticks had had the same experience, wandering outside these forbidding stone walls and trying to figure out how to get in. At length I find a familiar-looking courtyard: the only difference between it and famous old photographs of it is that Hitler is no longer marching in and out of the front door, and the statues of eagles perched atop swastikas have been removed. “It was built for Göring’s Air Ministry,” says the waiting Finance Ministry public-relations man, who is, oddly enough, French. “You can tell from the cheerful architecture.” He then explains that the building is so big because Hermann Göring wanted to be able to land planes on its roof.
Ihave arrived about three minutes late, but the German deputy minister of finance runs a full five minutes later, which, I will learn, is viewed by Germans almost as a felony. He apologizes a lot more than he needs to for the delay. He wears the slender-framed spectacles of a German film director, and is extremely fit and bald, but by choice rather than circumstance. Extremely fit white men who shave their heads are making a statement, in my experience of them. “I don’t need body fat and I don’t need hair,” they seem to be saying, while also implying that anyone who does is a wuss. The deputy finance minister even laughs just as all extremely fit men with shaved heads should laugh, if they want to remain in character. Instead of opening his mouth to allow the air to pass he purses his lips and snorts the sound out through his nose. He may need laughter as much as other men, but he needs less air to laugh with. His desk is a template of self-discipline. It is alive with implied activity—legal pads, Post-it notes, manila folders—but every single object on it is perfectly aligned with all the others, and with the edges of the desk. Every angle is precisely 90 degrees. But the most striking optional décor is a big white sign on the wall beside the desk. It’s in German but translates easily back into the original English:
the secret of success is to understand the point of view of others.
—henry ford
This surprises me. It’s not at all what an extremely fit bald man should have as his mantra. It’ssoft. The deputy finance minister further disturbs my wild assumptions about him by speaking clearly, even recklessly, about subjects most finance ministers believe it is their job to obscure. He offers up, without much prompting, that he has just finished reading the latest unpublished report by I.M.F. investigators on the progress made by the Greek government in reforming itself.
“They have not sufficiently implemented the measures they have promised to implement,” he says simply. “And they have a massive problem still with revenue collection. Not with the tax law itself. It’s the collection which needs to be overhauled.”
Greeks are still refusing to pay their taxes, in other words. But it is only one of many Greek sins. “They are also having a problem with the structural reform. Their labor market is changing—but not as fast as it needs to,” he continues. “Due to the developments in the last 10 years, a similar job in Germany pays 55,000 euros. In Greece it is 70,000.” To get around pay restraints in the calendar year the Greek government simply paid employees a 13th and even 14th monthly salary—months that didn’t exist. “There needs to be a change of the relationship between people and the government,” he continues. “It is not a task that can be done in three months. You need time.” He couldn’t put it more bluntly: if the Greeks and the Germans are to coexist in a currency union, the Greeks need to change who they are.
This is unlikely to happen soon enough to matter. The Greeks not only have massive debts but are still running big deficits. Trapped by an artificially strong currency, they cannot turn these deficits into surpluses, even if they do everything that outsiders ask them to do. Their exports, priced in euros, remain expensive. The German government wants the Greeks to slash the size of their government, but that will also slow economic growth and reduce tax revenues. And so one of two things must happen. Either Germans must agree to a new system in which they would be fiscally integrated with other European countries as Indiana is integrated with Mississippi: the tax dollars of ordinary Germans would go into a common coffer and be used to pay for the lifestyle of ordinary Greeks. Or the Greeks (and probably, eventually, every non-German) must introduce “structural reform,” a euphemism for magically and radically transforming themselves into a people as efficient and productive as the Germans. The first solution is pleasant for Greeks but painful for Germans. The second solution is pleasant for Germans but painful, even suicidal, for Greeks.
The only economically plausible scenario is that Germans, with a bit of help from a rapidly shrinking population of solvent European countries, suck it up, work harder, and pay for everyone else. But what is economically plausible appears to be politically unacceptable. The German people all know at least one fact about the euro: that before they agreed to trade in their deutsche marks their leaders promised them, explicitly, they would never be required to bail out other countries. That rule was created with the founding of the European Central Bank (E.C.B.)—and was violated a year ago. The German public is every day more upset by the violation—so upset that Chancellor Angela Merkel, who has a reputation for reading the public mood, hasn’t even bothered to try to go before the German people to persuade them that it might be in their interests to help the Greeks.
