Extra: Satya Nadella Full Interview (Ep. 324)
Stephen Dubner’s conversation with the C.E.O. of Microsoft, recorded for the Freakonomics Radio series “The Secret Life of a C.E.O.”
Listen and subscribe to our podcast at Apple Podcasts, Stitcher, or elsewhere. Below is a transcript of the episode, edited for readability. For more information on the people and ideas in the episode, see the links at the bottom of this post.
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What follows is a conversation with Satya Nadella, the C.E.O. of Microsoft. It was recorded in September, 2017, soon after Nadella published a book, called Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone. The interview was done for our six-part series, “The Secret Life of a C.E.O.” Some of the facts are already outdated — Microsoft’s market cap, for instance, has grown a lot more than $250 billion since we spoke.
Stephen DUBNER: Hello, it’s Stephen Dubner. Is that Satya?
Satya NADELLA: Yes, it is. Hi Stephen, how are you?
DUBNER: Great to meet you. Thank you. How are you?
NADELLA: Likewise. Thank you for having me.
DUBNER: Okay great. So, first of all, if you would, just say your name and what you do.
NADELLA: Satya Nadella, C.E.O. of Microsoft.
DUBNER: Very good. Now, Satya, the market cap of Microsoft has risen more than $250 billion during your three-year tenure. Microsoft employees are said to be happier now than they’ve been in quite some time. Everyone seems to love or at least like Satya Nadella. So, I want to know: are you enjoying yourself as well, or are you just leading the pack?
NADELLA: I think the time is right to hit refresh, because in some sense the idea that a lot of progress has been made is not how I look at it. I think, if anything, at least I hope for us, we are clearly grounded in all the things that we can do better — in terms of whether it’s the products we build, the capability we create, or the culture we have — and on all three fronts, I feel there’s a lot to be done. I’m proud of the progress, but it’s not sufficient. If anything, my entire purpose of this book, at least, was, look, this process is a continuous process of renewal. It’s not a destination that one reaches.
DUBNER: It’s no secret, and you make no secret of it, that a lot of people were hoping for an outsider to be appointed C.E.O. of Microsoft, but you’re a lifer. I gather there wasn’t a lot of enthusiasm internally when you were named. Talk about how that perception seems to have changed, at least as far as you can tell. Have people come up to you and said, “You know, I wasn’t so sure you were the right choice, but now I’m liking where we’re heading.” What do you hear?
NADELLA: When I think back at it, ultimately, I think anyone should evaluate people based on their ability to perform. And so I think that it is appropriate, whether it’s internally or externally, to be skeptical. And I think the board also did the right thing of looking far and wide and then saying, “Okay, let’s take the bet on this person.” As you said, I’m a consummate insider, but the one thing that I’ve tried to do, being someone who has grown up in Microsoft, is have as objective an outside-in view. In the end, the combination of the two, I think, is what helped me lead Microsoft.
DUBNER: Speaking of the board, let me just ask you one question I’ve really been curious about. Steve Ballmer, your predecessor, famously pushed to purchase Nokia, the fading mobile phone company, toward the end of his tenure. You voted against it, as you write in your book, but the deal wound up going through a few months after you were appointed C.E.O. So, I’m just curious how this works. First of all, why did the board select a C.E.O. who’d voted against this gigantic recent acquisition? I’m guessing they had asked you and discussed with them, in the interviews for the C.E.O. position, your position on Nokia. Correct?
NADELLA: Yeah, for sure. I mean, one of the things — I write about this in the book, but just to put the facts and make them clear — I was not a board of director at Microsoft. I was part of the management team with Steve. So, it’s not like I had a vote. Steve just went around the room and wanted to get the pulse of his leadership team, and we had a good debate. And, as I write in the book, I felt that it is important for us to do things — given where we were in the mobile space at that point, which was the number three slot with a huge gap between one, two, and three — to do something that was more unique, different, and differentiated. So, I was more in favor of that.
The Nokia acquisition, quite frankly, did give us some hardware capability, which we now deploy across the company in different ways. But I wanted to, after becoming C.E.O. in particular, focus our efforts on participating in mobility broadly defined. For example, this is again a lesson I learned, in fact, observing what Steven and Bill did, even with Windows. After all, we built Office for the Mac before Windows was even there. So, if you look all the way back into our own history, we have a precedent for how we can think about our software on other people’s endpoints. That’s in fact the start of our journey on mobility, but mobility is not about just the device. It’s the mobility of the human experience. So, at least, I had a vision of how we can think about playing it differently.
