The Exchanges

Q What does your day to day look like? And in particular, how are you managing by walking around? What virtual corridors are you wandering to just get a sense for what's going on on Microsoft? What are your customer engagements actually look like just for a normal day, not earnings or not a board meeting or something?

A Interestingly enough, um, my normal day is it, it's the two ends of it, right? Which is the, the customer stuff. So, There's not a day that I would say I'm not having, um, many of them are remote. I mean, there's Teams calls for me most of the day, at least two or three of them, uh, with some customer. It's sort of the most helpful way for me, um, uh, to stay most grounded, I would say. So I have at least one or two of those each day. And then, um, I'd say there is a lot of meeting time, um, uh, you know, Uh, you know, as a CEO, one of the things I've recognized is there are two types of meetings, right? One meeting is where I'm just supposed to convene and, you know, keep my mouth shut, because convening was the real thing, right? It is like, don't overperform, just sit and, because all the work would have either happened, uh, or will happen after, but, uh, so that's kind of one. And then the other meeting, which are the important meetings, where I do need to learn, or I need to make a decision, or communicate something. So meetings is another spot, uh, Then, I must say, it's kind of like all over, for me, Teams channels, right? I am lingering around Teams channels, uh, and they're most helpful. In fact, if anything, I learn the most there, I meet most people there. So, wandering the halls, I wish I can tell you that, you know, that is the form.

AI assessment note: “I am lingering around Teams channels, uh, and they're most helpful.”

Q there, uh, at Microsoft, uh, during the, uh, the thousand dot com bubble, and it really was, uh, you know, Microsoft's share price peaked in the late nineties, early 2000, and then didn't surpass it until 2016, I wanna say. What did it feel like in 1999? In particular, did you know you were in a bubble, or was it like, oh, this is the new, this time it's different?

A It's interesting, yeah. So, yeah, in fact, I remember, I think, you know, we probably became the largest market cap company in 2000. Uh, we crossed G, I remember that. Um, you know, we were capitalite, let's say, right? That time around, it was like, I guess I was more like Sam at that time, which is somebody else's capital was being spent. Quite honestly, when I look back at it, at that time too, the financial cycle aside, it was clear, the secular trend was clear that this is going to, because even the, by then, the, the business models were also emerging, right? Even for Microsoft, the biggest lesson at that time was, oh my God, like even our first order play, Uh, oh, we got to build a browser. We got to build a web server. Uh, we've got to, you know, have internet protocols everywhere. All, oh, we got, you know, we had a website builder inside of office with front page. We did all the obvious things, but we realized that just doing the obvious things didn't make sense. We needed to reinvent what we were doing, plus one of the new business models was clear. So in an interesting way, that cycle Um, kind of came out of nowhere. I mean, it came out of, you know, what was just, you know, whatever, rational exuberance or what have you, but, ah, the correction in some sense washed away a bunch of stuff, but I would say the ideas persisted.

AI assessment note: “at that time too, the financial cycle aside, it was clear, the secular trend”

Q all three from my cold dead hands. Where do you stand on the debate of do people have loyalty to, and there was also the revolt when they tried to take away four, oh, was it? That's right. And people were really attached to that model. Do people have loyalty to a model, or do they have loyalty to an AI brand, and how does this affect your business strategy?

A I think that in the consumer products, uh, this was the first time we saw that, right? When you changed models, they are not sort of uniform changes, uh, and they impact People differently, right? And, uh, personality is one such thing or style or what have you. And so it just sort of is a new dimension. So in other words, it's also an argument that, oh, wow, this is a new dimension of perhaps differentiation, right? Uh, people will, you know, it's sort of, there's the IQ side of it. There's the EQ side of it. Um, and then there is all these style points and maybe that's That's kind of one of the things that people will, uh, steer things towards. But long term for me, uh, I think you have to kind of make sure that the models are most capable for the hardest high value tasks. And then you continuously optimize after you have access to that for what the task at hand is, right? So as a, a product builder for us, you know, my, my thing is have the model drop, which is the most capable. But then what's in production, uh, is multiple models, and my favorite, like, new thing in GitHub, for example, is auto, which is, I want to keep, you know, people still obviously love Sonnet, whatever, they, they want to use it, but at the end of the day, I really want the model picker, and it just can't be a dumb model router. It has to basically have the intelligence to know that this task deserve…

AI assessment note: “So as a, a product builder for us, you know, my, my thing is”

Q Is that one app? Is that 10 different apps? Like, it's kind of interesting. If you think about the productivity suite that emerged, there was, you know, three Big apps in, um, Word, Excel, and PowerPoint, but it's interesting that that number was not one and was not 40, it was three, and so how do you think about this?

