Speaker 1: Hi everyone, I'm Emily Chang and this is Bloomberg Studio
Speaker 1: one point Out. A year ago, the coronavirus pandemic started
Speaker 1: creeping into the United States after taking a devastating toll
Speaker 1: across the globe. The early US outbreak was centered in
Speaker 1: Washington State, just miles away from Microsoft's headquarters. There, CEO
Speaker 1: sachan Adela made the call that a significant number of
Speaker 1: the company's one hundred sixty eight thousand employees could work
Speaker 1: from home. Now, his focus is shifting to not just
Speaker 1: keeping those employees safe, but keeping them engaged, with the
Speaker 1: rise of Microsoft's chat product teams and a new offering
Speaker 1: called Viva. All of this as Microsoft stock has continued
Speaker 1: to rise up more than five percent during his seven
Speaker 1: years at the helm after languishing for more than a
Speaker 1: decade under his predecessors Bill Gates and Steve Balmer. He
Speaker 1: shared this key guidance with us three years ago on
Speaker 1: Studio one Point Oh. It's not about changing everything. It's
Speaker 1: about changing what needs to be changed, and then in
Speaker 1: lies the tricks to speed. Since then, Microsoft's market cap
Speaker 1: has crossed one trillion dollars, now closing in on two
Speaker 1: trillion dollars. But with big tech scrutiny ramping up in
Speaker 1: Washington and rising tech competition in China, Nadella's next seven
Speaker 1: years at Microsoft will be just as critical. On this
Speaker 1: edition of Bloomberg Studio one point oh, an exclusive interview
Speaker 1: with Microsoft CEO Sacha Adela. Sacha, thank you so much
Speaker 1: for doing this. It's so great to have you. Thank
Speaker 1: you so much, Emily for having me. It's great to
Speaker 1: be with you. The pandemic has underscored the power of
Speaker 1: technology in helping companies and governments and families get through this,
Speaker 1: and Microsoft Teams has been a huge part of that
Speaker 1: and has been an incredible growth story. Give us a
Speaker 1: snapshot of just how much Teams has grown through the pandemic.
Speaker 1: As we talk a lot about remote work, but the
Speaker 1: reality is more than fifty of the workforce, whether it
Speaker 1: is in healthcare or in retail or critical manufacturing, to
Speaker 1: be uh in the at the site. And so one
Speaker 1: of the things that really got upended across industries was
Speaker 1: how do you connect people? So if you have someone
Speaker 1: on the front lines and then an engineer perhaps working
Speaker 1: from home, how do you connect So the team's growth
Speaker 1: was not just about knowledge workers collaborating but it was
Speaker 1: in fact really helping frontline workers and knowledge workers come
Speaker 1: together to keep business continuity in our society and our
Speaker 1: economy going. In fact, I shuddered to think even what
Speaker 1: the economic activity would have been, or what the state
Speaker 1: of services that we all you know, you know have
Speaker 1: today would have been but for the state of today's
Speaker 1: technologies and that cloud architecture and teams clearly has been
Speaker 1: a massive growth story for us, But it's mostly because
Speaker 1: of the context of the constraints and how to overcome them.
Speaker 1: Now you're onto what you believe will be your next
Speaker 1: massive line of business employee experience. Tell us about your
Speaker 1: newest product, Microsoft Fever. The thing that the pandemic has
Speaker 1: put really shine the light on is how important the
Speaker 1: experience for the employees is, right, I mean, when you're
Speaker 1: remote in particular, you want to be staying engaged with
Speaker 1: your business and your company and its sense of purpose
Speaker 1: and mission. You want to be able to collaborate, like
Speaker 1: as I said, between the folks on the front lines,
Speaker 1: when the knowledge workers, you want to be able to
Speaker 1: actually start learning, saying, as a new employee, I joined,
Speaker 1: how do I build that knowledge capital by learning from others?
Speaker 1: When I don't have some of the same social structures
Speaker 1: of the workplace. I need to be able to find
Speaker 1: them online learn from them as well as the learning
Speaker 1: content needs to be delivered more in the you know,
Speaker 1: the workflow tools I use every day. We've had to
Speaker 1: introduce even things like virtual commutes and so on in
Speaker 1: order to help people with transitions. So putting these things
Speaker 1: all together, the employee engagement, learning, collaboration and well being
Speaker 1: UH into one experience platform is what Viva is all about. UH.
