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Speaker 1: This week on the Business of Tech, powered by two degrees.

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Speaker 1: Microsoft turns fifty. Yes, the world's largest software company, started

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Speaker 1: by Bill Gates and Paul Allen on the fourth of

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Speaker 1: April nineteen seventy five, is now fifty years old, perhaps

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Speaker 1: more than any other company, IBM, Apple, Intel among them.

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Speaker 1: Microsoft is responsible for the personal computing revolution really taking hold.

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Speaker 1: It's had three CEOs, Bill Gates, followed by Steve Barmer

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Speaker 1: in the nearly two thousands and sach Inadella, who is

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Speaker 1: still in the top job today. But the drive in

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Speaker 1: force really was Bill Gates.

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Speaker 2: Can you see yourself working for somebody else?

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Speaker 1: I never have? Can you see it?

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Speaker 2: I'm used to having a company where the ideas that

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Speaker 2: I have are something that I can easily pursue, So

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Speaker 2: I think it'd be a tough transition.

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Speaker 1: That was a rather young Gates on the Today Show

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Speaker 1: in the US in nineteen eighty four, or almost a

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Speaker 1: decade into the Microsoft journey, by which point he'd had

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Speaker 1: a big hit with MS DOSS and was really well

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Speaker 1: on the way to creating Windows One, which would be

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Speaker 1: launched about a year later. That was the first version

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Speaker 1: of the operating system that today runs on roughly eighty

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Speaker 1: five percent of the world's computers. Gates never did work

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Speaker 1: for anyone else. He stepped down from full time work

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Speaker 1: at Microsoft in two thousand and six. He devoted himself

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Speaker 1: to philanthropy through the Bill and Melinda Gates Foundation, billions

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Speaker 1: of dollars raised and given away, pouring a lot of

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Speaker 1: money into HIV AIDS research, malaria eradication, and climate change

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Speaker 1: mitigation tech like carbon capture and storage and modular nuclear reactors.

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Speaker 1: He's a bit of a polarizing figure, Gates, but there's

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Speaker 1: no doubting the legacy he created with Microsoft, along with

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Speaker 1: Paul Allen. To build a company that survives and even

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Speaker 1: thrives through the exit of the founding CEO is a

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Speaker 1: big achievement, and after a rough period in the two thousand,

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Speaker 1: in the twenty tens, Microsoft seems healthier, bigger, and more

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Speaker 1: profitable than ever. But I thought it'd be great to

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Speaker 1: get a New Zealand perspective on the Microsoft story from

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Speaker 1: the woman who runs the local operation, Vanessa Sorenson. Vanessa

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Speaker 1: joined Microsoft in twenty seventeen after a long stint at Telecom,

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Speaker 1: then Spark and before that at Wang Computer has sort

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Speaker 1: of forgotten icon from the tech industry in the sixty

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Speaker 1: seventies and eighties. I wanted to get Vanessa's take on

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Speaker 1: Microsoft's big hits and misses over the last fifty years,

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Speaker 1: how Microsoft has evolved over its thirty four year history

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Speaker 1: of being in New Zealand, and also how she made

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Speaker 1: the investment case that resulted in Microsoft building its first

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Speaker 1: hyperscale data center region here in New Zealand that opened

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Speaker 1: in December. And I guess it's pretty much Vanessa's crowning

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Speaker 1: achievement as the MD of the local operation so far.

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Speaker 1: Vanessa Sorenson, Welcome to the business of Tech. How you doing.

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Speaker 2: I'm fantastic, thanks for having me.

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Speaker 1: Well, what a milestone this week fifty years ago Paul

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Speaker 1: Allen sadly departed now and Bill Gates, one of the

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Speaker 1: legends of personal computing and software. We're sort of in

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Speaker 1: the garage in New Mexico coming up with what was

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Speaker 1: going to be one of the biggest companies, if not

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Speaker 1: one of the biggest tech companies in the world. Incredible

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Speaker 1: And I guess that week back then the story goes

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Speaker 1: and Bill Gates recounts this on Gates notes really interesting

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Speaker 1: article that he's published which we'll link to in the

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Speaker 1: show notes. He was looking at the cover of Popular Electronics,

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Speaker 1: very good magazine at the time. There was a picture

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Speaker 1: of the Altair eighty eight hundred on the cover, which

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Speaker 1: is a computer sadly I never got my hands on.

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Speaker 1: I've never even seen except in the museum in Silicon Valley.

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Speaker 1: But he was thinking, Wow, this is a really cool machine.

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Speaker 1: And the two of them had a vision of putting

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Speaker 1: a computer on every desk and in every home, and

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Speaker 1: the key they sawt of doing that was coming up

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Speaker 1: with an operating system, a really good, efficient operating system

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Speaker 1: for at the start at the Altair, which was the

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Speaker 1: big new computer at the time. So that's where it

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Speaker 1: all began, really, isn't it.

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Speaker 2: Oh And yeah, incredible, you know, just to save even

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Speaker 2: when I go up to Redmond and there is kind

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Speaker 2: of like a little sort of mini museum of the

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Speaker 2: first official photo man. They had bad hair and they

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Speaker 2: looked literally twelve years old, And just imagine cooking up

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Speaker 2: something like that when it just wasn't you know, it

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Speaker 2: just wasn't sort of anything that you were following anyone else.

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Speaker 2: And so just extraordinary to your concept about an operating system.

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Speaker 2: To then build you know what was then software that

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Speaker 2: seemed turned into apps. Kind of just seeing what a

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Speaker 2: visionary like quite incredible. But obviously Bill had incredibly driven

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Speaker 2: parents that you know, really kind of gave him that

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Speaker 2: concept of electronics and what was the art of the possible?

