Satya Nadella on Hiring the Most Powerful Man in AI

When OpenAI threw Sam Altman overboard, Microsoft’s CEO saw an opportunity.

It’s been a messy few days at OpenAI. On Friday, the company’s board shocked the tech world by announcing it had fired CEO Sam Altman — the face people think of when they think artificial intelligence. Since then, the industry-leading AI firm has been in turmoil. Major figures at the company have resigned in protest of Altman’s firing, and nearly 600 employees signed a letter threatening to quit if the board doesn’t step down. The letter also threatened that displeased staffers would “imminently” follow Altman to his new position at Microsoft — the company that has helped bankroll Open AI with billions of dollars, and which almost immediately swooped in to hire Altman after he was let go. Altman is expected to be the chief executive of Microsoft’s new research lab, though factions at OpenAI are still trying to get him back. If Microsoft does retain Altman, it will be a major coup for CEO Satya Nadella; news of Altman’s hiring shot its stock value up by $56 billion

In the latest episode of On With Kara Swisher, Kara spoke with Nadella about the nuttiest business world shakeup since a different Sam got fired last November. Nadella explains the reasoning behind his big move, why he thinks he should have been consulted about OpenAI’s decision, and what has and hasn’t changed at Microsoft with Altman’s presumed arrival.

Kara Swisher: I want you to me an overview of where you are right now and what’s happening, because this has been quite a story for technology.

Satya Nadella: On Friday, I get a call saying that the OpenAI board was making a CEO transition. And we issued a statement right after that, which said they had appointed [chief technology officer] Mira Murati, whom I had known for a long time. Obviously she was very much part of the OpenAI team. And so we said, “Yeah, we will continue to work with OpenAI.” And so that’s kind of what all happened. There’s no real change, at least as far as I’m concerned.

Swisher: They didn’t consult you, correct?

Nadella: We were mostly working with Sam and the management team and the for-profit entity, and we didn’t have any relationship with the nonprofit board, which has the governance of this entity. That’s correct.

Swisher: Did you feel like you should have been consulted?

Nadella: At the very least, right? Of course, the nonprofit boards have their own commitment to their mission. But given all of our investment in OpenAI — and it’s not even the money and the capital. I mean, here’s a simple way to think about this. Sam chose Microsoft once. Sam chose Microsoft twice. And someone’s got to think about why. There is no OpenAI without Microsoft leaning in in a deep way to partner with this company on their mission. We love their mission. We even love their independence. We have no issues with any of it.

And look, I know in Silicon Valley people talk about who is getting ahead of the other. I believe in partnerships. In fact, one of the most understated things is great partnerships can create lots of enterprise value. So I deeply always have remained committed. And yes, they should have. As a partner, I think it does mean that you deserve to be consulted on big decisions.

Swisher: So your first statement on Friday was pretty diplomatic. You said, “We have a long-term agreement with OpenAI, with full access to everything we need to deliver our innovation agenda and exciting product roadmap and remain committed to our partnership and to Mira and the team.” So Mira then started negotiations. You were part of that, from what I understand, —of getting Sam back, because Mira had expressed interest in bringing him back. I think she moved up to that CEO position, but was already working to bring [co-founder] Greg Brockman and Sam back to the job.

Nadella: All through the weekend I quite frankly didn’t engage with the OpenAI board. The only person I know there is [board member] Adam DiAngelo. I was consistent. Same thing, I said, “Look, we really are very committed to OpenAI. We are very committed to Mira as the interim CEO. We want to make sure that whatever Sam does, you’ll definitely do with us and you should know that and we would be happy for Sam to come back if that’s what you choose to.” I was very clear that we would be supportive of Sam and Greg and the team, because the thing that we didn’t want is the team to get splinteredd and the mission to get jeopardized. But the point is, we were very confident in our own ability. We have all the IP rights and all the capability.

If OpenAI disappeared tomorrow, I don’t want any customer of ours to be worried about it quite honestly, because we have all of the rights to continue the innovation. Not just to serve the product, but we can go and just do what we were doing in partnership ourselves. We have the people, we have the compute, we have the data, we have everything. But at the same time, I’m committed to the OpenAI partnership and that’s what I expressed to them.

Swisher: And where does that stand? Because you have invested, is it $13 billion?

Nadella: And that gives us significant rights as I said. And also this thing, it’s not hands off, right? We are in there. We are below them, above them, around them. We do the kernel optimizations, we build tools, we build the infrastructure. So that’s why I think a lot of the industrial analysts are saying, “Oh wow, it’s really a joint project between Microsoft and OpenAI.” The reality is we are, as I said, very self-sufficient in all of this.

Swisher: I get that, but still, you want to know when something like this is happening because they need to deliver the partnership, correct?

Nadella: Correct.

Swisher: I mean, you invest thinking that they can deliver what they promised on their side.

Nadella: Absolutely.

Swisher: Was that a worry for you? It was clearly a crisis. I mean, let’s be honest. I mean, this was unprecedented. I’ve covered Silicon Valley, I’ve known you for decades. I’ve never seen anything like this.