Speaker 1: And I think that this represents a new category creation moment.
Speaker 1: If you look at what we have, the journey we've
Speaker 1: been on with Microsoft three six five. We started with
Speaker 1: individual tools, it became a collaboration suite UH, and now
Speaker 1: we think it's going to can really get into a
Speaker 1: new space around employee experience more holistically thinking about productivity
Speaker 1: not just narrowly as output, but all of learning and
Speaker 1: well being and collaboration. So if you spend your whole
Speaker 1: day in teams or word or outlook, are you putting
Speaker 1: all of those in one place? Is that what that
Speaker 1: would mean for the user? In fact, it's not that.
Speaker 1: It's the exact opposite, which is to say, use the
Speaker 1: tool that you're using for, for example, any of your
Speaker 1: communication needs or deep work needs. And then in the
Speaker 1: context of that, let us bring in the other people
Speaker 1: you want to work with, the learning content that's going
Speaker 1: to make you more productive, the well being nudges you
Speaker 1: need in order to make sure that you have the transition.
Speaker 1: So that's the main purpose of an employee experience is
Speaker 1: to not introduce one more new experience that you need
Speaker 1: to go to, but to bring an experience that you
Speaker 1: need in the tools that you're using every day as
Speaker 1: part of your work. Could this be your next ten
Speaker 1: billion dollar business? What's the total addressable market? I believe
Speaker 1: with the XP is you know HR software is there,
Speaker 1: or HCM or human capital management software is there. But
Speaker 1: it's more about really tying what happens in the HR
Speaker 1: or people operations to the entirety of the business right
Speaker 1: whether it's in finance, whether it's in marketing, whether it's
Speaker 1: in engineering. And so we think that this can be
Speaker 1: like in the years to come, in the decades to come,
Speaker 1: we'll talk about it like a CRM or an e
Speaker 1: RP class category. You have been very outspoken about how
Speaker 1: employee experience is suffering in the work from home environment,
Speaker 1: Microsoft teams data showing we're all take more meetings, more chats,
Speaker 1: more ad hoc calls, more chats on the weekends as well.
Speaker 1: What concerns you so much about working from home and
Speaker 1: this remote work period as it drags on. I would
Speaker 1: say my main thing is to not just have some
Speaker 1: new dogma about any one type of work, right the
Speaker 1: reality is everything in fact, coming out of this crisis
Speaker 1: perhaps or this pandemic, we're all going to recognize the
Speaker 1: importance of flexibility. There is real reasons why people may
Speaker 1: want to work from home, but it might be in
Speaker 1: different times and different you know, for different people. It
Speaker 1: will be different by geography, it will be different by
Speaker 1: business function, and so we need, at least from a
Speaker 1: workplace policy perspective as well as the infrastructure and the
Speaker 1: tooling perspective, build for that flexibility. So we cannot assume
Speaker 1: remote everything for all time to come, or all things
Speaker 1: have to happen only in the workplace. So I'm more
Speaker 1: fall into the camp of let's make sure that we
Speaker 1: have built in to both the policies and the infrastructure
Speaker 1: and the tools maximum flexibility, because none of us, I
Speaker 1: think we'll want to be constrained anymore, whether it's by
Speaker 1: the place or the time or the location. Even what's
Speaker 1: been the hardest part of work from home for you
Speaker 1: personally as a leader trying to run this company. I
Speaker 1: think for me it's been you know, the social capital
Speaker 1: that gets built, uh, you know in so many different
Speaker 1: ways when you're able to see the body language, you're
Speaker 1: able to learn from the accused people by watching people, uh,
Speaker 1: and some of that social capital is hard to create.
