hi there I've just had the most incredible experience of my life having been allowed to interview saan Adella the CEO of Microsoft which is now the most valuable company in the world wow please tune in SAA you are the CEO of the most valuable company in the world what's what's on your mind these days

look to me um Nikolai first of all it's great to be with you and um have this conversation what's top of mind for me is twofold right one is I'm grounded in the fact that in our business in Tech business now this is my 32nd year at Microsoft um I know that for a fact that there's no such thing as a franchise value and so that means every day you have to get up and hopefully you're doing things that are going to be relevant tomorrow um and so to me that's sort of perhaps the biggest lesson learned over all these decades and years

and so here we are on what is is essentially a complete new platform shift uh that we're in the midst of right I kind of say it's my 32nd year but it's year two of my fourth platform shift and so what's on mind is like okay what is this platform shift really all about and as a company can we be all in and innovate right I mean at the end of the day uh when I say there's no franchise value it also means that you get to play for it all up again even the battles we won and the battles we lost are all up for grab again and so therefore um there's a freshness to it so what's on my mind is you know that ability to ground myself back yet on on another platform shift and it's exciting

the fact that there is no franchise value does that make you nervous

absolutely I mean it should make every one of us nervous right at least that's why the tech is so exciting right it's sort of it's kind of like the two sides to the same coin right one is you're nervous and it's exciting so therefore you can't rest uh but at the same time hey who wants to be in in a business that you know where you don't get to reinvent yourself again and again

absolutely do you think we look at Tech in two narrow a sense I mean how can technology really be a driver for the next level of economic growth

yeah that's a great great question I think a lot about that right which is uh in some sense if you take at a GDP level uh Tech spend narrowly defined is probably 4 5% uh so the question is what is happening with the other 95% so one of the ways I've always thought about the prospects of any new technological Paradigm or platform shift like take AI let's I if AI is going to be the next big general purpose technology for me the real opportunity is let's say Tech spend goes from 5 to 10% over the next you know five years or what have you or 10 years then what happens to the other 90% And the pi does it become bigger right does the you know do we have a breakthrough in healthc care driven by AI do we have a breakthrough in material signs and energy transition because of uh AI uh and the list goes on right so to me that is fundamentally the way I think about it right which is I I think that one of the things that might be most important for us is to consider how a general purpose technology somebody was telling me this right which is in the height of the Industrial Revolution uh in the United Kingdom they spent 10% of their GDP building the railroads and obviously the railroads not just didn't is not about the railroads it was about the entire economy of the United Kingdom and so something like that I think is what uh that's the unit of analysis at least for me as to how Tech and its future will impact the in a broader society and economy

now um Google had almost all the top AI people and you suddenly got ahead partly due to your partnership with open AI now how did that come about

I mean um to me the way I came at this Nikolai is just very simple which is obviously we have been like I think the very first thing Microsoft research did in 1995 when it was formed was some stuff around speech right in fact I think we hired a bunch of the folks from CMU and so we've been at this AI thing in its variety of different forms forever um and so one of the things that when I met with the open AI folks and Sam and Greg and crew uh back in you know I would say when they were working even on the Dota 2 contest and what have you uh was to sort of say wow they have a new different approach to things and we wanted a partner I mean you know one of the things that I've always looked at over my years at Microsoft is look for high ambition um Technology Innovation companies right whether it you know or and partnership like whether it's Intel and windows came together and that was successful sap and SQL Server it came together and was successful so I'm always looking for partners that we can innovate with and that's what I found in uh Sam and team and uh and we you know at that time it was not like it was a it was a real uh in the dark right it is not like oh wow this is a sure sure thing everybody now talks about it as if uh you know this is the issue with tech right which is uh long before it's conventional wisdom you have to be all in and hope it works um and this is one of those things where we backed it long before it was conventional wisdom um and here we are but I don't take you know like there's going to be severe amount of competition you know Google's a very competent company and obviously they have both the talent and the compute and they have you know they're the vertically integrated player in this right they have everything from data to Silicon to models to have products and distribution and there's others as well and so yeah we will have significant amount of competition and I think if anything Microsoft's partnership with open AI is bringing more competition to otherwise what would have been a default Google should have be the default winner uh and if we partner well and we innovate well we can bring some competition to them