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Speaker 2: And yeah, wow, fifty years it's extraordinary.

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Speaker 1: Yeah, and look there were sort of desktop computers around

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Speaker 1: in the seventies, including from Wang Computer, a company that

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Speaker 1: I think you started your career at in the early nineties.

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Speaker 2: I know, man, I'm getting my age away now. And

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Speaker 2: the funny story about that is just before starting Wang,

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Speaker 2: actually I worked for a startup and my first job

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Speaker 2: was selling Microsoft licensing. They weren't even yet in the

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Speaker 2: country in New Zealand, and my boss at the time said, look, Vanessa,

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Speaker 2: don't go to Fiji buy Microsoft shares. I mean, no way.

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Speaker 2: I continue to remember that. But just extraordinary seeing the

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Speaker 2: old floppy disk selling box product, you know, the first

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Speaker 2: time Microsoft Word was available, then Excel, like wow, you

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Speaker 2: could do all of this amazing spreadsheets, and then PowerPoint

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Speaker 2: and just kind of the I just think back then,

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Speaker 2: I just didn't realize how fortunate I was to be

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Speaker 2: right in the middle of something that not only am

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Speaker 2: I continuing to be part of, but just seeing the

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Speaker 2: incredible leap change it's had for so many businesses.

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Speaker 1: Yeah, that's sort of when I got into the first

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Speaker 1: sort of the Intel computers of the nineties, the Pentium computers.

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Speaker 1: I was playing around building my own all obviously Windows

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Speaker 1: based on MS DOS base, but wangingt an interesting company

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Speaker 1: found it in nineteen fifty one by An Wang, the

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Speaker 1: company's named after and sort of I guess by the

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Speaker 1: time you were working at Wang, it had really had

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Speaker 1: to pivot. It was basically selling computers that were running

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Speaker 1: Windows and the early Office suite as well. But in

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Speaker 1: the seventies they wanted to build what they were calling

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Speaker 1: mini computers alone computer that was basically a word process.

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Speaker 1: So you bought this entire computer to do word documents.

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Speaker 1: And then Bill and Paul came along and went, forget that,

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Speaker 1: we want one computer that's going to do everything.

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Speaker 2: Yeah, and I think that's so. I remember going to

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Speaker 2: Wang and had a green screen and using Wang Office.

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Speaker 2: So yeah, it was a very proprietary, and I think

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Speaker 2: that's the word, you know, Microsoft blew apart. This whole

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Speaker 2: option is that you've got one thing to do at all,

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Speaker 2: and I think where Wang went astray was like, well,

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Speaker 2: we'll be the market leader. And of course they were

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Speaker 2: peter for their time, but they stayed within proprietary. They

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Speaker 2: didn't then open up their systems. And I've even watched

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Speaker 2: it with Microsoft over the years, you know, once Sarti

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Speaker 2: came in and said, hey, we're going to now be open.

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Speaker 2: I think for a lot of businesses just not pivoting

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Speaker 2: fast enough. And it was quite scary actually joining Wang.

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Speaker 2: It had such an amazing brand globally, and while I

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Speaker 2: was there, they went through chapter eleven and I was like, oh, okay,

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Speaker 2: didn't even know what chapter eleven was at the time.

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Speaker 2: And for watching Wang New Zealand survive, because the company

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Speaker 2: had an incredible brand and quickly pivot to being a

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Speaker 2: systems integrator and by then absolutely selling Microsoft and other hardware.

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Speaker 2: But sadly globally Wang Wang didn't do that, and it

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Speaker 2: would be very very interesting to see what that company

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Speaker 2: could have been today.

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Speaker 1: Yeah. Yeah, I guess reflecting on the companies off that period,

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Speaker 1: you've got ninety seventy five Microsoft, I think nineteen seventy

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Speaker 1: six Apple was founded as the two Steves was Niak

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Speaker 1: and jobs obviously similar thing in a garage coming up

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Speaker 1: with a pretty cool idea. You had Oracle, I think

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Speaker 1: seventy seven. Yep, a little bit earlier, the chip makers,

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Speaker 1: Intel and AMD early seventies, but you've got this cohort.

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Speaker 1: All of those companies are still around and a number

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Speaker 1: have gone by the wayside. But what do you think

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Speaker 1: it is about Microsoft, which basically had the same CEO,

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Speaker 1: Bill Gates for thirty years, then Steve Barmer, and now

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Speaker 1: Satya in terms of being able to pivot when needed

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Speaker 1: and adapt and innovate over such a long period of

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Speaker 1: time to still be around and be one of the

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Speaker 1: biggest companies in the world. What's in the DNA of

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Speaker 1: the company that allows them to do that?

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Speaker 2: I honestly think it's the concept of being a learned

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Speaker 2: or stay curious really, you know, try things like you're very,

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Speaker 2: very supportive to innovate. But of course we had some

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Speaker 2: years where we did store. You know, probably we're not

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Speaker 2: seeing that we were in that mover market. And you know,

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Speaker 2: you do look back over the history of companies and

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Speaker 2: I think you know it is different leaders, different age

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Speaker 2: and stage. You know, certainly the Bill Gates was so

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Speaker 2: about the development and being a very engineering led business.

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Speaker 2: Then I think with Steve Barmer was a very sales

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Speaker 2: driven company, and now Satia, who's been with the company

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Speaker 2: for twenty odd years, is bringing the combination of the both.