Speaker 1: Sometimes meetings can become very transactional. So to me that's
Speaker 1: probably been the hardest. I'm not saying but that that
Speaker 1: therefore we should sort of think that somehow remote work
Speaker 1: is inferior. As I said, there are times when you
Speaker 1: remote work can be very productive. But at the same time,
Speaker 1: I think we need to bring in more innovation, like
Speaker 1: together more than others to start even bridging the social
Speaker 1: capital creation capabilities. Do you think work from home could
Speaker 1: be stifling innovation? Is its stifling innovation? In fact, we're studying,
Speaker 1: We're collecting a lot of data, and the reality is,
Speaker 1: let's take our game studios right. The one place where
Speaker 1: we've seen some challenges is that the game studios do
Speaker 1: have a tough time in work from home, to be
Speaker 1: able to bring people together, to in fact collaborate, in
Speaker 1: fact watch other gamers to get the inspiration to create
Speaker 1: new content. So clearly there are some places where the
Speaker 1: innovation does take a hit. But at the same time,
Speaker 1: when I look at what's happening with some of the
Speaker 1: data around GitHub, it's fascinating to see how the world
Speaker 1: has come together, even more so in the open source side,
Speaker 1: to create critical software for very and innovate together. So
Speaker 1: I wouldn't say there's just one answer. So if anything
Speaker 1: I'm taking away is every there needs to be some
Speaker 1: structural change. Perhaps wherever there has been an impediment to
Speaker 1: creativity or innovation, one has to go back and ask
Speaker 1: what is that structural change that will allow us, Quite frankly,
Speaker 1: the next time there's another tail event and we have
Speaker 1: to work remotely or with other constraints, how can we
Speaker 1: continue to innovate. So I think that all the solution
Speaker 1: for every function and every industry is not there today,
Speaker 1: but I think there will be. This is my conversation
Speaker 1: with Microsoft CEO such An Adela. Up next with big
Speaker 1: tech facing new scrutiny from the US government, is it
Speaker 1: deja vu for Microsoft, having been through it before, during
Speaker 1: what some call It's Lost decade and deep platforming. The
Speaker 1: president should companies like Facebook and Twitter have the power
Speaker 1: to say whose voices we can and cannot here. I'm
Speaker 1: Emily Chang, this is Bloomberg Studio. At one point out
Speaker 1: it's been seven years almost to the day as we
Speaker 1: take this that you took over as CEO, and since
Speaker 1: then the stock has soared over after languishing for more
Speaker 1: than a decade across a one trillion dollar market cap.
Speaker 1: If you could pick one thing, what do you think
Speaker 1: is the single most important thing that you did, right,
Speaker 1: It's actually stunning to me that seven years have passed. Um,
Speaker 1: if I had to sort of you know, having grown
Speaker 1: up at Microsoft, perhaps even on day one when I started,
Speaker 1: of course there is a completely new job right now,
Speaker 1: recognize that, you know, the responsibility of being a CEO
Speaker 1: is different, even that from one step removed. But I
Speaker 1: came at it, I think, Emily, from that sense of
Speaker 1: pride in what this company represented for you know, in
Speaker 1: the world. I always felt that I joined Microsoft because
Speaker 1: of its mission, so reinforcing perhaps that mission sense of
Speaker 1: purpose and then having this culture of being the learn
Speaker 1: it alls has probably been the most important thing because
Speaker 1: they're they're very talented people. The opportunity, whether it was
Speaker 1: cloud or other technologies, was clear. And I think in
Speaker 1: any company, you know, you have to go back to
Speaker 1: the very basics of why do you exist? And if
Speaker 1: you don't exist, would anybody miss you? Being able to
Speaker 1: ask those questions and answer those questions and having a
Speaker 1: culture that even allows you to really honestly answer those
Speaker 1: questions is the most important thing. And uh and as
Speaker 1: an insider at Microsoft, I always felt that and so
Speaker 1: that is hot I started with. And that's how do
Speaker 1: I started even my seventh year. What advice would this
Speaker 1: such an adela give that such an adela seven years ago?
