Microsoft’s Satya Nadella: Why we need re-founders

The very best founders I know are brilliant at building systems. They connect teams, they remove bottlenecks, and they eliminate single points of failure. And yet When it comes to their own wealth. Most are running a disconnected stack. A tax accountant here and a state attorney there, a wealth manager who doesn't talk to either one of them.

Creative planning was built to fix exactly that. One integrated team of tax professionals, state planners, investment specialists, all coordinated by a dedicated wealth manager who sees your full financial picture and keeps every piece working together. Proactive tax efficiency, state strategy, investments all under one roof. Creative planning where wealth works together. Learn more at creative planning dot com slash masters of scale.

Global hiring is such a headache when you're building fast, but companies like Eleven Labs are scaling effortlessly with deal. They quadrupled their workforce in twenty twenty five. Without hiring an HR team. Build your global team with deal. Visit deal.com slash MOS and start expanding your business today. That's D E L

dot com. Slash M O S. Hey, folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more.

Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too. Join us at masters of scale dot com slash apply twenty six. That's mastersofscot com slash apply. Twenty six.

If you'd asked me even the day before or the hour before I would have said, hey, there's a chance, but I don't know who was interviewing, who wanted the job. There was a lot of I would say. Intrigue around it. Mm-hmm.

That is Sachin Adella. And he's talking about the moment in two thousand fourteen when it seemed he might become The next CEO of Microsoft. Saja had been with the company for more than 20 years. But even down to the last minute, his promotion was far from certain.

I remember One board member asked me. Do you really want to be a CEO? I said, Only if you want me to be the CEO. And then he said, Well, that's not how CEOs are made, right? I mean CEOs want that job and I said But that's sort of how I feel. And I remember talking to Steve about it. Steve Palmer.

Microsoft Second CEO Steve turns to me and says, Yeah, it's too late to change. It's like you are who you are. Sati was in fact very different from either of Microsoft's previous CEOs. Especially The one he'd be replacing.

Where Steve Ballmer projected absolute confidence. And assurance. Sha prioritized Asking questions. Where Steve saw the job.

as leading strongly from the top. Schaw it. As building a more open conduit for ideas. Wanted to be the kind of CEO. That would make room for feedback.

And foster culture. The rewards. New ideas. But as different as Steve was from Satya. Steve was also the one who advised them.

To be himself. The best advice I even got from Steve at one point was just be yourself, right? I mean you're never gonna be me. So therefore don't try to fill my shoes. As you probably know. Sacha got the job. And he took Steve Ballmer's advice to heart.

Recognize first that I'm not a founder. Obviously, Bill and Paul founded the company, and Bill and Steve built the company. So Steve had founder status, as far as I'm concerned. And so I felt like oh I just can't be like okay, here's the third guy who just shows up and does what Bill and Steve did. It needs a full reset. The reset meant I needed to make both that sense of purpose, mission, and culture.

First class. And my own. I would actually argue that Sachas run Microsoft as a type of founder. You can call it being a refounder. or even a late stage co founder.

The late stage co-founder doesn't need to have been there in the garage from day one. And they don't have to be the CO, although the CO often has the most leverage to effect change. What they need is the ability to tease out and articulate. What had previously just been implied.

That went through Microsoft, we would talk about culture, but it is never a serious thing. So I felt like wow, what's the meme even to pick? So that we can even have a rich conversation on it. Tia not only started that rich conversation about culture and mission, He made it central to his leadership. And that helped Microsoft kickstart a new phase of growth.

That continues to this day. That's why I believe companies don't just need founders. They also need refounders. As businesses scale, Refounders keep mission and culture on track and responsive to a changing world.

You gotta have incredible talent at every position. It's like this getting huge push. There are fires burning when you're going out. Such an idiot. And then you go back to, this is totally gonna be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Just how you do it. This is masters of scale. I'm Reed Hoffman, co-founder of LinkedIn, partner at Graylock.

And your host. And I believe companies don't just need founders, they also need Refounders. As businesses scale, Refounders keep mission and culture on track. And responsive to a changing world.