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Speaker 2: So we've still got the roots, have been absolutely and

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Speaker 2: engineering firm and believe that we've got to have the

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Speaker 2: most secure products that've got to work for everybody. But

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Speaker 2: he really embraced that we have to be open. We

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Speaker 2: can't have just our things working with our things, and

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Speaker 2: so I credit a lot of our exponential growth since

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Speaker 2: Satia about stepping down the silos within Microsoft truly co

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Speaker 2: working together to innovate faster. And boy, oh boy, haven't

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Speaker 2: we seen that over the last ten odd years that

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Speaker 2: he's been at the Helm.

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Speaker 1: Yeah, and over the fifty years, I mean there's been

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Speaker 1: a heck of a lot of hits ms dos, which

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Speaker 1: I don't go hands on with anymore. But I remember

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Speaker 1: in the nineties that was Windows existed, but if you

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Speaker 1: really wanted to get into the height of a computer

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Speaker 1: and do cool things, you were on the black screen

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Speaker 1: putting in prompts and commands, and that fundamentally that openness

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Speaker 1: that allowed you to basically do anything on the on

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Speaker 1: the operating system, off the computer, So it was the

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Speaker 1: flexibility it offered. Then, of course the Windows operating system

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Speaker 1: itself and really hit its stride. I think with Windows

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Speaker 1: three that was I remember that being a game changer,

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Speaker 1: and then obviously Windows ninety five was huge. I was

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Speaker 1: at the midnight launch of that in Auckland, Yep. The

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Speaker 1: first time and the only time I've ever queued for

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Speaker 1: a piece of software at midnight, I know.

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Speaker 2: And that's the thing, like these incredible moments that you

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Speaker 2: do remember, And I think it's that constant ability to

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Speaker 2: keep innovating. Don't sit there and go, Wow, we're onto

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Speaker 2: something great. Everyone loves it. I think that's you just

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Speaker 2: got to keep, you know, pivoting and moving and just

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Speaker 2: not sitting still. And I think that's that's certainly the

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Speaker 2: opportunity I see now in this era of AI and

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Speaker 2: what the art of the possible is going to look like.

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Speaker 1: Yeah, and we're going to talk about AI because it's

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Speaker 1: such a big focus on that at the moment. But

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Speaker 1: just looking back at some of those milestones in the company.

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Speaker 1: Obviously the Office Suite, so you had this operating system

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Speaker 1: which was great and flexible way to put programs on

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Speaker 1: a computer. And then Bill's thinking what's the key thing

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Speaker 1: that people want to use, and it's productivity. He was

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Speaker 1: selling computers mainly to businesses. First they wanted word processing,

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Speaker 1: they wanted Excel spreadsheets. We had Lotus one, two, three,

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Speaker 1: I think at the time, but a more user friendly

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Speaker 1: approach using that Windows interface and the mouse to access productivity,

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Speaker 1: and those products, those three alone, Word Excel, PowerPoint used

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Speaker 1: by billions of people still all over the world.

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Speaker 2: Extraordinary. I mean yeah, I remember again, you know, my

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Speaker 2: first ever job with a startup and selling software, and

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Speaker 2: it was either word against word perfect or loadus against Excel.

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Speaker 2: And truly it was I think that platform play that

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Speaker 2: Bill wasn't necessarily stating it, that wasn't about a platform,

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Speaker 2: but it was the same gooey interface, the same look

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Speaker 2: and feel, the same You didn't have to go and

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Speaker 2: learn something completely different. And I think that that DNA

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Speaker 2: is still through all of our products. And you know,

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Speaker 2: to me, that's the secret sauce of why did people

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Speaker 2: continually not just pay for those upgrades every time they came,

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Speaker 2: Because remember Peter, how difficult that was, right, You had

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Speaker 2: to go around with the floppy discs and I had

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Speaker 2: to upgrade everything and it certainly, you know, many years

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Speaker 2: before Cloud came along, people did because the next version

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Speaker 2: absolutely gave you that productivity. And I think that's the

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Speaker 2: that's the word that still underpins Microsoft. If you want

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Speaker 2: true productivity, you really want to save time, and you

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Speaker 2: want to do it well, you know, and not always

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Speaker 2: you know, companies that wanted to pay those licensing fees,

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Speaker 2: but it became core. You remember Exchange. I remember a

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Speaker 2: customer I was looking after they had a massive outage.

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Speaker 2: They just didn't realize that actually that was the number

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Speaker 2: one thing that that company needed to run. Like it

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Speaker 2: was such an aha moment, you know, the company couldn't

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Speaker 2: run without email, and no one really thought that until

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Speaker 2: it went down because it wasn't getting maintained. Their storage

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Speaker 2: just blew out, the board couldn't function like it was

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Speaker 2: a real wholly. This thing has become bigger than ben hur.

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Speaker 1: Yeah, and I think that's being the key to Microsoft's longevity.

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Speaker 1: As you said, there's been various phases off the business,

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Speaker 1: and there's been some phases that haven't been as successful

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Speaker 1: as others. You know, arguably, Microsoft was late to the

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Speaker 1: Internet revolution, missed the mobile revolution. Really when it tried

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Speaker 1: with Windows Mobile didn't quite work, arguably was late to

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Speaker 1: the cloud, but is now killing it with Azure. But

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Speaker 1: throughout all of that, the thing that I think saved

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Speaker 1: Microsoft when it took a wrong turn was it was

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Speaker 1: still the best company in the world for productivity software.

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Speaker 1: And that's ultimately what the average company user or someone

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Speaker 1: at home needed in their life.

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Speaker 2: Yeah, one hundred percent. And the fact, you know, I

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Speaker 2: see it with my own children using the Microsoft product

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Speaker 2: suite at school. You're going to then go into that

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Speaker 2: job and it's primarily what you know, what corporate businesses

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Speaker 2: are leveraging. And I think that's always underpinned. You know,

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Speaker 2: I think some of those market making moments that we

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Speaker 2: did miss boy have we learned. And I think that's

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Speaker 2: also you know, kind of calling us and growing up

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Speaker 2: now at age of fifty, really seeing those moments of

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Speaker 2: you know, you know, we missed Mobile, we miss search.

