It was a surprising way to kick off a technology conference at a moment in time where any piece of news– big or small– cues up the BUBBLE-OR-NOT Greek chorus of wailing and chest beating. Tech valuations, while almost universally sky-high, are nowhere near as high as the paranoia that we’re in a bubble. Or worse: The fear that you aren’t on the record having called this one out. A lot of tech commentary today has all the sophistication of a schoolyard game of “NOT IT!”

But the man on stage opening All Things Digital’s ninth conference wasn’t a player in the Valley’s central Web 2.0 psychological drama like Mark Zuckerberg of Facebook or Reid Hoffman of LinkedIn. CEO Dick Costolo of Twitter would wait until day two. Hearing from Marc Andreessen, the puppet master behind many of those soaring valuations, would have to wait too.

The man in All Things D’s ergonomic red hot seat was Eric Schmidt, the former CEO of Google– the last company everyone said would incite a public market tech bubble. (It didn’t.) The last company Wall Street watchers claimed was insanely overvalued. (It wasn’t.) The company that has been on top for much of the last decade, as the older generation of Web 1.0 giants have failed to innovate and up and comers have declined to go public.

Schmidt was the man who helped take Google from an amazing product founders were eager to sell to Excite or Yahoo to the most valuable company on the Web with one of the most killer business models in modern economic history. The man somewhat dismissively labeled with the informal title of “adult supervision” over Google’s founders– a role that more modern product wunderkinds like Zuckerberg have actively eschewed as unnecessary.

You could argue Schmidt left on a strategically brilliant high note last year. Google has been eclipsed in the Valley hype machine by Facebook, and no doubt, in the public markets too whenever Facebook decides to file. LinkedIn has already beat it as the largest recent Web IPO. By handing the reins to Larry Page before that happened, you could argue Schmidt handed over Google’s one-trick-pony problem to the engineers, leaving himself free to play the role of elder Internet statesman for the company, the President Barack Obama reelection campaign, or any sphere he prefers.

So why didn’t he seem more happy?

The talk didn’t seem to focus on all that Schmidt had accomplished, or Google’s still-powerful role as the second most highly valued member of the big four consumer technology companies as he called them, Google, Amazon, Apple and Facebook. Instead, it heavily dwelt on his failures. He repeatedly fell on his sword about missing the social/ identity revolution. He said four years ago he wrote memos about it, but did nothing about the memos he wrote. “I clearly knew I had to do something and I failed to do it,” he said. When asked why he responeded he was “busy, but the CEO should take responsibility and I screwed up.”

That wasn’t all. He talked about his failure to negotiate a music subscription service to run on Android, his failure to make faster product decisions which hopefully Page will change, his failure to make strategic deals with Facebook because he wouldn’t match Microsoft’s terms, and his failure to get Nokia as an Android licensee for its still gargantuan mobile phone base, particularly in emerging markets. He gave a nod to Apple’s “beautiful” but closed hardware products as the opposite of what Google offered, noted Google was no. 2 in display ads but that was still a multi-billion dollar business, and even said Bing did some parts of search better than Google. The talk wrapped up with a demo of Google Wallet– which already demoed last week– and came across less than revolutionary, more as an attempt to chase more nimble innovators like Square and Groupon.

When offered the opportunity to say what he’d done well at Google, he demurred, saying “You guys can write that story.”

Part of it was the questions lobbed at him. He was certainly not offered up softballs. But the last time I attended the All Things Digital conference, Ballmer and Gates were the opening chat. Microsoft is way more behind the eight ball than Google– particularly when it comes to the Web and the consumer– and they scatted and bebopped all over the stage about Microsoft’s all-mighty market position, and how those worried just didn’t get it.

Don’t get me wrong– it was refreshing to hear a tech leader who wasn’t so overtly in spin mode. It was a fascinating and frank window into his mixed feelings about his tenure at what’s still the world’s most powerful Internet company. But there’s a fine line between modesty and melancholy. Maybe it betrays something about my mood too, but for me, Schmidt seemed to tip over that line.

It wasn’t just his tenure at Google that weighs on him– it seemed to be the place the technology industry is in. Google was the crowning moment of Schmidt’s tech career, not the beginning of it. He cut his teeth in the enterprise world and when asked about the consumerization of enterprise, he didn’t immediately spin it as a win for an ad-supported, consumer facing company like Google. Instead, he said dramatically said, “We are seeing the death of IT as we know it.”

On a global policy level he described his biggest fear as the “balkanization of the Internet,” or a trend towards individual nations policing the Web in such a way that it’s no longer one, single open thing, rather a set of different Webs around the world. This is the pessimistic counter to the promise of Android, a platform that is activated on 400,000 phones per day and promises to take Google’s mission to organize and provide access to the world’s information global in a far deeper way than the PC revolution ever could. Similarly, he emphasized that all the great stuff being built on the Web to empower the rise of democracies could also be used to empower the world’s tyrants, terrorists and dictators. This lead to an admission that Google’s face recognition software was the only innovation the company had held back on releasing for ethical concerns that it be used for surveillance or constructing a harmful biometric database.

He insisted repeatedly he liked working at Google, wasn’t going anywhere anytime soon, and joked he’d work there after death if he could figure out a way. That may all be true, but it was clear from Schmidt’s demeanor that Google is no longer the swaggering do-no-wrong company of a few years ago. If there’s a frothy bubble in tech, it’s certainly not located “in the ‘Plex.”