Bill Gates, Satya Nadella & Steve Ballmer on Microsoft in the AI Era | The Circuit with Emily Chang

1. 0:00 – 2:29

   Microsoft Intro

   1. ECEmily Chang0:02

      [upbeat music] Be honest. Do you still get excited when you hear the Windows startup sound? [Windows startup sound]

   2. BGBill Gates0:15

      [laughs]

   3. ECEmily Chang0:15

      [laughs]

   4. BGBill Gates0:15

      It reminds me of a magic time. This feels like, you know, without it, there is no day that you could start.

   5. ECEmily Chang0:22

      Microsoft, an indispensable and inescapable force for 50 years. The company invented the software industry and changed the world as we know it, transforming personal computing from a nerdy curiosity into a global necessity.

   6. SBSteve Ballmer0:37

      Uh, I'll cheat a little bit.

   7. ECEmily Chang0:39

      Yes. With three CEOs spanning five decades, each leader marked a distinct chapter in technological history.

   8. SPSpeaker0:47

      The thing they all have in common is this extraordinary curiosity. You know, Bill is more of a reader. Steve studies numbers, finds patterns and pictures in them, and loves talking with people. Satya's like the Renaissance man CEO.

   9. ECEmily Chang1:03

      The software giant has lasted this long by catching and capitalizing on technology waves, constantly hedging their bets over an uncertain future.

   10. SBSteve Ballmer1:11

       We're always thinking about, okay, what happens tomorrow? What's gonna happen tomorrow? Will the company keep going?

   11. ECEmily Chang1:17

       They didn't catch them all, but just enough to stay relevant today.

   12. BGBill Gates1:22

       There've been so many twists and turns in the technological road. When I was in charge, you know, I'd sit up all night thinking, "Oh, we're gonna miss this. We're gonna miss that." The fact that we've been able to navigate this changing environment, kind of a miracle to me. You know, here we are and now, you know, the road's got all these AI twists and turns that Satya, with a little bit of advice from Steve and I-

   13. ECEmily Chang1:44

       [laughs]

   14. BGBill Gates1:44

       ... gets to, to drive the, the car around these curves.

   15. ECEmily Chang1:48

       Microsoft loomed large for years, but as the land of tech giants got more crowded and more competitive, it seemed to drift into the corporate doldrums, until Satya Nadella and a big bet on OpenAI brought them back into the zeitgeist. But the next generation of Microsoft has to do more than rely on ChatGPT's strategic advantage.

   16. SPSpeaker2:08

       We're at a really pivotal moment here. The company still needs to figure out a consumer-centric vision, a consumer-first vision, but it's not in Microsoft's DNA, and it remains to be seen if they can do it. [upbeat music]

2. 2:29 – 3:07

   Microsoft’s 50th Anniversary Event

   1. ECEmily Chang2:32

      [crowd murmuring] Welcome to Microsoft's 50th birthday. We're gonna go inside to watch the main event.

   2. BGBill Gates2:40

      Are we on The Circuit?

   3. ECEmily Chang2:41

      You're on The Circuit.

   4. BGBill Gates2:42

      Right now?

   5. ECEmily Chang2:42

      You're on The Circuit.

   6. BGBill Gates2:42

      We're on The Circuit.

   7. ECEmily Chang2:43

      It's a cameo from the competition.

   8. BGBill Gates2:45

      Oh my God.

   9. ECEmily Chang2:46

      Come in. I'll open the door for you.

   10. BGBill Gates2:47

       I love The Circuit.

   11. ECEmily Chang2:47

       [laughs] Thank you. [upbeat music]

   12. SPSpeaker2:54

       Welcome to the era of AI companions and of copilots.

   13. BGBill Gates2:58

       It starts with Bill and Steve, who are both here with us today. [audience applauding]

   14. ECEmily Chang3:06

       [crowd murmuring] Hi.

3. 3:07 – 5:49

   Bill Gates Reflects on 50 Years

   1. ECEmily Chang3:07

      We're waiting for Bill. Yeah, he'll be right here. He's finishing up an interview and then he's coming here.

   2. SPSpeaker3:14

      There's one more piece, Bill, and then if I hop in here.

   3. ECEmily Chang3:16

      Okay, Bill. Happy birthday.

   4. BGBill Gates3:19

      Thank you.

   5. ECEmily Chang3:20

      50 years. So it's 1975. What's going on inside Bill's brain? Did you and Paul think you had something this big in your hands?

   6. BGBill Gates3:29

      Well, we knew that software would be important. You know, we said, when people thought it was crazy, a computer, uh, on every desk and in every home. And so we saw it as this tool of empowerment.

   7. ECEmily Chang3:41

      Microsoft's journey begins with these two young hackers in the Pacific Northwest, Bill Gates and Paul Allen. They started obsessing over the emerging computer industry after spotting this cover of Popular Electronics. It's rudimentary stuff by today's standards, a mini computer kit that you'd program by punching holes into paper. Gates and Allen were hooked, and developed a new programming language for it. That became the foundational software for Microsoft.

   8. BGBill Gates4:07

      People probably remember the Apple II, the TRS-80, the Commodore PET. Those were the first computers that sold literally in the millions, and all of them included Microsoft Basic. So the reason you could write a program and try things out was because we'd worked with each of those companies. Then the IBM PC comes along.

   9. SPSpeaker4:28

      IBM now had 50% market share and was defining what a PC meant.

