Relevant! Relevant! Relevant! At 50, Microsoft Is an AI Giant, Open-Source Lover, and as Bad as Ever

Tech analyst Benedict Evans captured the company’s decline in a July 2013 essay called “The Irrelevance of Microsoft.” “No one’s afraid of them,” he wrote. The next month, the board pushed out Ballmer. Contenders for his job included the CEO of Ford and the former president of Skype. But Nadella wrote a 10-page memo arguing that Microsoft’s revival would come from a growth mentality. As he later put it, he wanted to change the corporate personality from “know-it-all” to “learn-it-all.” The board—along with Gates and Ballmer, who were on the search committee—agreed that he was the one.

“Obviously, I’m a consummate insider,” Nadella says, talking to me in July after his speech and a lusty ovation. He saw firsthand how the company had lost its way. “You forget what made you successful in the first place. And hubris sets in.” Microsoft, he says, needed more than a great caretaker or efficient manager. “The metaphor I like is re-founding. Founders create magical things from nothing.”

From his first day as chief executive, Nadella worked at the company’s Glengarry Glen Ross culture. Perhaps in part because one of his children had cerebral palsy (Zain Nadella died in 2022), Nadella is highly empathetic. In Microsoft of old, everyone had a story about Bill Gates shrieking at the top of his lungs over their stupidity. In Nadella’s first meeting with department leaders he wheeled in a cart loaded with copies of a book called Nonviolent Communication and gave one to each person. “Before Satya it was difficult to show up to a meeting where you didn’t know the answer, or where you had a thought but you couldn’t prove it,” says Microsoft workplace exec Jared Spataro. “Satya was more like, ‘Come with your brain. Be sharp, and let’s talk about it.’ That felt liberating.”

Nadella wasn’t a blamer. In 2016, Microsoft was humiliated when its much-touted chatbot Tay proved shockingly vulnerable to being manipulated into generating racist content. Reviewers were brutal. “I was getting forwarded emails from really angry employees,” says Lili Cheng, who led the project. “I was feeling really terrible about putting the company in that position. And Satya sent me an email that said, ‘You’re not alone.’”

The CEO also smashed through outdated corporate ideas, notably Microsoft’s aversion to open source software, which it saw as a threat to its model of locking in customers with proprietary tools. “Microsoft had totally neglected the open source world for a decade—in fact they’d been hostile to it,” says Nat Friedman, who in the early 2010s ran a company based on open source software. “While Microsoft’s relationships with developers have been central to the success of the company, it had lost a generation.”

Nadella wanted to win the next one. Even before he became CEO, when he was in charge of Azure, one trip set him on the course. He and his lieutenant, Scott Guthrie, met with a group of startups to sell them on the cloud service. All of them used Linux. When the Microsoft executives left the room for a break, Guthrie said that Microsoft really should support Linux. “Absolutely!” said Nadella, trash-canning years of Microsoft dogma. Guthrie asked whether they should review the decision with other Microsoft leaders. “No,” Nadella said, “let’s just do it.”

“In a five-minute break, walking to the bathroom and back, we were able to completely change the company strategy around support for Linux and open source,” says Guthrie. When Nadella later told Ballmer, who was in his final days at the company, he simply informed him of the policy shift. Then, two months after Nadella became CEO, Guthrie suggested that they change the name “Windows Azure” to “Microsoft Azure.” It was done on the spot, sending a signal that Microsoft would no longer assess every move based on its impact on Windows.