Shulou(Shulou.com)12/24 Report--

On November 27, artificial intelligence startup OpenAI fell into the most chaotic weekend in Silicon Valley history. As the company's biggest investor, Microsoft CEO Satya Nadella was supposed to focus on saving the company's fortunes. Nadella's thoughts, however, remained on cricket.

Nadella, however, was unable to concentrate on India's cricket World Cup final against Australia as he found himself embroiled in another match and required more action from him. Still, in the midst of frenetic negotiations, Nadella kept checking the scores and reporting real-time scores of his favorite sports to his less-than-enthusiastic colleagues. Despite the woes of the Indian team he supports, there is hope for his company, Microsoft.

Best outcome for Microsoft: Ultraman returns to OpenAI as CEO

Satya Nadella learned minutes in advance that OpenAI's board was about to fire Sam Ultraman, making it the craziest weekend of his tenure. The company behind ChatGPT has been pursuing a $90 billion valuation. Few board decisions threaten so much value in so short a time.

Although Microsoft spent more than $10 billion to acquire a 49 percent stake in OpenAI and use its technology to develop a new generation of software promising to revolutionize the way things work, the investment leaves Microsoft alone at the forefront of the AI revolution. But Microsoft didn't have a board seat, and Nadella and others found out almost simultaneously that their investments had suddenly gone awry.

When the board pointed the finger at Ultraman, he immediately turned to Nadella for help. Hours after the boardroom coup, they discussed by phone the possibility of Ultraman returning to OpenAI or joining Microsoft. If Ultraman can't return to OpenAI, the former CEO of the artificial intelligence company will become an employee of Microsoft.

At the end of the crazy weekend, Ultraman agreed to build a brand new AI division at Microsoft so he could continue working with Nadella and tap into Microsoft's computing resources. It soon became clear that hundreds of researchers were ready to join Microsoft with Ultraman. Microsoft has all the office facilities for these engineers, including LinkedIn's full-floor office building, rich cloud computing resources and Apple laptops. Microsoft employees assured their future colleagues that they didn't even have to use Teams, Microsoft's proprietary office software.

However, according to people familiar with Nadella's thinking, the ideal outcome for Microsoft would be for Ultraman to return to OpenAI as CEO. By opening Microsoft's doors to the OpenAI team, Nadella increased Ultraman's leverage, regaining Ultraman's position as OpenAI faced the departure of most board members. After five days of intense negotiations, Ultraman was successfully reinstated and got what he wanted. Ultraman specifically mentioned Nadella's support in a post confirming the return.

Key to Microsoft's Big Winner: Nadella's Strong Relationship with Ultraman

After Silicon Valley's hottest startup, OpenAI, fell into chaos, how did Microsoft keep its huge investment and even become a big winner unexpectedly?

A lot of the answer has to do with Nadella's management and leadership style and his trust in Kevin Scott. Scott is Microsoft's chief technology officer and the architect of the company's artificial intelligence strategy. These two characters helped restore Ultraman to his position at OpenAI, protect Microsoft's $13 billion investment, and extricate Microsoft from its predicament.

The unconventional partnership between Microsoft and OpenAI has occasionally been awkward. Nadella's masterstroke, however, was to build a strong relationship with Ultraman, a strategic move that made him an indispensable partner.

Nadella, 56, was born and raised in Hyderabad, India. As an ordinary student, his greatest wish was to attend a third-rate university, play cricket and work in a bank. After failing an entrance exam at India's most prestigious university, Nadella majored in electrical engineering at Manipur Polytechnic. According to his 2017 memoir Hit Refresh, he has been fascinated by computers and software ever since he wrote his first line of code as a teenager.

However, he had no intention of leaving India, at least not particularly. In fact, when applying to U.S. graduate schools, Nadella hoped they would reject him. However, he eventually came to the University of Wisconsin-Milwaukee to pursue a master's degree in computer science. In 1990, he received a call from Sun Microsystems, moved to California for two years, and then received a call from Microsoft in Redmond, Washington, which changed his life. He's going to work at Microsoft.