   10. ECEmily Chang4:33

       Gates and Allen got their software on the first IBM PCs, and in a stroke of business genius, inked a non-exclusive deal, making it possible for other manufacturers like Apple to license it. What was the scariest this-might-not-work moment along the way?

   11. BGBill Gates4:47

       Well, there were times in our relationship with IBM, uh, that were very complicated. Uh, very early on, uh, in the history of the company, we had a dispute with our customer and they weren't paying us. Thereafter, I said, "I'm gonna have enough money in the bank to pay everyone's salary for a year, even if nobody pays me anything." So I was very conservative financially. And we were always worried that once somebody realized what we realized, that they might, you know, do a good job as well. So, you know, why didn't IBM, who had all the capital in the world and great people, why couldn't they do what we did? And we thought, "Well, we're more dedicated to software. We're gonna price this stuff super, super low and make it available to everyone." Welcome to the Microsoft MS-DOS 5 upgrade training. It's... new.

   12. ECEmily Chang5:40

       Productivity software was the hot new thing transforming the workforce, and Microsoft soon became the company to work for, attracting people like this guy.

4. 5:49 – 6:49

   Satya Nadella’s Beginnings

   1. ECEmily Chang5:50

      This is a classic-

   2. SPSpeaker5:51

      A front-end tool-

   3. ECEmily Chang5:52

      ... throwback video.

   4. SPSpeaker5:53

      There we are. Yeah. [laughs] I know, I know. My daughter makes a lot of fun of my accent even here. As you can see, the most important architectural requirement for this piece is-

   5. ECEmily Chang6:02

      So you're a technical product manager here. You're demoing Excel. Who's that guy? Like, what's he thinking at that time?

   6. SNSatya Nadella6:09

      It was an Excel demo with a, I think a DB2 connector back to, at that time, a mini computer, um, and it was the beginning of that client-server era.

   7. ECEmily Chang6:19

      Did that guy have any idea he'd be running the place one day?

   8. SNSatya Nadella6:21

      No, no chance. [laughs]

   9. ECEmily Chang6:22

      [laughs]

   10. SNSatya Nadella6:22

       I was, like, hoping to stay there in my job-

   11. ECEmily Chang6:24

       [laughs]

   12. SNSatya Nadella6:25

       ... for the next month if I could. I was lucky enough to g- get hired. I never felt any job I was doing at Microsoft somehow was a path to the next job.

   13. ECEmily Chang6:34

       Mm.

   14. SNSatya Nadella6:34

       The job I was doing was, like, the most exciting thing that I could be doing, and I gave it it all, a- and, and the rest is history.

   15. ECEmily Chang6:41

       Nadella joined Microsoft in 1992 when the company started to cement its position as the default operating system for the world.

   16. SPSpeaker6:48

       Really,

5. 6:49 – 9:16

   Microsoft’s Ebb and Flows

   1. SPSpeaker6:49

      like, the origin of Microsoft was this idea that you could make money off of selling software. Before that, everybody sold the hardware, and you got software with it. But it was the idea that you could have a software company, and that was really revolutionary.

   2. ECEmily Chang7:02

      Dina Bass is a Bloomberg Tech reporter who's covered Microsoft since 1999. That's 25 years of war stories. There have been so many, like, ebbs and flows and waves-

   3. SPSpeaker7:12

      Right

   4. ECEmily Chang7:12

      ... and this and that.

   5. SPSpeaker7:14

      Some of it is routine where, you know, oh, another version of Windows, and some of it is a 4:30 AM phone call on your home phone with Microsoft PR talking into your voicemail about the fact that they're about to launch a hostile takeover bid for Yahoo.

   6. ECEmily Chang7:29

      [laughs]

   7. SPSpeaker7:30

      And you're seven months pregnant, and you're like, "Nah." [laughs]

   8. ECEmily Chang7:35

      Nah, nah.

   9. SPSpeaker7:35

      When I moved to Seattle, it was really a different place. It was the late '90s, and there was just this whole culture of the, the stock had gone crazy in that decade. So there was this whole culture of Microsoft millionaires.

   10. ECEmily Chang7:48

       Tech employees are a unique breed. Do they still call them Microsoftees?

   11. SPSpeaker7:53

       Think so. I mean, at least we've progressed from Microserfs, right?

   12. ECEmily Chang7:57

       Microsoft nearly dominated the PC market, practically printing money by selling new versions of Windows and Office. But shipping software back then had an entirely different meaning.

   13. SPSpeaker8:09

       When the company would finish work on a product, it was called RTM, release to manufacturing. That was when you froze the code and you sent it off to the nice people that published disks, which for your younger viewers is-

   14. ECEmily Chang8:20

       [laughs]

   15. SPSpeaker8:20

       ... a circular thing that you put in a computer. There'd be cascading turns of people s- you know, signing off on their own code, signing off that they were done, and at the end of it, there was a giant party. People would end up in the fountain. People would end up getting thrown into Lake Bill.

   16. ECEmily Chang8:35

       We saw Steve Ballmer jumping into Lake Bill.

   17. SBSteve Ballmer8:37

       [cheering] I like to be excited. There was so much to be excited about at Microsoft. We were doing great things and, you know, trying to m- really, if you will, be cheerleaders for a whole industry, and that was a lot of fun.

