The Exchanges

Q I'm drinking a Southern Comfort. It's, uh, we're in a beautiful pad. I'm really trying to visualize this one. Um, and we sit down, we go, what is the thing that we have to protect against? This is mine and your thing that we've built for 20 years. It's a new world. What do we have to protect against together?

A I think the thing that we have to protect is, from an Atlassian point of view, our creativity. I don't, we've, maybe if I zoom out, one of our earliest maxims about the business is we wanted to be a multi-decade technology company. Some of the companies we looked up to to the most as nerdy students of technology were like Microsoft, Adobe, Intuit. Because they survived multiple decades. And now they're, they're all still around. We, we, we have fantastical Adobe and Intuit people on our board, maybe not coincidentally. Uh, and we still look up to these companies. They're still competing today, 20 plus years after we made up this maxim. The reason you want to be a multi-decade technology company, I would argue, is you have to survive technological, technological disruptions just like now, right? We started kind of, you'd argue, at the very beginning of the internet kind of SaaS era. We survived the transition to SaaS, and we survived the transition to mobile, Whether crypto happened or didn't happen, I don't know, other people can debate that, and now we're in this AI transition, right? Those are kind of our three decades, put super simply. If you look back to Adobe or Intuit, well, they had to navigate DOS, to client server, to Windows, to the internet, to mobile, to all these things. What sets them apart, I think, those type of companies is they are always creating. It's very …

AI assessment note: “I think the thing that we have to protect is, from an Atlassian point of view, our creativity.”

Q dishwasher, so you're still ahead of me, so it's fine. Um, you and Scott were two of the most famous co-CEOs and really kind of pioneered the structure in tech for a long time. Now, obviously, you're solo CEO. I'd just love to hear your reflections on what were your biggest lessons from being such successful co-CEOs for years, and what worked and what didn't with the benefit of hindsight?

A Look, I think there's no doubt Atlassian wouldn't be where it is without Scott, probably without both of us, without the relationship. It's really hard starting a company. It's really hard building something. It's probably even harder doing it on the far side of the world from most of the other people who are doing similar things, and so having two equal parties, I think, in motivation, experience, we've always talked about this, is a really important part of what made it successful. And by equal, yes, equal, I don't know, shareholding-wise, equity-wise, but equal in terms of age, life stage, equal in terms of naivety and experience and wisdom, ah, I think that really helped, cause there's not, you'd go into a room and be like, oh, I don't know how to do this, and he goes, I don't know how to do it, and well, we gotta figure it out. But you have someone who's at a, um, very balanced, let's say, stage of all of those sorts of things. I remember when we both started having kids, it was around the same age, we both got married around the same time, That really helps. Cause when you have a kid, you're like, oh my God, this is really hard. I didn't get any sleep last night kind of thing. And then it goes for a long time. It's really helpful to have someone else who's in a similar situation and, and you can sort of talk through it and work through it. And we've juggled and balanced f…

AI assessment note: “one thing that really made it work is the, the equality and the balance”

Q some respects between what we wouldn't consider traditionally developers, and then the really valuable engineers and developers. The question becomes, you said, we will have more software engineers. Will we? Will we have the entry level? Will we have the, the kids studying CS who come in, and they're, they're decent, but they're definitely not a Tenex engineer, and they're not specialists. What does the future look like for them?

A I think we'll have far more of them. Uh, maybe that's a bold bet. Uh, We're hiring more grads this year than we did last year. More than we did the year before. Um, in some ways, look, uh, if you think about it, it's purely an economic question, which is dangerous when it comes to talent. If someone was going to be a 10 X engineer, 10 years ago, I would argue that person is probably still a 10 X engineer today. Maybe they're a hundred X engineer because they've got all these new tools, right? That's probably down to the person, their learning style, their ability to ingest information and how they solve problems, et cetera. Maybe the average engineer is going to be a 10 x engineer, and those 10 x engineers are now a hundred x engineers. It will come down to how they solve those problems, firstly. Secondly, I still have a bandwidth constraint of the number of people I have in R&D and engineering to build the ideas that the business could profitably build. That is still a constraint, and I think will be, I believe forever, but it's certainly a constraint that we've lived with for a long time. It's not going away today. Lastly, we've seen this with Loom, fascinatingly, in a, in a very different context. There's a good chance that those graduates come in with a different view on what it means to be a software developer And shake up the existing world of talent in a positive way for…

AI assessment note: “I think we'll have far more of them. Uh, maybe that's a bold bet.”

Q I'm drinking a Southern Comfort. It's, uh, we're in a beautiful pad. I'm really trying to visualize this one. Um, and we sit down, we go, what is the thing that we have to protect against? This is mine and your thing that we've built for 20 years. It's a new world. What do we have to protect against together?

