Bonus Episode: Satya Nadella at Code Conference 2021

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Hi, everyone.

This is Pivot from New York Magazine and the Vox Media Podcast Network.

I'm Kara Swisher.

Today, we've got a bonus episode from our code conference.

It's my conversation with Microsoft CEO, Sacha Nadella.

Thank you so much for being here.

Oh, it's my pleasure.

Thank you so much.

Good.

So we did your first interview.

That is right.

Correct.

How did you think that went?

Somebody, I remember the tweet right after

that interview.

I forget there was some founder, I think, right after me.

He said, oh, that guy is a manager, and there was a founder after him.

And I thought, ah, that's interesting.

And that grounded me.

I'm someone who grew up in Microsoft.

I was not a founder.

But in some sense, I think...

I tried to sort of make sure that I stayed grounded in what that meant and what I could do with it.

Well, you've done rather well.

You've You've done rather well.

The company is,

you have to give credit for things.

It was the most valuable company in the world.

It's now the second, I think, but it's in and out of that.

Talk a little bit about that process for you.

There's a lot of CEOs, new CEOs.

Ted just came in at Netflix, Andy Jassy just came in at Amazon.

What's your advice to them?

I mean, if I go back to, I think,

this distinction of what does it mean to be a CEO, what does it mean to be a founder CEO, it's pretty distinct, right?

I think one of the things

that founders have that sort of amazing followership and they take a lot of things for granted, rightfully so, because they created something from nothing.

And for any CEO, at least in my case, even though Steve technically was not a founder, he had founder status in our company.

And so I felt I was the first non-founder CEO.

And to be able to ground yourself on re, you know, what Reid Hoffman called re-founding is a great metaphor, which is to be able to recommit yourself to what's the mission and sense of purpose of the company.

To be able to articulate that, though, in your own words.

And

then build

the culture, the capability.

And at the end of the day, you've got to get a lot of things right around strategy and the new concepts.

So the best advice I ever got after becoming CEO is to be yourself versus try to fill someone else's shoes.

But doing so, respecting what came before you, but at the same time, to be able to shape what comes after to be truly something you believe in, not because something

was done before.

What is a mistake you can make?

I'm just thinking the new CEO of Disney insulting Scarlett Johansson probably is not the best move.

But what is something that you did that you,

what are some of the refounding principles that you thought were critical, not to mistake, besides the strategy?

Yeah, I mean, the

thing that

maybe as an insider, because in fact, it's interesting, Carol, I don't really think of my Microsoft career or my even my tenure as CEO of the last seven and a half years.

I think about it since 1992, right?

So what I'm, it's sort of one continuous film, if you will.

So

the mistake, at least, is to

you have to objectively look at yourself.

And it's hard, you know, because,

and especially as an insider, it was

perhaps even harder for me.

But the biggest benefit, at least, was when I criticized, I was criticizing myself, when I criticized what we were doing as a company.

It was not like I was critical of someone else.

I was critical of all of us, including myself.

And

it really did give me, perhaps, the best shot at being able to then work the issues versus feel like I'm just criticizing for criticizing's sake.

So the mistake I think of someone can make is not to respect the place that you sort of that was created.

You've got to go in there

and understand what made you successful in the first place.

And there must be lots of patterns that you need to renew.

So, not throwing everything out.

Like, for example, one of the things my father said to me once, which he was a civil servant, and he always had this thing about: look, when I work in an institution, I want to make sure that the institution becomes stronger and it doesn't fall apart after I leave.

And that stood with me, right?

So, as a CEO, I think the mistake you can make is it's all about cult of personality, it's about you, and it's once you leave, the thing falls apart.

So,

after all, if the previous CEO did a decent job, they gave you a platform.

Respect that.

But then make it your own, build, and then leave it a better place for the next CEO.

I guess that begs the question.

Did the previous CEO do a very good job?

As far as I'm concerned, Steve Balmer made some of the biggest bets that I was able to build on.

If Steve had not taken a bet on me running what was our cloud business, if he had not taken a bet on me spending all the money I spent, we wouldn't be where we are.

So I absolutely think that they're like all CEOs, he got a lot of things right.

We all get things wrong.

The one thing I learned from Steve all my years working with him, I never sort of sat with him in a meeting where he said, let me tell you, Satya, about all the great things I've done.

You would only talk about all the mistakes he was making.

It's the greatest gift that somebody can give you.

Right, but many of the things you shifted, let's talk about what you shifted because he made a lot of bets all over his place, whether it was the phone, all kinds of different things they did.

Same thing, Gates.

You have really, talk a little bit about your strategy, because you've sort of honed Microsoft into a much simpler setup, I would say.

Yeah, I mean, it goes back

a little bit to sort of rediscovering what that core identity, Kara, for me was.