   18. SPSpeaker8:57

       People brought Super Soakers to campus, and there was a giant water fight to the... Basically, to prepare for this, Microsoft, which has a very nice and pricey art collection, would take the art down from the walls because they didn't want it to get damaged. But it was a young culture that was kind of fun, which I think people don't really associate with Microsoft.

   19. ECEmily Chang9:15

       Microsoft

6. 9:16 – 10:12

   Windows 95

   1. ECEmily Chang9:16

      reached a pinnacle with the launch of Windows 95. It was a cultural moment.

   2. BGBill Gates9:21

      We had Jay Leno, and it was kind of maybe the time when people realized Microsoft was quite a unique company. Office had come together. The graphics interface had come together. You know, on all the different systems, whether it was Apple Macintosh or Windows on the PC, we were providing the top application. So that was definitely a fun day, uh, that, you know, showed that we had some special sauce.

   3. ECEmily Chang9:47

      People lined up around the block to get their hands on the latest operating system, eager to explore ways to click, type, and create with computers. Microsoft sold over 40 million copies in its first year.

   4. SPSpeaker9:59

      And in that moment, there's also kind of the seeds of their kind of downfall because in Windows 95, they don't have anything internet-oriented. They don't realize it's gonna be a thing. And all of a sudden, you see browsers

7. 10:12 – 10:22

   The Browser Wars

   1. SPSpeaker10:12

      come up. You see the internet start to become important, and they're completely flat-footed. So you have a few things going on at once in that kind of canonical evil empire era.

8. 10:22 – 13:29

   Antitrust Battle

   1. ECEmily Chang10:22

      This is when the company started to get in trouble with the US government. Microsoft was accused of wielding its market power, bundling its browser with Windows to try to ride the internet wave. They got big, monopoly big, according to the Department of Justice.

   2. SNSatya Nadella10:38

      How many of you use a PC without Microsoft's o- operating system? Gentlemen, that's a monopoly.

   3. ECEmily Chang10:45

      You were criticized for your aggressive business tactics and being anti-competitive. How do you reflect on that period?

   4. BGBill Gates10:53

      Well, we were so successful, uh, and one of the great rewards if you're, you know, that successful is the government comes in and says, "Okay, you know, do they have to do things to help out your competitors? Did you follow all those rules?" So yes, at that same time as the internet era was coming along in the, the '90s, we were involved in a US government, uh, lawsuit. Then Brad Smith came along.

   5. ECEmily Chang11:23

      Microsoft president Brad Smith joined in 1993 as a budding technology lawyer. You can find him at places like Davos liaising with heads of state or at Microsoft's tree house. You helped navigate Microsoft through one of, maybe one of the most challenging times in corporate history. Bill said the company could have died during the antitrust battle. What stands out to you from that time?

   6. SPSpeaker11:48

      We needed to figure out how to resolve disputes and not just figure out what it might take to win them, and that really meant making peace. And w- when I got the job of general counsel back in 2001, when I was selected, I said to Bill and Steve and others, "Look, if you wanna go make peace and negotiate agreements, I'm probably the right person. And if you don't wanna do that, then I'm- Probably not the right person

   7. ECEmily Chang12:14

      [laughs]

   8. SPSpeaker12:14

      Because I had a strategy I believed in.

   9. BGBill Gates12:17

      We were able to work a settlement out with the government, and you know, we've been a lot more aware of, okay, let's constantly be in touch with the governments around the world, make sure they're good with what we're doing. And, uh, and so we haven't had, uh, anything intense like we did there in the late '90s.

   10. ECEmily Chang12:34

       The Microsoft antitrust case has relevance for both Google and Meta today. Both companies are facing down lawsuits in a bid to break up dominant tech companies once again. That was sort of the beginning of a challenging time for innovation at the company. Was it bad for Microsoft but good for the industry in a way?

   11. SPSpeaker12:52

       No company will ever hit every wave better than everyone else. It just... That's not the way the world works. Now, it is the case that if you're distracted, you're much less likely to hit the next wave, and I think it is always worth remembering it is a big world. If you don't hit a wave, somebody else will. You have the opportunity to get the next one.

   12. ECEmily Chang13:15

       Some people will, will blame that on the distraction from the antitrust case, but some of it really was just a failure to understand where the market was going, to understand what consumers wanted, what Office users wanted, right? So they miss

9. 13:29 – 17:07

   The Steve Ballmer Era

   1. ECEmily Chang13:29

      search, they miss mobile.

   2. SPSpeaker13:31

      Right.

   3. ECEmily Chang13:31

      They miss social, basically. And the stock is flat for years.

   4. SPSpeaker13:36

      This is the Steve Ballmer era.

   5. SBSteve Ballmer13:37

      How much do you think this advanced operating environment is worth?

   6. ECEmily Chang13:41

      Employee number 30 at Microsoft, Steve Ballmer is the energetic, exuberant sales whiz who led Microsoft from 2000 to 2014. He put the big in big tech.

   7. SPSpeaker13:51

      When it was Bill to Steve, it was sort of obvious because Steve was the president of the company. He had been Bill's co-pilot, if you will, for basically 20 years.

   8. SBSteve Ballmer14:01

      When I first stepped in the role, I said, "Wow, this is actually quite different." I really understood what it means to be the, in the buck stops here position. Developers, developers.

   9. ECEmily Chang14:14

      [laughs]

   10. SBSteve Ballmer14:14

       Developers, developers, developers. It's part of my greatest hits, I guess.