Nadella: Of course. Anytime you have significant turnover, there’s always risk. There’s a key person risk and then the team risk. And at the end of the day, we can talk a lot about technology and other things, but it’s about the human capital of any organization.

That’s where I go back to what my message over the weekend. I like to keep things simple. I start with, “Hey, what is the thing that we were doing on Friday morning?” We were trying to build great products and great technology and do real research around everything from AI safety and alignment to the next generation models. I want to continue to do that on behalf of our customers and partners. And what’s the best way to do that? Have the people. And optimize for the people. And then obviously the boards have to do what they have to do around their governance, but I don’t know. I’m not a part of their board. So all I said is, “Hey, whatever it is that you’re doing, just make sure that you don’t compromise the mission of the organization in which we have invested and the people who are behind that that we bet on.” And so that’s it.

Swisher: I’m sure that was disturbing coming from you. But talk about Sam Altman. He’s the one that got the investment, who has the relationship with you. As you said, you don’t know this board. You’ve hired him now to create this new advanced research division. Can you talk a little more in detail about what that means?

Nadella: Sam is someone I’ve known for a very long time. And in the last, I would say, four and a half, five years that we’ve worked together closely now in this context, we’ve obviously gotten to know each other very deeply, not just as acquaintances, but as deep professional partners. And so I have great admiration for his vision, his ability to bring teams together and push. That’s what I want him to do irrespective of what happens right now. I just wanted him to make sure that he’s able to continue. And he’s a very mission-driven guy. He wants to continue to push this advanced AI work that he and Greg and the team were doing. That team will come and they’ll join Microsoft and we’ll continue to work with OpenAI. So nothing changes. After all, we had many engineers from Microsoft who are also working with OpenAI on Friday, and so we’ll continue to do the same.

Swisher: Nearly 600 of the employees want to leave at the company. So there’s not much OpenAI to work for if that happens.

Nadella: This is where I leave it to individual employees to decide. But as I said, we will definitely have a place for all AI talent to come here and move forward on the mission. And we will be supportive of whoever remains even at OpenAI or whatever. At the end of the day, I’m doing things that are meaningful for my customers and I’m going to continue to partner with OpenAI, and I’ll continue to make sure that Sam and his team are supported.

Swisher: So what is his advanced AI team? What does that mean and how are you going to fund it? Where’s it going to be?

Nadella: Think of it like how we organize GitHub or what have you. It’ll be a real team inside of Microsoft, where one of the things we have learned, Kara, the idea that we learned from having created GitHub, LinkedIn, Mojang Studios, is how to have innovators and builders who come to Microsoft and then continue to have an identity, a culture, a spirit to do things.

Swisher: What kind of funding does this get from Microsoft?

Nadella: I mean, the beauty of anything inside Microsoft is, I don’t have to talk to you about it.

Swisher: Well, you might have some billions laying around if everybody leaves OpenAI. That’s just my question.

Nadella: Yes. The silliness of it all is the little acquisitions we make and the little investments we make get more press than all of the money, which is the organic investment we make. But that’s the world, and that’s okay.

Swisher: I get that. I know you’re doing a lot of research, but I think a lot of people, and I am among them, think you just possibly got this company for free if all these employees go over. Were you surprised by how many employees were backing Sam?

Nadella: I think it speaks to Sam and his mission-driven approach to building teams, which obviously I admire a lot. If that is the eventuality, then great. But I don’t think of this as, “Hey, somehow we are trying to use this to get something for free,” as you described. I mean, we were happy on Friday morning.

Swisher: I think let me say you’re in a better position. You’re in a better position. You are.

Nadella: I was in a good position, Kara.

Swisher: Okay.

Nadella: There is nothing that’s really changed. On Friday I could have done exactly what I’m going to do today. I think that yes, it’s sort of better copy, but there’s no real change. In fact, Friday I was more productive than the weekend, let me put it that way.

Swisher: So this new unit, it’ll sit within Microsoft. It could have quite a lot of the OpenAI employees who have been promised jobs. Is that correct?

Nadella: That’s correct. We said, “Yeah, anyone who wants to join us…” Let’s face it, right? There’s a lot of competition for AI talent. I just wanted to make sure that in a world where people have choices, if they’re going to leave OpenAI, that Microsoft was a choice for them.

Swisher: Right. Mark Benioff’s trying to hire. He’s trying to grab some of those people. I’m sure everybody is. But you will continue to work with OpenAI no matter what happens. Do you know the newest interim CEO, Emmett Shear?

Nadella: I’ve not known him before, but I met him for the first time last night. I’ve had a couple of subsequent conversations and I relayed essentially the same message that I just told you, Kara, which is we are committed to our customers and the innovation and them and Sam. He knows that and he’s good with all of that. And that’s why I even put out the statement yesterday last night when I first came to know that he was going to be the new interim CEO.

Swisher: But you were more excited for the Sam acquisition — I’m going to call it the Sam acquisition just to annoy you. Is he in this capacity at Microsoft? Could this change if the board leaves and he goes back, are you open to that possibility with more Microsoft board presence?