I felt like at some point, you know, Microsoft was doing a lot of things out of envy, not because out of things that

things that we were meant to do, right?

So that's sort of,

in some sense, customers give you permission.

Your brand gives you permission to do things, and you should do those super well.

And maybe if you do that super well, you get more permission to do other things.

And so in that context, if you think about at least three layers of what we perhaps got right, first is we were able to take the big inflection points, like the cloud, and redo our entire server infrastructure.

In fact, it became more expansive.

I used to grew up in our server space, and I used to think it's a big business, except we now have a bigger business than we ever built in the client-server era.

We wrote the SaaS wave and reinvented Office 365.

I mean, we were all saying, oh, wow, can we ever build a bigger business than the traditional Office?

And Office 365 is orders of magnitude bigger than what we were doing.

Or same thing with Dynamics.

We had lots of chaos in the client-server era because we had grown there by acquisition.

Whereas now we have a complete cloud-native news business, SaaS, which doesn't even have the encumbrances of the first-generation SaaS guys.

So it was fantastic to be able to reinvent.

Even Xbox.

Xbox was part of Microsoft, but it was sort of this thing on the side.

Whereas today, Xbox is much more central to Microsoft.

It's built on a cloud.

The social network is critical to Microsoft.

And it's much more expansive.

What was built out of Envy?

I'm just curious what you think.

You know, it's entering, to me,

if I think about it, it's not even like, you know, doing things even in Windows.

Windows is a device, it is an operating system that was built for productivity and communications.

And to be able to reinforce that, or Windows is the today, in fact, if you think about it, right, it's the most open platform.

I mean, it's ironic that it is sort of

I used to think the, you know, both AOL

was killed by the web or the internet, and guess what?

We now have, what, five AOLs thriving, and so that's 25 years of progress for you.

So, therefore, we're saying, no, let's get back to what Windows is fantastic at, it being an open platform.

And being leaning into that uniqueness.

I'm not saying it's out of some great virtue out of us, but it's just about to have competitive.

It keeps you from not moving into those endy areas.

Like, I don't see Microsoft Studios anymore, although you had done MSN.

Search is not as big a focus for you all.

It's there, but that was certainly a bigger focus.

The phone, how do you stay out of those things without wanting to move into them?

Yeah, I mean, if I look at the new areas we've gotten into,

the first thing I always think in terms of strategy is before you go into something completely new, make sure you don't miss line extensions.

So the adjacencies,

whether it is building out our security business.

I mean, they're securing the platform and building security products.

We now have an end-to-end security suite that's best in class.

It's basically a new big business for Microsoft.

Of course, it has the adjacency to what we've always done.

Or developer SaaS, right?

With GitHub and what we've done with VS Code, we are into developer product duty.

You could say we were always into it, but we've now reinvented ourselves in that.

Or our new automation suite called Power Platform.

That's another complete line extension.

Or getting into new spaces like LinkedIn.

LinkedIn is a fascinating one for me because it is.

These are acquisitions you've made, LinkedIn, GitHub.

LinkedIn, GitHub, and Minecraft are the three large ones.

They all sort of center around building communities around something we had permission in, right?

Minecraft is very different than all the other games.

It's not sort of the same as Halo or whatever.

My kids play Minecraft.

And Minecraft just got us new permission in gaming, which we were primary on.

LinkedIn is about professionals.

And after all, Office is about professionals and knowledge workers, but we didn't have 800 members just choosing as consumers to

network.

So it's sort of both an adjacency and a difference business model.

So how do you think of acquisitions?

Because you've made several rather large ones.

So that's kind of how I think about it.

Like the primary thing I ask myself

is

will we be able to create the platform for that entity to thrive.

In other words, the classic question is, are you a better owner?

You're only a better owner if the mission for a LinkedIn or a GitHub or a Minecraft could be realized better with Microsoft as a platform.

In fact, in all three, one of the interesting things for me is we had other people who were bidding for those assets.

And all three founders chose to sell to Microsoft.

Are you surprised?

I was not surprised, but I feel like we got it right because that choice that the founder was making is to make sure that whatever it is that they've built can thrive and not just high price.

Right.

So, talk a little bit about that approach to buy Discord.

That was one that didn't work.

What extent do you see acquisitions

as important versus creating original things within Microsoft?

How do you balance those two?

I think fundamental bet

is organic.

I mean, when I look at our RD budget today,

the

inorganic things that you do, which is more episodic, seem, you know, they get the press, they get the headline number.

But when I look at the year-over-year RD increases, it's most, I would say, 80%

of or 90% of what a company does, at least at our scale, has to be about organic growth.

And inorganic things are definitely going to be key.

What did you want to do with Discord?

What is Discord?

No.