Imagine you're at your computer working late at night on a presentation. You're scanning an article on Emperor Penguins. To find the perfect quote. But perseverance. When suddenly

It happens. the screen becomes unresponsive. The scroll bar won't scroll. The page. is frozen.

What do you do? Well, thanks to the efforts of thousands of programmers since the dawn of the internet. you probably already know the solution. You just click the circular error icon in the corner.

and hit refresh. The article reappears, you select your slice of penguin themed wisdom. And carry on. The page you refreshed contains the same information as before. But now it's functional.

It's a way to start again without starting over. This is a brilliantly simple metaphor for leadership. Organizations too can be sluggish and unresponsive. Until you hit Refresh.

on things like mission and culture. And by the way, I wasn't calling my own metaphor brilliant. I've actually borrowed it from our guest. I wanted to talk to Sacha Nadella about this idea of resetting culture because of how successfully and thoroughly he's done it from one of the most scaled organizations in the world. As CO of Microsoft.

Only the third in its history. He has shifted the company's focus away from a cutthroat culture and anti-competitive practices towards embracing social networks, collaboration. And cloud. His book called Appropriately Hit Refresh. Crystallize ideas about how to kickstart a stagnant culture.

for the good of employees and the world they serve. And since he wrote that book in two thousand seventeen. Microsoft success has only elevated. In June, the company hit two trillion dollars in value. But you don't have to be a CO to trigger a refresh in your business.

And you don't have to be. New to the company. I always say I'm an insider with an objective outsider perspective. Satcha was born in Hyderabad, India. And came to the US to study computer science, earning a master's degree from the University of Wisconsin, Milwaukee in nineteen ninety.

He started his career at Sun Microsystems, but it wasn't long before Microsoft came calling. I was at Sun and I was Planning on going to business school? That was the trajectory I was on, and then I got an offer and I was convinced that look, you ultimately wanna leave business school and come back here, so why don't you come here directly?

So Satya went to Microsoft. And he loved it. The thing that struck me, I remember each week I would see a new category created, right? One day it'd be Access, the next day it would be Publisher, the next day it would be a new release of Visual Basic. I mean, it was just so exciting. to see the creativity of the developers, whether they were internal or external. Microsoft wasn't a brand new company.

Bill Gates and Paul Allen had founded it some seventeen years earlier, with a mission to put a computer on every desk and And in every home. But with so many software product launches, one after the other. It still felt. Like a startup.

Speed of growth. is often its own enthusiasm driver for employees. Because at that stage, speed can be a key part of the mission. And Microsoft. was growing exponentially.

But Satcha wasn't in the buzzy part of the business, at least back then. I joined what was at that point the fringe of the company, which was the server. For most of the nineties I would say read. We were still in the basement of building out that enterprise credibility. I remember distinctly going to New York City, visiting all the banks and in particular Goldman Sachs.

And they made me wait in the waiting room and saying, Hey, who is this guy from Microsoft wanting to talk to us about servers? They thought of us as some sort of toy PC maker. As Sacha sat in the Goldman Sachs waiting room, he thought about the reasons why Microsoft was so successful in the prosumer market while still struggling to assert legitimacy with enterprise clients. It takes long term commitment. In particular for enterprise sensibility, for what was predominantly a consumer company.

Because it goes back to trust. It's not just technology. I see that hubris sometimes in some of the folks here. Oh, I have technology, I'm so smart. So therefore the world should come and pray at my altar. That's not the way. Commercial customers want you to even show up. That hubris such observed would increase with time, and even between departments as he moved up the ranks at Microsoft. It was now the mid two thousands, and Microsoft was operating under its second ever CEO, Steve Ballmer.

One day Steve comes to me and says, You know what, I've got a assignment for you. I think you should go run big. You know Bing. It's Microsoft Search Engine. then the one that wasn't the other one. At that time it was not even called Bing, it was called Live Search or what have you. And we had had a lot of attrition. Obviously Google was the Bohemoth even back in that time.

