The Rise of the Full-Stack Builder and Hyper-Leveraged Generalist with Microsoft CEO Satya Nadella

1. 0:00 – 1:48

   Satya Nadella Introduction

   1. SNSatya Nadella0:00

      The world is gonna be very skeptical of tech and tech companies that say, "Trust us, we've got it. The future is gonna be glorious." You kinda have to deliver tangible benefits because it's too important this time around. It's too much of the economy for it not to be the case. True ambition is about making the impossible possible. I take great inspiration from sort of the people who were managing the Azure network. We built in the last 15 months more Azure capacity than we built in the first 15 years. I mean, it's crazy.

   2. SGSarah Guo0:30

      Wild.

   3. SNSatya Nadella0:30

      Our job is not to do Azure networking. Our job is to build the agentic system that does Azure networking, right? The way to get to information, way to educate yourself, way to continuously keep yourself updated has changed so much. Maybe the next big startup could be someone who builds a new university, a new pedagogy even of how to get someone to go through a curriculum and find economic opportunity that's highly valuable.

   4. SPSpeaker1:11

      Please welcome swyx, Sarah Guo, Elad Gil, and Chairman and Chief Executive Officer of Microsoft, Satya Nadella.

   5. SGSarah Guo1:22

      [audience applauding]

   6. SWswyx1:28

      Thank you. Hello, Saran.

   7. SGSarah Guo1:31

      Uh, I'm so excited to be here. Welcome to a crossover episode of No Priors and Latent Space with Satya Nadella. Um, congratulations on an amazing Build.

   8. SNSatya Nadella1:41

      No, thank you so much, and it's great to be with both of you. I listen to both of you or b- both the podcasts all the time. It's great to be on it.

2. 1:48 – 3:12

   Reflections from Microsoft Build

   1. SWswyx1:48

      Thank you so much.

   2. SGSarah Guo1:48

      So you're just talking about, um, these amazing, uh, announcements from across the Microsoft estate all morning for, I think, three hours.

   3. SNSatya Nadella1:55

      [laughs]

   4. SGSarah Guo1:56

      What is the, uh, what's the most important reflection or takeaway you have?

   5. SNSatya Nadella1:59

      I, I'd say there are, uh... Perhaps the, the biggest one for me is let's sort of conceptualize this more as an ecosystem play as opposed to a single model or even a single platform, right? I mean, you know, whatever I... At least for me, having grown up at Microsoft, having seen, whatever, four major platform shifts, uh, I sort of fall into that, um, uh, camp where a platform is defined by fundamentally its ability to create more value about the platform versus what's captured in the platform. And so if you, you view what's happening right now, I think this morning's keynote was: How can any company, whether it's an AI native company or a traditional enterprise company, participate as a first-class participant where they can point to AI they created, right? It's not that they don't use other people's AI. Of course they will. But to me, what's the path? What's the recipe? How do I do it? What does the stack look like? What does the tooling look like? What is valuable? How do you do that? That's it. That's sort of our job to do.

   6. SWswyx3:11

      Yeah.

3. 3:12 – 5:48

   Microsoft’s AI Training Strategy

   1. SGSarah Guo3:12

      Ecosystem strategy is, uh, very complicated, right? Because you end up building certain components, partnering for certain components, supporting them. You just announced this big suite of models. Like, tell us a little bit about the, uh, training strategy for Microsoft now.

   2. SNSatya Nadella3:26

      Yeah. So, so the thing that we wanted to do with the MAI models was to build, and as Mustafa talked about, first of all, a great lineage, right? Starting with pre-training, uh, with very good data quality, uh, doing all the ablations, making sure, because in, in some sense it's become even harder to build a clean lineage model just because there's so much stuff out there, um, that you truly need to ablate out to be able to have a fantastic pre-trained model. In fact, that's one of the challenges of a lot of the open weight models is they look great on one benchmark or two, but they're not great on practice. So that's why, in fact, even in the RFDEs are, they, they are pretty gone really excited about these MAI models because how the heck can a small 5B model hill climb? Uh, and it goes back a little bit to what I think is ultimately the key thing to do, which is try to pursue finding that cognitive core. Uh, so to me, starting with a clean lineage, then creating that ability for companies to be able to use this, right, not just as a generalist, but to create their own specialist by building this hill climbing scaffold around it, right? So it's not just the model, but you have a hill climb scaffold around it, then you will start building your RLE. You will start collecting the traces. Most importantly, you'll have private evals because we know all the evals out there are good, interesting, but they're not really that critical-

   3. SGSarah Guo5:01

      Gonna work, yeah

   4. SNSatya Nadella5:01

      ... at this point because they all can be maxed. And so the point is each company will have its own private eval. And so that end-to-end platform story around our models is sort of, uh, what I think is interesting. And then the one other thing, Sarah, since you brought that up, is I do feel there's a new frontier. Like, people talk about the frontier and are you operating at the frontier. Um, interestingly enough, if you add a little temporality to it, you can use, let's say, in, in, in fact, the, the Land O'Lakes demo we showed was pretty cool. We used, whatever, GPT 55, right? Then you collected a bunch of traces, and then you took a 5B reasoning model and achieved higher. Uh, so that is another aspect of what it means to appear, uh, you know, operate at the frontier.