   11. ECEmily Chang14:19

       [laughs]

   12. SBSteve Ballmer14:19

       And I'll never shake it.

   13. ECEmily Chang14:21

       Your 25th anniversary, you jumped out of a cake.

   14. SBSteve Ballmer14:25

       Ah.

   15. ECEmily Chang14:25

       I want, I want a do-over.

   16. SBSteve Ballmer14:27

       [laughs] I didn't even remember that.

   17. ECEmily Chang14:29

       You know, I miss Ballmer-style product launches. Do you think tech's too serious now?

   18. SBSteve Ballmer14:34

       I always thought, okay, you're gonna have fewer characters.

   19. ECEmily Chang14:36

       Mm-hmm.

   20. SBSteve Ballmer14:37

       You know, Bill Gates, a character larger than life. Larry Ellison, a character larger than life. Steve Jobs, obviously. And yet I think there's still some characters. The AI thing is tricky because if you don't seem serious enough, then people won't trust you with the privacy, you know, the, the, the issues that AI generates uniquely. So I see a little bit less of the, "Hey, let's do the-

   21. ECEmily Chang14:59

       Yeah, yeah

   22. SBSteve Ballmer15:00

       ... the big joke or thing," 'cause it's just tougher with these kinds of products.

   23. ECEmily Chang15:04

       During Ballmer's tenure, Microsoft wandered into its wilderness years, battling fresh challenges from Google in search and Apple in mobile. A new acronym emerged that described the big tech stocks of the moment, and it didn't include Microsoft. The company just couldn't connect with the shifting needs and tastes of consumers. The company missed mobile and social and search. Do you ever look back and think, "What if?"

   24. SBSteve Ballmer15:28

       Not too much, actually. You know, did the company mi- miss search? No, because it, all the stuff, including Satya, who worked on that stuff, all that stuff is now fundamental to what's going on in AI. So yes, there was a cycle of it the company missed. The one I would s- would highlight is the intelligence that you carry with you, i.e. your phone. That's the one I say, "Ah." And I know why I, we missed it. Missed meaning we don't have a strong position, and we have no position anymore. But I think that the company has really thrived despite that. I'm proud of that and, you know, are there things that Satya's missing right now? I'm sure, you know, 15 years from now he'll look back and say, " [beep] could've done that one..." Sorry. "Oh, shoot. Could've done that one better."

   25. ECEmily Chang16:19

       [laughs]

   26. SBSteve Ballmer16:20

       Uh, but there you have it.

   27. SPSpeaker16:22

       We ran a bunch of charts that tried to track his performance. If you looked at profit, if you looked at revenue, it went up. The chart that just was down was the stock, and there was just... It seemed like there was nothing they could do right at that point. And again, it's not totally accurate to say they missed mobile. They knew it was gonna be big. They couldn't figure out what people wanted. Bill Gates loved the idea of a tablet computer, a pen computer he called it in the '90s.

   28. SBSteve Ballmer16:49

       It's a tablet, and there's a pen here.

   29. SPSpeaker16:51

       He had wanted to do that forever, and they finally released one i- in the early aughts, and it's not something that anyone wants. And then Steve Jobs gets up there with the iPad, and it's exactly what people are looking for. Now, there's a couple of exceptions. In 2001, they released the

10. 17:07 – 17:54

    Xbox Release

    1. SPSpeaker17:07

       Xbox, which remains the, you know, the biggest American gaming empire. It was a tough decision for them to make. Bill and Steve both were unsure at various points. There was a lot of screaming and yelling around that decision. Bill, in a very foul-mouthed tirade at a meeting on Valentine's Day, accused the team working on it of, I'm not gonna use his exact wording on television, but messing up everything he had created at the company. Steve at this point is six weeks or so into his tenure as CEO, and this is the first major decision he has to make. Am I going to green-light this Xbox or not? And he decides to go for it, but not before raking the team over the coals. That ended up being a really prescient decision by Steve Ballmer, though. The other thing that Steve did that was really important, he

11. 17:54 – 19:00

    The Cloud Future

    1. SPSpeaker17:54

       decided to do some really smart things in terms of cloud.

    2. ECEmily Chang17:58

       Ballmer became the bridge from Microsoft's PC era to its cloud future, a transformation sparked by a competitive threat next door. Amazon identified that cloud computing would be the next opportunity, so Ballmer put together a team led by Satya Nadella to try to catch up and get a piece of the emerging market. Microsoft then launched Azure and brought Office apps to the cloud.

    3. SPSpeaker18:21

       It's a really pivotal moment because Microsoft at this point has been surveying customers about whether they wanna move to the cloud. Um, and customers are telling them, "We're not ready." And so the person that preceded Satya in that division basically tells Steve Ballmer, "Customers don't want it. We shouldn't move this quickly." And Steve looks at that executive, a guy named Bob Muglia, and says, "Well then, Bob, you're not my guy." And he replaces him with Satya. And there's, like, a sliding doors moment where that doesn't happen, Satya never becomes CEO, and you know, God only knows where the company

12. 19:00 – 21:24

    Succession Planning

    1. SPSpeaker19:00

       is.

    2. ECEmily Chang19:01

       I understand that, that Bill spent a lot of time succession planning when he handed the reins to you, and that you also spent a lot of time succession planning when you passed the reins to Satya. What's the key to building a company that outlasts its founder?

    3. SBSteve Ballmer19:15

       It was super important to let Satya have his space.