I had to make a decision. So I went to the parking lot, I drove past the building. And it was eight o'clock or so in the night. At that point, you know, the reputation of the team, the attrition, all of that was a bit of a challenge, but I saw people working late in the night. And I said, what the heck are these people doing here? So I remembered parking, walking around, and I just saw all of these folks who were super committed. And I said, God, I gotta join this party. In that moment, Satcha saw the Bing team's enthusiasm and sense of mission.

It reset his expectations for the division and what was possible. This is a great example of the power individuals have within a company to hit Refresh. Even if they aren't in leadership roles. By doubling down on their commitment to the mission, each member of the Bing Team

had an impact on each other member. And collectively, they strength a greater sense of possibility. And their new team leader. This is how good culture spreads. With each person

having the ability to affect it. But as that's how good culture spreads. That's how poor culture spreads too. I'll never forget this. When I was leading Bing

Bill at that point he was the chief software architect and he called a meeting, maybe two thousand nine Bill Gates had called the meeting to prepare the team for an upcoming acquisition. Our server division was about to acquire a piece of technology

Basically for parallel data warehouses. Inside of Bing, we were building up essentially the infrastructure for a data panel workload, which is essentially a search engine. In other words, Microsoft was about to buy something that Bing was already doing. I remember going into that meeting along with a couple of other lead engineers from Bing and sitting Across the table from this other group that was solving what was the enterprise data warehouse problem as understood.

And then here We had essentially The same thing, but done in a very different way. Sacha's about to get technical here. He realized in that moment how Microsoft could use Bing to accelerate their cloud service platform. Azure to rival Amazon's version.

AWS. Та раз the moment that I think it struck me. that what Amazon was doing on the other side of the lake The idea of as a service infrastructure and the elasticity, but more than just the business model shift. This unit of scale being completely different.

Is what dawned on me. In fact, that is one of the things I look back and say, Why didn't I? At that Point. Say to Steve or Bill. You know what? It's time.

To fold the Bing infrastructure. In order to accelerate Azure. But yet I didn't act. Right. I mean that is a real issue, which is what happens in a large enterprise, even for a senior executive. Who sees it but doesn't

Act. When in such a act. He saw that Bing could be used to support Azure. No new acquisitions needed. He saw it.

So why not speak up? Sacha has a theory. To some degree, it requires both sides. I should have been bolder in that role to say, hey, I see this, I wanna advocate for it. And then on the other side, the people who were leading our server side would need to have had a growth mindset because at that point they kind of viewed us as being as hey, you're the loss making division of Microsoft, so I don't have time for you. That is where culture in some sense gets in the way of wisdom prevailing.

Even in that moment of failure, Sacha learned something important. Poor culture Did get in the way of wisdom. The leaders in the room might not have shot down Sacha's comment. But they also didn't incentivise him to make it.

A growth mindset. Thrives on the diversity of ideas. Good? And less good. Meanwhile, a culture that says, We don't have time for any bad ideas, so let's just keep moving.

is missing out on transformational ones as well. Changing this part of culture usually falls to the leadership team. But it doesn't have to. If you're in a position like Satcha, where you can see something that everyone else is missing, you can speak up. It can be a bit of a high stakes play.

But even if it's not rewarded in the moment, in fact, even if it's punished in the moment. You show yourself as someone who puts positive energy toward the company's mission. That's an impulse. Good manager's reward. Satya took this lesson with him as he climbed the ladder at Microsoft.

All the way to the day he was named CEO. You may remember the advice Steve Ballmer gave him. From the top of the show. The best advice I even got from Steve at one point was just be yourself, right? I mean you're never gonna be me. So therefore don't try to fill my shoes. Sacha knew he wanted to lead the company as himself.

And he knew what he wanted to prioritize. I felt like oh I just can't be like okay, here's the third guy who just shows up and does what Bill and Steve did. It needs a full reset. And I felt the the reset meant I needed to make Both that sense of purpose mission and culture.

First class. And my own. When you've built substantial wealth through your business, it's often tied up in a single equity position. The upside is real, but so is the risk, and knowing when to act isn't always obvious. Creative planning works with business owners to build a strategy around concentrated equity.