4. 5:48 – 7:33

   Complexity of Real-World Deployment of AI

   1. SWswyx5:48

      Yeah. I, I think, uh, I first of all have to congratulate you on basically building a frontier Neo lab inside of Microsoft in two years. Um, I'm wondering, you know, you have all this AI strategy that you're rolling out. I'm wondering, what do you know now that you wish you would tell yourself two years ago where-- uh, two or three years ago? Three years for the Jensen partnership, two years for-Uh, MEI

   2. SNSatya Nadella6:07

      Yeah, I mean, I think the, the thing when-- that I reflect quite a bit, right? Which is sort of obviously I got into all this when I got excited by the, the scaling laws paper and, you know, when, you know, even the OpenAI partnership came about when those folks said, "Hey, we're gonna really throw a lot of compute at transformers." Uh, and they've helped, right? The thing that I always look back and say, "Wow, these things, um, do have capability that they're climbing up." W-- I mean this, you know, this crude way of saying it is intelligence is log of compute kinda works. Now what I think we underestimated perhaps is the real-world complexity of deploying these so that they actually deliver the value in the real world, right? So the outcomes as measured by any benchmark is interesting, important, but the true eval is when people out there are able to do unique things that they only can value, and it's very measurable, right? That I wish we had sort of even, like, had more in our consciousness, right? Which is as an industry. Because right now I think when people say, "Wow, I don't want a token max," it's an artifact of us not having thought ourselves as an industry that we are using tokens to create value every step of the way. So I think that's kind of what I wish we had gotten there, but I'm glad we are here.

5. 7:33 – 9:37

   Augmenting Human Capital

   1. EGElad Gil7:33

      What are some of the use cases that you've seen that have created the most value for your customers? Because I know that people talk a lot about code, and I think it's pretty clear that that's something that's having very large scale impact. Are there other areas that you find in common that your customers are really benefiting?

   2. SNSatya Nadella7:46

      Yeah. I think, yeah, to your point, obviously coding is now got... But it's interesting, by the way, Elad, just to even talk about the coding, right? Which is coding has worked so well that we now have to rebuild the IDE, right? [laughs] I mean, it's kind of nuts to see what we sh-launched is like, oh my god, I have these hundred agent sessions. I-- The cognitive load it transfers back to me as a human is so excessive that now I need a new UI. Uh, and, oh, by the way, I-- like the, the chat as the only artifact was also impossible, so that's why we need a canvas. So it's kind of interesting for all the things about where is software needed or where is UI needed, uh, you kinda need that even for code, right, in a fully agentic world. But that said, one of the things that we are starting to see, we started seeing with Cowork, but even some of the work we, we showed with auto com-- uh, um, Autopilot, right, on what you see with Claws is a good one. Because if you sort of think about a lot of human capital is doing the glue work, right? If you now can augment that with tokens/agents that are long-running, durable, right? Then your ability to scale even what is still judgment and glue work gets amplified like coding does. Uh, so you can... Like, I'm positive that six months from now we'll all be saying, "Oh, wow," like all through nigh- the night there was a bunch of stuff that all these autopilots that I have working on my behalf with my delegated authority, so to speak, right? I can-- sort of given even my identity, did a bunch of work. Then of course I'll need my new ADE to say, "What did you do?" Like, I my-- did I do this work, and so on. So I think that that's where compressing of workflows, uh, completing of tasks, uh, that's where I think a lot

6. 9:37 – 11:49

   Harnesses for Enterprise

   1. SNSatya Nadella9:37

      of the value gets created.

   2. EGElad Gil9:37

      I think you raised a really interesting point, which is there's the actual agent is doing the code, and then there's the harness around it, and that's the environment, that's the context, that's everything you're setting up as a developer around actually a coding agent. What is the harness for the enterprise? Is there an equivalent concept for broader productivity work, or how do you think about that concept sort of generalized?

   3. SNSatya Nadella9:56

      That's right. So, so in some sense, you kind of want the harness to define the models, the, the data, uh, and the tools, and so that you have a loop across those three. And so what we are trying to, first of all, make sure is each of our products that we build, right? Whether it's GitHub Copilot or the security copi-- the, the stuff we showed with MDASH, or even the discovery for science, it doesn't matter. All of them are multi-model harnesses, um, with tools access so that you can do this progressive, uh, disclosure of tools even so that they're token efficient. Uh, and then you're feeding it with very rich context, because that's sort of the other hard lesson we have learned in the last two years is, oh my God, the amount of work you need to do to prep the context layer, uh, such that your plan can execute in the most efficient way is where the magic is. So we have, in our case, we have the GitHub harness, which essentially we're using across all our products. It's available in Foundry, and we are open, like you can use your Llama harness, whatever. Or you can use the, um, uh, you know, any open harness or any harness of yours and train with your tools and multiple models and your context. And so that's the pitch. Because right now a lot of dialogue is, um, hey, if I train the harness plus tools and the model together, you get evals. And what we are proving out is, and the best example of that, is what we did with MDASH, right? Because when it launched, uh, it found bugs or vulnerabilities that were not found by Mythos.

