…In the latest episode of On With Kara Swisher, Kara spoke with Satya Nadella [on Monday, 20 November 2023, see reference to the Shear statement ‘last night’]…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 Sam Altman’s presumed arrival.

Satya 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.
Kara Swisher: Did you feel like you should have been consulted?
S. 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.

K. 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.
S N: All through the weekend, I quite frankly didn’t engage with the OpenAI board. The only person I know there is [board member] Adam D’Angelo. 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 splintered 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.
S: And where does that stand? Because you have invested, is it $13 billion?
N: And that gives us substantial 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.

N: Of course. Anytime you have substantial 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.
S: 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?
N: Sam is someone I’ve known for a very long time. And in the last, I would say, 4 and a half, 5 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.
S: Nearly 600 of the employees want to leave at the company. So there’s not much OpenAI to work for if that happens.
N: 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.

S: What kind of funding does this get from Microsoft?
N: I mean, the beauty of anything inside Microsoft is I don’t have to talk to you about it.

N: 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.
S: Let me say you’re in a better position. You’re in a better position. You are.
N: I was in a good position, Kara.
S: Okay.
N: 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.

S: But you were more excited for the Sam acquisition—I’m going to call it the Sam acquisition just to annoy you. Could this change if the board leaves and he goes back? Are you open to that possibility with more Microsoft board presence?
N: Oh, yeah. One thing I’ll be very, very clear on 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 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.
S: Does that mean a board observer or board seat?
N: We’ll sort of cross that [bridge] if it 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.

[While supposedly a MS observer was agreed on, the appointment still has not been announced as of 2024-04-29, and given the ‘frenemy’ dynamics of Nadella/Altman, it seems possible there may never be any such observer, much less a full voting board seat.]

S: So you had no worries about Sam Altman that the board had raised?
N: I am not aware of any of those things. And even in my conversations with them, none of them were raised to me.
S: It was so nontransparent and unclear if you’re making those kinds of allegations, calling someone a liar essentially.