The New Zealander was appointed in January to rebuild the team in the wake of Eddie Jones' disastrous tenure and concedes he is still getting to know some of the players.
"I've never been so unprepared to be fair," he said after a four-day training camp in Brisbane, which has doubled as a meet-and-greet.
"It's a little bit daunting, to be honest, but if I wasn't nervous, I don't think I'd be on the edge doing my job right.
"So I'm happy to be nervous because it just encourages me to work a bit harder and engage a bit quicker and a bit more often with the players so that we can try to be on the same page."
Schmidt, who steered Ireland to the top of the rankings and then helped the All Blacks make last year's World Cup final, has named a new-look 38-man squad for the first of two Tests against Wales in Sydney on July 6.
He needs to whittle it down to 23 and name a captain, but is keeping his cards close to his chest.
"The complication for me is just, first of all, I think it's easier to select that first captain once you've selected your team to make sure they're a starting player," he said.
"And then from there, I think you gauge how well they go... I'm pretty sure that we'll use more than just 15 of the same starters, so there could be a different captain for one or two of the Tests.
"And that will also allow us to just experiment a little bit."
Australia, who have slid to ninth in the rankings, last met Warren Gatland's Wales at the 2023 World Cup in France, crashing 40-6.
It is Wales' first tour to Australia for 12 years and they have not beaten the Wallabies Down Under since 1969, losing 11 successive Tests.