   4. EGElad Gil11:35

      Mm-hmm.

   5. SNSatya Nadella11:36

      Uh, and so there is existence proof, I would claim, that you can have a multi-modal harness, uh, that can in fact be more, uh, performant in the real world.

7. 11:49 – 15:09

   Developer Value

   1. SGSarah Guo11:49

      So premise behind the, uh, training at the independent Frontier Labs is really, you know, we're gonna have these models, and we'll have an API business, and we'll support enterprises and startups. But a first-party product, be it productivity or code or search, drives the majority of revenue. That's a different value equation than you're describing, I think, with the Microsoft ecosystem. Uh, if, if that's the case, tell me if it's the case, uh, 'cause obviously you have first-party products and you have enablement productsUm, what is the role of the develop- Like, what's gonna be hard, and the set of skills, and the value capture the developer has in that world?

   2. SNSatya Nadella12:23

      Yeah. So I think that there's always gonna be the case that someone who is super successful in- as a platform builder can also have first-party products. It was true with Windows. It is true, uh, with, uh, the, the SaaS side, and the cloud side as well with us and others, and so on. But the thing that is, is it should not be a limiter to other people achieving that same success, right? That, I think, is the core difference, which is the, the network effects this time around, around intelligence as such because they learn from data, and not really lots of data. It's just a few samples that you have to see to understand what's novel about something. So that's why the game becomes how to protect. So that's why I would say every company, having private evals may be the biggest IP, right? I think about it, like, what's that private eval that you can then use even a frontier model to hill climb on and not leak the traces may be one of the biggest drivers, uh, of IP. Like, so in other words, in other ta- acid testers, you have an eval that's private. You're using, uh, a g- a Model A. Can you switch it to Model B, and y- you know, climb up? If you can, then you're in control. If you can't, you're not in control, and that's where even the harness decision becomes super important, right? So therefore, having an open harness, letting all models come in, having your evals, your context, your tools help you hill climb, I think is the skills that an AI native startup needs, a SaaS company needs, or every enterprise needs.

   3. SWswyx14:07

      Mm-hmm. Yeah, I think in a very real way you are... Microsoft historically as an operating systems company and th- then become a cloud company, maybe, like, the third act is that you're a harness or evals company, whatever w-

   4. SNSatya Nadella14:19

      [laughs]

   5. SWswyx14:19

      ... whatever the, the sort of conglomerate of concepts that you wanna put together. Um, and I think, like, enabling every company to have, like, frontier intelligence or what- what-

   6. SNSatya Nadella14:29

      Yeah

   7. SWswyx14:29

      ... I forget the, the exact term that you used, um, is the, is the mission, right?

   8. SNSatya Nadella14:32

      That's it.

   9. SWswyx14:33

      Like, that is, that is the platform promise, that you build with us, you will get your intelligence, uh, for your data.

   10. SNSatya Nadella14:39

       That's right. That... To, to me, that is the... Like, if there was one tagline, uh, for this entire developer conference is, can everybody operate at the frontier with their frontier intelligence, right? To me, that is so important because otherwise, it... I- I don't know how you achieve stable equilibrium, right? Which is how do I then go and say, "Well, my company is gonna have a terminal value because I now know how to continuously compound-"

   11. SWswyx15:07

       Yeah

   12. SNSatya Nadella15:07

       ... on top of what's a

8. 15:09 – 15:51

   Can Everybody Operate at the Frontier with Their Frontier Intelligence?

   1. SNSatya Nadella15:09

      platform that gets better," right? So when, like, Windows obviously came out, Adobe built, Autodesk built, uh, or even, like, take what Jensen said. We built DX, and he built, you know, CUDA on top of it.

   2. SGSarah Guo15:23

      [laughs]

   3. SNSatya Nadella15:23

      Um, right? I mean, I always say to Jensen, "God, I got the short end of that," right?

   4. SGSarah Guo15:27

      [laughs]

   5. SNSatya Nadella15:27

      "I wish, uh, we had recognized it." But nevertheless, but th- that idea that you can build a platform layer that someone else can then extend out, um, and build their own intelligence layer in this case, I think is everything, right?

   6. SWswyx15:41

      Yeah.

   7. SNSatya Nadella15:41

      Without it, why have a developer conference? I can just come and have you all sort of just worship at the altar of one model.

   8. SWswyx15:48

      Yeah.

   9. SNSatya Nadella15:48

      But that's not a developer conference.

   10. SWswyx15:50

       Uh, backstage,

9. 15:51 – 17:38

   Modern Definition of IP

   1. SWswyx15:51

      we, we had a discussion about what is IP or what is the, the value in a company. It used to be the length of, uh, human experience at a company, and now it's this other thing, which is the evals, the, uh, experience in sort of applying agents to the company. Can you... I just want you to, like, flesh that out a bit more 'cause-

   2. SNSatya Nadella16:07

      Yeah

   3. SWswyx16:07

      ... it's very insightful.

