We Need An Ecosystem in AI, And Every Company Can Win A Place In It

00:11:48 · Sarah GuoPlay from here

[00:11:48] S1: So premise behind the training at the independent Frontier Labs is really, you know, we're gonna have these models, We'll have an API business and we'll support enterprises and startups, but a first party product, be it productivity or code or search drives the majority of revenue. That's a different value equation than you're describing, I think, with the Microsoft ecosystem. If if that's the case, tell me if it's the case, because obviously you have first party products and you have enablement products. What is the role of the develop like, what's gonna be hard and the set of skills and the value capture the developer has in that world?

00:12:23 · Satya NadellaPlay from here

[00:12:23] S0: Yeah. So I think that there's always gonna be the case that someone who is super successful as a platform builder can also have first party products. It was true with Windows. It was true with the SaaS side and the cloud side as well with us and others and so on. But the thing that is, is it should not be a limiter to other people achieving that same success, Right? That, I think, is the core difference, which is the network effects this time around, around intelligence are such because they learn from data and not really lots of data. It's just a few samples that you have to see to understand what's novel about something. So that's why the game becomes how to protect. So that's why I would say every company having private evals may be the biggest IP. Right? I think about it. Like, what's that private eval that you can then use even a frontier model to hill climb on and not leak the traces? Maybe one of the biggest drivers of IP. Like so in other words, another asset test is you have an eval that's private. You're using model A. Can you switch it to model B and, know, climb up? If you can, then you're in control. If you can't, you're not in control. And that's where even the harness decision becomes super important. Right? So therefore, having an open harness, letting all models come in, having your evals, your context, your tools help you hill climb, I think, is the skills that an AI native startup needs, a SaaS company needs, or every enterprise needs.

00:14:07 · swyx, Satya NadellaPlay from here

[00:14:07] S2: Yeah. I think in a very real way, you are Microsoft historically, as an operating systems company and then become a cloud company, maybe, like, the third act is that you're a harness or eval's company, whatever whatever the the sort of conglomerate of concepts that you wanna put together. And I think, like, enabling every company to have, like, frontier intelligence or what what I forget the the exact term that you use is the is the mission. Right? [00:14:32] S0: That's it. [00:14:33] S2: That is that is the platform promise that you build with us. You will get your intelligence for your data.

00:14:33 · swyx, Satya NadellaPlay from here

[00:14:33] S2: That is that is the platform promise that you build with us. You will get your intelligence for your data. [00:14:39] S0: That's right. That to to me, that is the like, if there was one tagline for this entire developer conference is, can everybody operate at the frontier with their frontier intelligence? Right? To me, that is so important because otherwise, I don't know how you achieve stable equilibrium, right? Which is how do I then go and say, well, my company is going to have a terminal value because I now know how to continuously compound on top of what's a platform that gets better. Right? So when, like, Windows obviously came out, Adobe built, Autodesk built, or even, like, take what Jensen said. We built DX and he built, you know, CUDA on top of it. Right? I mean, I always say to Jensen, god, I got the shorn head of that. Right? I wish we had recognized it. But, nevertheless, but that idea that you can build a platform layer that someone else can then extend out and build their own intelligence layer in this case, I think, is everything. Right? Without it, why have a developer conference? I can just come and have you all sort of just worship at the altar of one model. Yeah. But that's not a developer conference. [00:15:50] S2: Backstage, we you had a discussion about what is IP or what is the the value in a company. It used to be the length of human experience at a company, and now it's this other thing, which is the evals, the experience in sort of applying agents to the company. He I just want you to, like, flesh it out a bit, Marcus.

00:16:07 · Satya Nadella, swyxPlay from here

[00:16:07] S0: Yeah. It's a great way to frame it. Right? Because, yep, at the end of the day, every company is gonna have both the human capital that is still gonna be super valuable because humans and their ability to find the gaps that exist at all times is going to be the way we all will create value. Right. I mean, so I'm definitely in the camp that this is going to be about expressing new forms of human agency and ambition, even as token capital goes up. Right. So let's say any corporation has lots of tokens and a lot of human capital. The question is, how do you compound the two? So if you have a like, if you take in teams, I have a bunch of agents doing work and a bunch of humans doing work and the traces between those, that is really important context of how that enterprise is creating value. Then that goes back to train not a generalist model, but to taint train the company veteran agent. Right? That is super valuable again, which is when a company goes and says, it should in fact go on to the balance sheet is how I think about it. Right? That's fact, they may be like, human capital was never possible to go put on a balance sheet because you didn't know how to capture the tacit knowledge. Whereas now, I think you can with the agents that have learned through the through time, through all the traces. So that's what at least we think will happen. [00:17:31] S2: I think the SEC is gonna have to have accounting standards for token expertise.

00:17:31 · swyx, Sarah Guo, Satya NadellaPlay from here

[00:17:31] S2: I think the SEC is gonna have to have accounting standards for token expertise. [00:17:37] S1: You're talking about the equilibrium state and a stable equilibrium where companies have this compounding value and can see terminal value for themselves. Another challenge to, you know, the considered equilibrium of, okay, there are applications and workflows that are sort of common to a vertical or a horizontal. And this was like the generation of SaaS companies. And, you know, Microsoft has lots of SaaS properties as well. Then And there are things that are very specific to every enterprise that they're differentiated against. I'm sure you have heard much and participated in much of the debate about the end of software because all these workflows are cheap to generate now. Do you think the equilibrium looks different between what agents get built in enterprises versus in their vendors in the future? [00:18:23] S0: Yeah. So I think what's happening there is, see, we we had a particular way we captured, I would say, workflow in apps, right? Because we built a data model, right? We schematized some part of some business process. We then built a bunch of business logic. Yep. And then we put a bunch of UI on top of it. So that's kind of what every SaaS company- [00:18:47] S1: And a little configuration. [00:18:48] S2: For like twenty years, that