Speaker 1: I mean, the thing that perhaps was the steepest learning
Speaker 1: curve for me um as CEO was understanding what does
Speaker 1: it mean to have multiple constituents? Right? I mean people
Speaker 1: talk about it's about customers, it's about employees, it's about investors,
Speaker 1: it's about other stakeholders. And today, of course multi stakeholder
Speaker 1: capitalism is the topic that everybody is talking about. But
Speaker 1: understanding what as a CEO, what does that mean? How
Speaker 1: do you really grapple with it? And it can't be
Speaker 1: something that I will divide my week into multiple stakeholders
Speaker 1: right in equal quantities. It's about harmonizing that into the
Speaker 1: core of your business model as well as your operations
Speaker 1: of as a business. That's probably been the thing that
Speaker 1: I would say, having a framework for it. I feel
Speaker 1: fantastic about the work the entire team at Microsoft is
Speaker 1: done around it right, because you need to have a
Speaker 1: business model fundamentally where when you do well, the world
Speaker 1: around you is doing well. If that is broken, it's
Speaker 1: very hard to fix even if you have business performance.
Speaker 1: But if the world around you, because of your business
Speaker 1: performance is not doing well, that's a social contract that
Speaker 1: you cannot be put back together. So I would say
Speaker 1: that's the advice I would give any CEO is to ask,
Speaker 1: and you know, it's something that it's also got to
Speaker 1: be managed every day. It's not something you take for granted.
Speaker 1: Now you're now on your third administration US presidential administration
Speaker 1: as CEO of Microsoft. If there was one thing you
Speaker 1: want this administration to do that would make a difference
Speaker 1: for Microsoft, what would it be? I think, for quite frankly,
Speaker 1: for this administration and the last administration. Right now, the
Speaker 1: most important thing is how do we get past this
Speaker 1: pandemic because even as we speak, if you think about
Speaker 1: some of the big challenges we have around even the
Speaker 1: core logistics of delivering the vaccines, the vaccine supply chain.
Speaker 1: So I feel the price of its sector needs to
Speaker 1: do its job and do its super well. We have
Speaker 1: many capabilities, but even the government needs to do its job.
Speaker 1: And it's really I think, if anything, we've all come
Speaker 1: to recognize the strength in our institutions in the private
Speaker 1: sector and in the public sector, and how they all
Speaker 1: both need to be coordinated and stitched together. And quite frankly,
Speaker 1: governments are the most capable coordinating agencies we have. Uh,
Speaker 1: And we just need that and more of that going forward.
Speaker 1: The power of big tech is being scrutinized by regulators
Speaker 1: around the world, lawmakers around the world, and regular people
Speaker 1: around the world. What do you think it is that
Speaker 1: the tech industry is doing wrong that makes so many
Speaker 1: people wonder? Are they too big, too powerful and abusing
Speaker 1: that power? I'll say a couple of things. Big by
Speaker 1: itself is not bad, but competition is good. Uh. And
Speaker 1: more importantly, it's not just competition, but it's that point
Speaker 1: I made earlier, which is you need to have a
Speaker 1: big in this model um that really is aligned with
Speaker 1: the world doing well. I think that's what's being litigated right,
Speaker 1: which is there are certain categories of products where the
Speaker 1: unintended consequences of the growth on that category or lack
Speaker 1: of competition in it creates issues. And so that's what
Speaker 1: I think people are all looking at and saying, hey,
Speaker 1: what's the fixed for that? But I don't think big
Speaker 1: by itself is bad or but competition is good. And
Speaker 1: every business, in particular the businesses that are large and
Speaker 1: have high scale, the unintended consequences of your scale cannot
Speaker 1: be dealt after the fact. They need to be dealt
Speaker 1: while you're scaling. So when it comes to the d
Speaker 1: platforming of President Trump, for example, should a Facebook or
Speaker 1: a Twitter or Google or YouTube or Twitch have the
Speaker 1: power to say who we can and cannot hear from
Speaker 1: and if not, who should? Yeah, I mean this is
Speaker 1: another one of those places where I think unilateral action
Speaker 1: by individual companies in democracy is like ours is just
Speaker 1: not I think long term stable, we do need to
Speaker 1: be able to have framework of laws and norms which
Speaker 1: are societal norms around even internet safety. Uh, and what
Speaker 1: is the public square that really is in alignment with
Speaker 1: a thriving democracy. So we just need to get to
Speaker 1: a stable state, uh in that because otherwise, depending on
Speaker 1: any one individual CEO in any one of these companies
Speaker 1: to make calls that are going to really help us
Speaker 1: maintain something as sacred and as important as our democracy
Speaker 1: in the long run is just no way at least I,
Speaker 1: as a citizen would advocate for now. Slack has alleged
Speaker 1: that Microsoft combining teams into offices anti competitive. Um, what's
Speaker 1: your response to that? How does the landscape change now
Speaker 1: that slack has been bought by Salesforce and as part
Speaker 1: of this bigger entity. I think both Slack and Salesforce
Speaker 1: have been successful. For example, I always point out that
Speaker 1: when we think about what they were able to do,
Speaker 1: I always ask the question would slack away even existed
Speaker 1: if it was not for the free access they had
Speaker 1: on top of say, the Windows platform. They didn't have
Speaker 1: to call Microsoft, they didn't have to go through any
Speaker 1: of our app stores, they didn't have need any uh
Speaker 1: you know, off our permission. Compared to any of the
Speaker 1: other platforms that they're available on, we perhaps provide the
Speaker 1: most open platform and Windows and even on Office five.