DUBNER: One more question about Nokia before we move, I guess, back in time, actually. So, shortly after you were installed as C.E.O. you shut down Nokia, which resulted in a total write-off of the purchase and about 18,000 jobs lost. I mean, that’s a pretty big deal to be handling both the mechanics of it and the emotion of it, shortly after you come in as a not-obvious choice as C.E.O. Just walk me through what that felt like on your way to accomplishing.
NADELLA: First of all, I think these hard decisions around what to pick and focus on is something that I believe a C.E.O. uniquely has to do. That’s not something that you can delegate. That’s not something that someone else can do on your behalf. I mean, ultimately, that’s your core responsibility, and especially taking those decisions that impact people’s lives and livelihood is not easy. It weighs very heavily on me personally. Therefore, I had to think it through. And then having thought it through and made the decision, we had to execute on it, to your point, where what was of paramount importance was to make sure that the employees being impacted were treated with dignity and were given all opportunities to find their next play, whether inside of Microsoft or outside. That was my real concern and priority. That’s where I poured my energy. But I knew that I had to make calls on what is it that we are going to do, and how are we going to define the core value propositions that we were going to create.
DUBNER: You grew up in India. Your father was a civil servant with a thirst for Marxist ideas, to some degree. Your mom was a Sanskrit professor, and, as you write, the opposite of a “tiger mom.” She was really interested in you having a balance between intellect and happiness. You write that you weren’t the greatest student, and then you did immigrate to the U.S. Something you write in the book that really I found fascinating: you’ve noted that you benefited from good timing or good luck in a number of ways. You write the convergence of several tectonic movements helped you along: India’s independence from British rule, the American civil rights movement, which changed immigration policy in the U.S., and the global tech boom. I know that’s a lot to look back on, but for you, for just one person, when you kind of look at that arc, and how unlikely it would have been on paper 50 years ago or so — I’m just curious how you assess this whole system and all these events that led to it. And, I guess, the natural next question would be: What are you trying to do to prolong or what are you trying to do to continue to create opportunities for people like yourself?
NADELLA: Yeah, that’s a very important piece here, because I think I’m a product of two amazingly unique American things. The first is this technology that reached me where I was growing up that even made it possible for me to dream the dream, and then the enlightened American immigration policy, that we like to debate, but it allowed me to come here in the first place and live the dream. So, I think that that’s what’s unique about us. That’s what makes us competitive. That’s what I think makes us even be the beacon of hope for people who need it the most. So, I believe we should preserve it. We should promote it. We should debate it, for sure, because there are things that we may want to change in how our immigration policy’s implemented, how complicated it is, or can be simplified. But with that said, I am someone who believes only in America would a story like mine be possible. So therefore, I look at it and say, “Wow, if that’s the case, then let’s make sure, I will at least, do everything I can to make sure I advocate for that.”
DUBNER: In addition to you, the C.E.O.’s of Google, Adobe, MasterCard, and many other big American firms are Indian-American and often immigrants, like yourself. How do you account for that massive success? Is there anything you all have in common? I’m just really curious about your view on that.
NADELLA: Well, I mean, of those companies, other than Sundar at Google, we all went to the same high school, even. So, I don’t know. Maybe it was the water. First of all, I think it’s one of those false positives that you can take too much out of, right? I think each of us have had our own unique story and unique path. It’s, after all, a country with a billion people, and.
DUBNER: But a relatively low immigration rate for most of the immigration history, correct?
NADELLA: That is correct. And, I’m not, in fact, a very deep student — although, I think there’s been a book written about high-skilled Indian immigrants, which at some point, when I get the time I will read and study. I think what you’re seeing here is that last part of that formula, which is there was this tech boom starting in the early 9’0s. There was a good supply of engineering graduates out of the country, and I think market meets supply. Demand meets supply, and the enlightened immigration policy I think is what made it possible. People who’ve come here have contributed. When I look at the South Asian immigrant population or any other immigrant population, whether it’s from China or Eastern Europe, and I look at Microsoft, the number of countries and nationalities that are represented and what they have all brought to American competitiveness is something that I think is only possible in this country — nowhere else. Where else will you found a company and, say, “Let people from 65 countries come here and all become great, contributing employees, and taxpayers.”
