Satya Nadella, Microsoft AI, artificial intelligence, Microsoft transformation, Inflection AI, OpenAI investment, Microsoft CEO, tech industry, AI innovation, Satya Nadella biography
Discover how Satya Nadella, CEO of Microsoft, transformed the company into an AI powerhouse through bold investments and strategic partnerships. Learn about his journey, challenges, and vision for the future of AI at Microsoft.
How Microsoft’s Satya Nadella Became Tech’s Steely-Eyed A.I. Gambler
Microsoft’s all-in moment on artificial intelligence has been marked by billions in spending and a CEO willing to take enormous risks for enormous potential. Earlier this year, Satya Nadella, Microsoft’s Chief Executive Officer, executed a deal that surprised everyone outside his inner circle at Microsoft.
Mr. Nadella had set his sights on a Silicon Valley start-up called Inflection AI. The company’s CEO, Mustafa Suleyman, was one of the founders of the pioneering artificial intelligence company DeepMind. Despite raising over $1.5 billion in funding and hiring top researchers, Inflection AI did not have a great reputation for generating revenue. However, this did not deter Nadella.
Microsoft shelled out more than $650 million to license Inflection’s technology, hired most of its staff, and put Mr. Suleyman in charge of a more than $12 billion chunk of Microsoft’s business. It was, to put it mildly, a risky move.
Betting Big on AI
Risky bets on AI have become a habit for Mr. Nadella. Over the past five years, he has committed to investing $13 billion in another ambitious company called OpenAI, even though it had not yet proven its profitability. Additionally, he instructed all his lieutenants to integrate AI into Microsoft’s numerous products, even though the technology did not always work correctly.
Mr. Nadella’s belief in AI’s potential is evident. He sees the AI boom as a pivotal moment for Microsoft and the entire tech industry. His aim is to ensure that Microsoft, which was slow to the dot-com boom and missed out on the smartphone revolution, dominates this new technological frontier.
So far, Microsoft’s investors are on board with Nadella’s gamble. The tens of billions he has spent on AI in the past two years have increased Microsoft’s worth by 70%, bringing its value to over $3.3 trillion. This makes Microsoft one of the three companies, along with Nvidia and Apple, vying to be the most valuable publicly traded company in the world.
From Low-Key Boss to Steely-Eyed Gambler
The notion that Mr. Nadella is a steely-eyed risk-taker with a grand vision for AI can be hard to reconcile with his history as a low-key boss in an industry full of flamboyant leaders. A 56-year-old engineer who rose through the ranks of Microsoft to become its CEO about a decade ago, Nadella is credited with restoring Microsoft’s luster after a years-long slump under his predecessor, Steve Ballmer.
In a recent interview with The New York Times, Nadella’s passion for engineering was evident. He described investing in OpenAI because “it’s not like a Hadoop workload,” and choosing to integrate OpenAI’s technology into Microsoft’s Bing search engine first because “the graph traversal is sort of graph unification.” (Translation: OpenAI had complex computing needs, and AI would eventually tie Bing to other programs.)
Nadella rid Microsoft of many of Ballmer’s mistakes, including writing off most of the disastrous $8 billion acquisition of Nokia in 2014. He put Microsoft software on Apple iPads and iPhones, embraced open-source software, and turned Microsoft’s cloud computing business into a powerhouse.
The Turning Point: AI
However, Nadella was still searching for transformative opportunities. He paid $69 billion to acquire the video game publisher Activision Blizzard, despite significant resistance from antitrust regulators, and made a detour into the metaverse, which did not pan out as expected. Then AI came along, and Nadella believed it was the game changer he had been seeking.
In early December, Nadella met with Suleyman for hours at Microsoft’s headquarters. He vetted Suleyman with Reid Hoffman, a Microsoft board member and venture capitalist who co-founded Inflection. Less than a month later, Nadella finalized the deal. He announced the acquisition to Inflection’s stunned employees, emphasizing his hunger to keep Microsoft relevant and innovative.
Nadella’s Background and Vision
Nadella grew up in Hyderabad, India, with a mother who was a Sanskrit scholar and a father who was a Marxist economist. He attended high school at Hyderabad Public School, a prestigious institution modeled after Eton, and later pursued graduate studies in computer science at the University of Wisconsin-Milwaukee and an MBA from the University of Chicago Booth School of Business.
Nadella joined Microsoft in 1992 from Sun Microsystems. He married Anu Priyadarshini, an architect he had known since childhood. When he learned her green card application could take years, he turned in his own green card to apply for a high-skilled worker visa, allowing her to join him sooner. This move earned him renown on Microsoft’s campus.
As CEO, Nadella rapidly overhauled the company, pushing it to embrace cloud computing and open-source software. Under his leadership, Microsoft doubled its market share in cloud computing from 2015 to 2018, cementing its role as the No. 2 behind Amazon. In 2018, he greenlit the acquisition of GitHub for $7.5 billion in just 20 minutes, a move that significantly boosted Microsoft’s cloud business.
The AI Supercomputer
In late 2018, Nadella was surprised when Google unveiled BERT, an early version of AI technology that would power chatbots like ChatGPT. Several BERT researchers had recently worked at Microsoft, and Nadella realized that Microsoft’s computer network was not powerful enough to build such advanced AI. To address this, he considered investing in OpenAI, a start-up exploring new approaches to AI.
Despite internal debates, Nadella believed in OpenAI’s potential and its CEO, Sam Altman. By March 2019, Microsoft announced a $1 billion investment in OpenAI, acquiring rights to its products and the innovative cloud customer that Nadella wanted. The arrangement, though unconventional, has been a defining moment for Microsoft’s AI strategy.
Challenges and Triumphs
In 2021, OpenAI faced internal challenges, with researchers leaving over concerns about its commercial ambitions. Microsoft’s bet on the start-up was questioned internally, and Nadella took a detour into the metaverse, which did not yield the expected results. However, GitHub Copilot, a product using OpenAI’s technology to automate code writing, was a hit, reinforcing Nadella’s commitment to AI.
By August 2022, Nadella’s excitement for GPT-4, OpenAI’s breakthrough system, solidified his conviction to integrate AI into all of Microsoft’s products, starting with Bing. Despite internal doubts, Nadella saw AI as a transformative force, signaling that every old fight and bet was back on the table.
Crisis and Resilience
In late 2022, a crisis at OpenAI nearly derailed Nadella’s bet. OpenAI’s board ousted Altman, and Nadella worked the phones over a weekend to understand and fix the situation. He offered jobs at Microsoft to Altman and any OpenAI employee, prepared to absorb the start-up if necessary. The board reinstated Altman, and the crisis highlighted Microsoft’s dependence on OpenAI.
To mitigate this, Nadella focused more on Microsoft’s own AI work and explored new partnerships, including with Inflection AI. Despite concerns about Suleyman’s management, Nadella decided to move forward, believing in his potential. The deal, announced three weeks later, involved hiring nearly all of Inflection’s staff and giving Suleyman immense resources to create AI “agents.”
The Future of AI at Microsoft
Nadella’s vision for AI extends beyond search, aiming to revolutionize how people interact with computers. With more than 10,000 people working under Suleyman, Microsoft is poised to lead in AI innovation. Nadella’s bold moves and unwavering belief in AI’s potential have positioned Microsoft at the forefront of the next technological revolution, cementing his legacy as a steely-eyed AI gambler.
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