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Speaker 2: We were slower with Azure, but we did it incredibly

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Speaker 2: strategically and tactically, and now being you know, number one

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Speaker 2: in most markets, certainly Australia and New Zealand because it's

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Speaker 2: the most secure you can rely on it We're not

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Speaker 2: going to stand up the next day and compete with you.

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Speaker 2: We want your business to thrive and survive. And I

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Speaker 2: think that's it also underpinds what Microsoft's all about.

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Speaker 1: Yeah, and the one area that's really topical at the moment,

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Speaker 1: which is artificial intelligence, which is artificial intelligence, Microsoft was

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Speaker 1: actually early into. The one time I did actually speak

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Speaker 1: to Bill Gates was a long time ago. He'd stepped

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Speaker 1: down at CEO. I think he'd gone into the CTO role,

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Speaker 1: so Steve Barmer was in the hot seat and Bill

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Speaker 1: was working on product development and R and D and

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Speaker 1: that sort of thing. And the only thing I remember

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Speaker 1: from that conversation I think I asked him, you know,

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Speaker 1: what's the next big thing? And he said, artificial intelligence?

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Speaker 1: Is that really okay? And he went on and talked

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Speaker 1: about what Microsoft's research division was doing with AI, and

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Speaker 1: so he was talking about it way way back then.

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Speaker 1: It took a while for that really to manifest itself

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Speaker 1: into what we know as AI today, but definitely, you know,

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Speaker 1: that visionary thinking was there.

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Speaker 2: One hundred percent. And I think, look, artificial intelligence has

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Speaker 2: actually been around a long time, and like you said,

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Speaker 2: it's more the sci fi movie where you know, all

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Speaker 2: those things now we can do. It's a bit like

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Speaker 2: everything in life. We needed the compute power, you know.

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Speaker 2: I remember listening to James Cameron about, you know, the

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Speaker 2: making of Avatar, and he's like, I dreamt that up

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Speaker 2: twenty years ago, but there just wasn't the compute power

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Speaker 2: to actually design, you know. So I think a lot

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Speaker 2: of these visionary thinkers where now the convergence of you know,

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Speaker 2: platforms like asure, you know, in the most secure way,

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Speaker 2: the compute power that you need, and now overlaid with

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Speaker 2: all of the AI tools. Holy, I mean, we're you know,

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Speaker 2: to be right in the middle of that and know

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Speaker 2: that you're in it, because I think for me, I

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Speaker 2: remember the Internet being launched. I was like, oh wow,

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Speaker 2: how did that happen? With this, you feel like you're

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Speaker 2: right in the center of it, and every day there's

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Speaker 2: some new way that we're using the tool set, and

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Speaker 2: I think it's quite quite extrame ordinary to be in that.

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Speaker 1: So the New Zealand of Microsoft operating about thirty four

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Speaker 1: years Yeah, what was the You obviously were there in

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Speaker 1: that company at the time, you were around the industry, though,

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Speaker 1: what was the real impetus for the arrival here. Was

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Speaker 1: it government driven or was a business community saying that

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Speaker 1: we want Windows on our computers. There's a number of

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Speaker 1: Wang and others were selling computers at the time, Compac

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Speaker 1: and IBM. We want really good access to expertise from

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Speaker 1: Microsoft here underground.

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Speaker 2: Well again, back in the first startup that I first

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Speaker 2: worked for, essentially software, I remember we had to buy

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Speaker 2: Microsoft product through Brian Moore, Brian and Eddie Wilmot, who

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Speaker 2: were really incredible industry leaders back thirty five forty years ago.

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Speaker 2: And I think it was actually just New Zealand such

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Speaker 2: an incredible country that our early adopters, quite frankly, and

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Speaker 2: I think from a Microsoft perspective because I didn't work there,

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Speaker 2: they said, wow, what could we do with this really

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Speaker 2: amazing sovereign country that's extremely secure about New Zealand becoming

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Speaker 2: an earlier dopter and I think that's when I moved

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Speaker 2: to Wang. Actually Microsoft was right behind our building, and

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Speaker 2: you know, just seeing I think that the takeop as

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Speaker 2: a country for the products, and you know, it was

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Speaker 2: such a great thing to have a big global you know,

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Speaker 2: really decide to rout down in New Zealand. And I

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Speaker 2: think that's that's been amazing for our country because we

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Speaker 2: have been able to get our hands on the software

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Speaker 2: and also have many of our people part of the

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Speaker 2: development up in Seattle. In fact, I met with Maurice

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Speaker 2: Williamson and hopefully won't mind me saying, but he was

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Speaker 2: really key as a minister back all those years ago

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Speaker 2: talking to Bill Gates about you know, hey, imagine if

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Speaker 2: we did this and did that. So I was really

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Speaker 2: surprised to hear. And I found a couple of old

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Speaker 2: photos actually in l clearing out a storage unit of

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Speaker 2: when Bill Gates even came to New Zealand. So a

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Speaker 2: lot of it was about what is this really innovative

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Speaker 2: country doing and what could they do?

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Speaker 1: Yeah, and a lot of kiwis in the tech industry

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Speaker 1: really cut their teeth that Microsoft went to Redmond did

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Speaker 1: a stint up there. I remember, I think it was

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Speaker 1: Windows Vista, which wasn't a great release of Windows for Microsoft,

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Speaker 1: but I remember meeting several kiwis who are involved in

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Speaker 1: the development team preparing for that launch. And it's just

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Speaker 1: been throughout the decades people go into a stint up there.