    4. ECEmily Chang19:18

       Mm-hmm.

    5. SBSteve Ballmer19:19

       And I think that was a key learning, 'cause when Bill and I, we sort of had a long hand-off. And so in a sense, the long goodbye I think is, is difficult, because role reversal is difficult. And I think I'd learned that enough to say, "Look, I love you. I might think I have a lot you can learn from me," and I said to him, "but don't listen to old CEOs. Former CEOs are former CEOs."

    6. ECEmily Chang19:47

       [laughs]

    7. SBSteve Ballmer19:47

       "You're gonna know what to do, and anything you don't know, you're gonna figure out."

    8. ECEmily Chang19:53

       What was it about Satya?

    9. SPSpeaker19:55

       Satya was not beholden to the past. He was not beholden to making sure that Office helped Windows. And so he was able to make decisions, I think, in a way that was a little bit freeing. Steve famously got upset when employees had iPhones. Satya wanted everybody to experience everyone else's products, to know about them. I remember talking to someone, an executive from another company, had been at a conference with Satya, and every single business leader in the room kept pulling out their BlackBerry, checking their email. Satya didn't look at it the whole day. He just listened.

    10. ECEmily Chang20:27

        Bret, I mean, how confident are you that Nadella can bring this company back from where it's been, and sort of restore, uh, Microsoft to greatness, and win in the places where it can?

    11. SPSpeaker20:39

        There's not a tech leader who doesn't respect Satya Nadella. He's really taken a, an extremely complex and large company and genuinely changed its culture and strategy.

    12. SPSpeaker20:47

        With Satya, you know, his first reaction when the succession p- process was announced was not to throw his hat in the ring. I mean-

    13. ECEmily Chang20:56

        Yeah

    14. SPSpeaker20:56

        ... he literally said, "I don't think you need me."

    15. ECEmily Chang20:58

        Wow.

    16. SPSpeaker20:59

        And then a couple m- months later he said, "Well, I think maybe you need me." [laughs]

    17. ECEmily Chang21:03

        [laughs]

    18. BGBill Gates21:05

        This company's had three CEOs. [laughs] They're all right here. This is all-

    19. ECEmily Chang21:09

        [laughs]

    20. SPSpeaker21:12

        Not everybody knew him as well. He had only been running the cloud business for a little less than three years. If it had been two years later, I think it would've been obvious. So it was a bet.

    21. ECEmily Chang21:23

        You are credited with

13. 21:24 – 23:50

    Satya Nadella Era

    1. ECEmily Chang21:24

       leading Microsoft's comeback, and you came in as kind of a wartime CEO. Is it peace time now, or is it still war?

    2. SNSatya Nadella21:32

       I mean, th- those metaphors are interesting. To me, I, I feel like the Microsoft I grew up in was that there was no such thing as, oh wow, we won anything. So at least the core DNA and the core posture I've had in, throughout my 32 years at Microsoft is we better get our act together to make sure we're learning fast enough about what the next big thing is. It's all about, hey, are we being relevant, uh, in the future? That's the only way to survive.

    3. ECEmily Chang22:01

       When Satya Nadella took the reins in 2014, he challenged the Windows-obsessed hierarchy and reoriented Microsoft around the cloud and AI. It worked, and the stock talked, to the delight of Ballmer, Microsoft's largest shareholder.

    4. SBSteve Ballmer22:16

       Everything's three times-

    5. ECEmily Chang22:17

       Mm

    6. SBSteve Ballmer22:17

       ... as big.

    7. ECEmily Chang22:18

       Mm-hmm.

    8. SBSteve Ballmer22:18

       Revenue's three times as big.

    9. ECEmily Chang22:19

       Mm.

    10. SBSteve Ballmer22:19

        Profit is three... Uh, market cap's more than three times as big.

    11. ECEmily Chang22:22

        [laughs]

    12. SBSteve Ballmer22:22

        All good by me. So every, you know, everything has scaled so much. It's, it's amazing.

    13. ECEmily Chang22:28

        Microsoft surged back to Wall Street glory with the Magnificent Seven, shorthand for high-performing tech stocks with market caps bigger than some countries. The hardest lesson you've learned as CEO?

    14. SNSatya Nadella22:39

        I think the hardest one is to be able to really live that, right? The deliver the present and, and then prepare for the future, that ability. Like as a CEO, what is it that you have to do? Each quarter you have to create magic, uh, right? That's kind of what every 90 days the market expects you to create magic, and that's kind of the reality of the world we live in. Uh, while at the same time building a long-term institution, and the accountability that goes with it, being able to sort of understand what it takes to have that ultimate accountability, uh, to both deliver today and to, for tomorrow, and to be able to get that balance right.

    15. BGBill Gates23:18

        It's a much more complex job today. I have to say I'm in, you know, great admiration for how zen he is-

    16. ECEmily Chang23:25

        [laughs]

    17. BGBill Gates23:25

        ... at, you know, picking the things he's gonna focus on and all the, you know, uh, choices. He's very good about drawing both Steve and I in, so whatever expertise we have, he gets the benefit of that. You know, so I think he's kind of a model. He wasn't there in the early days, and yet, you know, of all the tech companies, I think he's, he's been the best at carrying forward even the original spirit

14. 23:50 – 29:25

    The Bet on OpenAI

    1. BGBill Gates23:50

       of what made Microsoft special.