Look, I mean,

don't make me laugh, Sachi.

You know, the thing that I feel

that we're in the business office to sort of look at anything that is in the core communications

and whether it's entertainment or communications and productivity, we want to be a primary.

And we will definitely keep working on our own and we'll keep looking at assets.

Well, then I just sort of have to ask about TikTok.

Tell me what happened there.

It's the strangest thing I've ever sort of worked on.

I figure.

It's the strangest thing I've ever ported.

It's unbelievable.

I mean,

it's, I learned so much, Cara, about so many things and so many people.

So

give it to us.

I mean,

one of the things,

first of all, you got to remember, TikTok came to us.

We didn't go to TikTok.

I think the way people talk about it is as if I went looking for TikTok.

I mean, TikTok was caught in between a lot of issues they were having across two capitals, and they wanted a partner.

And Yi Ming, whom I'd met a couple of times before,

and fundamentally came to us and said, Hey, can you be a cloud provider who can help us with these security things that we seem to be hearing about?

And that's kind of how it started.

But I was pretty intrigued, I must say.

It's a great property.

Obviously,

everybody seen their growth and what have you.

And

and

and and then I guess the rest is history well tell me I don't know what what what you know it's what part

about your discussions with Donald Trump

he's gone now for a little while at least

you know President Trump I think had sort of a particular point of view on what he was trying to get done there and

and then it just I just dropped off.

I mean, it was interesting.

There was a period of time when I felt that the USG had some particular set of requirements, and then they just disappeared.

Yeah.

And I, I mean, I, I'm, I don't, I'm not part of the USG, so you'll have to ask someone there.

Interesting lack of execution.

That's interesting.

That quality.

But what did you want it for?

Tell me what you were thinking about it.

Yeah, to me,

you know, if we had a chance to both,

quite frankly, the place where even if you, you know, go to Yiming and ask him, like, the thing that attracted attracted him to even talk to Microsoft was all of the stuff we had done around child safety.

For example, whenever I think about the investments around

social media in particular, what we are doing

in content moderation and child safety is what would have given us even permission.

Right.

What we were doing with our future.

And there are a few companies who could have done this, correct?

Yeah, I mean there are a few companies who can, I think, bring a lot.

I mean, there's the cloud platform, there's the security infrastructure that was very much required, because if you remember, at least at that time, what was the conversation was the complete fork

of the code base, which you then need.

to have the engineers to be able to take over a code base and then to secure it on an ongoing basis.

That required competence.

And on top of it, you better know something about running a social media, which we know with either it's through Xbox Live or LinkedIn.

And so it is an interesting product.

And also the way it was engineered,

quite frankly, appeals a lot more to me and Microsoft, I think.

The way it's about design and AI, and I like that.

So were you surprised Oracle showed up?

I mean, Oracle is a very competent company.

And I think that the partnership,

you know, I mean, at this point, it's all moot, right?

I mean,

I have no idea.

What's happening now?

I have no idea.

Have you called?

No.

Okay.

All right.

Would you like to inquire TikTok?

At this point, I'm happy with what I have.

Okay, all right, okay.

So I want to talk a little bit about,

are you looking at anything else?

I'm happy with what I have.

All right, okay.

Well, let's talk a little bit about cybersecurity because you mentioned it.

One of the things you were involved in was the Jedi project before Jeff showed up.

He's suing Elon now, so don't worry about it for you.

Talk a little bit about that process and then a little bit about solar winds and what happened there.

Yeah, I mean on Jedi I think at this point the Department of Defense has decided themselves that they want to go multi-cloud.

Quite frankly, we were advocates of a multi-cloud strategy across all of the federal government on

and so it is what it is and we are happy to compete for each contract and we were proud to win it first time.

We won it second time and now hopefully we'll get to execute on it going forward.

And then on solar winds it's a it's a

question for Jedi.

Was it a is it a bad thing that they haven't moved forward more quickly on this for national security?

Absolutely right.

I mean

any

it's one of the things that I feel the United States in general all up

you know the federal government is probably a little better off than a lot of the state and local governments because we do need to modernize our infrastructure as rapidly because it even you know touches upon the cyber issue which is what is our biggest we were after all there was significant penetration of, let's call it, the client-server era technology inside of our government and inside of our private sector.

And so it's more incumbent on people like us or a country like ours to modernize faster.

And it does require capital investment.

Like the run costs, in fact, it was stunning to me.

I was meeting with one of the

state CIOs and the run costs of most of the CIOs still is predominantly mainframe.

I mean, in 2021, when you have that, that's a problematic thing.

So you need to modernize.

From Microsoft's point of view, how important are Defense Department contracts for government contracts?

We have been,

Department of Defense has been a big customer of ours from day one, and they're important, but they're not the only customers.

