A Decade Under the Influence of Satya Nadella

Exactly 10 years ago I sent the tweet above. First and foremost, it's wild that it has been 10 years. So long ago, that they were still called "tweets".1 Second, my god what a decade Satya Nadella and Microsoft have had.

On that day, Microsoft held an event in San Francisco to talk about their "Mobile First, Cloud First" strategy. Or as Harry McCracken succinctly put it in a headline at the time: "Microsoft’s Nadella Will Introduce Nadella’s Microsoft".

Nadella kicked his remarks off with a joke "It’s day 52 for me; who’s counting?" He meant, of course, it had been that many days since he took over the CEO role at Microsoft. At that time, there was some skepticism that someone so deeply rooted in Microsoft could actually change things – he had already been at the company 22 years at that point. He addressed this head-on, including quoting T.S. Elliot:

It’s been just an amazing five weeks or so for me. And it’s perhaps the most striking thing for me has been how in spite of having spent most of my adult life, 22 years at Microsoft, you see things from a very fresh set of eyes and a fresh perspective, and relearn the place in some sense.

And I think TS Elliott captured it best when he said that you should never cease from exploration, and at the end of all exploring you arrive where you started and know the place for the very first time. And for me that has been more true than ever before.

And today marks that beginning of exploration for us. Our customers want to know where we are going, what is our innovation agenda, and our team is really ready for it. We want to talk about one aspect of our strategy going forward. It’s a very important aspect and over the course of the next couple of weeks and couple of months we will come back, and many other leaders on our team will come back and talk about other aspects. And in all of that you will see what the new core for Microsoft is and what our innovation agenda is. And most importantly, what I want to key in on is what we as a company can uniquely do to serve our customers better.

And everything that we do going forward is grounded in this worldview, which I describe as the world of ubiquitous computing and ambient intelligence. It’s an amazing canvas for innovation and it’s an amazing opportunity for growth for our company.

The rest of Nadella's speech – which you can read in full here – was a masterclass in reframing a narrative.2 Microsoft, after what many had viewed as a "lost decade" under former CEO Steve Ballmer, was in desperate need of a change. To be clear, the company was still printing money. But they were also then throwing it away – at first trying to buy Yahoo for $40B ($44.6B to be exact) which, thankfully for Microsoft, failed,3 and later buying Nokia smartphone business for $7B (as well as some services and patents for €5.44B to be exact). The latter was clearly a mistake, one which, to his immense credit, Nadella quickly wrote-down and unwound.4 There would be no sunk cost fallacy poisoning this Microsoft any longer. If nothing else, a CEO change gives you the cover to do that.5

It also, of course, gave Nadella runway to make the big announcement that day: Microsoft's Office suite would be coming to Apple's iPad. Yes, the historic and at times bitter rival. And the device which was seen as a very direct threat to Microsoft's Windows dominance. Now obviously Nadella and his team didn't create the software from scratch in just a few weeks – it had long been gestating under Ballmer, and perhaps he was gearing up to launch it as well. But Nadella clearly knew what a powerful symbol it would be, if nothing else, to announce it at his first big event at the helm:

So I’m going to go ahead and open this Word document here, and you’ll see it brings it up in the native viewer. But unfortunately, this is what happens. My doc actually has a table of contents. It’s gone. My graphics are on top of my text. And if I scroll down, I see that there’s a bunch of text kind of jumbled on the side. I can’t even read it at all. If I only had the real Office for iPad, I could get more done. (Laughter.)

Well, it turns out as of today you do. So approximately 11:00 Pacific Standard Time Office for iPad goes live in the app store, very specifically Word, Excel and PowerPoint live for everyone to download and enjoy.

In a way, it was almost the inverse of the famous/infamous Steve Jobs keynote at Macworld Boston 1997, where the newly appointed "iCEO" announced a strategic investment from Microsoft, with Big Brother Bill Gates looming over his shoulder.

Anyway, I stumbled upon my old tweet recently and again, simply couldn't believe it has been 10 years. Microsoft's market cap that day was around $280B. Apple's – about three and a half years into Tim Cook's tenure – was around $650B. Apple, valued by nearly $400B more, was over two times the value of Microsoft.

Today, Microsoft's market cap stands at $3.1T. Apple's $2.7T. It is now Microsoft, incidentally, which is valued by roughly $400B more in the market. Both companies have had wild runs, but Microsoft is clearly the one on an upswing at the moment, bolstered by AI (and smart investments and totally not acquisitions), while Apple has been falling, in part due to the lack of an AI story (and, of course, the barrage of attacks by regulators – but really, stagnating growth).

1 So long ago that my Twitter handle was still @parislemon -- which you can clearly see in the comments below the tweet.

2 He also, it must be noted, mentioned "machine learning" pretty early on in his remarks. AI! In 2014!

3 It's easy to say in hindsight, but it sure feels like if Microsoft had been able to acquire Yahoo for $40B+, it may have sunk both companies. Maybe -- maybe -- Microsoft could have leveraged Yahoo to bolster Bing. But it seems more than likely that it would have been another big write-down. And perhaps ended Ballmer's tenure much earlier.

4 Nadella's first deal? Buying Minecraft maker Mojang for $2.5B. A decidedly better deal! And certainly forward-thinking...

5 It helped, of course, that Nadella was against the deal from the get-go. Something which may have helped him land the CEO role.