In his book, however, he mentions that during the interview process, he underwent a series of engineering tests and coding scenarios, in which a simple question puzzled him: If you saw a crying baby on the street, what would you do? The answer seems obvious: Call 911. But the interviewer told Nadella,"You need some compassion, man! If a baby lies crying in the street, pick him up. "

Nadella remembered that lesson as a Microsoft employee. One of his first encounters was Steve Ballmer, who greeted his future CEO successor with a "very expressive high-five." During his first few years at the company, Nadella took Compaq computers around the country every week to visit customers and flew to the University of Chicago on weekends to study.

As he rose through the corporate ranks, Nadella oversaw several key businesses of the Microsoft empire, such as cloud computing business Azure and search engine Bing. Azure is now the engine of the company's overall growth, and even Microsoft's stock performance is closely tied to it. During Nadella's tenure, Microsoft returned more than 1100 percent, compared with 215 percent for the S & P 500. Bing, despite its mediocre performance, helped microsoft generate $12 billion in ad revenue last fiscal year.

When Nadella took over as Microsoft's third CEO in February 2014, his image was very different from that of his two predecessors. Bill gates is a grumpy, yelling-out guy, and ballmer is more of a celebrity who elicits public cheers. Nadella, on the other hand, likes to do business in a gentle and light way.

He landed the CEO job by writing a 10-page memo over the Thanksgiving holiday answering board questions about his vision. Nadella explained that his first priority was fixing the company's internal culture. He told executives at a conference that he felt the mere release of new products was no reason to celebrate, and that Microsoft had to measure its success by whether people really liked it. "We need to develop a deeper empathy for our customers and their unexpressed, unmet needs," he writes in the book. "

Family life helped Nadella develop deeper empathy. His eldest son, Zain, was born with severe cerebral palsy and needed special care. Zane died last year at the age of 26. "Being the father of a son with special needs was a turning point in my life and shaped who I am today," Nadella said. He praised Eun as "the joy of our home, his strength and warmth inspiring me to push the limits of technology."

Nadella has been Microsoft CEO for nearly a decade, and employees know what to expect from him.

He is a leader who recognizes his limitations and is willing to delegate power to people he trusts. As an executive, he can be friendly, but he can also cut back when necessary. A former executive said Nadella had threatened to fire underperforming employees. Another former executive recalls telling a grandstanding employee pointedly to "sit down." He rarely swore, but in a meeting with Microsoft executives, he told them it wasn't their job to complain.

Nadella himself worked tirelessly. An employee who accompanied Nadella to China walked into the hotel gym at 3 a.m., suffering from jet lag, only to find Nadella already at work, ready for the day.

Nadella is also not afraid to suffer losses and terminate projects that do not work. He vetoed efforts to bring Bing to AppleWatch, calling it a waste of time. Nadella has a unique ability to reduce a task to the most important problem without alienating anyone in the room,"says a former microsoft executive who reported to him." "

Without board seats, Microsoft OpenAI bets are susceptible to two scenarios

What distinguishes Nadella from his predecessors is not just how they behave. Gates is a technical genius, Ballmer is a brilliant business model, and Nadella is an engineer. However, during his tenure as CEO, Nadella completed several mega-deals. For example, he bought LinkedIn for $26 billion and then activision for $75 billion. By contrast, he was more open to the idea of collaboration. While Ballmer snatched an iPhone from an employee and pretended to step on it, Nadella reached out to competitors, launching Microsoft Office for iPad at his first major product launch.

Since then, he has struck deals with Amazon, reached a delicate settlement with Google, and publicly stated that Microsoft is open to startups, including startups like OpenAI.

Nadella and Ultraman's brotherhood began with a chance encounter at the Allen&Co. conference in Sun Valley, Idaho, in 2018. Nadella was very interested in Ultraman, and Ultraman was impressed with Nadella. Ultraman left the conference convinced that Microsoft was the only company with the capital, computing power, and clear understanding of AI to work with his startup.