DUBNER: Yeah. Let me ask you to brag just a little bit — maybe more than you’re interested in, or maybe be a little bit more jingoistic than you’re interested in — but I’m just curious to know, as an Indian, is there anything about your upbringing, your culture, your family structure, your kind of familial appreciation for education, accomplishment, discipline — I understand that you kind of downplay it and say, “It might be a false positive,” and so on, but I think a lot of people listening around the world will want to say, “Whatever they are doing to succeed so brilliantly, if I could perhaps mimic just parts of that within my own family or so on,” I’m just curious to know if there’s anything that you would identify as necessarily Indian.
NADELLA: You know, I don’t know, quite honestly, Stephen, whether there is anything necessarily Indian. I do believe that there is a certain structure to the educational system of that country that I think I definitely benefited from and all the others you mentioned benefited from. The high school I went to I think was — the four or five of us who went there, we were very fond of the place because I think it was formative in very different ways. Shantanu was a debater. I was a cricketer, and we all learned different things there, but both of us are fond of that institution. I think more than anything else, it gave us the freedom to think, learn, and pursue bold dreams. But I don’t know that there’s anything uniquely Indian about it.
When I start to talk to people — for example, it’s amazing to see this generation of people who grew up after the Cultural Revolution, and, in fact, the first generation that went to college after the Cultural Revolution, they are the ones who immigrated, and many of them who work as my colleagues at Microsoft had a chance to learn a ton from them. Same thing from Eastern Europe, and when the Berlin Wall fell, and a lot of Eastern European countries started participating in our economy, and they came. I think each one of these societies — some of the best and brightest, people with ambition, people in tech — that’s, I think, the common thread here. And, in fact, the fact that the U.S. was able to tap into it — that’s the story that needs to be written, quite frankly, which is, which other place — I mean, think about the timing right? Oh yeah, the Berlin Wall fell, but where did they all show up? In the Silicon Valley. That’s, I think, what we should learn from.
DUBNER: It’s a great point. Let’s talk about your own family for a bit. You and your wife, who’s an architect, have three kids. The eldest, now in his early 20’s, has severe cerebral palsy. One of your daughters has learning differences that required her to go to school in Canada. So, that obviously had a huge impact on your family and on you as a person, especially as you were climbing the corporate ladder at Microsoft. Can you talk about how being a parent within that family changed your worldview as a manager? You write about the empathy that you learned to accomplish. I’m really curious to know what kind of contributions that parenting had to your ultimately becoming the kind of C.E.O. you are.
NADELLA: I think some of those moments and some of the learning from being a father, a parent, clearly have been defining moments for me all these “hit refresh” moments, when I which I write in the book — and, in fact, it was hard for me to write — because I wanted to write only the second and the third stanzas, which is about the technology and the future. But I had to look back and sort of ask myself, like, “Okay how did this come about?” Even the books, whether that’s Nonviolent Communication or Carol Dweck’s Mindset, were all books my wife introduced me to. But when I think about my son Zain’s birth, the thing that strikes me, quite frankly, ex-post is how naturally it came for Anu, my wife, what she needed to do. I was 29 years old. Both my wife and I were the only children of our parents. So, we were more concerned about, “Oh, how should we decorate our nursery? When will Anu get back to our job after our son is born?”
And, yet, on the 13th of August 1996 at 11:29, all our life changed. It took me multiple years to even understand what had happened because in some sense I was more about, “Why did this happen to us? What happened to me?” And it’s only by observing my wife really step up, give up her career, and do all things she was doing to care for Zain, that’s when I realized nothing happened to me. Really something has happened to my son, and it’s time for me to step up and see life through his eyes, and do what I should do as a parent and as a father. So that’s, I think, perhaps, the biggest lesson for me around empathy.