so if you look 3 to five years from now where is Microsoft in this whole AI ecosystem you think

so to me I think about this in the fullness of the stack right so I want us to have first and foremost the best AI infrastructure uh so that means when it comes to Azure whether it's for training whether it's for inference to have fantastic infrastructure we'll partner with Nvidia we'll partner with AMD we'll have our own own silicon uh we will have our own system architecture we will take the best system architecture Innovation from Jensen and Lisa and others who may come along and make sure Azure is serving the needs of open AI serving the needs of Mistral uh serving the needs of fi that we are building right which is the small language model so that's kind of the first uh thing that we want to do which is the best work um in being able to build the infrastructure out for both training and inference and then the next layer up we want to have like the entire data tier right so you can imagine as these models and model capabilities become uh you know more capable I think the data tier will be completely uh redone uh right we've talked with the retrieval augmented generation already you have all these things where whether it's embeddings vctor search how do you chunk data such that retrieval augmented generation can work well so that's an entire l layer or when contact lens become bigger that's a different sort of data layer like what's the throughput between data and your inference Fleet uh how do you sort of think about that so therefore we will innovate on the data layer and then of course on top of it is where um we will innovate on our uh co-pilots one of the first products we built was get up co-pilot in fact my entire confidence in this generation of AI started when I started seeing from GPD 3 to 35 and that implementation in GitHub uh and so we now have you know not only GitHub co-pilot we have co-pilot for M all knowledge work in Microsoft 365 we have co-pilots for these functions whether it's service or sales or Finance uh so we're going to innovate in our app layer uh on our own and so that's I think fundamentally how I look at it it's it's a full stack approach uh and each layer by the way we're we will innovate we will have Partners we will have others innovating there will be competition even it's not like you know one of the things of being a platform company is you got to be comfortable with many third parties competing with you on different layers because that to me is core otherwise you kind of try to you know do everything in a monolithic way and at least what we've learned over the years is the best thing to do is to keep each layer competitive on its own

you said in the beginning that we are year two into this Paradigm Shift uh how do you see it compared to other technological breakthroughs that we that you've been through

so at least the four I've seen Nicolai is um obviously PC client server both what happened on the you know PC and the server side that was my first that's kind of when I joined 92 where at the beginning of that uh then there was the Web Internet uh and then there was mobile cloud and so AI is the fourth um I think one of the interesting things is each one of these built on the previous right so I don't think the web would have happened if there was not and you B his PC after all the first time I saw MOS uh you know was as a browser on top of Windows right so and then Netscape came about and then uh IE and what have you and so therefore I think um you sort of see each one of these births the next uh and then it goes beyond uh what births you right that's I think the the real thing right right now we're seeing that right which is the cloud um as we know of it and mobile uh and PCS on the edge have really birthed the AI age and the question is what happens next uh right which is does it go beyond that and that I think is going I mean there's going to be AI that is not just what about cognitive work AI that is also going to accelerate science so I think that that's a exciting space uh AI that is going to be embodied in the real world so what may happen in robotics is an exciting space and so there is a bunch of things that are going to happen over time uh but clearly yes this is year two of a complete new paradigm that obviously reinforces what happened pre or bills on what happened previously but also also is showing early signs of what happens next

if there had been no shortage of um uh chips now would the development have gone even faster

that's a good question in the sense of scaling laws right so there are two sides to it right there's the the training side and the inference side on the training side clearly uh compute and compute scale and the scaling laws have proven to be very successful U and the question is how long does that go is there going to be another model architecture breakthrough or what have you um I I think that one has to see it's it's unclear uh but we definitely are not going to bet against scaling laws nor are we going to bet against uh or not are we going to say that this is the last Model architecture breakthrough in fact a great example of it is even uh what what we've we've seen even with uh our small language model Innovation like fi right which is we are able to create what is significant um capabilities uh in a small language model uh which uh doesn't require obviously the same amount of compute right which is uh like just like attention is everything attenti is all you need uh textbooks is all you need I mean that sort of intuitively speaks to uh how I think Co you know learning can happen and so therefore I would say uh yes if more more more capacity there is in the world the chances are that we will be able to make progress but at the same time I would discount a real breakthrough uh in model architecture that doesn't perhaps require uh the same type of compute so that's why I think um at least I want to keep myself open-minded about it