However, despite investing $13 billion, Microsoft did not win a board seat on OpenAI or play much of a role in its governance because it feared too much influence would attract the attention of increasingly stringent regulators. This leaves Microsoft exposed to OpenAI's strange architecture.

Ultraman's company began as a nonprofit organization, and its board's primary responsibility was not to maximize shareholder value, but to develop safe artificial intelligence for the benefit of all mankind. With no board seats, Microsoft was caught unprepared in the OpenAI upheaval. The company is also vulnerable to two scenarios: one where Ultraman leaves to start a business and takes most of his employees, and the other where OpenAI's board fires Ultraman without consulting its biggest investors. The second scenario seemed unlikely, but suddenly became a reality.

Gates initially did not like investing in OpenAI, suggesting a complete acquisition

Even before the OpenAI crisis, Microsoft's investment was not generally optimistic. According to people familiar with the matter, Bill Gates himself told executives that it made no sense for Microsoft to support OpenAI without fully acquiring the company. Although Gates later changed his mind, his concerns were not unfounded. Microsoft must strike a delicate balance on OpenAI: protecting investments while keeping its stake below 50 percent to avoid regulatory pitfalls.

Although Ultraman returned to OpenAI, Microsoft's problems were not solved. Former U.S. Treasury Secretary Larry Summers won a seat on the restructured OpenAI board, but Microsoft did not. It's unclear how Nadella will ensure that doesn't happen again.

To understand Microsoft's bet on the future, you need to understand Nadella's past. Nadella's parents hung posters of Karl Marx and Hindu goddesses of wealth and prosperity in his bedroom, but Nadella wanted to hang posters of his favorite cricketers. He was so obsessed with cricket that in high school, while his father worked abroad, he stayed home and continued to play. He even mentioned cricket on his resume when he applied for the Microsoft job. Other executives used baseball analogies, while he used cricket.

Nadella's experiences on the field shaped his executive mindset. He played in a memorable match against a team so strong that Nadella and his friends were intimidated. Their coach didn't allow them to do that, but encouraged them to say,"Don't just watch from afar, go play! Nadella can still hear that voice echoing in his head, writing: "It tells me you have to respect your competitors but not be in awe. Go compete! "

And he did. Microsoft has invested $3 billion in OpenAI since 2019. At the end of 2022, the startup released ChatGPT, the hottest product in tech history, and Nadella himself translated a poem with it. In early 2023, he placed another $10 billion bet, helping Microsoft reach a market cap of $1 trillion this year, growing faster than most companies.

Of course, growth often comes with growing pains. AI technology is extremely expensive to develop, and as Microsoft builds the necessary computing infrastructure, the company's spending is expected to soar. It's unclear when or if the company will be able to cover those upfront costs by adding new revenue. There is some evidence that individuals and businesses are willing to pay high prices for AI assistants like GitHub Copilot. However, AI tools for larger software products, such as Microsoft's office suite Microsoft 365, are still in their early stages, with businesses paying $30 a month. Many of Microsoft's existing and new customers will have to pay for that bet.

Nadella is banking on OpenAI's independence to bring innovation that benefits both Microsoft and humanity. OpenAI uncertainty, however, suggests that even as one of the world's most valuable companies, outsourcing the future to a startup that isn't fully controlled is risky.

Ultraman said last month: "I'm not going to pretend it's a perfect relationship. But he sees Nadella as a friend rather than an enemy and calls them "super consistent" on the most important AI issues. When they appeared together at OpenAI's inaugural developer conference earlier this month, Nadella was introduced enthusiastically by Ultraman.

Ultraman asked at the time: "How does Microsoft view this partnership? Nadella responded: "We love you! "Neither expected at the time that what followed would bring them closer together.

As for that cricket match played alongside the OpenAI riots, Nadella's company had a better day than the team he supported: India lost at home. He congratulated Australia on winning and then went back to work looking for his own victory.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.