Top Googler

	Eric Schmidt, CEO of Google

SAN FRANCISCO -

Eric Schmidt has become the tech world's premiere pundit. As such, his observations on his company are both lofty and, well, a bit opaque.

In a wide-ranging conversation with New Yorker writer Ken Auletta on Wednesday, the Google (nasdaq: GOOG - news - people ) Chief Executive chatted about advertising, YouTube, the pace of change in technology and those pesky allegations that the Internet giant is trying to thwart a deal between Yahoo! (nasdaq: YHOO - news - people ) and Microsoft (nasdaq: MSFT - news - people ).

Auletta--whose lengthy profile of Google last spring rankled company insiders because of the paucity of quotes from executives--kicked off the conversation by asking Schmidt about how the Internet giant plans to make money from its myriad projects and businesses. Right now, virtually all the Mountain View, Calif.-based company's $16.6 billion in annual revenues come from online search advertising.

Schmidt delivered this lofty sound bite: "The goal of the company isn't to monetize everything. The goal of the company is to change the world."

Next, Auletta honed in on YouTube, the video-sharing site that Google acquired in 2006 for $1.65 billion. Advertising hasn't taken off on YouTube because advertisers are worried that their brands will appear next to questionable content. Schmidt admitted that Google hasn't figured out how to make lots of money from the video site.

So how does Google judge YouTube's success? Schmidt gave a vague response: "Because of the way the company works, we'll know. We measure everything to the millisecond. We can tell."

Schmidt added that unlike most companies, Google doesn't have to worry about making money from all its ventures since its search advertising business is a cash cow. "We have the luxury of time," he said. "Most people in the business are so pressed for time. They have to make money now."

Then Auletta asked Schmidt about his "good friend" Microsoft Chief Executive Steve Ballmer, saying that Google is trying to block the software giant from acquiring Yahoo!. Schmidt sidestepped the question and made a joke. "That decision is up to Yahoo!, not Google. Am I missing something?" he said.

After trying to acquire Yahoo! for three months, Microsoft dropped its offer in May in part because the Web portal was also trying to hash out an advertising partnership with Google. Microsoft said such a partnership would prevent it from acquiring Yahoo!

Auletta asked the question again. Schmidt got serious but still sidestepped a direct answer. "We've said an independent Yahoo! is better for competition and innovation," he said. "We think it's in the market's interest and the end user's interest."

Asked what he worries about most, Schmidt assured Auletta it's not the competition. "It’s not competitors' moves that screw up a business," he said. "Because of our market position, we have an opportunity to define ourselves as we go forward. There are many obstacles to continued success. We hope to be a great company some day."

In other Google news, co-founder Sergey Brin paid $5 million to research a seat on a future flight to space. The money went to Space Advertures Ltd., a privately held venture that sends groups of people into space. In 2007, Microsoft billionaire Charles Simonyi paid $25 million for a 13 day trip. (See "Billionaires in Space.")

Heading out of the atmosphere should give Brin an even higher-minded point of view on the mundane business of making money on earth