talking of a small language models do you think a small country like Norway should develop its own model

you know one of the things that I've studied there's an economist out of darthmouth his name is Diego colan and he did one of the best longitudinal studies uh of Technology diffusion uh and the fundamental conclusion um paraphrasing was that any country that wants to get ahead should one first make sure that they don't reinvent the wheel which is they import the best general purpose technology that is available in and then on top of it build value ad so I think for example U even on for no way first thing I would do is if we feel like for whatever reason these Foundation models are not good at Norwegian or what have you then let's make sure they're fine-tuning and and there there are many things one could do even top of foundation models like an open eye model or a Mistral or what have you so there are ways you can add unique knowledge unique value on top of even what exists uh before you go off and say let's build all the compute all of it and do the same pre-training run uh you know there's no nothing stopping any country from doing any of this uh but the question is what is the value ad and so therefore I think that you start from the value ad and then back into whatever is needed for it

when you look at how uh important the big technology companies have become in in geopolitics what kind of Reflections do you make

well I mean at the end of the day um to two things right one is I'm very very grounded on the fact that we are a multinational company that is a definitely in this case a us-based multinational company that has to earn permission and license to operate one country at a time right so therefore I I think of the uh we're not nation states are the ones that have power we get to operate in any Nation based on our ability to contribute to that country's progress right so whenever I am right whether I'm in Norway or or I'm in Jakarta or or New Delhi or wherever I I am always grounded on uh fundamentally the fact is are we able to make you know look the local politicians and political leadership and Society at large in the eyes and say that we contributed to their public sector becoming more efficient or large multinational companies in the region becoming more globally competitive because of some tech input education outcome Health outcome small businesses and their productivity at the end of the day you have your your social contract with the country uh comes from your ability to contribute to their local progress and that so I don't think we we can ever be Beyond geopolitics will exist with or without us and our goal has to be how do you participate and have permission to operate

moving on in your book um refresh you talk about three areas you talk about AI you talk about Quantum Computing and mixed reality so um how uh what kind of opportunities are you seeing in Quantum Computing

it's fascinating in fact I I think of all those three still right for example when I think about um mixed reality I think of it as that's an embodied AI right effectively whether it's autonomous uh Vehicles robotics or people with glasses they're all seeing the real world is the prompt effectively so your real World understanding so therefore I think of in the generation of AI some of these things become even more interesting and more important and we do need to broaden the aperture versus thinking narrowly of just one device or one form factor similarly Quantum is a fascinating thing when I I me mentioned science right one of the things I look at it and say is in order to make progress on science you need great insilico simulation Quantum is the ultimate breakthrough right so when we have a complete new system architecture cure that go breaks free of the one Nyon limitation uh you are then finally going to be able to simulate something like the Dynamics of a cell or a molecule right so that I think when you can do that then everything else even in terms of biology becomes more feasible the interesting thing is AI is kind of like an emulator of that simulator in other words you can kind of simplify the search space and we see this already Nikolai one of the things we did recently uh was um we have a of a model for Material Science which we use to generate a new novel compound which we then went and manufactured we worked with the Pacific National Lab locally here to effectively go reduce the uh the the lithium content uh by 70% in a new battery material uh and produced it right not just conceptualized it but simulated It produced it and so to me uh something where like Quantum plus AI I think can be the ultimate accelerator of science uh and we are making progress right we will even on Quantum we're taking a very full stack approach we have our software stack with uh you know our Q sharp which is our Quantum programming stack so we are excited about sort of the progress we're making on Quantum and how it complements Ai