Look, we're not a defense contractor.

We are a

company that builds commercial technology that's broadly used.

And we've been very, very clear that we want to make sure that there is

that the Department of Defense can use the same technology we build for commercial customers.

All right, so tell me, talk to me about cybersecurity.

Yeah, the fundamental thing I think we're hitting upon is we can talk a lot about what are the specifics

of the adversary in this case, how they were able to penetrate the supply chain essentially

of

this one company and thereby its blast radius was very, very high.

But the the the thing and you came forward compared to other companies, correct?

Yeah, I mean disclosure is another side of it, right?

Which is one of the key things in cyber security is we now need to make sure that whoever gets impacted.

So in our case, basically, yes, we had an instance of solar wind.

Interestingly enough, the way we had designed our network is that instance obviously got the update from solar winds, but it stayed there and it didn't propagate.

And so but at the same time, we wanted to make sure that everybody understood that our production servers or nothing was, nothing was affected, and we disclosed on that.

And the reality is a lot more people were impacted by it and very few people disclosed, but it's up to them.

But the bottom line, though, is more than any disclosure or any headline around how this happened, the thing is trust.

There was a great paper by, I think, Ken Thompson and his Turing Award.

paper actually.

It's trusting trust, I think is what it's called.

And

it just, I think, hits the right thing, which is you ultimately, you can come and we can talk about technology and technology and technology.

Ultimately, you've got to trust the institutions from whom you're getting your software from.

And how do you ensure that?

That is where I think the role of governments and multilateral agreements

and institutions is going to be the thing.

So you can't solve the cyber problem by just talking about technology.

So what has to be done is this is a public priority.

I interviewed Marina, I'm ranking Mariana Hatsukato, talking about public-private partnerships.

What is the problem in doing that?

Because

these have to span government.

What is the challenges you face?

I think, well, the challenges are first to try and prioritize this as a domain that requires.

We had a White House summit, I think, last month, which is is a great, the fact that the White House is prioritizing this is fantastic.

I mean, multiple things have to happen.

New standards that NIST

puts in place, which is Department of Commerce around, let's say, supply chain attacks.

That is something that will, I think, raise the bar for everybody.

Then the national security apparatus and the intelligence agencies, right?

Today, I would say information sharing across both sides, public and private, that I think needs to happen.

Then there's a side to diplomacy as well, right?

Which is you do need to hold other nation states accountable

when cyber attacks are being propagated by a nation state.

And we also need to have some moral equivalent of a Geneva Convention here, because in some sense, if you think about the people who suffer the most under any cyber attack, it's the small businesses and it's the individual consumers, i.e.

the most vulnerable.

And

so therefore you need...

How did Geneva Convention work with that?

It goes back to how did the Geneva Convention work?

We've got a bunch of people, a bunch of countries that are coming together within some auspices of a multilateral

and within some governance of some multilateral organizations that can enforce the convention.

Why would China do this?

China would do it because they have a stake in the world being safe, right?

China, I think, cares as much or should care as much about cybersecurity for their own

economy because no one's going to be somehow

isolated from the, and in fact, if anything, cyber doesn't have borders like the pandemic.

And so,

of all things, this is a place where I think the world does need to cooperate

in order to protect their own citizens and protect their own economy.

What is your hopes for that cooperation?

I mean, today we are in that state where

it's sort of a little bit of, hey, the globalization as we knew of it didn't work that well.

So therefore, we should just all be about our countries first, which, by the way, is correct because after all, every country does need to look after its national interests, its national security.

And I subscribe to that as a CEO of a multinational company.

I feel I only have permission to operate in any country if we are meeting that country's national interests.

Otherwise, we should get kicked out.

And so, having said that,

I think we now need to recognize that all of what globalization did can't be thrown out.

We, in fact, need multilateral institutions with some strength on big issues, whether it's climate or cyber or pandemic response, because without it, the world's too connected, too connected in capital markets, too connected in climate, too connected in many other dimensions.

Are there national security interests, you being one of the big tech companies?

I just talked to Lisa Sue about that.

Are there considerations of nationalist protection, I guess?

I think every country will in the United States.

I think there is, for example, I'm sure Lisa touched on this.

There is real concern about like, hey, what does our silicon supply chain look like?

What is our dependence on other countries and perhaps what happens

to our ability to continue to operate our economies and so on.

And that's good.

I mean, after all, you know, you may say that in the last phase of globalization, the way the supply chains were organized may not be completely compatible with whatever are the national security considerations.

So they need to be rearranged.

And that'll happen in time.

And so I think the question, though, is,

Does that mean we can get disconnected?

That is, I think, is a fallacy.

You cannot disconnect yourself from the world.

You can take steps to make sure that you're more resilient if something happens, like the, you know, whether it's the pandemic or it's whether it's the supply chain.