    2. ECEmily Chang23:53

       Nadella's legacy includes big investments and acquisitions, from LinkedIn, GitHub, Activision Blizzard, to what some have called the deal of the decade, a $13 billion bet on OpenAI. Microsoft's biggest hit?

    3. SNSatya Nadella24:06

       Windows.

    4. ECEmily Chang24:06

       Biggest miss?

    5. SNSatya Nadella24:08

       Clippy.

    6. ECEmily Chang24:08

       [laughs] I love it.

    7. SNSatya Nadella24:10

       It was just ahead of its time.

    8. ECEmily Chang24:11

       [laughs]

    9. SNSatya Nadella24:12

       It was just ahead of its time. It's back again.

    10. ECEmily Chang24:14

        Biggest surprise?

    11. SNSatya Nadella24:16

        The biggest surprise was- Maybe, maybe this OpenAI ChatGPT. Having a chat interface become a hit was a real surprise.

    12. ECEmily Chang24:28

        The concept of a chatbot isn't new. They tried before with Clippy, Cortana, and Tay, the bot that had to be shut down 16 hours after launch.

    13. BGBill Gates24:36

        Soon Tay was ranting about Hitler.

    14. ECEmily Chang24:39

        But ChatGPT was a massive success, giving Microsoft a surprise jump in the AI race. The deal with OpenAI, was it smart, lucky, or a quick fix?

    15. SPSpeaker24:50

        It's hard to argue anything other than smart. The original deal back in, you know, 2019, nobody really knew if it was gonna work out the way they said, right? And Bill Gates init- Bill Gates opposed that deal on technological grounds because Bill thought that the way that the technology of the AI market would play out was gonna be a different way, and that what Sam and company wanted to do wasn't gonna be how it would work. Lucky that they picked the right horse perhaps.

    16. ECEmily Chang25:14

        The OpenAI and Microsoft partnership delivered a hit, but there've been some bumps along the way.

    17. SPSpeaker25:21

        It is full mutiny within the world's most important AI company.

    18. ECEmily Chang25:26

        Who's gonna be CEO of OpenAI tomorrow? You tell me. [laughs]

    19. SNSatya Nadella25:31

        I will leave it to OpenAI and its board.

    20. ECEmily Chang25:33

        What's Satya like in a crisis?

    21. SPSpeaker25:35

        Satya to me that weekend was like a duck. He was completely calm above the water, and underneath the water he was paddling furiously. You pointed out to me that quote that about, you know, Microsoft being above them, below them, around them-

    22. ECEmily Chang25:47

        Mm-hmm

    23. SPSpeaker25:47

        ... and you know, which sounds kind of scary, but really it's true. The contract that Microsoft had, had struck in with OpenAI really gave them access to everything no matter what happened. And at the same time, things are starting to change on the basis of that.

    24. ECEmily Chang26:00

        Microsoft is building its own models. OpenAI is making other friends, and your partnership ends in 2030. Are you trying to tell the kids that maybe this marriage isn't forever?

    25. SNSatya Nadella26:11

        This is another thing I, I learned in the last 50 years is, you know, you approach all partnerships and create long-term, stable partnerships which are win-win, right? So I hope that for decades to come Microsoft and OpenAI will be partnered in a variety of different ways. Will they have other partners? Absolutely. Will we have other partners? Absolutely.

    26. ECEmily Chang26:29

        But the relationship is changing, right? Like, how is it changing, and what happens when that deal is up?

    27. SNSatya Nadella26:33

        I think that any company that has gone from being a research lab to one of the most successful product companies of this age, obviously things have to change, for them and for us and in the context of the partnership, right? We have IP rights. Uh, we're thrilled about that access we have. Uh, we are infrastructure providers. They are the biggest customers of ours. And so to us, having that multifaceted sort of partnership is what we are really focused on, and so why would any one of us want to go upset that?

    28. ECEmily Chang27:02

        Still, business is business, and it seems like there's always a new twist on tap in that relentless pursuit of relevance. As we saw with Search and your competition with Google, sometimes you just can't fight the verb. It's habit-forming, and ChatGPT is the verb right now. So how much do you worry that Microsoft loses the mindshare game?

    29. SNSatya Nadella27:22

        Every day that ChatGPT succeeds is a fantastic day for Microsoft.

    30. ECEmily Chang27:26

        Right. Every time you search on ChatGPT, Microsoft makes money, right?
15. 29:25 – 32:45

    Mustafa Suleyman’s Plan for Consumer AI

    1. ECEmily Chang29:26

       Hello.

    2. SPSpeaker29:27

       Hey.

    3. ECEmily Chang29:28

       Good to see you.

    4. SPSpeaker29:28

       Great to see you.

    5. ECEmily Chang29:29

       Mustafa Suleyman is head of Microsoft's Consumer AI team, who came in-house in a buzzy acqui-hire. Suleyman's job is to make Microsoft's own chatbot, Copilot, as essential as Excel or Windows in a big bet on the next era of computing.

    6. SPSpeaker29:43

       Everything is about to shuffle-

    7. ECEmily Chang29:45

       Mm-hmm

    8. SPSpeaker29:45

       ... whether it's search or the browser or apps or the operating system. These models are just completely different to any one of those last generations of software.

    9. ECEmily Chang29:55

       So right now you feel like you have a once in a decade opportunity.

