Satya Nadella: belief

Transcript context

…I could not afford the API costs of Satya tokens. Whatever you want to call it, are the Satya tokens a tool or an agent, whatever. Right now, if you have models that cost on the order of dollars or cents per million tokens, there’s just an enormous room for margin expansion there, where a million tokens of Satya are worth a lot. Where does that margin go and what level of that margin is Microsoft involved in is the question I have. In some sense this goes back again to, essentially, what’s the economic growth picture going to really look like? What’s the firm going to look like? What’s productivity going to look like? That to me is where, again, if the Industrial Revolution created… After 70 years of diffusion is when you started seeing the economic growth. That’s the other thing to remember. Even if the tech is diffusing fast this time around, for true economic growth to appear it has to diffuse to a point where the work, the work artifact, and the workflow has to change. So that’s one place where I think the change management required for a corporation to truly change is something we shouldn’t discount. Going forward, do humans and the tokens they produce get higher leverage, whether it’s the Dwarkesh or the Dylan tokens of the future? Think about the amount of technology. Would you be able to run SemiAnalysis or this podcast without technology? No chance, at the scale that you have been able to achieve, there’s no chance. So the question is, what’s that scale? Is it going to be 10x’ed with something that comes through? Absolutely. Therefore, whether you’re ramped to some revenue number or you’re ramped to some audience number or what have you, that I think is what’s going to happen. The point is, what took 70 years, maybe 150 years for the Industrial Revolution, may happen in 20 years, 25 years. I would love to compress what happened in 200 years of the Industrial Revolution into a 20-year period, if we’re lucky. Microsoft historically has been perhaps the greatest software company, the largest software-as-a-service company. You’ve gone through a transition in the past where you used to sell Windows licenses and disks of Windows or Microsoft, and now you sell subscriptions to 365. As we go from that transition to where your business is today, there’s also a transition going on after that. Software-as-a-service has incredibly low incremental cost per user. There’s a lot of R&D, there’s a lot of customer acquisition costs. This is sort of why, not Microsoft, but the SaaS companies have underperformed massively in the markets, because the COGS of AI is just so high, and that just completely breaks how these business models work. How do you, as perhaps the greatest software-as-a-service company, transition Microsoft to this new age where COGS matters a lot and the incremental cost per user is different? Because right now you’re charging like, “Hey, it’s 20 bucks for Copilot.”…

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