Speaker 1: You can, in fact use all of the APIs that
Speaker 1: we expose, integrate with any application, and people use it.
Speaker 1: If you look at even the usage reports, this slack
Speaker 1: usage and Microsoft three five years, it's so and same
Speaker 1: thing with Salesforce. So the fact that they're combining will
Speaker 1: compete with them, and they will also cooperate with them
Speaker 1: and provide them access to our platforms. And I think
Speaker 1: they should measure it by what type of success they've
Speaker 1: had on top of our platform. You worked at Microsoft
Speaker 1: through its own antitrust battles, You remember what that was like.
Speaker 1: It's been called the Lost Decade if you will. What
Speaker 1: cultural risks do you believe these companies face, even if
Speaker 1: they're not broken up. What's happening on the inside as
Speaker 1: these investigations play out. I don't know if there are
Speaker 1: real parallels between what happened with Microsoft and any of them,
Speaker 1: but I would say I think the core, as I
Speaker 1: always go back, is you know, if you have a
Speaker 1: business and a business model where when you are doing
Speaker 1: well around you, people are doing well, uh, and that
Speaker 1: is something that your own employees feel, then I think
Speaker 1: things will work out culturally. When that is not true,
Speaker 1: I think It's very, very hard because one of the
Speaker 1: things I feel is, as somebody said, you've got to
Speaker 1: keep it simple. What do you say, what you do,
Speaker 1: and what you think all needs to be consistent. You
Speaker 1: can't sort of have a real distance between those three things.
Speaker 1: And that's what at least would be my advice and
Speaker 1: to anybody in starting with ourselves. You're listening my conversation
Speaker 1: with such An Adela, CEO of Microsoft, Remember Microsoft trying
Speaker 1: to buy TikTok. Nidela tells us why, and we talk
Speaker 1: about Microsoft's future in self driving cars and what the
Speaker 1: CEO's next seven years will hold. I'm Emily Chang, this
Speaker 1: is Bloomberg Studio. At one point out stay with us.
Speaker 1: What are your biggest concerns about a rising tech industry
Speaker 1: in China. I think that first of all, there is
Speaker 1: no God given right for the say US tech companies
Speaker 1: to take for granted that they cannot be other tech
Speaker 1: powers and text fears. So, if anything, rising competition in
Speaker 1: the world, whether it's from Europe, whether it's from China
Speaker 1: or the rest of Asia, is some thing that I
Speaker 1: think all of us, even quote and quote in the
Speaker 1: West Coast of the United States, need to be more
Speaker 1: grounded in because sometimes I think we celebrate our own
Speaker 1: advances far too much, and we should be more looking
Speaker 1: to saying what's happening in the world and how relevant
Speaker 1: is our technology in the world. So from that perspective,
Speaker 1: I'm a more big believer that the world does better
Speaker 1: when there is real competition across the globe and there
Speaker 1: is more technology that then is diffused throughout that said,
Speaker 1: national security concerns are real concerns, uh, and that's for
Speaker 1: nation states to really, you know, legislate on. But I
Speaker 1: think for private companies like ours, we should be thinking
Speaker 1: about how how good is our technology, how useful is
Speaker 1: our technology around the world, and welcome competition wherever it's
Speaker 1: coming from. Microsoft tried to buy TikTok and it didn't happen.