    10. SPSpeaker29:59

        I really do. I think these next couple of years are gonna be, uh, a defining moment. We're gonna look back and be like, "This was the era of real agents."

    11. ECEmily Chang30:07

        Mm-hmm.

    12. SPSpeaker30:07

        You know, forming a lasting, meaningful relationship with an AI companion that becomes the primary way that you do computing in the world.

    13. ECEmily Chang30:17

        He's trying to create a seamless and futuristic consumer AI experience, a new mission for Microsoft.

    14. SPSpeaker30:23

        The number one priority for us is that we have to produce beautiful, elegant consumer products that regular young people love, right? And that is not the way that young people think of Microsoft's products today, and that's a very big shift in our thinking.

    15. ECEmily Chang30:41

        Microsoft's product suite still, I think, has a lot of challenges, and in many ways can feel dated.

    16. SNSatya Nadella30:47

        [whimsical music] [laptop closing] Like Excel, you're making me cry. When are we banning Microsoft Outlook? I spent two hours today trying to open an email. You have one job.

    17. ECEmily Chang31:00

        How do you make it smarter, but still simple and delightful?

    18. SPSpeaker31:05

        So you o- you clearly want it to reason over your past data, use your personal information, and then get really good at taking actions inside the browser, searching for things on your behalf, and that's just an iterative process that, you know, is gonna take many, many quarters to come to pass.

    19. ECEmily Chang31:22

        Mm-hmm. What do you think your approach, your secret, is going to be?

    20. SPSpeaker31:27

        I think humor is gonna be central.

    21. ECEmily Chang31:29

        Hmm.

    22. SPSpeaker31:29

        It's gotta have a sense of itself, a little bit of character.

    23. ECEmily Chang31:33

        Hmm.

    24. SPSpeaker31:33

        It needs to remember you and know who you are. And that range of personalization, that's gonna be a key differentiator.

    25. ECEmily Chang31:41

        All right, we're gonna try out some different voices.

    26. SPSpeaker31:42

        [upbeat music] Looking for answers or a new perspective? Let's chat and figure it out together.

    27. ECEmily Chang31:49

        [laughs] Whoa.

    28. SPSpeaker31:50

        I wanna hear your big ideas.

    29. ECEmily Chang31:53

        Ooh.

    30. SPSpeaker31:53

        I can write stories, brainstorm ideas-
16. 32:45 – 34:49

    Microsoft’s $80B Investment in AI

    1. ECEmily Chang32:45

       on a massive spending spree.

    2. BGBill Gates32:47

       Microsoft's putting out $80 billion of investment, you know. Clearly, that's a sense that, wow, we have something that customers are gonna want. We're willing to invest at a level that's completely unheard of. I mean, that's... it's a pretty mind-blowing number.

    3. ECEmily Chang33:02

       We're in this new computing era. Tech giants, including you, are building these AI data centers. Do you have any concerns about the size and scale of this bet? Like, are we building the future the right way?

    4. SNSatya Nadella33:14

       I think the, the scale is pretty stunning, but the real test here, Emily, is what happens in the real economy. The real test is not some benchmark or what have you of AI. It's one simple fact, which is when we start seeing higher growth rates around the world, and the benefits of that growth rate, by the way, being much more broader, uh, s- cross-sectorally and by economic strata, then I think we would have achieved something.

    5. ECEmily Chang33:39

       The emergence of DeepSeek from China, you told your team to quickly integrate it into Azure. Why don't you think it's a risk? And, and what do you think of China's role in this fight?

    6. SNSatya Nadella33:49

       The thing that I think about is there'll always be open source.

    7. ECEmily Chang33:53

       Mm-hmm.

    8. SNSatya Nadella33:53

       Uh, and if anything, what DeepSeek has proven is open source can come from any place. In this case, it happens to come from China. The next model may come from some other country. It may come fr- from the, a lab in the United States. It doesn't matter. In this industry, we better sort of really face up to the fact that this is a rate of diffusion that's faster than anything before, and it's worldwide.

    9. ECEmily Chang34:14

       [upbeat music] There's a version of AI that's a security and privacy nightmare. How do you think about it?

    10. SPSpeaker34:25

        Well, I think that it's just an imperative for us to protect security and privacy in every aspect of technology, whether we're talking about AI or social media or the content we create at work. The aspect of AI that is most interesting is that it is sort of the ultimate tool and the ultimate weapon.

    11. SPSpeaker34:45

        [crowd cheering]

17. 34:49 – 40:15

    Ethics

    1. SPSpeaker34:51

       So the question I wanted to address today is really simple: What does all this mean?

    2. SPSpeaker34:56

       Mustafa, shame on you. You say you, you claim-

    3. SPSpeaker34:59

       Well-

    4. SPSpeaker34:59

       ... that you care about using AI for good, but Microsoft-

    5. SPSpeaker35:01

       That's fair

    6. SPSpeaker35:01

       ... sells AI weapons to the Israeli military.

    7. SPSpeaker35:05

       I-

    8. SPSpeaker35:05

       You are a war criminal.

    9. SPSpeaker35:05

       I hear your protest. Thank you.

    10. SPSpeaker35:06

        Shame on you.

    11. SPSpeaker35:08

        [chanting] Microsoft is a war profiteer. Microsoft is a war profiteer. Shame on you.