and where does the gaming fit into this

yeah so to me one of the things in fact Microsoft was in gaming long before we you know we were into windows in fact flight simulator I think was launched long before Windows was launched so uh we are very very excited obviously now with Activision as part of Microsoft we have Mobile gaming we have cloud gaming we have console gaming PC gaming so we are a full stack game publ publisher uh as well as a game systems provider um and so our goal there is one we're in gaming for our love of gaming right so I always sort of say we should never be in businesses as a means to someone other end it has to be an end otherwise it's not a business so to me gaming uh is something where we want to bring joy of gaming that's the one pure consumer entertainment category I love the fact that gaming on a secular basis is probably going to be if not already the biggest entertainment category out there so that's one and of course it has real implications on the rest of it right if you think about even remember it's interesting I'm not talk to Jensen about it but one of the greatest sort of success es of gpus was fostered by innovation in gaming right DX which was the Microsoft graphic stack is what made gpus uh an accelerator uh right after all the gpus were created for PC gaming you know gaming I think as both a an application of AI in terms of like game testing one of the first areas I'm very excited about is games are so complicated right now one of the things that we want to use I is to be able to find these bugs in these even closed worlds uh before they're out there and so therefore we have some very great use cases there uh but beyond that I think gaming as uh data in the context of some of the Innovation uh in our models I think is going to be important

do you game yourself

I'm a you know a light gamer I used to do a lot more of Civ was my favorite game Age of Empires is a another great game that I enjoyed I wish I could play more uh but you know from time to time I slip into it

um you have really changed the culture at Microsoft when you look back what do you think are the most important changes you made

look I mean Nicola I sort of first of all I've as I said I've grown up all my professional career for most part is all Microsoft so uh you know when you say I've being at Microsoft for 30 two years all the good the bad uh I was part of it right so I don't sort of somehow think that uh I'm I don't repes I represent all errors of Microsoft yeah which makes it even more incredible that you have made these changes yeah and the way though I came about it is quite frankly as a consumate Insider I basically pattern matched as to hey what were the thing when were we at our best uh what was the cultural set of attributes that helped us succeed and then when we failed what were the cultural attributes that caused that failure and then you know dampen this latter and amplify the former that was as simple as that so one of the things I look back even in my you know career at Microsoft when we first became the largest market cap company I forget I think in the early 2000s I think we crossed G you know people on our campus prob were walking around including me thinking oh we must be God's gifts uh to humankind uh because we are so brilliant and what have you except what we needed to be grounded on that day was to say wow we now have a real responsibility to reground ourselves to innovate again uh so that we are relevant in the future right and so that's why I I I was lucky enough to have read Carol D's book on mindset which is around child psychology called growth mindset and I love that book I read it more on the context of sort of our children's education but I must say I got educated because I felt like this is uh what makes uh individuals children in school it's very clear right it's better to be a learn it all versus a know it all because even if the know it all has great innate capability uh the learn it all you know even if they start from behind they will surpass the know-it-all right that's sort of uh you know true for children in school it's true for CEOs in my seat uh it's true for companies and so we took that approach

Nikolai we said let's be a learn it all versus annoy it all uh and the day you say you've achieved that cultural transformation means you're Anno it all so therefore it is a good way to sort of say every day you make a bunch of mistakes you at least have the courage to acknowledge them and continue on it and so it's a it's not a destination you ever reach but how do you get the the the uh organization to buy into that how do you get it to penetrate down towards the Perma Frost in the organization it's a beautiful it's a great point so I think the way I I I think see the problem of Corporations especially for non-founder companies and Founders have great power and great followership and that's why I think they're so successful or at least you know at least we only talk about the successful Founders but if you set that that class aside for M modals like me uh it can't be like okay new Dogma from a new CEO and more corporate spe it has to appeal to us as human beings that's why I you know I credit more of this work uh by Carol and team and so on because it's not like it was not like I don't think anybody at Microsoft views growth mindset as some Microsoft Dogma or definitely not Saia Adela Dogma it is something that speaks to them as humans right which is it's good for them as friends colleagues Partners parents neighbors it integrates work in life they can bring their own personality and passion to it uh and benefit from it right I I always say like you're not do like this Microsoft culture of growth mindset is not for Microsoft it's for you and if you you should only practice it if you feel like it speaks to your own thriving at Microsoft and in life uh that's I think what I attribute it to right it wouldn't have taken off if it was just another thing that is a topdown slogan uh it is ult I always have believed that which is ultimately people work um and Find meaning in work uh only if they can find some true deeper meaning for themselves and so that's I think what I've been always trying to invoke

well they clearly also have found um true deeper meaning in in the concept of empathy because uh you talked a lot about that and you say that it's key to Innovation and Leadership and so on so what do you um why why is that why is it so important for you