And I write about this in the book as well, which is I think empathy is only developed through your life’s experience. It’s not something that’s really endowed on you. But every passing year — with, perhaps, every passing mistake you make, you develop more of a sense of being able to see life through other people’s eyes — it’s going to make you a more effective parent, a more effective colleague, and a more effective partner. I think that’s at least what I’ve been able to learn from my own personal experience.
DUBNER: When you look back on your younger professional self, when you had less empathy than you later developed, do you see yourself as being professionally selfish and overly critical, or were you always a relatively nice guy?
NADELLA: It’s for others to judge, I guess. But I would say, it’s hard. I don’t think — even that interview question I write about, I always ask myself, at whatever 25 when I was interviewing, and somebody says, “What would you do if you see a baby on the street crying after having fallen down?” I answered, thinking this is some trick question, maybe there is some algorithm that I’m missing, and said, “I’ll call 9-1-1,” only to have that manager get up and walk me out of the room saying, “That’s the absolute bullshit answer. If you see a baby fallen down, you pick them up and hug them.” And I was devastated because I remember thinking about it and I said, “How could I not get that?” And that’s when you say, “Well, you know what, life has a way of teaching you.” And the question is — when that lesson is taught you learn from it versus try and say, “Whatever innate capability I have is the only innate capability that I ever have.”
DUBNER: Your wife presumably would have picked the baby up instantly. Correct?
NADELLA: Presumably, because, after all, that’s what came naturally to her with Zain’s birth. But I think she would also be willing to admit that it is, in fact, through her own life’s experiences that her abilities— For example, she was telling me the other day about how much she has learned — being a mother of a child with disabilities — on how to relate to others and especially new parents with children with disabilities. It’s not something that she grew up with or had an innate capability for, but it’s something that now she has definitely a much more empathetic view on.
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DUBNER: Let me ask you about the future and the kind of things Microsoft is working on, which I know you’re very excited about and ultimately, the idea is that we’ll all be excited about it. Whether it’s for a person with disabilities being able to engage with others or the world more, or whether it’s for productivity et cetera, I’m curious to know what you see the future really looking and feeling and smelling like. You write that “we are hard at work building the ultimate computing experience blending mixed reality, artificial intelligence, and quantum computing.” So walk us through that a bit. What’s it look like? What does it actually do?
NADELLA: I mean this is the real fun part, right? One of the things about computing, unlike, perhaps, any other medium and especially software, is it’s most malleable. In other words, you create something from nothing, and it’s always changing. Mixed reality to me is that ultimate blending of the human experience with the computing experience. I mean, think about it: your field of view, right — what you see — is a blend of the analog and digital. That’s what you get a glimpse of when you wear the HoloLens, where I walk into my office and I put on my HoloLens, I have all these dashboards I’ve created with all these pie charts and what have you, that are just all floating around in my room. It’s an infinite screen room, and I think that in the future, obviously, what is now a form factor that looks like a big set of goggles will become just like a set of eyeglasses. So, I think the ability to blend analog and digital is what we describe as mixed reality. There are times when it will be fully immersive. That’s called virtual reality. Sometimes when you can see both the real world and the artificial world. That’s what is augmented reality. But to me, that’s just a dial that you set. And we have taken a pretty unique approach in thinking about this space, and so that’s one aspect.
In fact, just to give you a good example and your listeners a good example: at a conference just earlier this week, we demonstrated how fundamentally mixed reality changes collaboration. I mean, just imagine if your hologram was right here interviewing me as opposed to just on the phone. We showed Ford using mixed reality to change how they collaborate. In the past, Ford would create these clay models, which weighed 5,000 pounds, that needed to be moved so that people can critique the new car. Whereas now, they have essentially these sessions where people in manufacturing, design, sales can all look at the model, simultaneously annotate it, leave voice comments — I mean, it’s just a complete new way to collaborate.
In A.I., I think that the ability to reason over data and create intelligence is another amazing breakthrough. I give you again a very tangible example. A group of people came together at Microsoft and created this new app called Seeing A.I. that anyone can download from the Apple App Store, in fact. It uses all of the cutting edge machine learning A.I. techniques around computer vision from our cloud and brings about the capability for someone with visual impairment to be able to see. In fact, one of my colleagues Angela Mills, whom I ran into recently, was telling me about how she has a visual impairment, and she uses that app now to confidently go into the cafeteria, order food. She walks in — and I had not even realized this could be such a challenge — which is, she said, “I can now walk into a conference room at work knowing that that’s the conference room that I’m expected to be in, instead of barging into the wrong meeting, for the first time.” To know that A.I. can actually help someone fully participate in her job, it’s remarkable.