    12. ECEmily Chang35:13

        Not everyone is along for the tech industry's ride to the AI promise land. There are consequences and challenges ahead as this new underlying technology embeds itself into everything. Do you think we're gonna really look back on this march of progress as positive? You know, I've heard Bill talk about how he never thought that tech could be negative until the, the era of social networking. I guess I wonder if this sort of relentless march of progress could, in the future, mean fewer jobs, fewer opportunities, less meaning in our lives.

    13. SPSpeaker35:46

        I think it's super important to acknowledge the uncertainty around what's gonna unfold over the next 10 or 20 years. Anyone who is confident is probably wrong, and so that means that we have to be alive to the fact that this really is different to other types of technology. It is not just a simple tool. It's dynamic. It's emergent. It adapts to you on the fly, and that means there could be all kinds of third-degree effects that are quite hard to predict.

    14. ECEmily Chang36:17

        You've said that the age of complete human dominance will be over in 10 years. What does that really mean for us?

    15. BGBill Gates36:24

        What it means goes beyond, you know, which company actually delivers that or what their stock price is. It's a much more profound thing than just, like, the browser wars were. I mean, it didn't matter to people really who won the browser wars. Here, the, the capacity, the intelligence will give humans a lot of choices.

    16. ECEmily Chang36:47

        It's a complicated picture for the software giant. Its mission is the future of work, but it's investing in technology that's reshaping the future of opportunity. AI-powered coding assistants are changing how software gets built, automating tasks normally handled by junior developers. That's become a bragging point at the very top.

    17. SNSatya Nadella37:05

        And so I would say maybe 20, 30% of the code that is inside of our repos today in some of our projects are probably all, uh, written by software. What about you guys?

    18. SPSpeaker37:14

        I don't know, maybe half the development is gonna be done by AI.

    19. ECEmily Chang37:18

        Is AI gonna make engineers obsolete?

    20. SBSteve Ballmer37:22

        AI is gonna vastly change the way software gets built.

    21. ECEmily Chang37:26

        Mm-hmm.

    22. SBSteve Ballmer37:27

        It will, and yet there's still gonna be people who have to figure out-

    23. ECEmily Chang37:31

        Mm-hmm

    24. SBSteve Ballmer37:31

        ... what the world needs, how to give it to them. Will all of the code-crunching activities of yesterday-

    25. ECEmily Chang37:39

        Mm-hmm

    26. SBSteve Ballmer37:40

        ... be around tomorrow? No, a lot of those will go away, but I, I'm an optimist. People say, "Oh, you know, are you gonna put people out of..." And this happened every time.

    27. ECEmily Chang37:49

        Yeah.

    28. SBSteve Ballmer37:50

        You know, "Will this cause a loss of jobs? Will that cause a lot of jobs?"

    29. ECEmily Chang37:53

        Mm-hmm.

    30. SBSteve Ballmer37:53

        You know what I say?
18. 40:15 – 43:02

    Microsoft’s Next 50 Years

    1. SNSatya Nadella40:16

       Thank you for your vision, your leadership, your passion, and for building the Microsoft that we know today, a company that has truly changed the world.

    2. ECEmily Chang40:26

       What is Microsoft in 50 years? Like, your best guess.

    3. SPSpeaker40:30

       I mean, a, a Petri dish with a couple of cells-

    4. ECEmily Chang40:32

       [laughs]

    5. SPSpeaker40:33

       ... connected to, like, an, an AI being that controls everything. I don't know that we know what it is in five years-

    6. ECEmily Chang40:39

       Mm

    7. SPSpeaker40:39

       ... because we're talking about the technological innovations here and how do they lead with their own product and not just because they picked the right model. Microsoft is preaching this gospel of AI changing everything about the way we work. What Satya wants to see is for that to be proven out first at Microsoft.

    8. ECEmily Chang40:58

       Microsoft changed the world. Will Microsoft change the world again?

    9. SNSatya Nadella41:02

       I go back to the founding moment when Bill said, "You know what?" The software industry didn't exist, and he and Paul sort of said, "Oh, we should build software, and hopefully [laughs] we can monetize it and there will be an industry." I mean, it's crazy.

    10. ECEmily Chang41:15

        Hopefully they will come.

    11. SNSatya Nadella41:17

        Yeah, and, and it all happened. But the, the other thing about it, though, was that, that core of, wow, we wanna build software so that others can create more software. That I think is what gives us relevance. I always say this: Longevity is not a goal. Relevance is.

    12. ECEmily Chang41:33

        Mm.

    13. SNSatya Nadella41:33

        And the framing of this company from 1975 to 2025 has been the same, which is, can you do things that allow others to do more things?

    14. ECEmily Chang41:44

        If you could time travel to 2075, what advice would you give your successor?

    15. SNSatya Nadella41:48

        The advice I got from Steve Ballmer when I took on the job is the advice that I think of all the time, which is be bold, because if you're not bold, you're not gonna do anything, and be right, because if you're not right, you won't amount to much. And so the, uh, that ability to sort of get past the status quo by really boldly thinking of a future that doesn't exist, but then executing, huh?

    16. ECEmily Chang42:13

        Mm-hmm.

    17. SNSatya Nadella42:13

        Right? At the end of the day, business is about being able to earn the stripes one step at a time, and I think that's what this company has exhibited. What has ta- it has taught me all through my career at Microsoft, which is you gotta dream and execute, dream and execute, and, you know, we've not gotten it always right, both either on the dream side or on the execution side, but on the batting average, it's pretty good. [gentle music]

Episode duration: 43:02