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Speaker 1: Some of them have gone and started up their own

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Speaker 1: companies as well. It's sort of a mini university for

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Speaker 1: tech talent.

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Speaker 2: Oh, like the best. In fact, all of our interns

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Speaker 2: that come and join us, I say, mate, this is

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Speaker 2: going to be the best NBA you could ever get

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Speaker 2: because what you get access to, Especially now, Peter, I

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Speaker 2: think there's about two hundred and twenty thousand people work

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Speaker 2: for Microsoft, and I say, they're your closest friends. There

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Speaker 2: are a ping away on teams, they'll help you, They're interested,

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Speaker 2: And I think that's what's really blown me. My mind

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Speaker 2: away is is just how helpful people are within Microsoft,

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Speaker 2: no matter what level where they are sharing what they're doing.

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Speaker 2: And yeah, boy, it's the best university I could ever

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Speaker 2: imagine going to.

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Speaker 1: Yeah, and obviously Sacha Nadella has been down to New

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Speaker 1: Zealand and I think really inspired by some of the

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Speaker 1: stuff Microsoft has done with Mari around translation and that

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Speaker 1: sort of thing. And I guess on your watch, the

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Speaker 1: biggest development really potentially in the New Zealand Division's history

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Speaker 1: has been building all of that data center infrastructure in

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Speaker 1: New Zealand. Huge investment. What was it like trying to

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Speaker 1: convince Satya and the senior executive at Microsoft to actually

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Speaker 1: invest big dollars like that in New Zealand.

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Speaker 2: Well, Peter, it's one of the reasons I came to

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Speaker 2: Microsoft seven and a bit years ago because I just

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Speaker 2: you know, thinking, imagine if we had this year, what

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Speaker 2: could it do for startups, for New Zealand, for the

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Speaker 2: health industry, for education and so part of that plan

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Speaker 2: was definitely getting so to come to New Zealand. So

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Speaker 2: about five years ago he did, and just him meeting

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Speaker 2: so many of our incredible startups and kids, and it

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Speaker 2: really started from there. And of course we then had

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Speaker 2: to go through lots of gymnastics to get the business

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Speaker 2: case forward. But actually the relationship and the strong relationship

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Speaker 2: we have with the likes of Fonterra, many of the banks,

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Speaker 2: they worked with us because they could see what this

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Speaker 2: could do for their business and true transformation with data

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Speaker 2: in country and so we're really fortunate we weren't sort

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Speaker 2: of doing this alone. And it wasn't about them committing

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Speaker 2: to money, Peter. It was about designing what we could consider.

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Speaker 2: And none of us knew that this AI movement would come.

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Speaker 2: I mean, talk about perfect timing. Right we opened in

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Speaker 2: December last year the AI movement was starting. You know,

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Speaker 2: I kind of look again and think we can be

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Speaker 2: so much more forward thinking because of this, you know,

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Speaker 2: movement of both of these things coming together. So I'm

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Speaker 2: immensely proud and I just think, you know what, I

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Speaker 2: speak to a lot of ex leaders of Microsoft New

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Speaker 2: Zealand and they said they never ever thought it would come,

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Speaker 2: but actually we're an incredible country. We've got sustainability, renewable energy,

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Speaker 2: the contract that we've signed with Contact Energy which enabled

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Speaker 2: them to expand geothermal, Like that's what New Zealand's about.

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Speaker 2: And I think, you know, we've got to promote it

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Speaker 2: more and more and more and have more of those

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Speaker 2: investments coming into this country.

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Speaker 1: Yeah, and AI is going to be integral to the

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Speaker 1: future of Microsoft. We see that in the massive investments.

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Speaker 1: For instance, it's made in Open AI and soft Bank

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Speaker 1: has just invested forty billion in that company, so that

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Speaker 1: and Microsoft's own internal AI capability is growing as well.

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Speaker 1: What's your reflection on where we're at in the sort

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Speaker 1: of the AI revolution. I just wrote a report for

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Speaker 1: the AI fours. I'm looking at how businesses are using it,

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Speaker 1: and the vast majority said it's mostly generative AI and

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Speaker 1: it's mostly off the shelf tools. So although AI has

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Speaker 1: been around for a long time. Our businesses have latched

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Speaker 1: onto these tools which are relatively cheap, quick to adopt,

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Speaker 1: and they can get runs on the board very quickly.

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Speaker 1: But you know, about half of the company sort of said,

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Speaker 1: we're still not seeing the return on investment yet, and

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Speaker 1: maybe they don't understand that yet. It's early days. But

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Speaker 1: at what point you think we are really going to

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Speaker 1: see those particularly those productivity gains that so many reports

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Speaker 1: have been written about the fact we need advanced technology

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Speaker 1: to improve our productivity because we have other challenges like

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Speaker 1: an aging population, our workforce has peaked. We can't rely

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Speaker 1: on China commodity prices going up and up and up.

433
00:24:55,680 --> 00:24:57,760
Speaker 1: Growth is stalled in China, so it's got to be

434
00:24:58,400 --> 00:25:01,880
Speaker 1: technology driven productive. What's the next step in that journey.

435
00:25:02,440 --> 00:25:05,320
Speaker 2: Well, you know, look, we we had a report done

436
00:25:05,359 --> 00:25:08,480
Speaker 2: by a censure which it was incredible because it said

437
00:25:08,520 --> 00:25:11,280
Speaker 2: we can realize seventy six billion of increased DUDYP by

438
00:25:11,320 --> 00:25:16,160
Speaker 2: twenty thirty eight, and that was incredibly conservative. Peter, And yes,

439
00:25:16,240 --> 00:25:20,160
Speaker 2: I'm hearing you about the ROI, but we're really starting

440
00:25:20,200 --> 00:25:22,600
Speaker 2: to see a clock now because I think, yeah, it's

441
00:25:22,640 --> 00:25:24,880
Speaker 2: like you dip your toe's it's going to be a fad.