And to finish it off, the arc on quantum, I brought up a Fields Medal winner in math, a couple of physicists, and a computer scientist earlier this week to talk about quantum and the progress we’re making there. But, ultimately, I believe in order to bring about some of these magical experiences in A.I. capability, we will have to break free of some of the limits we’re hitting of physics, really. I mean, Moore’s Law — even though we’ve grown transistors exponentially — that is becoming hard. And even if we grew the transistors exponentially, computing power was only growing linearly, but in order to reason over larger and larger amounts of data — I mean, think about the unsolved problems, right? We talk about global warming. What if there was a catalyst that could absorb carbon? We can’t. I mean, that problem cannot be solved — the organic chemistry problem that cannot be solved. It’ll take a classical computer the amount of time that has transpired between the Big Bang to now. But a quantum computer can solve that. So, I think we need to go after this bold new departure of building out a computer that’s very different — all the way from the math to the physics to the computer science.
DUBNER: So you think in computing that next level is more reachable than in say— Well, let me ask you another parallel: batteries, right? Energy storage in batteries — Are you saying that quantum computing will attain the next level for computing faster than battery technology will for energy storage?
NADELLA: No, in fact, the computing is about helping every industry and every human endeavor of innovation get there faster. So, for example, take the battery piece. I’m not an expert in batteries, but if it is about discovering some new material that can store energy better, then the ability to really discover that material is some computational problem that needs to be solved or modeled. That’s where something like a quantum computer can help. So in some sense, computing is not about living in its own world. It’s about being blended into — solving the most challenging problems of the day.
DUBNER: Well, it sounds like it’s the engineering or the computer engineering version of your mission, essentially now, as you describe Microsoft as a platform company. Correct?
NADELLA: That’s correct. If you think about Microsoft and our story of our birth, so to speak, the first product that Paul and Bill created was the basic interpreter for the Altair. And, of course, this week I was talking about Visual Studio, and what you can do with quantum computers. A lot has happened between the Altair and the quantum computer. But what has remained constant for us is that we create technology so that others can create more technology, and I always say, “We are in the empowerment business. We empower people and organizations all over the planet to achieve more.” And that to me is at the core of who we are.
DUBNER: I’m going to ask you a series of relatively short questions hoping to get in as much as we can in the time that you’ve got. So, let me start here. Satya, you’ve got over 120,000 employees around the globe. If we put them all together in one room, how many do you think you’d know by name?
NADELLA: Let’s say 5,000.
DUBNER: Wow, that’s impressive, really?
NADELLA: Twenty-five years, 5,000, 5 percent. Yeah, for sure.
DUBNER: Now, are you sending copies of the book to every employee, or maybe requiring all of them to buy it?
NADELLA: No, we’re sending copies to every employee, and it’s an annotated edition. In fact, it’s called, not Hit Refresh, but it’s F5. So, it’s the browser command, and it’s fun. It was actually fun doing an annotated version of it. It’s called the employee edition.
DUBNER: Since we’re not getting the annotated edition, give us a taste of what kind of things they’ll be learning that we’re not learning.
NADELLA: It’s mostly just fun comments on the side, like even the title, where it doesn’t say “Microsoft’s,” it says “Our.” It’s not, Hit Refresh but Command F5. Those are the kinds of things.
DUBNER: Okay, obviously the role of C.E.O. is vast, and there are many duties and obligations. There’s deal-making. You’ve acquired LinkedIn and Mojang, the makers of Minecraft, among others. There’s strategic planning and customer relations and technical elements — you are after all an engineer — and daily personnel management. Can you rank for me your different duties from least favorite to most? I don’t know how honest you’re willing to be, but I’m really curious to know from least to most favorite.
NADELLA: I mean I have to admit, the most favorite is when I get to meet these engineers who know no fear or no conceptual boundary and can dream of the most impossible things. It’s no question. I mean, for me, that’s when I get energized. That’s my most favorite. I’d say my least favorite thing would be when someone says, “Come just do these ribbon-cutting type of things.” I wonder why, especially, why does somebody care about a C.E.O. of a tech company? But yet, I think people think somehow there is some value we add, and I’m always astounded by it.