A I think that that's right. I mean, to me, it will be a few, I think, and in fact, the reductionist person, you know, in me says, man, they'll be the same things, except the job they do is going to be different, because I think, you know, a table, At least at the human level, right? Uh, because we can all talk about, like, what tools will agents use to communicate with each other, right? That's a different thing, right? Right now, for the RL loop, they are simulating our production environment, but they will ultimately be more efficient in creating their own production environments to kind of RL themselves. So, but let's just leave that aside. But in order to communicate with us, I feel like We have discovered some good things that we like. We like spreadsheets and tables, and we like documents in sort of linear form. We like inboxes or messaging tools. So these are like reasonable UIs, except the question I think you asked is, how does this thing have when it shows up in an IDE with like a set of changes? You have to help me more than just Say, okay, now here is a file, go to that file. Like, like that directed plan, not just to execute, but for me to do my workflow. Uh, like one of the things that we are experimenting with this mission control in GitHub Copilot is that, right, which is, well, the idea is you go have five, six different branches in which you fire off all these …

AI assessment note: “to me, it will be a few, I think... they'll be the same things”

Q can do RAG, and they can have access to everything in your enterprise, but it's not quite the same as the model actually knowing something as a model, and so the models, unless you train custom models inside your company, cannot actually get smarter at what it is that you do, and You know, the 1000th query is not any smarter than the first. Where do you think that goes?

A I think there are two things there. I think, I mean, I think if I understand his thing, it's all about in-context learning or continual learning, right? I mean, that's sort of the ultimate thing, and it sort of speaks to the thing I was saying, which is, if you kind of have the model's cognitive core separated from its knowledge, then you have essentially the continual learning, you know, formula, so to speak, or the algorithm, and then you just unleash it. There, at least there are three things to me that are outside of the model at runtime that I think you kind of have to crack, right? One is memory, and all forms of memory, right? Short, long, um, right? Even like this, these big challenges of, you know, humans are great at long-term credit assignment, right? Which is how does, um, intuitively, like somebody said to me, hey, the day, you know, you know, AI models can both reward and remember that you, you know, how to punish Uh, for some mistake, because they have the ability to do long-term credit assignment, that's when you'll know they have real memory, but in any case, memory is one. The second one is entitlements, right? So, which is, they have to really respect all of the permissioning system at runtime, right? Because this is where, because there are roles, what access do I have? Uh, and so the model needs to meet that, and then the action space, uh, all has to work. …

AI assessment note: “if you kind of have the model's cognitive core separated from its knowledge”

Q a lot of activities in companies that are kind of the same, uh, regardless of the, the, um, the size. That said, there's also probably things that only show up at the, uh, you know, 200,000 person, um, uh, you know, city, state, um, uh, uh, size that, you know, I wouldn't be aware of at the 10,000, uh, person size. What effects only show up when you're that big?

A There are two things I would say, uh, quite honestly, having only worked at Microsoft, it's not that I'm like an expert, but the one thing I would say, taking over for a founder, Steve and Bill built a company. I mean, Paul and Bill started, and Steve and Bill scaled it, and I was sort of the first quote, unquote, non-founder person. The thing I realized quickly, or in fact, I got into the job and I realized that I need a team. And just to have the ability to manage the scope. But then, You know, you know, that AG Lafley thing that we put out there, which I think is a great one. Like, what is this, this, what, and being clear about what does the CEO clearly need to do though in that, right? Which businesses are you in? Which businesses are you out? Synthesizing the outside, having the standards, setting the standards for culture, and then the ability to your point about having that performance culture that you can't say, hey, I'm only about the long term or I'm all over the short term. You've got to deliver both.

AI assessment note: “I realized that I need a team. And just to have the ability to manage the scope.”