The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:10:28 · Harry Stebbings
[00:10:28] S1: You said about kind of the importance of owning your own intelligence for some of your amazing customers that you have. You were talking about some in The UK. Is that the model environment that we have moving forward, intelligence for companies with their own data?
00:10:40 · Satya Nadella
[00:10:40] S0: Yeah. So I think this is, to me, one of the most important things, which is what's the future of a firm in an era of intelligence? Because if you go back even to Hayek, his fundamental description of an economy is local intelligence. Tacit knowledge is distributed throughout the economy. Without that, there can't be only one firm and it can't be one intelligence. And so, that's sort of the foundational thing. In fact, capitalism works because of that. Price discovery works because of that. Or pricing mechanism works because of that. So, therefore, I think it'll be important for every firm to be able to accumulate knowledge at increasing scales using AI versus leak. That's why I called it the reverse information paradox, right, which is Kenneth Arrow kind of described this paradox of information where if you're a seller and you disclose the secret without a patent or a trade secret protection or copyright protection, you leak the value. Now, for the first time, the buyer needs the protection because the buyer, even most people think of it as, Oh, my data. It's even my exhaust of using it, right? Thumbs up, thumbs down signal. You're creating value for the model company versus capturing that value for yourself. So I think one of the things that at least I ascribe is that we need to have, for this to be stable, more of that surplus that gets created by use of intelligence to remain at the firm. And by the way, it doesn't need to be only by embedding your knowledge in weight. It can be in context. It can be in your evals, right? You may have a benchmark. In fact, one of the things that I'm very gung ho about is we all become, every firm will have a private eval benchmark, which is their core IP, and every model comes in and tries to sort of hill climb on that eval. And that, to
00:12:31 · Harry Stebbings, Satya Nadella
[00:12:31] S1: me, is how a firm works. I love this private eval's benchmarks for each company. This is for a rarified air of companies, so it would seem. Your Harvey's or your Lagoras or the kind of very forward thinking AI companies. Will that disperse to every company in the world you mentioned? [00:12:47] S0: It happens. Yeah. It happens, Harry, always. Right? Which is, you know, there were... There was a day when remember in the late '80s and the early '90s that the few companies that had deployed PCs and were doing forecasting, which felt magical, they were able to put it in Excel, spreadsheets, send it in email, and avoid the fax machine and interoffice memos. And it felt like, Oh, wow, when will this happen? And it took ten years maybe, and it spread all throughout. This time around, what is considered, Oh, I'm an AI native company and I do this, I think five years from now, it'll be pretty passe, I would imagine. And then that's kind of what... I mean, these tech cycles always start like that, right? Which is even cloud. Remember in the beginning of cloud, it was like the big deal was, oh, who's cloud native and who's not? And you know, if you're not cloud native... And now everybody is. Right? Even Lloyd's, you know, which is, what, 500 years old, is cloud native. And so it happens. Do we move into
00:12:47 · Satya Nadella, Harry Stebbings
[00:12:47] S0: It happens. Yeah. It happens, Harry, always. Right? Which is, you know, there were... There was a day when remember in the late '80s and the early '90s that the few companies that had deployed PCs and were doing forecasting, which felt magical, they were able to put it in Excel, spreadsheets, send it in email, and avoid the fax machine and interoffice memos. And it felt like, Oh, wow, when will this happen? And it took ten years maybe, and it spread all throughout. This time around, what is considered, Oh, I'm an AI native company and I do this, I think five years from now, it'll be pretty passe, I would imagine. And then that's kind of what... I mean, these tech cycles always start like that, right? Which is even cloud. Remember in the beginning of cloud, it was like the big deal was, oh, who's cloud native and who's not? And you know, if you're not cloud native... And now everybody is. Right? Even Lloyd's, you know, which is, what, 500 years old, is cloud native. And so it happens. Do we move into [00:13:40] S1: an implementation economy then? Because when we think about these customers, say, as you said, some of you are very big customers, they will need heavy FTE support much more so than they have done in traditional years or in the last ten years. Will we have a very heavy implementation economy to transition existing customers into this?
00:13:40 · Harry Stebbings, Satya Nadella
[00:13:40] S1: an implementation economy then? Because when we think about these customers, say, as you said, some of you are very big customers, they will need heavy FTE support much more so than they have done in traditional years or in the last ten years. Will we have a very heavy implementation economy to transition existing customers into this? [00:13:58] S0: It's interesting, right? The implementation economy, like systems integrators have always existed, right? We've depended on implementation economy for lots of other technology diffusion. So this one, I think, has different contours, right? Because- do [00:14:13] S1: think is different about this one?
00:14:13 · Harry Stebbings, Satya Nadella
[00:14:13] S1: think is different about this one? [00:14:14] S0: It's the combination of tech and business, if I could say. But it's not classic management consulting, it's not classic systems integration, and it's not classic technology support. For example, think about this. You want to start. When I look at my FD engagements, right? Even take the Unilever example I talked about at the keynote today. It's fascinating. They built an agentic system to say, Hey, we want to really have order to cash automated using an agentic system, plus their trade claims. And by the way, they started using a frontier model, and then they substitute for, in fact, I think they're using currently an MAI model for all the trade claims because it's sort of a lower cost. By the way, they control it, right, because they're able to train on their traces. And so we had some FTEs, but a lot of who got deployed, and now their IT team itself is managing it all. But it started with what's the business, what's the eval, what's the way to conceptualize the agentic architecture? So it's sort of business consulting combined with technical consulting. And I think, yeah, you're right in saying that there will be a new set of skills that'll get built in the ecosystem. Today, I think all of us have, quote unquote, our own but FTEs will become like... You know, the traditional systems integration will become new FTE. You've mentioned, obviously, MAI.