I think about this as um I think most people think of empathy as some kind of a soft skill that's interesting in the context of your family or personal life and works all about hardcore you know whatever right but that but I look at that and say again what is where is innovation come from right Innovation comes from us being able to drive the solutions to unmet unarticulated needs of customers out there right so the key being unmet and unarticulated so that means you have to have a better sense when you're even looking at some log data or you know some customer interview data or whatever you it's not just the words that they're saying but you got to be able to walk in their shoes uh and the good news there is this is innate in us all human beings we have uh the ability to empathize with the other person um in fact design thinking is that right so when people go and say let's do learn about design thinking design thinking is applied empathy uh and so to me uh that's what I pull the thread on which is let's not think of empathy as something that you know is just a soft skill that you reserve for your friends and family but it's I think it's at the root of all Innovation uh it's about being able to meet the unmet unarticulated needs that comes from your unique I mean your innate ability to have curiosity to learn about others walk in their shoes innovate on their behalf uh and that I think is I think what we have to do and that's why I I think empathy is an important important skill for all of us

when did you first discover the power of empathy I mean I I read your book fantastic book you talk very warmly about your mother she being very empathetic

yeah and you know I think that one of the things that I I feel like all of us learn how to turn on this bit of empathy through life's experience right so in some sense every day you get confronted with different circumstances not just yourself personally but people around you uh for me obviously the birth of my son uh for both my wife and me was uh was a life-changing event and was something that uh you know over the years I at least learned a lot because I I I remember in the early days it was all about sort of my son was born with cbal poliy he passed away a few years ago uh and um uh but you know in the when when he was born it was a lot about what happened to me I was sort of you know essentially quote unquote um you know in you know all about why did this happen to us why did it happen to me how and then I realized after watching in some sense my wife uh who was there as a caregiver as a parent uh you know taking him up and down Seattle to every therapy possible uh quite frankly you know it took me years not you know days or months or weeks um and um and then I realized that nothing had happened to me but something had happened to my son and I needed to be there for my son and that is the experience I talk a lot about but there's experiences like that every day right some colleague of mine comes with some you know parent of theirs who needs care right that sort of you know I learn from it I or at least let me put it this way I am more a tuned to learning from other people's experiences today than I was in the beginning of my career and I think that happens to all of us right which is life's experiences if they they ACW uh that ability to build a deeper empathy for other people and that also helps you be a better manager a better coworker a better uh innovator

do you um think there is a contradiction between empathy and execution

I don't right I think that at the end of the day to me you have to take accountability right so this is one of the things that uh in business um like in life too right uh you have to be accountable for making real progress uh one of the things I think about why do businesses exist businesses exist at least I like this Colin mayor definition that you have to create profitable solution to challenge of people in Planet uh because that's at least a good way to allocate the global resources that are available right the profit motive is a good motive because it means you're competing and allocating resources in the most efficient ways and uh and face competition and so therefore you have to have great execution you have to have great accountability and so I think of empathy as a necessary condition to create great solutions that are profitable and that are competitive solutions that are winning in the marketplace as opposed to somehow this being a tradeoff

when you look at your your your skill set and your personality what do you think it is that makes you so effective as a leader

I mean first of all right I I I I don't think of this as I I don't know I have causality here well understood because quite frankly it's so much easier for others to app Pine on this than or rather it's it's just really for others to judge and assign uh causality there but the way at least I come at this is I don't start with uh what am I good at I am very keenly shaped by what am I not good at uh in other words I'm always looking what can I learn from someone else so if there's one attribute I have I don't start each day by thinking oh all the stuff I know and I'm good at I'm like wow what am I weak at whom do I talk to whom do I meet how do I really shape the colleagues around me who have better skills than me on many fronts uh that's what I'm wired like maybe that helps but I don't know whether that's the causality but I don't start each day was saying wow I'm so good at this so therefore I'm GNA go do this no I come at the exact opposite

is it something you learned from is this something you learned from Bill Gates because he said the same thing right he's a he's really a Le