When to diversify, how to manage tax risk, and how to protect what you've spent years building. Creative planning where wealth works together. Learn more at creative planning dot com slash masters of scale. Humans will never be more intelligent than AI. There's gonna be two types of companies.

Those are great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Calyubi. And on my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone.

Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely from Ford's CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode.

I hope to see you there. We're back. With Microsoft CEO Sacha Nadella. We've been talking about the ways a leader. Or in fact anyone in an organization.

can hit the refresh button and reinvigorate stagnating mission and culture. To share this episode with a friend. Send them to masters of scale dot com slash nadella. N A D E LLA

To hear my full unedited conversation with Satya, become a member by going to masterscale.com slash membership. Hitting refresh is something that happens in all kinds of industries, not just in tech. So before we get back to Sacha, let's take a brief detour from Microsoft headquarters to Hollywood. And the moment another leadership change was about to unfold. When I first got the call that Armando was going to be leaving

was a bit of a shock just as a fan of the show It was very much like Oh my God. Wait a minute. Armando's leaving Veep. That was TV writer and director David Mandel.

He's known for his work on Emmy Award winning shows like Seinfeld Curb Your Enthusiasm. And more recently, as executive producer of the fast talking, foul mouth political satire. Veep. But David didn't create Veep. That distinction belonged to the show's original showrunner.

Armando Ianuci. David got the call to take over a showrunner in season five. And he wanted To put the cast and crew at ease. I start sitting down having breakfast with the cast.

individually as quickly as I could. He will admit this. Tony was really worried. That would be actor Tony Hale. who played Gary.

Loyal aid to the show's lead character, Selena Meyer. Tony was definitely the one that was just like, who is this guy and why is he here? David needed to earn Tony's trust along with the rest of the team. But he also needed to make that team his own. Which occasionally proved

Challenging. They made me hire three editors. And I was very confused. Three editors. For context.

is one more than David was used to. took time to figure out why. Yeah. Armando shot a lot and often found the episodes in the editing room.

And so the reason he had three editors was he would bounce from edit room to edit room. as they were working, they were just constantly trying different things. I definitely Do the show just differently. I like to know what the first scene of the season's gonna be.

And the last scene of the season's gonna be I lay it all out. On a giant board in a conference room, ten columns, ten shows. I'm not finding anything in the edit room. Processes that had been set up for Armando didn't make sense for David.

But when he tried to change them. He was often met with a curious answer. It's VEEP. That was always the answer. It's Veep. Like kind of a this is how we've always done it. And we did it that way for a year and it drove us a little crazy occasionally, the it's Vee. And then after the one year, it was just like, Yeah, I don't care anymore.

It's Veep syndrome might feel familiar to anyone whose organization has gone through a leadership change. It can be difficult to shake loose old habits and establish processes. But it's also completely necessary. If I had tried to do and write exactly Armando's show you would have gotten a weird knockoff.

I can write Veeep, but I can't do an impression of Armando. It just comes off like some weird Bootleg like a weird mimeograph. slightly smudgy and purple and not quite as good. David had another challenge too. The environment around the show was shifting.

Sometimes a change in leadership isn't the only reason a business needs to be reset. To Trump, yes. Whether you like him or not, everything did change. In Veepworld, Selena Meyer had gone from VP to president to former president. In real life, America had gotten a new president too. Donald Trump

So much of Veep early on, before I ever got there, the show created by Armando was This is what politicians really sound like behind closed doors, like when you don't see them. Well, that wall, that closed door went away. He just said what was on his mind whenever he wanted to. We did an episode in our first season where the president accidentally tweeted something and there's that clip of everybody going, Oh my God, the president tweeted and they ran. I mean that just feels like I'm talking about a telegraph machine. That's how ancient it feels. Like it feels like a story from pioneer days. So The nature of Veeep changed. David and his creative team, including the cast and crew, lean hard in this new direction.

What was once a show about the dazzling vulgarity of outwardly respectable politicians. became a story about the terrifying endgame of seeking power without consequences. If Selina really wants to get the White House back, what is she prepared to do? And the answer has to be Anything.