   4. SNSatya Nadella16:07

      It's a great way to frame it, right? Because yeah, at the end of the day, every company is gonna have both the human capital that is still gonna be super valuable, uh, because humans, uh, and their ability to find the gaps that exist at all times is going to be the way we all will create value, right? I mean, so I'm definitely in the camp that this is going to be about expressing new forms of human agency and ambition even as token capital goes up, right? So let's say a cor- any corporation has lots of tokens and lot of human capital. The question is: How do you compound the two? So if you have a... Like, if you take in Teams, I have a bunch of agents doing work and a bunch of humans doing work, and the traces between those, that is really important context of how that enterprise is creating value. Then that goes back to train not a generalist model, but to tain the-- train the company veteran agent, uh, right? That is super valuable agai- again, right? Which is when a company then says it should in fact go onto the balance sheet, uh, is how I think about it, right? That's so... In fact, there may be... Like, human capital was never possible to go put on a balance sheet, uh, because you didn't know how to capture the tacit knowledge. Whereas now I think you can with the agents that have learned through the h- through time, through all the traces. Uh, so that's what at least we think will happen.

   5. SWswyx17:31

      I, I think the SEC is gonna have to have accounting standards for-

   6. SGSarah Guo17:34

      [laughs]

   7. SWswyx17:34

      ... token, uh, expertise. Uh.

10. 17:38 – 21:48

    Future of Vendor vs. Enterprise Agents

    1. SGSarah Guo17:38

       Y- you're talking about the equilibrium state, um, and a stable equilibrium where companies have this compounding value and can see terminal value for themselves. Another challenge to, you know, the considered equilibrium of, okay, there are applications and workflows that are sort of common to a vertical or a horizontal, um, and this was, like, the generation of SaaS companies, and, you know, Microsoft has lots of SaaS properties as well. And then there are things that are very specific to every enterprise that they're differentiated against. Um, I'm sure you have heard much and participate in much of the debate about the end of software because all these workflows are, are cheap to generate now. Um, do you think the equilibrium looks different between what agents get built in enterprises versus in their vendors in the future?

    2. SNSatya Nadella18:23

       Yeah. So I think what's happening there is, see, we, we had a particular way we captured, uh, I would say workflowIn apps, right? Because we built a, a data model, right? We schematized some part of some business process.

    3. SGSarah Guo18:40

       Mm-hmm.

    4. SNSatya Nadella18:40

       We then built a bunch of business logic.

    5. SGSarah Guo18:42

       Yep.

    6. SNSatya Nadella18:43

       And then we put a bunch of UI on top of it, right? So that's kind of what every SaaS company-

    7. SGSarah Guo18:47

       And a little configuration.

    8. SNSatya Nadella18:48

       Right.

    9. EGElad Gil18:48

       For like 20, 20 years that was the plan.

    10. SGSarah Guo18:50

        Yeah.

    11. SNSatya Nadella18:50

        And that was it. So interestingly enough, now you kind of get to re-litigate that vertical stacking, right? So I still think, for example, that data model that you built underneath every SaaS application is super good, right? It's like, why reinvent it? Like, I, I... My general ledger better be a general ledger. I don't need new schema creation. [laughs]

    12. SGSarah Guo19:11

        No.

    13. SNSatya Nadella19:11

        Uh, in fact, that entity relationship, uh, is actually pretty good, robust thing that I want to feed.

    14. SGSarah Guo19:18

        And you want to be stable.

    15. SNSatya Nadella19:19

        That's right.

    16. SGSarah Guo19:20

        Yeah.

    17. SNSatya Nadella19:20

        Then same thing with business logic, right? If, if you look at, uh, we have this product called Power BI, right? It is like dashboards galore people created. The beauty underneath that dashboard is a very rich semantic model, right? Someone took the pain to create a dashboard and do all the measures, and you want that. That's business logic, right? I want that to be available to me. So I think the challenge of the SaaS business model is we packaged one way. We now have to learn how to unbundle these things, and rebundle in new ways, and discover new business models, right? I mean, if you look at it, d- what's happening today with Microsoft 365 is a great example, right? We have this thing called Work IQ. In fact, like, what we are realizing is, oh my God, like, you know, if you look at... In fact, there's a p- historical parallel too, right? We sold first Exchange and SharePoint, and, uh, you know, before Teams we had a thing called Lync Server, and what have you. And we thought, "Oh, that's all gonna move to the cloud." But little did we realize that, oh, the number of people who will use servers in the cloud is 10X, 100X, right? Because people were not buying servers, they were just buying a subscription.

    18. SGSarah Guo20:32

        Mm-hmm.

    19. SNSatya Nadella20:33

        The same thing is now happening with M365, because with Work IQ we've exposed what was perhaps the most important database in a company that never got used as a database because it was only captive to our apps.

    20. SGSarah Guo20:47

        Mm-hmm.

    21. SNSatya Nadella20:47

        Right? It was, oh, email operated on it. Teams operated on it. Word, Excel, PowerPoint, SharePoint. But now, like this is one of the co- coolest things I get to do with Work IQ. I go to a GitHub repo and I say, "Hey, I attended a bunch of design meetings last week related to this repo. Can you capture all that and tell me what changes I should make?" I mean, think about that, right? It literally can go look at all those transcripts, come back with a plan to change a code base, right? Previously, you could never have thought of using M365 for something like that. So the value creation opportunity now in the agent world is in fact 10X more, but it does require us to have, for example, there's going to be usage around M365, right? Which is going to be perhaps more than even the u- end users. And we have to even re-architect. Like, in fact, like what I use to serve an inbox or a mailbox cannot be used to serve an agent. Uh, and so that's sort of what we're doing.