Yeah.

We'll be back with more from Satcha Nadella after the break.

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off.

Welcome back to this bonus episode of Pivot.

Here's more of my conversation with Microsoft CEO Sachinadella at this year's code conference.

One of the things, I want to talk about two areas.

One, the pandemic, you just mentioned it.

How has it affected running your company?

In terms of what the work from home, obviously you benefited, Teams benefited, Zoom and other companies.

Tech has never been more valuable.

How are you thinking about this?

Your policy is

hybrid, right?

Correct?

How did you think about this?

Yeah, I mean, the first thing, Cara, I'd say is

we

for sure have seen tremendous amount of growth.

I mean, you know, being a software company, being a cloud company at a time when the most malleable resource that was available for people to continue to operate was digital tech.

And so obviously the adoption curves went up across all sectors of the economy.

So did your valuation.

And yeah, I mean so that we were clearly beneficiaries of it.

The one thing though, interestingly enough, before we come to sort of our own policy, the interesting thing was during even the early sort of months of the pandemic in 2020, as we were going remote, we needed to really ensure that we were scaling all of our cloud for all the frontline people, whether it was in healthcare or retail or critical manufacturing, because those are the folks who needed.

In fact, I always say we are the first responders for all the first responders out there.

And

even today, in fact, we talk about the hybrid policies of a few tech companies or the tech sector.

But in the overall labor market, it's still a very small percentage because most people are actually

at work and working.

So that said to your point, right now, at least there's a real structural change, right?

Some of the poll data in our own employee base, it's pretty clear.

Yeah,

I describe it sometimes as the hybrid paradox, right?

Which is there is 70% of the people want to say they want more human connection.

And 70% of people say they want more flexibility.

And so therein lies the challenge.

What do you do?

Yeah, the best thing is to sort of make sure that we build the tools that allow for that flexibility.

In fact, the other thing, at least in my own opinion, and the policy at Microsoft is let's not try and make too dogmatic a decision right now

on we found the future and this is the future.

Let data

over time, not data today, but like what are people's expectations of employees has changed.

Let's accept that.

Have your employees been more productive?

In fact, all of the metrics, in fact, this is what I feel even where all the metrics will say they've been very productive.

In fact, if anything, we want to make sure that things like wellness,

we are really being careful because there is old, you know, productivity can lead to burnout.

How are you managing that?

Therefore, the role of a manager has become more important.

Interestingly enough, when you get to a workplace, say one bad manager could be compensated by just the work environment and a lot of people around the person.

Whereas when you're remote, you're very dependent on managerial excellence at all levels.

So I do feel that our employees have been very productive.

But what is productivity in the long run, right?

You just can't say, oh, patents filed or code written or pull requests.

Those are all interesting metrics, but I think that

it's too early to tell, right?

Whether productivity or innovation.

So

I want to make sure that we do take,

I'll tell you one place where we were not that productive, Game Studios.

It is very clear that

they need to be, it's interesting, we learned a lot about which functions need to be gather for what.

So we now have, I think, a bit deeper understanding of what people need to be together for what.

And so to your earlier question, I think we then now need to make sure that we have enough flexibility, but at the same time, new norms will emerge which bring people together in order to.

What's your instinct for yourself?

I think I'll do what we have now stated as our policy.

That's at least where I'll start, which is at least work, you know, maybe three days a week in person, two days a week,

you know, remotely.

But which three days in two days?

That's going to be the one that we are going to basically allow individual team norms to emerge.

Do you think this is a big area of business for you?

You have teams, obviously, tons of other things.

Some of it worked.

A lot of the teleeducation just didn't.

Anyone with children knows what a disaster it was, no matter where you sat.

Yeah, I mean, the

thing, if you sort of do this simple two by two quadrant and you say there's synchronous communications, asynchronous communications, and then there is collaboration happening, but people are together and remote,

you could get away in the past, perhaps, by being good in, say, a couple of cells in that four two by two or the four quadrants.

You now need to be great at all four.

So, to your question, is this a good business for us?

Because it's a tools provider and a platform provider, it's a good business.

But to your point, the practice, whether it's in education, whether it is in healthcare, or whether it's in retail, I think we will have to accept that we now need to be able to deliver whatever service or content in more ways than we did in the past and improve its efficacy.

Education is probably the place where we have suffered the most

because the core pedagogy has to evolve in order to support the different ways people learn.

Yeah, absolutely.

So you see the opportunity, one of the things that's happened is, as we said, your company's never been more valuable.

All of tech has never been more valuable.

Someone, I think it's Scott who said I should ask this, how have you escaped scrutiny of

regulators?

Because we were scrutinized a lot.

I understand that.

I recall.

But talk a little bit about that.

