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Google CEO Eric Schmidt Appears In Traverse City, Michigan.

Eric Schmidt of Google Says His New Office in Ann Arbor Michigan Office is Doing Very Well.
The chief of Google says the Internet company's Ann Arbor business is "doing very well" and is growing "as fast as we can train people."

Eric Schmidt, CEO of Google, said after addressing the nation's governors about economic innovation in Traverse City that he's convinced Michigan has the educated work force needed to fill 21st Century jobs, including the jobs at the Google advertising sales office in Ann Arbor.

"It's growing very rapidly. We're clearly going to expand it," Schmidt said.

John Burchett, lobbyist for Google and former chief of staff to Michigan Governor, Jennifer Granholm, said the company now has 150 employees. When Google announced a year ago it would open the ad sales arm in Ann Arbor, officials projected 1,000 people would eventually be hired.

Schmidt said Google is finding the work force it needs in and around the University of Michigan campus and hasn't had to import employees.

"There's a physical limit to how fast you can grow," Schmidt said. "You can get the office space but it takes time to train employees."

Schmidt recently visited his new Ann Arbor AdWords operation and reported "the energy level as pretty phenomenal." He said Michigan is doing some of the things to entice cutting-edge companies like Google to come to the state, including promoting broadband technology and offering a "very searchable" state government data base.

Michigan should take heart, Schmidt said, that even though its economy is languishing and unemployment here is among the highest in the nation, "the barrier to entry for an entrepreneur now is the lowest it's ever been. Smart people here can create new companies and new jobs with less money."

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Schmidt and AT&T CEO Randall Stephenson Spoke at The National Governors Meetings in Traverse City, Michigan.

Both CEOs told the nation's governors: That America's Schools don't make the grade.

The Two titans of the high-tech economy told the nation's governors on Saturday that their states are not doing enough to educate students for technology-heavy jobs or to clear the way for investment by their companies.

"We're not competitive in our education programs," Randall Stephenson, chairman and chief executive of AT&T, told the National Governors Association.

"Our education system is falling flat."

Stephenson also had tough words for states that he said put up regulatory roadblocks to investment by companies such as his. Asked by Tennessee Gov. Phil Bredesen what role states should play in monitoring or regulating the spread of broadband technology, Stephenson said, "Increasingly, your role is ... to stay out of the way."

The AT&T chief and Eric Schmidt, chairman and CEO of Google, spoke to the opening business session of the governors' 99th annual meeting at Grand Traverse Resort in Traverse City - a hotbed of leading tech companies in Michigan - the session focused on how states can boost business innovation and economic growth.

Both had plenty of advice, suggesting that governors' most important role was to boost education and knock down regulatory walls.

Schmidt, a pioneering Internet executive, encouraged states to show more daring in looking for better ways to increase student performance in public schools.

"Almost anything we try is going to give us more information," Schmidt said. "Why not simply try five different things and see what kind of results you get?"

But it was Stephenson, who has held the top job at AT&T for less than two months, who had the toughest words for the more than 30 state chief executives in attendance. He said that an AT&T agreement with its largest union to bring back 4,000 jobs that had been outsourced to India was struggling because of faulty U.S. education standards. "We're struggling to find qualified candidates to fill those 4,000 jobs."

He praised Michigan and other states that have consolidated franchising processes for cable television, allowing companies such as AT&T to work out blanket agreements with state governments rather than individual deals with dozens of cities and counties. But when several governors -- including the Democratic Bredesen, and Vermont Republican Jim Douglas -- asked if states shouldn't establish rules to protect consumers or require companies to extend broadband lines to rural areas, Stephenson pushed back. He said the best thing governors could do to encourage economic growth was to knock down regulatory barriers.