    22. SGSarah Guo21:47

        I don't believe in,

11. 21:48 – 24:02

    Near-Term Predictions on Model Pricing

    1. SGSarah Guo21:48

       like, permanent business models for any of these domains, but in the near term, do you have a prediction between, uh, you know, outcomes-based pricing, token-based pricing, enterprise bundles?

    2. SNSatya Nadella22:00

       Yeah. The way I, I think about this is always we've had... Like, let's even take the per user pricing.

    3. SGSarah Guo22:06

       Mm-hmm.

    4. SNSatya Nadella22:07

       The per user pricing is really an artifact of someone creating a budget needing certainty, right? Because it's the most important thing. Like, somebody wants a budget.

    5. SGSarah Guo22:19

       Mm-hmm.

    6. SNSatya Nadella22:19

       They need a per user. And, and per user is just a set of entitlements to usage, right? That's kind of what it is. And so the way is, if the first bundling will be take some usage, bundle it into per user stacks and, you know, then sell subscriptions. So subscriptions I think are gonna be there, per user is gonna be there. Then the next big thing will be consumption. So people will say, "I want consumption." And it's also possible that people will say, "I don't even want to pay for any of the subscriptions or the consumptions outcome."

    7. SGSarah Guo22:49

       Mm-hmm.

    8. SNSatya Nadella22:49

       But remember, most people love outcomes until they have an outcome, because once you have an outcome, it's like giving away royalty, right?

    9. SGSarah Guo22:56

       Mm-hmm.

    10. SNSatya Nadella22:56

        I mean, like I've, I've talked to customers who love, you know, outcome-based pricing, and I say, "I'm all in." Until they, "Oh my God," like, "What are you talking about? You're sharing in my outcome? No, no, no. I want you to go back to per user pricing, and I want you to consumption price." Right? So I think that debate will go on. Uh, but and all, all, all of these business models have a particular time and a place versus one to rule them all. And if anything, if you're a SaaS vendor or you're a platform vendor, having that flexibility... And quite frankly, we faced this with GitHub, right? We just recently announced a per user pricing on GitHub because little, you know, we- GitHub Copilot was constructed at a per user level before we understood even, uh, the intensity of usage of agents, right? It was an interactive way for a developer to use code complete, maybe task. It was not like, oh, I launched 10,000, you know, agents that are going on all day, right? So that is what the adjustment is about. So now that we really want, there will always be a per user-

    11. EGElad Gil23:59

        Mm-hmm

    12. SNSatya Nadella23:59

        ... but there will have to be a consumption meter.

12. 24:02 – 25:58

    Durability of SaaS

    1. EGElad Gil24:02

       How do you think about the durability of SaaS more generally? One thing I've observed is in a lot of enterprises internally, there will be teams that almost have agent euphoria. They're so excited about the explosion of things they can build that they're trying to rebuild a lot of applications. They're going to their SaaS vendors and saying, "We're not gonna work with you anymore," or, "We're considering an internal project." And it seems like in six to nine months, maybe some of those people will come back and say, "Actually, we, we can't rebuild everything." How do you think about what's durable in this world and what isn't?

    2. SNSatya Nadella24:28

       It's a... It... I think we have to go through one full budget cycle on this to really see the, um-Uh, the sort of the emergence of the equilibrium, because at the end of the day, there's marginal cost to even generating the app, right? So in, in fact, there can be even a, a simple way to say it, like if you should always acquire something if the marginal cost of building and maintaining, uh, something on your own is higher. Uh, right. That should be like it's a quantifiable-

    3. SPSpeaker25:00

       Yeah

    4. SNSatya Nadella25:00

       ... right, a quantifiable thing. And the maintenance part is important, right? Even, like you gotta remember, like, hey, you know, all the security stuff that now AI will find, you better fix them too, fast. Uh, of course, there's a coding agent to help you with, but then that burns tokens, right?

    5. SPSpeaker25:15

       [laughs]

    6. SNSatya Nadella25:16

       So whose responsibility is it? It's kind of like a, a cycle that you've gotta think through. And I think we have gone through the excitement that I can generate a lot of software. I think the next thing would be, what software do I really wanna generate? What software do I wanna use from others? How do I compose these two into some agentic workflow that I have agency over, right? Because I think there'll be very little tolerance for anybody who's inflexible, uh, at the vendor level. Uh, but at the same time, I think that anyone who has got that flexibility shows up, delivers the value, will be back at again, right? We're selling software, uh, but with just different business models, in fact.

13. 25:58 – 28:18

    What Satya’s Building

    1. SNSatya Nadella25:58

       It-

    2. SPSpeaker25:58

       Uh, speaking about building software, um, one of my favorite moments from, I think, a previous build maybe one or two years ago was they had a big-- they, they-- there was a section of you building your own software. I'm curious if you're building anything now.