Your company is one of the most powerful companies.

There's two ways you can go here.

One is we're not doing anything that would attract scrutiny.

And the other is they're so bad that

they're focused on that.

Do you think, should you mush everybody together?

I always say.

I think that's the issue, right?

Which is what is

the tech company today?

Here's

my thesis.

And

I think that it's sort of very important.

And interestingly enough, the regulators, at least today, seem to, whether it's in the United States, whether it's in Europe,

even China,

everyone seems to recognize that there seem to be two forms of tech.

This is now not even saying let's not get into financial services, let's not get into health tech, let's not, but even in what is considered core tech, I would say there is platform technologies which act as factors of production.

So that is their input for someone else so that they can create new products and services.

So things like cloud fit into it, productivity suites, business application suites.

A lot of Microsoft business is that factor of production.

And there is also what I'll call factors of distribution.

So these are marketplaces, whether they're app stores, whether they are, you know, news feeds in social media or search, which is the biggest of them all as an organizing layer.

And so all of those,

or e-commerce marketplaces.

So I think finally people are coming and saying, oh, you know, this idea that And both, by the way, have a place under the sun.

After all, these marketplaces reduce transactional costs, which I think all of us can do with.

And platforms are commodities ultimately if these markets are competitive.

And the issue though is measuring the social impact of these

basically factors of distribution are what everybody is evaluating.

First of all, is there competition?

I mean, one thing that I sort of look at is, hey, when was last time, sort of lots of funding went into search.

Yeah.

Other than good old Microsoft, you know, where we spent billions of dollars trying to compete with.

Good old Microsoft.

That's why I always say we're going to be at it because that market has to get competitive.

I mean it's kind of like the most ridiculous thing that is the biggest market in the world is just a complete monopoly.

Do they deserve antitrust scrutiny?

No, I just want, we need to compete.

You're just saying.

I'm saying the onus is quite frankly on us to compete.

I mean they've done a fantastic job.

Let me just not sort of.

Should regulators come in here.

I'll let the regulators do whatever they need to do, but the bottom line is for us to sort of say, let's make these factors of distribution more competitive.

And if they become more competitive, then even the unintended consequence of any one thing will be less.

And I think that's the simplest way.

So I'm not sort of saying let's wait for regulators on any side.

I think, you know, I think we should just compete in lots of these points.

What about Facebook?

Are you glad you didn't get into social media?

We are in social media.

We love LinkedIn.

You are.

Okay.

LinkedIn is the only social media company anybody likes correct

snapchat snapchat look I mean I think in social media what do you think is happening over there what do you think of all the scrutiny they're getting the criticism

I think in

in the case of you know we we kind of run I mean obviously we we have LinkedIn we also have

Xbox Live

so the thing though what at least we've learned is context matters.

In other words,

as a

platform in this case of a social media network, you need to use the context of that network to enforce the standards of discourse on the network.

That's sort of what the terms of use all are about.

It's a hard problem.

I mean, disinformation is a hard problem.

There is no AI that solves for it.

There's no amount of just even moderators that solve for it.

But the best thing, though, is for us to recognize our responsibility and govern

by

using the context of the platform.

What is allowed?

Like on LinkedIn, we know ultimately, why is anybody on LinkedIn to find economic opportunity?

That's the context.

So, we want to curate everything we do, all the mechanics.

How would you run Facebook if they said you're the CEO?

I mean, there is, I let you bring Mark in and have that problem.

He's never coming back here.

Just saying

it's three for three with him and me.

So, I am not going to talk about any other CEOs' problems.

All right, what about Epic and Apple and Google?

Look,

first of all, let me put it this way.

I think app stores are absolutely important assets, right?

After all, if you think about like even on Windows, we have an App Store.

And if anything, when we didn't have an App Store, some of the security challenges were remaining.

And so therefore, I think app stores are a necessary mechanism.

Each platform, the way, like Xbox has an app store, Windows is an app store, the economics of Xbox are very different.

So,

I don't sit here in judgment, quite frankly, as someone who competes and cooperates with all these folks, that one person's doing something right and the other person's doing something wrong.

And I think they all have to sort of both listen.

Everyone, including people like us, have to ultimately listen.

In fact, that's probably the biggest lesson.

I was complaining about the Windows App Store that I've.

Yeah, but I'm just saying, if I think back in the 1990s, right, the biggest thing, lesson learned from Microsoft's own sort of history here is when there's a lot of people sort of complaining about something that you are doing, then there must be something that you're doing that's bothering people that you need to reflect on.

And that's it.

I mean, and so therefore, to me, that's what I like to look at.

And so, and every company and every CEO probably needs to reflect on.

We'll be back with more from Satcha Nadella after the break.

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Welcome back.