442
00:25:25,480 --> 00:25:27,880
Speaker 2: You know, can we afford the ten dollars a month

443
00:25:27,920 --> 00:25:30,879
Speaker 2: per person? In fact, i've heard companies now say if

444
00:25:30,920 --> 00:25:33,520
Speaker 2: they if we're not given it, we'd like the mobile phone.

445
00:25:33,560 --> 00:25:35,439
Speaker 2: Remember when that came out and companies weren't going to

446
00:25:35,440 --> 00:25:37,240
Speaker 2: pay for it. Well, I'll pay for it myself. So

447
00:25:38,040 --> 00:25:40,680
Speaker 2: I think there's always the starting point. And we truly

448
00:25:40,800 --> 00:25:44,679
Speaker 2: are seeing the gains now for the innovative companies that

449
00:25:44,720 --> 00:25:48,959
Speaker 2: are grabbing hold of it. And you know, recently, you know,

450
00:25:49,119 --> 00:25:52,640
Speaker 2: just seeing the Ministry of Social Development partner on an

451
00:25:52,640 --> 00:25:56,680
Speaker 2: incredible project where we can leverage all of these tools

452
00:25:56,920 --> 00:25:59,639
Speaker 2: that are actually going to help people find jobs, like

453
00:25:59,760 --> 00:26:02,200
Speaker 2: cannnecting them with the right people. I mean, and again

454
00:26:02,240 --> 00:26:06,439
Speaker 2: it was a really quite simple project. NDPGG rights and

455
00:26:06,560 --> 00:26:10,320
Speaker 2: counting livestocks sounds simple, but the money it's saving them.

456
00:26:10,760 --> 00:26:13,960
Speaker 2: You know. Vista Group on product personalizing podcasts. So these

457
00:26:13,960 --> 00:26:16,920
Speaker 2: are the cinemas. Every morning, the lead the owners of

458
00:26:16,960 --> 00:26:19,679
Speaker 2: the cinemas are driving to work. The podcast tells me

459
00:26:19,720 --> 00:26:22,119
Speaker 2: how much popcorn did we sell? How many seats were filled?

460
00:26:22,160 --> 00:26:27,200
Speaker 2: Like these are really really tangible and they're slowly coming along.

461
00:26:27,240 --> 00:26:31,080
Speaker 2: I think my worry Peter is that New Zealand wants

462
00:26:31,119 --> 00:26:33,520
Speaker 2: to sit back and wait. We say we're fast followers,

463
00:26:33,600 --> 00:26:37,760
Speaker 2: and I'm like, please start on anything that you hate

464
00:26:37,800 --> 00:26:40,840
Speaker 2: spending money on, like get a project around that. Just

465
00:26:40,920 --> 00:26:44,159
Speaker 2: prove that out because you are spending money and I

466
00:26:44,240 --> 00:26:47,240
Speaker 2: know it will have a difference. And I really hope

467
00:26:47,240 --> 00:26:50,200
Speaker 2: that these tools one day will save, you know, solve

468
00:26:50,320 --> 00:26:52,800
Speaker 2: cancers that we could never have even thought possible in

469
00:26:52,880 --> 00:26:55,680
Speaker 2: our lives. And fell para here in New Zealand about

470
00:26:55,680 --> 00:26:57,760
Speaker 2: what they do with breast cancer. Now they're looking at

471
00:26:58,080 --> 00:27:00,760
Speaker 2: moving it into brain cancer. It's like this stuff we've

472
00:27:00,760 --> 00:27:04,040
Speaker 2: got to celebrate. So we are definitely seeing it more

473
00:27:04,080 --> 00:27:07,919
Speaker 2: and more bigger companies going okay, we're all in with

474
00:27:08,080 --> 00:27:10,280
Speaker 2: co pilot because it's not going to take over your job.

475
00:27:10,320 --> 00:27:12,880
Speaker 2: It is a co pilot to help you. And then

476
00:27:12,920 --> 00:27:15,880
Speaker 2: seeing the back end compute power, especially with NZ North

477
00:27:15,920 --> 00:27:18,679
Speaker 2: now live watch the space. You're going to see some

478
00:27:18,680 --> 00:27:20,160
Speaker 2: incredible stories coming out.

479
00:27:20,520 --> 00:27:23,080
Speaker 1: Yeah, and one of the key things to really being

480
00:27:23,119 --> 00:27:26,600
Speaker 1: able to leverage AI is having that capability and that

481
00:27:26,640 --> 00:27:30,320
Speaker 1: capacity in companies to understand it. You've committed to training

482
00:27:30,440 --> 00:27:34,160
Speaker 1: one hundred thousand New Zealanders in AI and digital skills

483
00:27:34,160 --> 00:27:37,200
Speaker 1: over the next two years. It's a lot of people.

484
00:27:37,640 --> 00:27:40,399
Speaker 1: How practically, how are you going to go about that?