    3. SNSatya Nadella26:09

       Yeah. So I, I think the... You know, first of all, let's face it, right, building software has made it possible for even the incompetence of a CEO of a company like ours-

    4. SPSpeaker26:19

       [laughs]

    5. SNSatya Nadella26:19

       ... uh, you can build. So thank God. But that said, I, I, I, I do feel that, you know, something like, um, GitHub Copilot, to me, and especially the new Sessions app or the new app, has just made it so much more possible for you to have agency over artifacts that you felt you couldn't touch before, right? So to-- for me as a CEO even, to go to a code base, uh, to be able to learn about it... Like I remember joining Microsoft long back, you know, first and then you say, man, everybody had to go in and look at, you know, whatever, Cutler's Malik or what have you, to learn how to do good C, uh, C++ code. Um, so now that ability to be more full stack up and down is so good. But that doesn't mean every one of us should be doing the same thing. The question is: how do you then have the ability to inspect things, learn things, see things? Um, I think it's just so much more. And so to me, what I'm building a lot of is these long-running foundry agents, uh, right? So there's autopilots. So the easiest thing is, to me, I think I just built one, uh, even last week, where the idea was, hey, can I have an agent that is continuously monitoring essentially my own chief of staff autopilot, right? We're gonna have that obviously in, uh, Scout. That's what, uh, uh, we showed. But it is so easy and trivial to build. I took Work IQ. I said, "Take Work IQ, go, uh, and build a foundry long-running agent, uh, store all the memory in, um, uh, using Ray Fin," right? Basically at my back end as a service. And lo and behold, it built it, and not only built it, I could say, "Publish to Teams," and it published the damn thing to Teams. So the ability, uh, to have a, you know, some end-to-end project like this complete is just pretty miraculous.

    6. SPSpeaker28:17

       How do you think, uh,

14. 28:18 – 30:54

    Future of Engineering Roles

    1. SPSpeaker28:18

       that impacts the different types of engineering roles that exist in the future? Because right now I think there's, you know, a dozen different types of engineers that you can be, from QA, front end, et cetera. You know, there's a big swath. I've heard some people argue that in four or five years we'll basically end up with four engineering roles. It'll be people who are managing agents, it'll be four deployed engineers or FDEs, it'll be security engineers, and then people working on large scale infrastructure for a small number of services, and then everything else just collapses into the agentic world.

    2. SNSatya Nadella28:47

       Yeah, I-

    3. SPSpeaker28:47

       Do you think that's a correct view of the world?

    4. SNSatya Nadella28:49

       Yeah. I mean, I think, I think we'll have to experiment our way through it, but what you said is what-- there are some very at scale things. At LinkedIn, they did structurally change, uh, and it, you know, basically built up a new discipline called Full-Stack Builder, right? So they went and said, "Hey, let's bring, uh, people from design and product management, front end engineering, all pull them together, uh, but also have an edge," right? It's not like the design person still doesn't have the design edge, or the front end person doesn't have the front end edge, but you can give yourself bigger scope in roles so that you're not confined to one role. Um, and then equally infrastructure has become very critical, right? So in other words, like, I mean, RLEs, I mean, one thing we've realized is even for the Excel team, for example, building the RLE in which a reward can be learned is actually one of the hardest sort of infrastructure problems. Uh, and so you kind of need even new talent, right? Distributed systems people, even in what was considered an end user app team, uh, because it's a different skill set. So yes, infrastructure science is the other one, obviously. Um, so I think we'll see how these evolve, right? Where's the s-real... I mean, always the world will have a bunch of specialists. Um, you know, I think the generalist role is going to be the most exciting, right? Because the leverage of a generalist, um, is where we are going to see the maximum returns, right? When you, when you said, "Hey, are you coding?" I'm now a gen-- like what-- I've basically translated knowledge work, right, which I did, where I created a Word document or a spreadsheet or even, uh... And now I can build an app, right? It's in the same sentence.

    5. SPSpeaker30:38

       [laughs]

    6. SNSatya Nadella30:38

       Uh, right. That idea that, oh, wow, my generalist skills have gotten a higher leverage, I think is what we're gonna see across the board.

    7. SGSarah Guo30:46

       Music to the ears of CEOs and VCs that are, like, a little dangerous in a lot of ways-

    8. SWswyx30:51

       Golden age for idea people

    9. SGSarah Guo30:52

       ... idea people, yeah-

    10. SWswyx30:53

        Uh

    11. SGSarah Guo30:53

        ... with

15. 30:54 – 34:36

    How Microsoft Can Be More Ambitious

    1. SGSarah Guo30:54

       a lot of agency. I- if you take that idea of personal agency and you just zoom it out to the organizational context, um, uh, my partner Mike Vernal, who, uh, actually started his career at Microsoft, just wrote an essay where one of the big takeaways is i- it's an age where you can be much more ambitious, and you need to be given the pace of the environment and how quickly, actually, users and companies are open to adopting new technologies. Um, how do you think about... I, I feel silly asking this of somebody running a, you know, trillion-dollar-plus company already, but how do you think about how Microsoft can be more ambitious now?