A I think the thing that we have to protect is, from an Atlassian point of view, our creativity. I don't, we've, maybe if I zoom out, one of our earliest maxims about the business is we wanted to be a multi-decade technology company. Some of the companies we looked up to to the most as nerdy students of technology were like Microsoft, Adobe, Intuit. Because they survived multiple decades. And now they're, they're all still around. We, we, we have fantastical Adobe and Intuit people on our board, maybe not coincidentally. Uh, and we still look up to these companies. They're still competing today, 20 plus years after we made up this maxim. The reason you want to be a multi-decade technology company, I would argue, is you have to survive technological, technological disruptions just like now, right? We started kind of, you'd argue, at the very beginning of the internet kind of SaaS era. We survived the transition to SaaS, and we survived the transition to mobile, Whether crypto happened or didn't happen, I don't know, other people can debate that, and now we're in this AI transition, right? Those are kind of our three decades, put super simply. If you look back to Adobe or Intuit, well, they had to navigate DOS, to client server, to Windows, to the internet, to mobile, to all these things. What sets them apart, I think, those type of companies is they are always creating. It's very …

AI assessment note: “the thing that we have to protect is, from an Atlassian point of view, our creativity.”

Q When I hear you talk about the centrality of design there, I think about Satya Nadella's statement Business applications will collapse right in the agent era. They are essentially crud databases with a bunch of business logic. How do you feel about that reflecting on your centrality of design?

A It's very easy to make a big statements in the current era because it can't be proven wrong. Hence those statements could theoretically have some value of right. Do I believe that all Business applications, maybe all applications, full stop. I guess you could argue every piece of application is just a crud piece of software. Um, emails, just the same thing, right? I don't know if it's a business application or a consumer application. Um, I still believe there is a role for software to solve certain purposes. There's an old adage in enterprise software that every single piece of enterprise software can be replicated with email and Excel. It's quite true, right? You can do any application you want with email and Excel. You can replicate Any communication app, you can replicate any business process app, you can make it. Now, there's a reason we don't all just sit there and email and Excel still very used, very popular, right? But at the same time, they are not used for large scale things. We have HRS systems and CRM systems and project management systems and lots of communication systems from Zoom and Slack and all the things, right? They're all very specific versions, you might argue, of email and Excel, but they serve a very specific purpose. Um, what we've seen over the last 10 years is the opposite. We've had a Cambrian explosion of SaaS apps to do more and more and more speci…

AI assessment note: “I'm not a believer in that world view. I don't think it's likely”

Q some respects between what we wouldn't consider traditionally developers, and then the really valuable engineers and developers. The question becomes, you said, we will have more software engineers. Will we? Will we have the entry level? Will we have the, the kids studying CS who come in, and they're, they're decent, but they're definitely not a Tenex engineer, and they're not specialists. What does the future look like for them?

A I think we'll have far more of them. Uh, maybe that's a bold bet. Uh, We're hiring more grads this year than we did last year. More than we did the year before. Um, in some ways, look, uh, if you think about it, it's purely an economic question, which is dangerous when it comes to talent. If someone was going to be a 10 X engineer, 10 years ago, I would argue that person is probably still a 10 X engineer today. Maybe they're a hundred X engineer because they've got all these new tools, right? That's probably down to the person, their learning style, their ability to ingest information and how they solve problems, et cetera. Maybe the average engineer is going to be a 10 x engineer, and those 10 x engineers are now a hundred x engineers. It will come down to how they solve those problems, firstly. Secondly, I still have a bandwidth constraint of the number of people I have in R&D and engineering to build the ideas that the business could profitably build. That is still a constraint, and I think will be, I believe forever, but it's certainly a constraint that we've lived with for a long time. It's not going away today. Lastly, we've seen this with Loom, fascinatingly, in a, in a very different context. There's a good chance that those graduates come in with a different view on what it means to be a software developer And shake up the existing world of talent in a positive way for…

AI assessment note: “I think we'll have far more of them... We're hiring more grads this year”

Q Why is that? Is that adoption and education? Is that data cleanliness and availability? Is that security and permissioning in large enterprises? Why?

A Every single one of those and more. I think it is, it's experience, it's understanding, it is people. You have to understand your problem well. You have to change the way you look at the problem often, the workflow, the business process. You have to understand the technology and what it is and is not capable of at the current time. You have to have the security, the data, you have to have the cleaning list, you have to have all these things. The magical demo of just like a push a button and like some app pops out or this thing happens, it doesn't exist, right? It doesn't mean the technology is not useful at all, but I think there's a lot, there's a lot more work to do to really deliver on the promise. Like most technical disruptions, we're, we've got a hype cycle going on.

AI assessment note: “Every single one of those and more.”

Q dishwasher, so you're still ahead of me, so it's fine. Um, you and Scott were two of the most famous co-CEOs and really kind of pioneered the structure in tech for a long time. Now, obviously, you're solo CEO. I'd just love to hear your reflections on what were your biggest lessons from being such successful co-CEOs for years, and what worked and what didn't with the benefit of hindsight?