Nadella: Oh, yeah. One thing I’ll be very, very clear is we are never going to get back into a situation where we get surprised like this ever again. If anything, we are much more resolute that we cannot have our customers and so on feel like there are going to be surprises. We’ll definitely take care of all of the governance issues and anything else. And as I said, we have all the rights, so therefore we will make sure that if we go back to operating on Friday, we will make sure that we are very, very clear that the governance gets fixed in a way that we really have maturity and guarantee that we don’t have surprises. That’s all.

Swisher: Does that mean a board observer or board seat?

Nadella: Sort of cross that if that happens. But I think that we will need to make sure that our interests are solid. It’s not like I felt that on Friday morning, somehow our interests were not solid. But we’ve learned a lesson or two and we’ll make sure that we will double down on it.

I think the key thing, I think, at least for our customers is to know that this is where I look at it and say, if even everything disappeared, we have everything we need in order to just continue to keep innovating without a blip. And that I think is the one thing that is not understood by the world. We wouldn’t be Microsoft in 2023 with the capability up and down the stack if we didn’t have that. And it’s silly for people to keep thinking about like, “Hey, one company with little technology is going to make all the difference.” We are a lot bigger. We love the partnership, but we are not single-threaded.

Swisher: Were you worried about any of the allegations the board made, including [co-founder] Ilya Sutskever, who has now signed the letter saying he deeply and also noted deeply regrets his participation in the board’s action?

Nadella: I did not hear anything. For me, first of all, Ilya is an amazing scientist. He was another core person at OpenAI that I admired a lot and I still admire for all the unbelievable core work he has done. I was surprised. I mean, I’m also just reading. I don’t know anything about his opinions about what happened or not and so on, but nevertheless, I’ve not heard anything. And if the question is about safety, oh my God, that matters I know to Sam, it matters to OpenAI. In fact, one of the things that I think brought Microsoft and OpenAI together was, “Hey, look, we are going to build AI that can broadly be distributed so that people can take advantage of it with products like GitHub, Copilot, or ChatGPT, or Copilot in M365 or what have you.” And at the same time we think about alignment.

Swisher: So you had no worries about Sam Altman that the board had raised?

Nadella: I am not aware of any of those things. And even in my conversations with them, none of them were raised to me.

Swisher: It was so non-transparent and unclear if you’re making those kinds of allegations, calling someone a liar essentially. And your hope is that you do this thing with Sam and also OpenAI stays a company or he moves back to OpenAI and then you stay with more, at least observation of the board, et cetera.

Nadella: I want us to continue to serve our customers with the roadmap that I’m very confident about and committed to. On Friday morning, we were partnering with OpenAI and Sam, and today we are going to be working with Sam and OpenAI.

Swisher: Will that be the case if this board stays? I don’t think they will. That’s my opinion.

Nadella: It’s not my decision so I really don’t really have an opinion to express on that. It’s for them and others constituents who have any say on that. But to me, I was comfortable partnering with OpenAI with their board and I’m happy to keep working with OpenAI and they’ll have to sort out their board and what have you.

Swisher: I have one more specific question. Would Sam become a potential, I’m not trying to replace you, Satya, but a potential CEO of Microsoft in this case?

Nadella: Let’s just say that it’s fantastic to have lots of capable people who can become CEOs of Microsoft.

Swisher: Okay, so all this puts a spotlight. I reported early on about a misalignment between the nonprofit board and Sam’s efforts and this split between those who see a world who see the business opportunity and a little bit of hype and others worried about the dangers of moving too fast. What do you think about this? Where do you stand?

Nadella: The optimism I have for this generation of technology is the fact that this debate exists. The question is, how can you really make sure that the use of the tools gets propagated and the weapons not so much? I mean, I think about also this, there’s a timeline, right? There are existential issues in the long run if you lose control of AI, and that requires real thought and real safety research, real alignment research that you have to commit to. Then the real world harms today, right? Whether it’s election interference, deepfakes, bias, bio- terrorism, the amount of work we did, whether it’s for Bing Chat or ChatGPT or Copilot to make sure that harmful content doesn’t get created. So I feel that we have sort of got to work all ends of it on a daily basis. It’s not just not talking about it, learning the engineering process, having these principles guide the engineering process, and then having oversight and safety boards and with real teeth. And that’s all something that we constitute even with OpenAI.

So I am very committed to responsible safe AI development, and at the same time driving the benefits of it. I mean, to me, when I see that rural farmer in India who’s able to use something that was produced in the West Coast of the United States to have more agency in their life, that’s magic. When I see somewhere in the Middle East, a kid can have a personalized tutor because of what we built., That’s magic. And I want that benefit. And at the same time, let’s make sure that all the harms that people talk about and we take them seriously.

This interview has been edited for length and clarity.

On With Kara Swisher is produced by Nayeema Raza, Blakeney Schick, Cristian Castro Rossel, and Megan Burney, with mixing by Fernando Arruda, engineering by Christopher Shurtleff, and theme music by Trackademics. New episodes will drop every Monday and Thursday. Follow the show on Apple Podcasts, Spotify, or wherever you get your podcasts.