    2. SNSatya Nadella31:28

       It's a great question. Um, I think, um, I think the, the thing in these type of transitions is to have a conceptual model of how work can change to go after outcomes that you could hardly imagine previously, right? In fact, Kevin Scott has this nice line, right, which is, um, when you can make the impossible... Like, when you're making hard things easier, that's sort of one point of leverage, but true ambition is about making the impossible possible. So now the thing that is missing a little bit in all of our organizations is what is that new conceptual model of what can we build? What was impossible, and what can we build? And I'll give you one example of this, right, which is I take great inspiration from sort of the people who were managing the Azure net- network, and they came to the... This is from even last year. You know, we were scaling. You saw the... I, I talked about sort of how we built in the last 15 months more Azure capacity than we built in the first 15 years. I mean, it's crazy.

    3. SGSarah Guo32:42

       Wild, yeah.

    4. SNSatya Nadella32:42

       Right? It's pretty wild, and it's the same team. So they saw that, and they said, "Bob, this just ain't gonna work if we don't reconceptualize our work." So they built... Essentially they said, "Our job is not to do Azure networking. Our job is to build the agentic system does th- that does Azure networking," right? These are the folks managing the 500-plus fiber operators managing the VAN, right, all over. And fiber operations ultimately is a physical operation. Things get cut. Things get, uh, you know, have to be repaired. You know, we have fancy words called DevOps and so on. Basically, emails are coming in, and you gotta go respond to them, take care of it. So they built this agentic system. They even have a character for it. It's called Miles, and it sort of does all this sh- stuff, right? They started sort of screaming for more tokens and so on, and so they were saying, "Look, I, we don't need a headcount. We need tokens in order to be able to manage, uh, our operation." That reconceptualization-

    5. SGSarah Guo33:41

       Mm-hmm

    6. SNSatya Nadella33:41

       ... of what their work is, right? They, they basically took their work and made it meta, right? That meta work is now their new work.

    7. SGSarah Guo33:49

       Mm-hmm.

    8. SNSatya Nadella33:49

       Right? In the '80s if somebody had come to us and said, "4 billion people are gonna get up in the morning and start typing," my model would've been, "We need 4 billion typists?" But we're not doing typing. We're doing knowledge work. So that to me I think is it, right, which is, whether it's Microsoft or whether it's any organization, is to give ourselves permission to do new types of metacognition, meta work, using these new tools to change the outputs that matter, uh, and then really make the impossible possible. So completing that dot or the, the connective tissue across those, I think is where a lot of the enterprise value will get created.

    9. SWswyx34:30

       Should we talk about data centers?

    10. SNSatya Nadella34:31

        Yeah, please ask.

    11. SWswyx34:32

        Oh, okay. Well, uh, uh, w- we, this leads nicely into

16. 34:36 – 38:01

    Data Centers and Community Impact

    1. SWswyx34:36

       the data center build-out. I always think, I just, I'm just impressed with the sheer scale of the build-out from Microsoft but also everyone else, that this is redefining what it means to be a hyperscaler, and I just feel like that, that, that is, had unprecedented scale on finances, uh, on the way you run the company, but also the communities that are, that are impacted. Um, yeah, just talk a bit more about what you're seeing on the ground, like, when you visit your-

    2. SNSatya Nadella34:59

       Yeah, I think there are two aspects of it. Obviously, the, the build-out is, uh, extraordinary. Um, you know, nothing like this has happened, and it's great to be, uh, one of the participants in it. Uh, but you brought up the other part, right? I think at this point it's clear that unless we as an industry, uh, are very principled about ensuring that the benefits of all the stuff we're talking about are felt in real ways, uh, at the community level, right? Because this is not just a, a campaign. Um, right? It has to be real where people are saying, "Look, this is not ch- changing the prices on energy for me." In fact, if anything, it's bringing down prices because long term there's going to be a better grid. There's going to be more energy. Water consumption is in fact not sort of, uh... In fact, water is being replenished, right? You gotta really, you know, sh- educate folks on truly what's happening, the cl- the, the closed loop systems we are building. We have to invest in the training, the jobs, the tax base. In fact, the least talked about stuff is the amount of jobs that get created during construction, after construction. What's the tax base that's there in the community? And, and all this has to be real. Um, and, and if that is the case, then we will have permission. If it is not, we won't have permission. It's as simple as that, right? Which is, uh, we, we... I think we have to take it as an industry pretty seriously. Uh, I think it's good for communities to be skeptical, ask the hard questions, for us to do the hard work, earn that. Um, but at the end of the day, if this, if we can really be the produ- Like, I've always felt, like, in human history if you use a lot of energy but also create a lot of value for society-The story has been fantastic. If you don't do that, it's not been that great. And this time around, I'm a firm believer that ultimately if you do have a token economy that drives productivity, that drives economic growth, that drives broad spread, um, you know, participation, better health outcomes, um, then I think we'll be in a great place. Uh, and that's at least what we all have to be focused on.

    3. SWswyx37:13

       Yeah. It, it makes me think actually that with all these initiatives that you're doing, might be e- easier to see ROI in the communities first before in enterprise. [laughs]

    4. SNSatya Nadella37:21

       [laughs] Yeah. I, I mean, I think both sides. In fact-

    5. SWswyx37:23

       Yeah

    6. SNSatya Nadella37:23

       ... it comes back together. It has to be the people in the communities are going to be employed, are going to be participants, uh, in the real economy, right? That's, I think the question is, like, if we... If the broad economy is doing well and the communities are doing well, the dots get connected. It's sort of the market forces are such that we will connect the dots. And that, I think, is it. Like, you ought to be able to see the evidence. You can't be about any one company, uh, but it has to be broad economic growth and broad ec- you know, community permission.