That is why Europe’s money problems feel not just problematic but intractable. It’s why Greeks are now mailing bombs to Merkel, and thugs in Berlin are hurling stones through the window of the Greek consulate. And it’s why European leaders have done nothing but delay the inevitable reckoning, by scrambling every few months to find cash to plug the ever growing economic holes in Greece and Ireland and Portugal and praying that even bigger and more alarming holes in Spain, Italy, and even France refrain from revealing themselves.
Until now the European Central Bank, in Frankfurt, has been the main source of this cash. The E.C.B. was designed to behave with the same discipline as the German Bundesbank, but it has morphed into something very different. Since the start of the financial crisis it has bought, outright, something like $80 billion of Greek and Irish and Portuguese government bonds, and lent another $450 billion or so to various European governments and European banks, accepting virtually any collateral, including Greek government bonds. But the E.C.B. has a rule—and the Germans think the rule very important—that they cannot accept as collateral bonds classified by the U.S. ratings agencies as in default. Given that they once had a rule against buying bonds outright in the open market, and another rule against government bailouts, it’s a little odd that they have gotten so hung up on this technicality. But they have. If Greece defaults on its debt, the E.C.B. will not only lose a pile on its holdings of Greek bonds but must return the bonds to the European banks, and the European banks must fork over $450 billion in cash. The E.C.B. itself might face insolvency, which would mean turning for funds to its solvent member governments, led by Germany. (The senior official at the Bundesbank told me they already have thought about how to deal with the request. “We have 3,400 tons of gold,” he said. “We are the only country that has not sold its original allotment from the [late 1940s]. So we are covered to some extent.”) The bigger problem with a Greek default is that it might well force other European countries and their banks into default. At the very least it would create panic and confusion in the market for both sovereign and bank debt, at a time when a lot of banks and at least two big European debt-ridden countries, Italy and Spain, cannot afford panic and confusion.
At the bottom of this unholy mess, from the point of view of the German Finance Ministry, is the unwillingness, or inability, of the Greeks to change their behavior.
That was what the currency union always implied: entire peoples had to change their ways of life. Conceived as a tool for integrating Germany into Europe, and preventing Germans from dominating others, it has become the opposite. For better or for worse, the Germans now own Europe. If the rest of Europe is to continue to enjoy the benefits of what is essentially a German currency, they need to become more German. And so, once again, all sorts of people who would rather not think about what it means to be “German” are compelled to do so.
Jörg Asmussen offers the first hint of an answer—in his personal behavior. He is a type familiar in Germany but absolutely freakish in Greece—or for that matter the United States: a keenly intelligent, highly ambitious civil servant who has no other desire but to serve his country. His sparkling curriculum vitae is missing a line that would be found on the résumés of men in his position most anywhere else in the world—the line where he leaves government service for Goldman Sachs to cash out. When I asked another prominent German civil servant why he hadn’t taken time out of public service to make his fortune working for some bank, the way every American civil servant who is anywhere near finance seems to want to do, his expression changed to alarm. “But I could never do this,” he said. “It would be illoyal!”
Asmussen agrees and then addresses the German question more directly. The curious thing about the eruption of cheap and indiscriminate lending of money during the past decade was the different effects it had from country to country. Every developed country was subjected to more or less the same temptation, but no two countries responded in precisely the same way. The rest of Europe, in effect, used Germany’s credit rating to indulge its material desires. They borrowed as cheaply as Germans could to buy stuff they couldn’t afford. Given the chance to take something for nothing, the German people alone simply ignored the offer. “There was no credit boom in Germany,” says Asmussen. “Real-estate prices were completely flat. There was no borrowing for consumption. Because this behavior is rather alien to Germans. Germans save whenever possible. This is deeply in German genes. Perhaps a leftover of the collective memory of the Great Depression and the hyperinflation of the 1920s.” The German government was equally prudent because, he went on, “there is a consensus among the different parties about this: if you’re not adhering to fiscal responsibility, you have no chance in elections, because the people are that way.”
In that moment of temptation, Germany became something like a mirror image of Iceland and Ireland and Greece and, for that matter, the United States. Other countries used foreign money to fuel various forms of insanity. The Germans, through their bankers, used their own money to enable foreigners to behave insanely.