Speaker 1: Why did you want to buy TikTok? You know, it's
Speaker 1: it's it's it's I think TikTok has achieved a lot
Speaker 1: of success in being able to take take a new
Speaker 1: media format like short form video and create a very
Speaker 1: interesting property. Here. We had a very crisp vision or
Speaker 1: for what we would want to do with it, uh,
Speaker 1: and including for example, addressing some of the very real
Speaker 1: concerns around national security, But that was the last summer
Speaker 1: and we moved on. Would you be interested in other
Speaker 1: social media properties today have emily, whether it's Minecraft or
Speaker 1: Xbox Live or LinkedIn or even get up because it
Speaker 1: is you know, one of the things perhaps that's not
Speaker 1: as well understood in the world is we do have
Speaker 1: some very high scale, proper communities and properties like that
Speaker 1: that we are engaged in making sure. For example, what
Speaker 1: does internet safety look like, how does the quality of
Speaker 1: the dialogue on the LinkedIn platform, what's moderation on Xbox
Speaker 1: Live look like? How can we even think about GitHub
Speaker 1: and making sure that that community is thriving. So to me,
Speaker 1: I'm very very focused on the properties we have, scaling
Speaker 1: them and scaling them with these unintended consequences, in particular
Speaker 1: around internet safety. Microsoft is now teaming up with GM
Speaker 1: and Cruise to commercialize self driving cars. You know, talk
Speaker 1: to us a little bit more about what we'll see
Speaker 1: here in terms of Microsoft's mobility play. It's actually an
Speaker 1: interesting combination or GM that is an incumbent and Cruise
Speaker 1: that is a new entrant, both relying and depending on
Speaker 1: Microsoft cloud computing technology to build their own computing platforms,
Speaker 1: and that's what we want to replicate quite frankly broadly
Speaker 1: in the auto industry as well as in other industries,
Speaker 1: because we think that the model that at least I
Speaker 1: have is that this is not about one wordically integrated
Speaker 1: company called Microsoft. It's about digital technology being much more
Speaker 1: evenly spread across every tech industry. I mean, every industry
Speaker 1: becoming more like a digital tech industry. And that's what
Speaker 1: we are intend to do. Even with these partners, we're
Speaker 1: seeing a huge pushback against the establishment and centralized power.
Speaker 1: Was it whether it is the capital riot or individual
Speaker 1: investors driving up the price of game stoff, or the
Speaker 1: unionization of tech employees. Do you see it as a
Speaker 1: fundamental shift in power from institutions to individuals? And how
Speaker 1: will these trends inform your next seven years as the
Speaker 1: CEO of Microsoft. It's a great it's a great question, Emily,
Speaker 1: And you know, you know, sort of in some sense,
Speaker 1: I'm still learning what this shift looks like. But I
Speaker 1: would say the core principle of institutions and institutional strength
Speaker 1: that fundamentally distributes power is a good thing. It's that's
Speaker 1: kind of what democracies were all about. I mean, Fundamentally,
Speaker 1: democracies were about institutions that actually distributed power. So any
Speaker 1: institution that centralizes power will have more challenges in the
Speaker 1: long run because they won't be as resilient as distributed powers.
Speaker 1: So from that principal perspective, I think that we can
Speaker 1: take perhaps a lot of hope from what's happening, but
Speaker 1: we'll also have to watch how this plays out so
Speaker 1: that we really make sure that now we don't swing
Speaker 1: from one to the other only to sort of recognize
Speaker 1: that there needs to be more thought given to how
Speaker 1: we transform such an Adella, CEO of Microsoft, thank you
Speaker 1: so much for joining us on this edition of Bloomberg Studio.
Speaker 1: At one point, now, thank you so much, Emily, Bloomberg
Speaker 1: Studio at one point. I was produced and edited by
Speaker 1: Kevin Hines. Our executive producers Alison Weiss Are. Managing editor
Speaker 1: is Daniel Culperson, with production assistance from Mallory Abelhouse and
Speaker 1: editing assistance from Brian Carter gainor I'm Emily changing your
Speaker 1: host and executive producer. This is Bloomberg