Now back to my conversation with Satcha Nadella of Microsoft.

You suspended Microsoft PAC donations to politicians who oppose certification of the 2020 results.

How should big tech work in this highly partisan environment?

That's a great question, right?

I

get very weary of

individual CEOs, individual companies

in a democracy like ours

make

decisions to sanction sort of

our own political system and its constituents.

It just bothers me.

I mean, after all, I mean, as an immigrant to this country, one of the greatest things about the United States is its democracy,

its vibrancy.

And so for me to take, or for our company to take stances seems, quite frankly, silly.

Because after all, we are all companies are not meant to do that.

Individuals do.

But that said, I think we will need to have certain grounding in some values,

like protecting our democracy.

So when those

lines are crossed, how can you be clear that

you

will use your voice?

And it's you've got to be sparing on it.

You just can't be out there

just trying to act as if you are somehow the replacement.

So when people say business leaders are now the people who are going to somehow solve what I mean, I don't want to live in a country where I have to depend on CEOs to govern us.

At the same time, IBM was at the forefront of integration.

Apple was at the forefront of gay and lesbian rights.

And that's fantastic.

We can definitely lend our voice, lend our support, push for legislation.

After all, we sued the U.S.

government on many issues around privacy.

And those are all instruments of our democracy that I think we should.

What happens when you get faced with the Texas abortion laws for trans issues or voting rights?

Like, take the Texas issue.

We're very, very clear at Microsoft that we will support the women's choice on

their rights, on their, you know, any medical decisions they make.

And so, therefore, our insurance will cover them wherever they want to go and exercise that right.

So, we will make sure we do

protect our, you know, our employees.

That's our responsibility, and we'll be clear on that.

Do you get tired of the political partisanship?

I mean, you got sucked into the TikTok thing.

That was lunacy.

The partisanship,

yeah, I mean, I think the way it's currently characterized, because

if it's debate that allows us to truly get things done ultimately by compromising, after all, democracies do function in that form.

But right now, I think, yeah,

I think we can all do better.

And I think we can do even

as individuals as well as organizations like a private company on how to take

any issue, just completely ignoring every nuance and making it as if it's just two decisions.

It's just not going to help us.

And so I'm actually, you know, at least President Biden and his approach saying, look, I want to talk this through and perhaps bring people together and compromise.

I hope it sort of leads to more,

less partisanship, more action, and more benefits.

Because there are real points on both sides, except those points have to be reconciled in a way that is very, very different than at least the current state of play.

All right.

Speaking of, you knew this is coming, do better.

The Bill Gates situation.

Can you talk a little bit about the impact on Microsoft and what your role was in that?

Yeah, look, look, Bill Bill's our founder and

remains our founder.

He's very engaged on things that he cares about.

There are certain technologies he deeply cares about.

And even though he now is not on our board,

you know, he remains in close contact with the company on those issues.

And the Microsoft of 2021

is a different place that I am responsible.

My leadership team, the lived experience of any person in the company is our responsibility and we shape it every day.

We're not perfect by any stretch, but we care deeply about all topics of our culture and we're working it every day.

Was it?

That's a lot of good words.

I appreciate them.

But was it right to take him off the board?

Was it important?

As Bill stated and we stated, Bill left the board.

It was not about the board asking him to leave.

And he decided that, in fact, that he had a lot more things to do with

climate work and his philanthropy.

But did it have an effect within Microsoft?

You know, look, I mean, Bill has been, you know, he was CEO and then he was

on our board, but he was not full-time at Microsoft.

So in some sense, Bill's transition

has been many decades, I mean, maybe more than a decade in the making.

So the impact on Microsoft at this point is more about the people at Microsoft and what we do for the future.

Right.

I'm going to let you off the hook.

I think the fact that he was left from the board, he left, is great.

That was probably the right thing to do.

Same time, disclosure is also important.

So it's a difficult, it's a difficult situation.

But I appreciate your

answering that.

Rob,

you're an old friend.

Oh, yeah.

Great to see you guys.

Great to all be live in the same place.

I had a question about ransomware.

Oh, yeah.

Something that I guess a lot of us have been thinking about.

It seems to me that between better tracking of zero-day exploits,

secure cloud backup for enterprises, helping with enforcement, there's a big role for Microsoft since Microsoft's platforms are generally involved in all the big cases.

Not unilaterally by any means.

I'm curious how you're thinking about that and how important that is as like a, it's almost like a mission for Microsoft's platforms to be secure.

Yeah, I'm so curious.

First of all, it's great to see you, Rob.

And it's, I 100% agree with you.

I think what we were able to do with, say, botnets is what I would like us to do even with ransomware.

Because starting, if you think about the botnet work, it's one of the to going back to that public-private.

That is a place where the public-private partnership works superbly, right?