This is what makes the German case so peculiar. If they had been merely the only big, developed nation with decent financial morals, they would present one sort of picture, of simple rectitude. But they had done something far more peculiar: during the boom German bankers had gone out of their way to get dirty. They lent money to American subprime borrowers, to Irish real-estate barons, to Icelandic banking tycoons to do things that no German would ever do. The German losses are still being toted up, but at last count they stand at $21 billion in the Icelandic banks, $100 billion in Irish banks, $60 billion in various U.S. subprime-backed bonds, and some yet-to-be-determined amount in Greek bonds. The only financial disaster in the last decade German bankers appear to have missed was investing with Bernie Madoff. (Perhaps the only advantage to the German financial system of having no Jews.) In their own country, however, these seemingly crazed bankers behaved with restraint. The German people did not allow them to behave otherwise. It was another case of clean on the outside, dirty on the inside. The German banks that wanted to get a little dirty needed to go abroad to do it.
About this the deputy finance minister has not that much to say. He continues to wonder how a real-estate crisis in Florida could end with all these losses in Germany.
Monday, August 01, 2011
In The Plex by Steven Levy
Below are some interesting quotes from "In The Plex" book, written by Steven Levy. Great read. A must-read book for those who own Google and also for people who want to understand about online/internet companies.
Regards,
David
In The Plex
by Steven Levy
What I discovered was a company exulting in creative disorganization,
general principle that everyone should think big and then make big things happen. He believed that the only true failure was not attempting the audacious. “Even if you fail at your ambitious thing, it’s very hard to fail completely,” he says. “That’s the thing that people don’t get.”
But those who spent time talking to Larry and Sergey knew that there was something special about them and their company. The two founders had already sketched a road map that struck observers as ludicrously grandiose. But their determination and confidence when they explained their vision imbued an almost hypnotic plausibility into their wild expectations.
The OKR embodied ambition. “It sanctions the ability to take risks,” says Doerr. Even worse than failing to make an OKR was exceeding the standard by a large measure; it implied that an employee had sandbagged it, played it safe, thought small. Google had no place for an audacity-challenged person whose grasp exceeded his reach.
huge data centers spread around the world, costing more than a billion dollars each,
(According to an industry observer, Data Center Knowledge, there were twenty-four major facilities by 2009, a number Google didn’t confirm or dispute.)
Google would not say how many servers it had in those centers. (Google did, however, eventually say that it is the largest computer manufacturer in the world—making its own servers requires it to build more units every year than the industry giants HP, Dell, and Lenovo.
“We owned the fiber. It was ours. Pushing the traffic was nothing,” says Sacca. How much fiber did Google own? “More than anyone else on the planet.”
According to Sacca, the shell cost about $50 million, but its contents were valued close to a billion dollars. There was more than 200,000 square feet of space for the servers and infrastructure and another 18,000-square-foot building for cooling towers. In addition, there was a 20,000-square-foot administration building that included a Google-esque cafeteria and a dormitory-style building almost as large for transient workers. The exterior gave no clue about its contents.
Forty-five containers, each holding 1,160 servers, are arranged in a two-story setup. The cold aisles on those buildings ran at 81 degrees.
“We had written enough scripts and basic infrastructure so that the data centers all over the world could be run from Mountain View,” says Jim Reese. “It didn’t matter whether you have 500 or 500,000 computers—you could run them remotely. We designed it for scale. We need physical hands only to get computers in place and replace the hard drives and motherboards when they fail. Even at the point where we had 50,000 computers, there were maybe six of us maintaining them.”
Credit Suisse in April 2009 calculated that YouTube was spending more than $350 million a year to stream an estimated 75 billion video plays to users. Google would privately tell journalists that those guesses were based on what others had to pay to move such massive numbers of bits. With its superefficient cloud infrastructure and its private fiber-optic network, Google’s costs were less, much less. (Exactly how much less, the company wasn’t saying, but Ramp-Rate, another company conversant with infrastructure costs, made its own assessment of $83 million.)
How many books were ever printed? Around 30 million? Even if the cost was $10 a book, the price tag would only be $300 million.
Since its earliest days, Brin and Page have been consistent in framing Google as an artificial intelligence company—one that gathers massive amounts of data and processes that information with learning algorithms to create a machinelike intelligence that augments the collective brain of humanity.
“I just feel like people aren’t working enough on impactful things,” he said. “People are really afraid of failure on things, and so it’s hard for them to do ambitious stuff. And also, they don’t realize the power of technological solutions to things, especially computers.”