DUBNER: And would you say podcast interviews rank closer to the ribbon cutting or the meeting with engineers?
NADELLA: You know, talking to you is one of my great pleasures.
DUBNER: All right, now I know you’re a good liar because that sounded very credible. Let me ask you this: You write interestingly in the book about many reforms you’ve made at Microsoft especially on the, kind of, executive and management level. Talk to me for a minute about meetings. It’s something that I think confounds a lot of people. Talk to me about what is the right number of people to have at a meeting and when is the right time or what is the right occasion to have a meeting.
NADELLA: Oh, that’s such an amazing question. In fact, we’ve gone and analyzed this. In Office 365, we have something called “org analytics” that comes with it, which helps, in fact, organizations understand the meeting habits. It’s so stunning, right? We do all kinds of analytics around sales data and a lot of other pieces of information. What if we started bringing that same amount of rigor to how people spend time?
So, for example, one thing that we realized is the more senior you are the more careful you need to be in setting up meetings. This was a big awakening to me, as well. When I set up a review, it turns out that people will do at least five reviews before they show up to me because that’s kind of how it goes, right? They review with their manager or their manager will review with their manager. So depending on the topic and the matrix organization, it could become an exponential growth thing. So, giving proper guidance, that, “Hey, this is a discussion we’re going to have. You don’t need to have pre-meetings for essentially what is going to be a discussion,” I think can help cut down the amount of time people spend on meetings. It’s simple, yet it has a profound impact in organization.
Just to give you another aspect of meetings, which is, you buy a company and you hope that the integration is going well. You can actually observe it. You can, in fact, see whether salespeople are talking to engineering teams. And if sales people are not talking engineering, that means the feedback cycle is broken. So, some meetings are actually crucial. So, you can think of, essentially, your organization like a graph and reason about that graph with the questions you have: What nodes are connected? How frequently are they connected? And so that’s the kind of stuff that we’re, in fact, building right into our products.
DUBNER: Microsoft has had an amazing run as a tech firm, and it’s had a very nice renaissance under your leadership. That said, history is not kind to most big firms. They tend to not adapt or not keep up. I.B.M. is not a bad example of that trend. Athough they’re still quite alive, they’re diminished. What are the odds, do you believe, that Microsoft will still be a big player in 10 or 20 years, and what does it need to do to get there?
NADELLA: I mean, you basically have captured the essence of this book, which is, if there is anything that we can learn, I think — whether it’s for us as individuals, whether it is us as institutions or organizations or as societies — is hit refresh. Nothing can be taken for granted. There’s no such thing as a perpetual motion machine. What you have to do is be great at being able to hit refresh at the crucial times and know that not every one of those moments of refresh is going to work out. But that should not dissuade you from going after the next opportunity you get.
DUBNER: One last question for you: You have openly opposed many of President Trump‘s immigration policies as well as his withdrawal from the Paris climate agreement. You also, at least judging from the photographs I saw in the reporting, didn’t seem that enthusiastic about meeting with the president’s technology council a few months back. What is it like for you to be — and I know that you’re a kind person and a careful person, and you’re the C.E.O. of a multinational firm — I’m not expecting fireworks here, but I am curious to know what it’s like for you to be the C.E.O. of a multinational firm and an immigrant in the age of President Trump.
NADELLA: You know, I’ve had a chance to meet President Trump twice — once before he was inaugurated and once after along with a lot of my industry colleague — and had a rich dialogue around immigration, around investments in digital technology, in the public sector, and infrastructure. And it’s a conversation, quite frankly, that we had in the previous administration, and it’s a conversation that mirrors pretty much my dialogues with heads of states all over. And so I think that I’m a great believer in the exceptional country that we have that is the United States, and everything that we can do to make sure that we remain competitive, create more economic growth and prosperity in this country, is something that I definitely would love to contribute to.
DUBNER: It’s a pleasure speaking with you. I appreciate your time, and I congratulate you and all your good hard work, and I hope we cross paths again.
NADELLA: I look forward to it. Thank you so much for the opportunity.
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