A Look, I think there's no doubt Atlassian wouldn't be where it is without Scott, probably without both of us, without the relationship. It's really hard starting a company. It's really hard building something. It's probably even harder doing it on the far side of the world from most of the other people who are doing similar things, and so having two equal parties, I think, in motivation, experience, we've always talked about this, is a really important part of what made it successful. And by equal, yes, equal, I don't know, shareholding-wise, equity-wise, but equal in terms of age, life stage, equal in terms of naivety and experience and wisdom, ah, I think that really helped, cause there's not, you'd go into a room and be like, oh, I don't know how to do this, and he goes, I don't know how to do it, and well, we gotta figure it out. But you have someone who's at a, um, very balanced, let's say, stage of all of those sorts of things. I remember when we both started having kids, it was around the same age, we both got married around the same time, That really helps. Cause when you have a kid, you're like, oh my God, this is really hard. I didn't get any sleep last night kind of thing. And then it goes for a long time. It's really helpful to have someone else who's in a similar situation and, and you can sort of talk through it and work through it. And we've juggled and balanced f…

AI assessment note: “having two equal parties, I think, in motivation, experience... is a really important part”

Q I think it's Alan Roosevelt's statement that kind of bad discussions are about other people, mediocre ones are about events, and smart discussions and good discussions are about the future and ideas. When we look forward, you said that you don't believe the chatbot is kind of the interface of AI in the future. What do you think is the interface for AI in the future with that in mind?

A Ah, that's a good question. Look, I think that's what we're all trying to create, right? It's one of the fascinating questions around today. It's the reason why fundamental design is such an, uh, important skill and talent, I would argue in the next few years, maybe forever, but right now it's, it's hugely important. I think that interface is going to be probably, it's safe to say, far more evolutionary. So I don't know if there will be an interface. It might be that AI is rewriting interface. In theory, AI can generate some code, write the code to create a new interface for every single screen you look at, right? I don't think we'll probably see that. It'll be too discombobulating for users. They'll get lost. They'll be like, wait, everything's moving all the time. Like I, if you watch users in any user study, they like knowing that I go to this button, I click the thing and that happens and I go to this thing and that happens. So they're going to want stability in their interfaces. They're not going to want this dynamically changing always interface, but we can generate new interfaces pretty quickly. I suspect It might look a lot more like today than we think, but it will be a lot smarter, it will do very different things, and there will be a lot less Click to value ratio. There are, there is no doubt that a lot of software requires you to, uh, click or type to indicate what …

AI assessment note: “It might look a lot more like today than we think, but it will be a lot smarter”

Q What was the thought process behind that? Because you've got to then believe that vibe coding as a category will be a sustainable and enduring category. In software creation. Do you believe that?

A It might depend on our definition of vibe coding. I believe that there is a large group of people who we may or may not call software developers, who will want to be able to create technology of a certain quality or level, or that meets a certain set of standards. Maybe the design standards, software security standards, whatever it is. Um, I'm not sure whether we'll call these people software engineers. I don't think it really matters. I think it becomes one of these annoyingly not useful debates. Um, if you ask me, in Atlassian, I will end up with far more generalists. People, I will end up with a wider organization, and people will do far more things, and their jobs will hopefully be more fulfilling because of it, right? I will have, um, people in finance who are quote-unquote vibe-coding an application to solve a financial problem for themselves, Where previously they might have tried with Excel, or they might have filed a ticket with IT, or they just wouldn't have bothered, right? They're writing Python code to do crazy complex analysis. The cost of that code is so small that they maybe do it three or four times, maybe throw it away because it didn't work, right? That is not what I would argue is software development. That is a financial professional who's trying to get their job done and has a new set of tools to go get it done. Marketers making websites. You might argue i…

AI assessment note: “It might depend on our definition of vibe coding. I believe that there is a large group”

Q and not picking on Salesforce, but picking on Salesforce, the question that remains is like the pricing model. We've got so used to a per seat pricing, you know, it's what predicates Salesforce's growth now is just an expansion in seats, bluntly. How does the per seat price, does the per seat pricing model die in the next wave of SaaS? And how do you think about navigating that successfully?

A I think the Only logical replacement out there. Well, there's two logical replacements. One is per value delivered, some unit of value, um, and the other one is some sort of consumption based model. Back to my prior point, go talk to customers about how much they love consumption-based models. Generally, they don't love them very much, because they're not quite sure how much they're going to consume, they don't want to be in control of their employees, so the world does trend to a non-consumptive-based model in many areas, not in all areas, right? AWS is obviously consumption-based. At some point, those consumption-based models tend to flip, where it's not clearly transactional, like a stripe or something, or, you know, where you, you can clearly measure consumption. Into a, another form of payment. I would, you know, we give away kind of unlimited storage. Many vendors do. It doesn't mean the storage doesn't cost us money, but it's our job to get enough money from a customer that we can on average pay for the storage and we have the right controls of exception limits and stuff like that. I do wonder if AI ends up that way around. Value based pricing, I think is fascinating on a delivered outcome basis. Pay me for every X I deliver. The problem with that becomes twofold, I suspect. Number one, you've got to measure X very accurately that both the seller and the buyer are prepar…

AI assessment note: “there's two logical replacements. One is per value delivered... the other one is some sort of consumption”

Q Do you think you've become a better leader? Respectfully, the richer you've got, and the context I give for that actually is like, I don't worry so much, so I'm less emotionally volatile, I'm more neutral now because like, downside's a bit capped, and I, I see upside much more.