    7. SWswyx37:56

       Yeah.

    8. EGElad Gil37:56

       I guess I want to talk about what are you most optimistic about currently, or what have you most updated

17. 38:01 – 39:52

    AI’s Impact on Society

    1. EGElad Gil38:01

       your personal models on regarding societal impact of AI?

    2. SNSatya Nadella38:05

       So you're saying what's the, the-

    3. SWswyx38:07

       What have you updated most on in terms of societal impact of AI?

    4. SNSatya Nadella38:10

       Yeah. I think the, um, the b- the most, uh, critical thing is the first question we even started with, which is we need to tell the story and make it real, that everybody has a real shot to participate as a first-class participant in this new economy, right? That's kind of, I think, w- in the next 12 months, 18 months, we need a way for people to say, "Oh, wow, I get it," right? There's gonna be tremendous capability, tremendous amount of infrastructure, but I can see what is gonna happen, whether it's the benefits like health outcomes or my ability to create a startup or my ability to run my local sort of, uh, store more efficiently. It's just happening, and I see that, uh, benefit myself, right? That to me, you know, earning that permission in a path-dependent way, we can't wait. See, the one thing, Elad, that I've now learned is I think the world is gonna be very skeptical of tech and tech companies that say, "Trust us. We've got it. The g- future is gonna be glorious." Uh, you kind of have to deliver tangible benefits. Um, and quite frankly, politicians winning elections, uh, because they have advocated for that. That'll be at least my adjustment because without it, um, thinking that somehow... Because it's too important this time around. It's too much of the economy

18. 39:52 – 42:28

    AI and Education

    1. SNSatya Nadella39:52

       for it not to be the case.

    2. SGSarah Guo39:53

       So one very simple framework I have for, you know, what are or what is gonna be the broad benefit of AI, um, beyond the communities just working in technology are, are sort of wealth creation-

    3. SNSatya Nadella40:07

       Yep

    4. SGSarah Guo40:07

       ... is gonna happen in a ton of different companies, startups and large companies. Then you have healthcare. You, you had amazing demos today. There are companies like OpenEvidence. I think that is happening. Um, education seems like another one that's an-

    5. SNSatya Nadella40:19

       Yep

    6. SGSarah Guo40:19

       ... obvious good where we haven't seen as much impact as I'd expect. Do you have a hypothesis on why that might be or if it'll come?

    7. SNSatya Nadella40:26

       Yeah, I mean, I think this is where, again, how we think about education, how... You know, recently I met with, uh, the founders of Alpha School and learnt a lot about what they were going and going about. And it's fascinating to listen, uh, to how to even rethink-

    8. SGSarah Guo40:40

       Mm

    9. SNSatya Nadella40:40

       ... uh, what does education really look like? Because I think it's actually very important.

    10. SGSarah Guo40:45

        Mm-hmm.

    11. SNSatya Nadella40:45

        Uh, and I'm not saying anything traditionally being done is less important, right? I was even looking at the, uh... [laughs] It's fascinating to see. I, I, I forget the which Stanford class it was, uh, the, the Asian guidelines for CS something.

    12. SGSarah Guo40:57

        Mm.

    13. SNSatya Nadella40:57

        Uh, because you still need people to learn. Uh, like it was an interesting AI class that they were making sure people were learning how to apply softmax appropriately versus saying, "Hey, fix my training run." [laughs]

    14. SGSarah Guo41:09

        Mm-hmm.

    15. SNSatya Nadella41:09

        Uh, so I think learning concepts is important. It's going to be, uh, critical. But the way we create the incentives, what are the credentials, how we value those credentials, what is the employment opportunity for those credentials. So I think that there's a complete change that has to happen, uh, given the way to get to information, way to educate yourself, way to continuously keep yourself updated has changed so much. So I think interestingly enough, maybe the next big startup and success story could be someone who builds a new university, um, or a new, um, pedagogy even of how to get someone to go through a curriculum and find economic opportunity, uh, that's highly valuable.

    16. SGSarah Guo41:57

        Well, that has felt, uh, perhaps impossible for a long time, but it's a great note to end on and something that might be possible.

    17. SWswyx42:03

        It's still possible. [laughs]

    18. SGSarah Guo42:03

        Yeah. Thank you, Satya.

    19. SNSatya Nadella42:04

        Thank you so much. Thank you.

    20. SGSarah Guo42:05

        Yeah.

    21. SNSatya Nadella42:05

        I appreciate it. Thank you all. [upbeat music]

    22. SGSarah Guo42:09

        Find us on Twitter @NoPriorsPod. Subscribe to our YouTube channel if you wanna see our faces. Follow the show on Apple Podcasts, Spotify, or wherever you listen. That way you get a new episode every week. And sign up for emails or find transcripts for every episode at no-priors.com.

Episode duration: 42:26