The show had changed. Radically But that was what the show had to be. When the show finally ended. Having one wild acclaim.

And multiple Ms. under both Ianucci and Mandel. It was a feeling that V. had risen to meet the moment. I think people in my position or any position where you're coming in after someone, it's very

What's the word I'm looking for? Easy I guess to think that I should just do what the other guy did, but if you do that You fail. This advice is spot on.

whether you're running a beloved comedy series or a global business. Relying on what's been done in the past won't cut it. You need to be able to reassess. Reset and refresh. Thank you, David.

For sharing the story. Okay. Detour's over. Back to Satya. When we left him, Sacha Nadella had just become the third CO in Microsoft's history.

Under its first founders, the company had been scaling with implicit rules and guidelines around mission. As a re founder. Sacha wanted to make these guidelines more explicit. And adapt them to a new age. Now the other part of it though

Which is a really key thing and ties back to the gross technology, ties back to the learning. Is you're not just anointed as co founder, you have to earn it to some degree. And it's not earned by getting the job. It's earned by that first year or two of how you're leading. And what were the things that you were doing to kinda say, Hey This is our mission. We are the people who could do this awesome mission, and here's how we're doing it now. What were the key moves that you made that

Other students Of Hitting refresh. would say, Oh, that's really important. I should know that now. In some sense I always think about this as if I was let's say an outsider

I would have had to have a very different playbook. I mean in some sense We never I criticize Whatever it is that we may have been doing. I was not criticizing somebody else. I was criticizing myself because I am a consummate insider. Nobody could have said, Satya, somehow you dropped from the sky. I mean, God, I was part of the Microsoft culture. I thrived in it. It's another reminder that hitting refresh on company culture doesn't have to come from outside.

It can come from a consumm insider as long as that insider is thinking holistically about the organization. has the humility to consider what is and isn't working, even if they've been part of the problem. And is now in a position

To affect change. There are so many ways for this to play out. For Sacha, it meant showing up with values and priorities that were explicitly defined. It was starting again. Without starting over.

Let's start the most Tactile which is bringing a sense of empathy more into leadership. Talk about why that became an important value for you. And then also part of where your

thought about look, empathy doesn't mean not making sharp business decisions is actually part of being a really good and sharp Leader. This notion of empathy is at the core of

uh learning. We are in the business of meeting unmet, unarticulated needs of customers, right? That's where is the source of all innovation, all design thinking. And then you say, Oh, how does that happen? That happens because you have empathy for the context, the situation, that unmet, unarticulated need, you're listening beyond the words, you're seeing things beyond what is just playing out in front of your eyes. You learn it through your life's experience. It's not like I go to work and say, Oh, I'm gonna turn on my empathy button now and I'm now gonna be very empathetic. You have to tap into the very innate human part of us. In twenty fourteen. Microsoft's culture at that time, which was a little hard edge, quantitative, metric driven, engineering, I felt like the stuff all sounds really soft.

But In retrospect, oh my god was the organization hungry for it. The words used to describe the refresh might have seemed soft. But the refresh itself manifested in concrete And specific ways.

One of the ones that I actually thought was a microcosm of the cultural change. was getting rid of stack ranking. Right, to say, look, not only is there what we should do, there's also what we shouldn't do. It became at some point a bad carricture. Of

everything that was wrong in the company. For those who've never had to navigate it, stack ranking is basically enforced grading on a curve. If you have a team of five people You have to rank one as exemplary. One is good, one is average, one is below average, and one.

Let's call him Kevin. As poor. Even If all five, including Kevin. Turned in exemplary work.

Last quarter. The reason behind the system is To oversimplify a little. Motivation. If you know there's a top spot, you want each team member fired up to get it.

What can happen in practice, however, is that Kevin treats his very own teammates as the competition. If he can beat them, he wins, and they lose. Regardless of the initial reasons behind it. Stack ranking had become a notorious culture killer at Microsoft. And it was reviled within the company.