A I don't think it's monetarily related, to be honest. I, I think one of the, you asked what Scott and I had in common. Neither of us are particularly monetarily motivated, right? I used to love the old quote that I didn't become an entrepreneur to make money. It doesn't mean I can't count. And neither of us are, neither of us are particularly, like every time we do those personality surveys and stuff, I remember we did one and some guys like, you're the weirdest founders ever. And we was like, why that's like, well, importance of money to both of you is like off the charts at the bottom. So I don't think monetarily, no. I do think if I twist the question, the richness of my life, I think, has made me a better leader. Right? Uh, uh, having kids has made me far more empathetic to employees. You know what I mean? Like, in terms of all sorts of things, wisdom, pain, difficulty, all the suffering, whatever Jensen likes to say, going through all of those journeys, I think as long as it doesn't make you kind of gnarled and hardened, and it makes you wise in a thoughtful way, I think that is what probably makes you a better Leader, person, whatever. It's a richness of the experiences that you've been through, then it is some sort of capped downside, right? I mean, I don't have to look at the right-hand side of a menu. Great.

AI assessment note: “I don't think it's monetarily related, to be honest.”

Q and not picking on Salesforce, but picking on Salesforce, the question that remains is like the pricing model. We've got so used to a per seat pricing, you know, it's what predicates Salesforce's growth now is just an expansion in seats, bluntly. How does the per seat price, does the per seat pricing model die in the next wave of SaaS? And how do you think about navigating that successfully?

A I think the Only logical replacement out there. Well, there's two logical replacements. One is per value delivered, some unit of value, um, and the other one is some sort of consumption based model. Back to my prior point, go talk to customers about how much they love consumption-based models. Generally, they don't love them very much, because they're not quite sure how much they're going to consume, they don't want to be in control of their employees, so the world does trend to a non-consumptive-based model in many areas, not in all areas, right? AWS is obviously consumption-based. At some point, those consumption-based models tend to flip, where it's not clearly transactional, like a stripe or something, or, you know, where you, you can clearly measure consumption. Into a, another form of payment. I would, you know, we give away kind of unlimited storage. Many vendors do. It doesn't mean the storage doesn't cost us money, but it's our job to get enough money from a customer that we can on average pay for the storage and we have the right controls of exception limits and stuff like that. I do wonder if AI ends up that way around. Value based pricing, I think is fascinating on a delivered outcome basis. Pay me for every X I deliver. The problem with that becomes twofold, I suspect. Number one, you've got to measure X very accurately that both the seller and the buyer are prepar…

AI assessment note: “Well, there's two logical replacements. One is per value delivered”

Q What was the thought process behind that? Because you've got to then believe that vibe coding as a category will be a sustainable and enduring category. In software creation. Do you believe that?

A It might depend on our definition of vibe coding. I believe that there is a large group of people who we may or may not call software developers, who will want to be able to create technology of a certain quality or level, or that meets a certain set of standards. Maybe the design standards, software security standards, whatever it is. Um, I'm not sure whether we'll call these people software engineers. I don't think it really matters. I think it becomes one of these annoyingly not useful debates. Um, if you ask me, in Atlassian, I will end up with far more generalists. People, I will end up with a wider organization, and people will do far more things, and their jobs will hopefully be more fulfilling because of it, right? I will have, um, people in finance who are quote-unquote vibe-coding an application to solve a financial problem for themselves, Where previously they might have tried with Excel, or they might have filed a ticket with IT, or they just wouldn't have bothered, right? They're writing Python code to do crazy complex analysis. The cost of that code is so small that they maybe do it three or four times, maybe throw it away because it didn't work, right? That is not what I would argue is software development. That is a financial professional who's trying to get their job done and has a new set of tools to go get it done. Marketers making websites. You might argue i…

AI assessment note: “It might depend on our definition of vibe coding. I believe that there is a large group”

Q You said there about the craziness of this time. It is, and I find that quite hard because I'm looking at this as an ambassador going, what is sustainable? What is not sustainable? And I'm trying to assess durability in a world of complete unknowns. How would you advise me, Mike?

A Look, I think you've got some very difficult choices as an investor in the current time. Most of the things are vastly overvalued, probably true. Some of the things will be worth far more and are undervalued, and the far more is probably overweight all of the things that are overvalued, like as classically happens, right? Uh, for all the dot coms that went bust, Amazon turned out to be quite a good business. That makes it particularly hard in this era to be an investor. Secondly, we aren't in an era where we have a durable business model for a lot of these things. So the old argument that, you know, uh, some AI company, let's just call them, give a hundred million dollars to, uh, a model company who then give a hundred and fifty million dollars to a cloud provider who then gives two hundred million dollars to Nvidia to buy chips. And everyone's like, look how much revenue we've all got. And you're like, yeah, but you're all like losing fifty million bucks on the way through. It's a pretty good adage, but maybe they'll make it up in scale, right? We all, I don't think anybody really, really knows. We know that it's a foundational technology. We know that it changes so many things. Where the monetary value and the fundamental value lies on the far end of it, in terms of how the business models shake up, if you think about the search era and advertising and all these things, right…

AI assessment note: “I don't think anybody really, really knows... Where the monetary value and the fundamental value lies”

Q He's built a great, built a great business. Yeah, but if, if this is true that switching costs is actually incredibly low, are these fundamentally good businesses?