I don't know I mean it's a good point both Bill and Steve uh there is uh there's a sense at Microsoft I think that that's an interesting thing we're going to be 50 years next year um there is you know what Andy Gro would talk the paranoid survive or what have you um and I don't come at it but though with paranoia right I I mean I don't like paranoia I like this just that's why I go back to my own words for this is that's why the the growth mindset or confronting your own fixed mindset having confidence that wow what an unbelievable world we live in that every customer can teach me every partner can teach me every colleague can teach me like what more can I ask for in life uh so it's not paranoia it's not like oh wow we have to go in every day uh that if I don't learn something I'll you know fail I'm more about like what do I learn so that I can innovate maybe uh that's how I come at it and that's right Bill and Steve in their own unique way uh had that mindset and so I've grown up around it

and how do you install that kind of I mean it is humbleness in a way right how do you install that in an organization

you know at the end of the day you know humbleness is an interesting word right I I always say that you you need confidence um and uh humility uh and not hubris right because there is sometimes confidence with humility can allow you to really make great progress but confidence that translates into hubris and bring you know it's the downfall of you know civilizations Empires and IND indviduals right and from ancient Greece to Modern Silicon Valley and so that's why I think uh you have to sort of really get that calibration that you got to have some confidence in your own capability

you said in the podcast with um with our common friend Adam grant that uh your father he had a list of people he met and a list of ideas generated have you got a list of people you want to meet

yeah yeah so I he had this you know he had this note in his diary were full of that schema uh which is uh people met uh ideas generated and tasks completed which I love which is a beautiful way each day to keep account of uh and absolutely uh so that's sort of like I I took that uh to heart and that's essentially how that's my framework for life as well

another thing that makes you stand out is you know there is a saying most people ignore most poetry because most poetry ignores most people that's clearly clearly not the case for you tell me about your love for poetry

I love poetry you know F you know the because in an interesting way I got into poetry very late uh my mom was a a professor of Sanskrit drama and um and um and so she really instilled in me or at least tried to instill in me the love for um you know poetry and in her case you know Sanskrit uh literature and poetry and what have you but I think of it as compression it's the best like when you think about code uh is as I coded more is when I sort of sort of felt like wow poetry is basically natural language compression um and it is able to describe you know it's it's a model of the world in the most uh succinct form and so there's um and I I got into uru poetry in a big way in my mid-30s and so I grew up in Hyderabad where obviously Udu poetry was in the air um and now of course I love it but even you know the American poets uh the English Romantics Germans they're F I mean like so I I'm at least I'm not I I wouldn't say I know much poetry uh but I at least I'm fascinated by the ability of the human mind to compress uh thought whether it's code or poetry

well that's fantastic last question um SAA we have um tens of thousands of young people listening to this what is your best advice to young people

I'd say the best you know advice for anyone starting out in I oh you know some sort of advice I got uh which I paraphrase as never wait for your next job to do your best work right which is one of the things is any job you get like I don't remember ever at Microsoft feeling like oh I have to get a promotion in order to feel more satisfied or more fulfilled because I Som felt I had gotten the lottery and I was in the best job I could ever be in and I'm not saying you shouldn't have ambition you shouldn't strive for your next promotion you shouldn't put advocate for yourself or have others you absolutely should do all that but at the same time really my advice would be also to take the job you have at hand and do an un wonderful you know go at it with uh all of you the wiger and all of the energy and also Define it as broadly as possible right I mean that is perhaps one of the things when I look back at it I never defined my job narrowly uh and that I think was both very satisfying in the moment and it helped I think land me the next job and so that that that is my perhaps the ad one advice I would leave people with

well I cannot think of anybody who is doing a better job than you so uh big thanks for being in the show good luck with everything and and uh you know all the best

thank you so much n such a pleasure