So Satcha got rid of it. The principle Issue of any system like StackRank has is it doesn't leave room for judgment. What is

Who said that a team cannot have All about average performers. We all know that performance is in some sense relative. The world measures us that way. But at the same time you can have periods of People performing in one team extraordinarily well and they should be rewarded for it. In fact, the stack rank, I think, artificially took away the power of an individual manager.

In being able to distribute rewards. Fine, but if I'm not a leader, what can I do to change something like stack ranking? It's totally out of my hands. Well.

That's not the whole story. Remember Satcha's experience at the meeting where he wanted to speak up and didn't? This is again a place where speaking up is its own small Strategic refresh button. You don't have to put your career or your relationship with your boss at risk to make this happen.

Even in the most rigidly structured companies, there are usually some avenues to give feedback, such as project postmortems or 360 reviews. That doesn't mean you'll see instant change every time you raise your hand. But if we have the means to speak out and speak up. Do Employee disgruntlement around stack ranking was what let Sacha know he should kill it.

Their feedback. was a crucial step in the refresh. Another way Sache helped reset Microsoft was in his approach to acquiring new companies. Including LinkedIn.

Another thing that I've seen in your leadership And Personally. scene right from my own experience. Із а верин апроч.

To M A. and acquisitions. There's obviously the LinkedIn side, which you know, kinda started with some very early conversations of just get to know you and saying Hey, let's establish a relationship. I think this is part of your partnership background. It's like, look, let's just talk and help each other and then see where the conversation goes.

But it isn't just LinkedIn, of course. There's everything from Minecraft, uh GitHub and all of these others. Okay, let's take a first principle's rethink. And a cultural evolution How has that shaped your approaches to MA in terms of what kinds of companies, but also how to do it, how to evaluate it, how to make it successful?

Yeah, I mean in a fairly major way. I distinctly obviously remember my first set of conversations with you. I mean you were clear Even I I remember first Broaching the subject and you care, hey, look, we are enjoying building LinkedIn and we have no interest in any conversation about acquisition. But as you said, you mostly wanted to start talking about hey, what do you care about? What are you doing at Microsoft? Here's what we're doing at LinkedIn. Is there really stuff for us to Talk about that is meaningful to our members. So

I've looked at MA as At the meta level it needs to do two things. One is it needs to be something that we can clearly Quote unquote. Say it fits our mission, it fits our identity, or we can be a better owner, which is sort of a very narrow way to talk about it. But

Can we Say oh as part of Microsoft will a LinkedIn a GitHub a Minecraft fit. Trive. And flourish. Then the second aspect

Which Is also equally important to me is how will Microsoft change Because of a LinkedIn, a Minecraft and a GitHub. This more symbiotic approach to MA contrasts sharply with what the Microsoft of old might have done. There's no such thing as a static company that can somehow survive the changing circumstances.

So to me, that's what it represented. One theme it was clear is what was Microsoft WeCap? We didn't get. networks. We didn't get communities. We did not understand what virality meant at scale. Also the business model implications of it. We were weak in all that it meant. So therefore it was very important for us, even though Minecraft yes was a game, I saw it.

As a man of worse. I didn't see it. Oh, here is just another game. This is exactly the type of perspective that refounders bring. A first founder can get a company to a powerful place in society. The Re founder has to.

And gets to ask. How do we earn keeping it? This is a good place to ask you to highlight something I've heard you say a lot internally, which I think is a very good part of leadership and as a reflection of part of what growth psychology and growth mindset really means. Which is

How do we earn right? to be the provider here? How do we earn the right to play this role in society? When I think about the license to operate for a company. Where does that come from?

I am very deeply influenced by this statement by Colin Mare and his book called Prosperity, which I think is a good description of what is a social contract of a corporation, which is to find profitable solutions to the challenges of people and planet and the two key words being that profitable Solutions, but the other one being the challenges of people and planet. So whenever I think about Microsoft, I feel like hey, we get to operate as a multinational company in all the countries we operate in. by ensuring that there is real symmetry between us doing well and the world around us doing well.