A Look, I think like a lot of things in AI, most of these businesses have been built very fast, both in terms of the creation of the technology behind the business and the customer base and everything else. Which almost by virtue of that means the switching costs are quite low at the moment. You cannot build a business fast that has high switching costs. It, it doesn't, it like logically makes sense. Do they have high switching costs in the future is a, is a very different question than are there high switching costs today, right? Everybody, one of the, one of the fascinating things for me about AI is we navigate this, this, this disruption, this period of, of creativity. Large language models have been dropped on the whole world at the same time. It's like someone just went, you can all have these for free, go. Which is something I don't believe we've seen in technology before. It's very unique. So that, it took a long time for mobile phones to permeate the world. It took a long time for PCs to permeate the world. It took a long time for these things. It's very different to have, you know, a billion technically literate people get access through cloud providers to It doesn't matter, open AI, Anthropic, you know, Gemini, Llama, go. And everybody, that's why you're seeing such a verdant creativity, which is fascinating. It also means, again, the switching costs of almost everythin…

AI assessment note: “And they will have to build up, one would argue, to build sustainable businesses.”

Q Y. Once you get past that and go, okay, well then the fundamental question is how do you build defensibility post that phase? The next criticism is, well, Mike, come on. They've all got shit margins. They're all negative margin businesses. They're crap. They can't be good businesses. How do you respond to the critique of the low margin nature of relatively all of the AI tools that we're using?

A We're too early to really understand what those margin profiles are. We don't understand the monetization models for a lot of them yet. They keep changing pricing schemes. Every three months. So not understanding the monetization model, not understanding really where the relative value is, Um, the time degradation of model value. So the whole sort of like, hey, I've trained a model. It cost me a billion dollars. Am I going to get that billion dollars back in the nine month period before the next model is better and it cost me other billion dollars to train? These have all got to be sorted out. I can't tell you how the world's going to sort them out, but I can tell you that they will be sorted out in some form. Margins are probably built in these businesses with customer value delivered, right? There is a partnership and a relationship with your customers And a faith that you will continue to deliver value that in some ways build margin over time in different, different seven powers manners than just pure switching costs, which is often about a somewhat a captivity kind of a notion. And then you get to, well, where does the fundamental value live? In any technological change, the value can shift around. You might argue, well, the chip vendors are going to capture all the value. Some investors believe this at the moment, uh, possibly. You might argue the power producers that are …

AI assessment note: “We're too early to really understand what those margin profiles are.”

Q How does that then reflect on how you behave? Because you have to play the game on the field. You have to make bold bets. How does that reflect on what you do?

A I think what we've tried to do is a couple of things. Firstly, We've said for two and a half years now, we need to make bets. We need to make, um, not in the same way you just used the word, sorry. We need to make, uh, choices or opinions about how we think things are going to evolve, but we need to be willing to change those. So we have various hunches, I would say, that we've made, that we said, hey, we think over the next three years, this is going to be what happens. But about every quarter, we, we reassess those sets of fundamental, uh, uh, choices. Uh, I can, I can go through a bunch of them, but I think that's one that you have to do as a business. You have to be willing to walk away from those hunches that you have, but at the same time, you have to make them. You can't be in this era of, oh, I'm not really sure what's going on in all these different areas. Secondly, I think you have to listen to your customers very deeply. Because in an era where everything's swimming around and there's a lot of noise, let's just say, in the world about what is and isn't, Oftentimes you've got to find the stable thing, which is to go back to the customers and say, do you feel this way? And talk to enough of them that you get internal conviction about what is or isn't happening. Um, you've got to talk to the right customers. You've got to talk to enough of them. That is definitely true,…

AI assessment note: “I think what we've tried to do is a couple of things. Firstly, We've”

Q said there about Jensen. Jensen said if he knew how hard it was, he would never have done it. And my, my heart broke as an Nvidia fanboy and a Jensen fanboy. It was like, you know, the shattering of Father Christmas not being real, which he obviously is for anyone listening, uh, who's under the age of 10. Um, If I asked you that, what would your response be?