I mean, even the judicial system and its support of takedowns on the botnet.

I think the same thing needs to happen on the ransomware, including this is one place where the crypto rules should be very, very clear so that the incentives are

placed in the right place.

So we are definitely going to go after this.

This is definitely a topic of discussion, even in the White House, and what they want to do, but it will require.

Microsoft, we are making it our mission.

As you said, the best thing we can do immediately is on the black backup restore.

In fact, the detection, the interesting thing is you know what set of activity anybody who is involved in ransomware does, which is first delete backup.

So we need to get better at being able to sort of see that first activity and then to, you know, do the mitigating thing.

So, absolutely the right call, and we are on it.

Right.

Are you interested in the cryptocurrency markets?

You know, I'm watching it very, I mean, when I say, like, you know,

the

there's multiple things there.

I'm very definitely interested in the use cases of what's the distributed database underneath crypto.

But we've got to get out of this POW thing in the sense that there needs to be a better than proof of work so that we don't have the energy use problem and what have you.

So, I think it's a great general purpose technology there that I think can have many use cases.

I was recently learning about settlement of our own accounts payable across all the banks, across all the countries.

Oh my God, it's sort of so pretty antiquated.

And so, some new infrastructure for that would be fantastic.

And then, on the currency side, my own feeling is that

nation states, and I know you had a great conversation just before me, but I think nation states are going to find it very, very hard for just some decentralized infrastructure to completely take over.

So I see that that's what I'm not an expert on crypto.

And so therefore, we're watching to see what equilibrium do we reach between what is an alternative infrastructure for how the world ascribes value and how value gets transferred.

And then good old nation states, they're not going to go away.

See China this week.

See the United States.

Right here.

And the United States, but a little slower right here.

Hi, Terry Kawaja, Luma Partners.

Question about advertising.

As Kara mentioned, you've had sort of fits and starts with businesses in and around advertising from search to MSN, et cetera.

That was back when advertising was more of an art.

Today, it's much more science, right?

You've got,

it's a trillion-dollar global industry.

You've got ads coming to gaming.

You've got advertising being far more data, software, and cloud related.

So I guess my question is, might that change per your comment about product extensions, given the scale of that opportunity, that vertical,

your approach?

Yeah, I mean, first of all, advertising as a business model is a very powerful business model, as you described it.

And we definitely want,

we do have, you know, like LinkedIn has a significant advertising business.

And then Bing and what's happening in gaming and our news feed, both all of those add up.

So we would probably be, I forget now, fourth largest advertising business.

There's a huge distance between one, two, and four.

So we do have aspirations to grow that.

And I think that the opportunities today of being able to take a fresh take at it,

I think are there.

And you're going to see us take a run at it.

All right, Sacha has an eight o'clock flight, so I'm going to have one more quick question.

Sacha, how you've made great leadership in many areas that you work on.

Can you comment on the future role of Microsoft in healthcare in the context of leaders like Tim Cook saying that's going to be the most important work Apple will ever do?

Where do you stand at Microsoft in terms of your work in healthcare and life sciences?

Yeah, well, look, I mean, I think

in general, I would say I think the next stop, you know, if we come back here at code, let's say 10 years from now or five years from now,

i want to be in hawaii with my children we will

we will be talking about for sure um you know what's happening in healthcare what's happening in energy what's happening in financial services as if it was just tech in our case we're very very excited about our nuance acquisition which is still pending but uh what for example what nuance has done to take the cutting-edge ai work and apply it to where some of the biggest problems are which is physician burnout,

and to be able to really help them focus more on the patients, less on the administrative tasks, as just one example.

So, yes,

I ascribe to that, which is we are doing a lot today with

in healthcare being a provider to all the providers, the payers, the life sciences companies with our cloud tech.

I think drug discovery will fundamentally get super accelerated with some of these large-scale AI models and their ability to simulate even the biochemistry.

And so, therefore, I think there's tons and tons of things that we as Microsoft are investing in and looking forward to sort of seeing that.

Lots to do.

Lots to do for sure.

You look like you're having fun.

I am.

I think.

I am.

And it's, it's, you know, look, there,

I think one of the things I think is it's such a privilege to be in this industry at a time where its impact

is

so

visible and so broad.

And I also think to the many questions you asked, it's also incumbent on all of us is to really make sure that as we scale this, the unintended consequences of scale is something that we invest the time.

Don't take care of the issues before they become scale issues.

Right.

Some of them are intended.

Some of them are intended, but I really enjoy interviewing someone I actually like.

Anyway, Satya, thank you so much.

Thank you so much.

Okay, that's the show for today.

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This month on Explain It To Me, we're talking about all things wellness.

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That's this month on Explain It To Me, presented by Pureleaf.