I couldn't agree more. Pursuing symmetry between the health of your business and the health of the world around you is how you earn the right to be a provider at scale. It's a measure. of how well you are living your values as a company. That doesn't mean you're bad if you happen to be succeeding in an economic downturn.

But your definition of success should include the success of the community around you. And by the way, the CO isn't the only one who determines this. Any employee can and should regularly ask. Do our daily operations make the world around us better? Are we acting in a way that serves the mission?

Making a regular practice of asking that question is acting like a refounder. Part of Sacha's Refounder Mission. has been to prioritize collaboration over exclusivity in moves that might have shock the Microsoft of the late nineteen nineties. Like partnering to build AI applications with a nonprofit company. One of the things that I think is something you would do that neither Bill nor Steve would have done is the partnership with Open AI and the focus on that being the play.

And obviously we both have a hundred out of ten respect for both Bill and Steve. So this is not a criticism of the it is simply a different ways of playing the game. Say a little bit about how You thought about like this is why it's important for Microsoft, this is why it's important. for the right outcomes in the world and here is the kinds of things we're doing. By partnering with an external technological organization that is actually in fact a five O one C three.

about how we're navigating these joint missions together. One of the things that influenced me a little bit was I've never heard this directly from Bill, but when he set up Microsoft Research One of the social contracts of Microsoft Research was After all, Microsoft wouldn't have existed if it was not for the broad contributions of the research community at large, which led

To the internet and led to all of the technologies that made it possible for Microsoft to exist. So it you always had as a percentage of some RD, we've got to do fundamental research with, in some sense, no strings attached so that we can contribute back. So that has always stuck with me. If AI is gonna be one of the most defining technologies, what is an organization that is gonna do work and then how are we then going to be able to partner with that organization to even further democratize it? I think of it as a continuation of how do we stand for being that platform company, that developer tools company with broad mission to democratize the most defining technologies. In fact I say

If it was Oh wow. D Two companies in the world or three companies in the world have AI, that's not a world that any of us wanna live in. In fact, that's a world that won't exist. No country will allow that. It is a silly way to even conceptualize it. So therefore this thing about sometimes when people say, Oh, you know what, we are the AI company, I say bullsh to that because the world doesn't need you.

To have AI, the world needs AI. Yes. We were bringing AI to the world, but not only us and only us. Exactly. Incredibly. A company that was once hauled before Congress to defend a monopoly on how people get online is now partnering with OpenAI and working towards global access. And this shift away from a need to dominate has actually made Microsoft more successful than ever.

Going back to sort of your fundamental thesis At some point if you're successful, you will outlast your founders as a company. And if you are gonna outlast that founder, that handoffs are gonna be super critical. Successful businesses are meant to outlast their founders. Which is why refounders need to be part of the design.

So wherever you can, look for those refounders and take on that founder mindset. Wherever in the company you are. I'm Reed Hoffman. Thanks for listening. Masters of Scale is a Wakewhat original. Our executive producers are June Cohen and Darren Triff. Our senior producer, Jordan McLeod.

Our supervising producer is Jabe Quinjabi. Our producers are Adam Skuse, Catherine Clark Gray, Hiley Bondi, Marie McCoy Thompson, and Christina Gonzalez. Our editor at large is Bob Safia. Our music director is Ryan Holliday. Original music and sound design by Eduardo Rivera. Audio Editing by Keith J. Nelson, Steven Davies, Andrew Nault, and Mike Gallagher. Mixing and Mastering by Brian Pugh. Special thanks to Chris Yay, Elisa Schreiber, David Sanford, Saida Sapieva, Greg Biotto. Adam Heiner

Emily McManus. Kelsey Capitano. Tim Cronin. Anna Pizzano, Ben Richardson, Mina Kurosawa, Sarah Tarter, Charlie Menesis, Chaneme Ezequena, and Colin Howard. Become a member of Masters of Scale to get access to a year's worth of courses and content on the Masters of Scale courses app.

Find out more at masterscale.com slash membership.

What you see above is a preview of the first minutes. One unlock costs 3 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.