A Look, there are certainly times where you may have felt that way. I think if I took the average of all of the days in the last 23 years, nah, do it again every single day. Like, we've been, I still say we a lot, uh, I have been, we have been, both of us, incredibly lucky. Like, this is, we've had so many lucky breaks go our way, we've worked hard, We've got to work with amazing people. Like, I think, to your question on the founders as well, I would add, I would add that, because I do think it's really important. If you don't enjoy the people you work with, it doesn't, all the rest of it doesn't matter. I have an awesome exec team. I have some awesome Amazing colleagues at work that I'm inspired by, that I love working with, that I love turning up to work with, you know, the old dinner party conversation I think is really important. If there's one seat left and you're like, ah, your last person arrived, you go sit down. Do you look at the person on the left and right and think, ah, I don't want to sit there? Then you're working with the wrong team. And as a founder, it's my job to make sure that there's no seats at the dinner table that I do not want to sit in, right? But at the same time, that's where the joy comes from. Like, what are we doing for? A company is, there's a group of people trying to achieve something in common, right? A team, a group that, like, we have some so…

AI assessment note: “if I took the average of all of the days... do it again every single day”

Q said there about Jensen. Jensen said if he knew how hard it was, he would never have done it. And my, my heart broke as an Nvidia fanboy and a Jensen fanboy. It was like, you know, the shattering of Father Christmas not being real, which he obviously is for anyone listening, uh, who's under the age of 10. Um, If I asked you that, what would your response be?

A Look, there are certainly times where you may have felt that way. I think if I took the average of all of the days in the last 23 years, nah, do it again every single day. Like, we've been, I still say we a lot, uh, I have been, we have been, both of us, incredibly lucky. Like, this is, we've had so many lucky breaks go our way, we've worked hard, We've got to work with amazing people. Like, I think, to your question on the founders as well, I would add, I would add that, because I do think it's really important. If you don't enjoy the people you work with, it doesn't, all the rest of it doesn't matter. I have an awesome exec team. I have some awesome Amazing colleagues at work that I'm inspired by, that I love working with, that I love turning up to work with, you know, the old dinner party conversation I think is really important. If there's one seat left and you're like, ah, your last person arrived, you go sit down. Do you look at the person on the left and right and think, ah, I don't want to sit there? Then you're working with the wrong team. And as a founder, it's my job to make sure that there's no seats at the dinner table that I do not want to sit in, right? But at the same time, that's where the joy comes from. Like, what are we doing for? A company is, there's a group of people trying to achieve something in common, right? A team, a group that, like, we have some so…

AI assessment note: “nah, do it again every single day.”

Q You said there about the craziness of this time. It is, and I find that quite hard because I'm looking at this as an ambassador going, what is sustainable? What is not sustainable? And I'm trying to assess durability in a world of complete unknowns. How would you advise me, Mike?

A Look, I think you've got some very difficult choices as an investor in the current time. Most of the things are vastly overvalued, probably true. Some of the things will be worth far more and are undervalued, and the far more is probably overweight all of the things that are overvalued, like as classically happens, right? Uh, for all the dot coms that went bust, Amazon turned out to be quite a good business. That makes it particularly hard in this era to be an investor. Secondly, we aren't in an era where we have a durable business model for a lot of these things. So the old argument that, you know, uh, some AI company, let's just call them, give a hundred million dollars to, uh, a model company who then give a hundred and fifty million dollars to a cloud provider who then gives two hundred million dollars to Nvidia to buy chips. And everyone's like, look how much revenue we've all got. And you're like, yeah, but you're all like losing fifty million bucks on the way through. It's a pretty good adage, but maybe they'll make it up in scale, right? We all, I don't think anybody really, really knows. We know that it's a foundational technology. We know that it changes so many things. Where the monetary value and the fundamental value lies on the far end of it, in terms of how the business models shake up, if you think about the search era and advertising and all these things, right…

AI assessment note: “anyone who tells you that they know it is probably not telling you the truth”

Q I think it's Alan Roosevelt's statement that kind of bad discussions are about other people, mediocre ones are about events, and smart discussions and good discussions are about the future and ideas. When we look forward, you said that you don't believe the chatbot is kind of the interface of AI in the future. What do you think is the interface for AI in the future with that in mind?

A Ah, that's a good question. Look, I think that's what we're all trying to create, right? It's one of the fascinating questions around today. It's the reason why fundamental design is such an, uh, important skill and talent, I would argue in the next few years, maybe forever, but right now it's, it's hugely important. I think that interface is going to be probably, it's safe to say, far more evolutionary. So I don't know if there will be an interface. It might be that AI is rewriting interface. In theory, AI can generate some code, write the code to create a new interface for every single screen you look at, right? I don't think we'll probably see that. It'll be too discombobulating for users. They'll get lost. They'll be like, wait, everything's moving all the time. Like I, if you watch users in any user study, they like knowing that I go to this button, I click the thing and that happens and I go to this thing and that happens. So they're going to want stability in their interfaces. They're not going to want this dynamically changing always interface, but we can generate new interfaces pretty quickly. I suspect It might look a lot more like today than we think, but it will be a lot smarter, it will do very different things, and there will be a lot less Click to value ratio. There are, there is no doubt that a lot of software requires you to, uh, click or type to indicate what …

AI assessment note: “Somewhere between the two is probably where it”

Q When did you most vehemently disagree, and how did it resolve itself?