485
00:27:40,840 --> 00:27:43,360
Speaker 2: So we're scaling through our partners and you know that's

486
00:27:43,400 --> 00:27:45,520
Speaker 2: my other role as well. I'm fortunate to run New

487
00:27:45,600 --> 00:27:48,200
Speaker 2: Zealand and I'm also the partner leader across Australia and

488
00:27:48,240 --> 00:27:50,800
Speaker 2: New Zealand. And so we're scaling through our partners and

489
00:27:50,840 --> 00:27:53,800
Speaker 2: we're investing in them to roll it out. We've got

490
00:27:53,800 --> 00:27:57,280
Speaker 2: incredible tools that are now monitoring and checking that. We're

491
00:27:57,320 --> 00:28:03,040
Speaker 2: signing up incredible opportunity unities with some other government agencies

492
00:28:03,960 --> 00:28:07,400
Speaker 2: which are going to be phenomenal. I'm you know, mentioning

493
00:28:07,520 --> 00:28:10,880
Speaker 2: the Ministry of Social Development with the AI tools we're

494
00:28:10,920 --> 00:28:15,439
Speaker 2: going to connect into this incredible project, which is going

495
00:28:15,520 --> 00:28:20,040
Speaker 2: to make it easier and literally just funding it, you know,

496
00:28:20,240 --> 00:28:22,720
Speaker 2: I think making it so much more available where these

497
00:28:22,760 --> 00:28:25,959
Speaker 2: courses used to cost money, Your certification used to cost money.

498
00:28:26,880 --> 00:28:29,560
Speaker 2: So you're going to see a lot more open opportunity

499
00:28:29,560 --> 00:28:32,320
Speaker 2: where people can go and do these courses. And the

500
00:28:32,359 --> 00:28:34,080
Speaker 2: next thing we want to do it is infusing it

501
00:28:34,119 --> 00:28:36,760
Speaker 2: in schools because I think that if you can start

502
00:28:36,800 --> 00:28:39,200
Speaker 2: skilling and I talked to my own children like, yeah,

503
00:28:39,240 --> 00:28:41,960
Speaker 2: we haven't even this stuff's not even available to us.

504
00:28:42,640 --> 00:28:45,000
Speaker 2: We're doing that as well, and with the university, so

505
00:28:45,080 --> 00:28:48,960
Speaker 2: you attach this while you are studying. So yeah, we're

506
00:28:49,000 --> 00:28:52,000
Speaker 2: going to be tracking progress. You know. We truly believe

507
00:28:52,000 --> 00:28:54,000
Speaker 2: that this is New Zealand's opportunity to get more of

508
00:28:54,040 --> 00:28:57,880
Speaker 2: those high paid jobs. We lift everyone up and immensely

509
00:28:57,880 --> 00:29:00,880
Speaker 2: proud of our relationship with the likes of Tubatoa where

510
00:29:00,880 --> 00:29:04,640
Speaker 2: we aligning with them to upskill more Mani Pacifica through

511
00:29:04,680 --> 00:29:08,320
Speaker 2: their programs. So yeah, we've got a very very clear

512
00:29:08,360 --> 00:29:10,720
Speaker 2: plan which we're executing. It is a lot of people,

513
00:29:10,800 --> 00:29:12,200
Speaker 2: but we believe we can get there.

514
00:29:12,880 --> 00:29:14,680
Speaker 1: Yeah, and I think as we look to the next

515
00:29:14,800 --> 00:29:18,560
Speaker 1: fifty years, you know, hopefully Microsoft will be around. It's

516
00:29:18,600 --> 00:29:23,040
Speaker 1: one hundredth anniversary, and part of it is having a

517
00:29:23,080 --> 00:29:26,360
Speaker 1: sort of an equitable relationship with the people of the

518
00:29:26,360 --> 00:29:30,120
Speaker 1: country that you're operating in. Some argue that big tech

519
00:29:30,160 --> 00:29:33,080
Speaker 1: has got too big. There's too few companies that have

520
00:29:33,160 --> 00:29:38,600
Speaker 1: concentrated power. So what's the key do you think for

521
00:29:38,640 --> 00:29:42,480
Speaker 1: you for the future of Microsoft New Zealand Building that

522
00:29:42,600 --> 00:29:48,600
Speaker 1: really healthy relationship that allows innovation to thrive without being

523
00:29:48,840 --> 00:29:50,600
Speaker 1: too dominant in people's lives.

524
00:29:51,640 --> 00:29:53,480
Speaker 2: Yeah, and it's a tough one, right because we've also

525
00:29:53,560 --> 00:29:56,440
Speaker 2: seen over the last fifty years organizations go with every

526
00:29:56,480 --> 00:29:59,280
Speaker 2: single other company and get nowhere. And so it's a

527
00:29:59,320 --> 00:30:01,880
Speaker 2: real double sword. And I think the only thing I

528
00:30:01,920 --> 00:30:05,000
Speaker 2: can say, and this is to quote starting Adella, we

529
00:30:05,080 --> 00:30:07,040
Speaker 2: know when you're not happy with us, you can simply

530
00:30:07,080 --> 00:30:10,440
Speaker 2: turn us off. You know, the whole cloud movement, you

531
00:30:10,520 --> 00:30:13,800
Speaker 2: dial it down, moving to CSP now rather than big

532
00:30:13,880 --> 00:30:18,600
Speaker 2: complicated licensing contracts. It's up to you. And we believe

533
00:30:18,600 --> 00:30:21,000
Speaker 2: competition is a good thing. We have to earn the

534
00:30:21,120 --> 00:30:24,880
Speaker 2: right every single day and for me, it's that means

535
00:30:24,920 --> 00:30:29,560
Speaker 2: continue innovating, be the most secure, have investments like we've

536
00:30:29,560 --> 00:30:31,640
Speaker 2: done an ENDZ North that will show that we will

537
00:30:31,640 --> 00:30:33,640
Speaker 2: be here for the next fifty years. Believe you me

538
00:30:33,800 --> 00:30:36,800
Speaker 2: with the size and scale of that. But it's great

539
00:30:36,840 --> 00:30:39,520
Speaker 2: for all New Zealand, like it puts us on the map,

540
00:30:39,640 --> 00:30:42,040
Speaker 2: it connects us to the rest of the world. It

541
00:30:42,160 --> 00:30:46,000
Speaker 2: enables you know, businesses like Contact Energy to bring forward

542
00:30:46,040 --> 00:30:50,240
Speaker 2: projects they could never have done otherwise. And we've got

543
00:30:50,240 --> 00:30:54,640
Speaker 2: to embrace this. But everyone has choice, Peter, and that's

544
00:30:54,640 --> 00:30:57,120
Speaker 2: what we know, and that's why every single day. We

545
00:30:57,160 --> 00:30:57,880
Speaker 2: have to prove that.