A Well, look, firstly, our first shareholder agreement did have Actually in there that if we couldn't agree on something, we'd go to a game of scissors, paper, rock. Best of three. Um, We never got into any bigger disagreements when that shareholder agreement was actually governing the company. Don't worry, there's a large public company that's no longer, uh, in the bylaws. Uh, but it was for probably well over a decade. Uh, I always knew I'd lose this as a paper rock game, best of three, so therefore we didn't do any disagreements that required imposition, uh, the, the, uh, use of that clause. Uh, I think we, look, we've disagreed over acquisitions, we've disagreed over strategic directions, et cetera. I've always lived by the maximum. If I can't convince him that something's a good idea, it's probably not. That is a really good marker that something is probably not a good idea and vice versa. I think he would say probably the same thing, which meant, you know, if you did disagree, Maybe you tried to lobby the other person, convince them for a while. If you couldn't convince them, it was a good idea. We didn't do the thing. Um, and it, it worked pretty well. Um, there was no real, I would say major, major disagreements that were sort of epic singular points that business went one way or the other. Um, we've been in the same boat for a long time.

AI assessment note: “If you couldn't convince them, it was a good idea. We didn't do the thing.”

Q Y. Once you get past that and go, okay, well then the fundamental question is how do you build defensibility post that phase? The next criticism is, well, Mike, come on. They've all got shit margins. They're all negative margin businesses. They're crap. They can't be good businesses. How do you respond to the critique of the low margin nature of relatively all of the AI tools that we're using?

A We're too early to really understand what those margin profiles are. We don't understand the monetization models for a lot of them yet. They keep changing pricing schemes. Every three months. So not understanding the monetization model, not understanding really where the relative value is, Um, the time degradation of model value. So the whole sort of like, hey, I've trained a model. It cost me a billion dollars. Am I going to get that billion dollars back in the nine month period before the next model is better and it cost me other billion dollars to train? These have all got to be sorted out. I can't tell you how the world's going to sort them out, but I can tell you that they will be sorted out in some form. Margins are probably built in these businesses with customer value delivered, right? There is a partnership and a relationship with your customers And a faith that you will continue to deliver value that in some ways build margin over time in different, different seven powers manners than just pure switching costs, which is often about a somewhat a captivity kind of a notion. And then you get to, well, where does the fundamental value live? In any technological change, the value can shift around. You might argue, well, the chip vendors are going to capture all the value. Some investors believe this at the moment, uh, possibly. You might argue the power producers that are …

AI assessment note: “We're too early to really understand what those margin profiles are.”

Q When did you most vehemently disagree, and how did it resolve itself?

A Well, look, firstly, our first shareholder agreement did have Actually in there that if we couldn't agree on something, we'd go to a game of scissors, paper, rock. Best of three. Um, We never got into any bigger disagreements when that shareholder agreement was actually governing the company. Don't worry, there's a large public company that's no longer, uh, in the bylaws. Uh, but it was for probably well over a decade. Uh, I always knew I'd lose this as a paper rock game, best of three, so therefore we didn't do any disagreements that required imposition, uh, the, the, uh, use of that clause. Uh, I think we, look, we've disagreed over acquisitions, we've disagreed over strategic directions, et cetera. I've always lived by the maximum. If I can't convince him that something's a good idea, it's probably not. That is a really good marker that something is probably not a good idea and vice versa. I think he would say probably the same thing, which meant, you know, if you did disagree, Maybe you tried to lobby the other person, convince them for a while. If you couldn't convince them, it was a good idea. We didn't do the thing. Um, and it, it worked pretty well. Um, there was no real, I would say major, major disagreements that were sort of epic singular points that business went one way or the other. Um, we've been in the same boat for a long time.

AI assessment note: “there was no real, I would say major, major disagreements that were sort of epic”

Q How does that then reflect on how you behave? Because you have to play the game on the field. You have to make bold bets. How does that reflect on what you do?

A I think what we've tried to do is a couple of things. Firstly, We've said for two and a half years now, we need to make bets. We need to make, um, not in the same way you just used the word, sorry. We need to make, uh, choices or opinions about how we think things are going to evolve, but we need to be willing to change those. So we have various hunches, I would say, that we've made, that we said, hey, we think over the next three years, this is going to be what happens. But about every quarter, we, we reassess those sets of fundamental, uh, uh, choices. Uh, I can, I can go through a bunch of them, but I think that's one that you have to do as a business. You have to be willing to walk away from those hunches that you have, but at the same time, you have to make them. You can't be in this era of, oh, I'm not really sure what's going on in all these different areas. Secondly, I think you have to listen to your customers very deeply. Because in an era where everything's swimming around and there's a lot of noise, let's just say, in the world about what is and isn't, Oftentimes you've got to find the stable thing, which is to go back to the customers and say, do you feel this way? And talk to enough of them that you get internal conviction about what is or isn't happening. Um, you've got to talk to the right customers. You've got to talk to enough of them. That is definitely true,…

AI assessment note: “we need to make choices or opinions... but we need to be willing to change those”

Q like, this is a game of who can survive the longest. And my question to you is, you speak with such vigor and energy today, 23 years in. It is a game of who can survive the longest. Has there ever been a time when your energy or enthusiasm waned? And how did you get through that? And what would you say to founders who maybe are waning in energy?

A My favorite quote of Tobes is, uh, he once told me that the founder's job is to fight the entropy of ambition. And I wrote it down, and I was like, fuck yes, that is exactly what I have to do, because the moment we stop being ambitious as a business, all those numbers and things that I just said, we are freaking tiny as a business. Right? We are minute, and we have to feel like we are minute. We have to feel like we have to fight for every customer and every user, and we should, and we are. On the scale of the global economy, we're like, we're like tiny, which means we've got a long way to go. There are certainly times in 23 years, for sure, where you get tired and exhausted. I think you have to, there's a physical tiredness and a mental tiredness, maybe they're a little bit different. Physical tiredness, yes, you've got to take breaks, you've got to be, Uh, uh, careful on the, the old classical, you're running a marathon, not a sprint, those types of things. You've got to figure out how to be there, deal with little bits of sleep or whatever it is. Um, some people are wired for doing that. Some people aren't. I've always been pretty wired to do it. Mental tiredness. I think you have to think about things in, in sort of eras, and you have to take breaks mentally as well. I, I don't know. Maybe I'm not a very good person to answer this question. I, I've, I've liked the best job …

AI assessment note: “There are certainly times in 23 years, for sure, where you get tired and exhausted.”

Q When I hear you talk about the centrality of design there, I think about Satya Nadella's statement Business applications will collapse right in the agent era. They are essentially crud databases with a bunch of business logic. How do you feel about that reflecting on your centrality of design?

A It's very easy to make a big statements in the current era because it can't be proven wrong. Hence those statements could theoretically have some value of right. Do I believe that all Business applications, maybe all applications, full stop. I guess you could argue every piece of application is just a crud piece of software. Um, emails, just the same thing, right? I don't know if it's a business application or a consumer application. Um, I still believe there is a role for software to solve certain purposes. There's an old adage in enterprise software that every single piece of enterprise software can be replicated with email and Excel. It's quite true, right? You can do any application you want with email and Excel. You can replicate Any communication app, you can replicate any business process app, you can make it. Now, there's a reason we don't all just sit there and email and Excel still very used, very popular, right? But at the same time, they are not used for large scale things. We have HRS systems and CRM systems and project management systems and lots of communication systems from Zoom and Slack and all the things, right? They're all very specific versions, you might argue, of email and Excel, but they serve a very specific purpose. Um, what we've seen over the last 10 years is the opposite. We've had a Cambrian explosion of SaaS apps to do more and more and more speci…

AI assessment note: “I'm not a believer in that world view. I don't think it's likely to happen.”

Q Do you think you've become a better leader? Respectfully, the richer you've got, and the context I give for that actually is like, I don't worry so much, so I'm less emotionally volatile, I'm more neutral now because like, downside's a bit capped, and I, I see upside much more.

A I don't think it's monetarily related, to be honest. I, I think one of the, you asked what Scott and I had in common. Neither of us are particularly monetarily motivated, right? I used to love the old quote that I didn't become an entrepreneur to make money. It doesn't mean I can't count. And neither of us are, neither of us are particularly, like every time we do those personality surveys and stuff, I remember we did one and some guys like, you're the weirdest founders ever. And we was like, why that's like, well, importance of money to both of you is like off the charts at the bottom. So I don't think monetarily, no. I do think if I twist the question, the richness of my life, I think, has made me a better leader. Right? Uh, uh, having kids has made me far more empathetic to employees. You know what I mean? Like, in terms of all sorts of things, wisdom, pain, difficulty, all the suffering, whatever Jensen likes to say, going through all of those journeys, I think as long as it doesn't make you kind of gnarled and hardened, and it makes you wise in a thoughtful way, I think that is what probably makes you a better Leader, person, whatever. It's a richness of the experiences that you've been through, then it is some sort of capped downside, right? I mean, I don't have to look at the right-hand side of a menu. Great.

AI assessment note: “I don't think it's monetarily related, to be honest.”

Q Does the democratization or the cheapening of software creation Make software more or less valuable? Does it make design more or less valuable? How does it change discovery with an infinite supply?

A I do think it makes design more valuable. Good design. Scarce resources probably get more valuable, and I think good design is quite scarce. I don't know. There's no doubt in my mind that we will create far more technology. Right? We often get asked this, is do you think all software developers are going away? I said no. I was on a panel with, uh, uh, or speaking right before, I should say, Matt from AWS, and we both violently agreed that five years from now, we'll have more engineers working for our company than we do today. More software developers working for our companies. We will create far more. They will be more efficient. But software is, uh, technology creation is not output bound. It's, it's, it's like, The demand supply is, is very off the charts. What I mean by that is we, we don't have a shortage of ideas for new technology that we want. Find me a software company or a technology company that gets to the end of its roadmap. Like the roadmap is unlimited in length, and we will keep coming up with new ideas. Human creativity, we will come up with new ideas for things that we want to build into our software. Maybe crap ideas, maybe good ideas. We'll have to build them and test it and see. I like to be an optimist and think we will end up with far more technology, firstly, and secondly, far better technology. Because I can afford, if things are cheaper to build, quote …

AI assessment note: “I do think it makes design more valuable. Good design.”