546
00:30:57,880 --> 00:31:03,200
Speaker 1: Out absolutely well. Look, thanks so much. Congratulations on fifty

547
00:31:03,280 --> 00:31:06,240
Speaker 1: years and over seven and a half years of you

548
00:31:06,440 --> 00:31:10,520
Speaker 1: at Microsoft. That's been a pretty whirlwind sort of ride

549
00:31:10,600 --> 00:31:12,920
Speaker 1: as well. But thanks so much for coming on the

550
00:31:12,960 --> 00:31:13,640
Speaker 1: Business of Tech.

551
00:31:14,240 --> 00:31:16,200
Speaker 2: Thank you for having me. And yeah, I can't wait

552
00:31:16,240 --> 00:31:18,120
Speaker 2: to maybe I'll come on the next one for fifty

553
00:31:18,200 --> 00:31:21,720
Speaker 2: years or we far too old them, Peter, but thanking

554
00:31:21,760 --> 00:31:24,680
Speaker 2: forward to it. Enjoyed it, see you.

555
00:31:30,480 --> 00:31:33,640
Speaker 1: Thanks so much to Vanessa Sowrenson for coming on the show.

556
00:31:34,040 --> 00:31:36,640
Speaker 1: I've got to say a slightly subdued birthday celebration. I

557
00:31:36,640 --> 00:31:39,480
Speaker 1: think for Microsoft that fifty years quite a big one.

558
00:31:40,160 --> 00:31:43,240
Speaker 1: They did get the three CEOs back together last week.

559
00:31:43,280 --> 00:31:45,360
Speaker 1: That was great to see because I don't think Bill

560
00:31:45,520 --> 00:31:49,240
Speaker 1: and Steve Barmer are particularly close these days. I don't

561
00:31:49,240 --> 00:31:52,120
Speaker 1: know if they ever really were, but it really was,

562
00:31:52,480 --> 00:31:56,040
Speaker 1: and you know, Bill Gates acknowledges this. It was Barmer's

563
00:31:56,080 --> 00:31:59,280
Speaker 1: sort of natural ability to hustle and get deals over

564
00:31:59,320 --> 00:32:03,960
Speaker 1: the line, and just his natural enthusiasm and intensity. And

565
00:32:04,000 --> 00:32:07,560
Speaker 1: if you've ever been to a Microsoft conference, you've seen that,

566
00:32:08,400 --> 00:32:10,520
Speaker 1: you know, twenty years ago when he was on stage

567
00:32:10,800 --> 00:32:14,600
Speaker 1: literally sweating he was so worked out about all of

568
00:32:14,640 --> 00:32:17,480
Speaker 1: this stuff, so he was integral to it, but he did,

569
00:32:17,520 --> 00:32:21,760
Speaker 1: you know, pass the baton to Sacha Adella. And I

570
00:32:21,800 --> 00:32:25,960
Speaker 1: guess Satcha's big success really has been cloud computing and AI.

571
00:32:26,280 --> 00:32:29,440
Speaker 1: You know, Microsoft had been a player in service software,

572
00:32:29,920 --> 00:32:33,160
Speaker 1: very successful there, but Satua really saw the future off

573
00:32:33,160 --> 00:32:35,880
Speaker 1: the business being cloud centric and he picked that up

574
00:32:35,880 --> 00:32:37,840
Speaker 1: and ran with it. Now it's one of the biggest

575
00:32:37,920 --> 00:32:41,240
Speaker 1: cloud companies in the world with its Azure platform, and

576
00:32:41,520 --> 00:32:44,719
Speaker 1: it's a leader in AI too, through open Ai and

577
00:32:44,760 --> 00:32:48,320
Speaker 1: its own internal efforts as well. So I hope you

578
00:32:48,440 --> 00:32:51,960
Speaker 1: enjoyed the chat with Vanessa. Show notes are in the

579
00:32:52,000 --> 00:32:54,959
Speaker 1: podcast section at businesses dot co dot nz. You can

580
00:32:54,960 --> 00:32:59,200
Speaker 1: stream the podcast on iHeartRadio or your favorite podcast app.

581
00:33:00,120 --> 00:33:04,400
Speaker 1: Next week, how could we do doge properly here in

582
00:33:04,680 --> 00:33:07,640
Speaker 1: New Zealand. I've got a fantastic panel lined up to

583
00:33:07,680 --> 00:33:10,800
Speaker 1: talk about how we need to make government more efficient

584
00:33:10,920 --> 00:33:13,520
Speaker 1: and transparent, but how we could do it without all

585
00:33:13,560 --> 00:33:17,360
Speaker 1: the craziness that's gone hand in hand with Eli Musk's

586
00:33:17,400 --> 00:33:21,320
Speaker 1: Doge in the United States. That's next week's episode, dropping

587
00:33:21,440 --> 00:33:23,200
Speaker 1: on Thursday, and I'll catch you then