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tv   The David Rubenstein Show Peer to Peer Conversations  Bloomberg  October 29, 2017 2:30pm-3:00pm EDT

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david: you have had to follow bill gates and steve ballmer, two legendary figures. satya: look, clear message was don't try to be like us. david: did steve say if you do this well, we will be happy? has having empathy made you a better ceo? satya: my pursuit is the growing sense of empathy for people around me? david: do you get a standing ovation for what you have done? satya: i have a lot of people saying, hey, come and fix my computer. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪
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david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? you have now had to follow bill gates and steve ballmer, two legendary figures. did you feel you were ready for the job following those legends? or were you saying i could do a better job than they did? satya: the best advice i got from both bill and steve i think helped me a lot. the clear message was, don't try to be like us. don't even bother to sort of
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say, i am seceeding these people. just be your own. in fact, i remember very distinctly, even during the interview process, the board was conducting -- they asked me, do you want to be the ceo? i said, only if you want me to be the ceo. the feedback i got was that people who want to be ceos are like, i want to be ceo. that is not me. i remember i was talking to steve come and he said, yeah, just be yourself. it is too late to change. david: since you have been the ceo 3.5 years, the stock is up, i guess about 120%. when you go to the annual shareholder meetings, do you get a standing ovation for what you have done? satya: no, i get a lot of people asking me come home and fix my computer. [laughter] david: ok. you are an native of india. what part of india? satya: i was born in the central part of india. david: and so growing up, your parents doted on you, i assume? satya: yeah, they did. david: and they told you you would be prime minister or something important in the
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country. what did you want to be? david: they wanted me to stop playing cricket and take my studies a little more seriously. david: you were an avid cricket player? satya: yes. david: when did you realize you wouldn't be a professional cricket player? satya: pretty soon. [laughter] satya: i quickly realized and best, i would play what is considered perhaps first-class in india, but i was not going to go much further than that. but that is when my dad, in fact -- i remember one of the big decisions that change my life was -- my entire outlook was so provincial when i look back at it. which is, hey, i want to stay in hyderabad, maybe study economics and political science. that was about the extent of my ambition. he looks at me and said, what are you doing? you have to get out of this place. he pushed me out to get to an engineering school, and that pretty much, of course, pretty much defined the trajectory afterwards. david: your father was a member of the senior civil service, which is an important position
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in india, is that right? satya: my dad was a different guy than me. his academic prowess, which is humorous when you look at my report card. he was always humorous. he would look at my report cards and say i don't understand how anybody can have these kinds of marks. but the nice thing about it was he would say it in such endearing ways, that he would never make me feel bad. [laughter] david: the marks weren't high enough? satya: not high enough. the guy never met an exam he did not ace, as he would say. [laughter] david: ok. satya: so, it was astounding to me that he would have a son who could not ace an exam. david: your father is still alive? satya: yes. david: he must be proud of what you have achieved? satya: not enough. [laughter] david: so, you went to college in india, and then decided to go to graduate school in the united states. satya: yeah. david: where did you go? satya: i went to the university of wisconsin in milwaukee, and
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that is when i switched from engineering to computer science. david: but, if you are from india, the university of wisconsin-milwaukee could not have been that well-known. satya: i showed up in milwaukee. david: did you have a winter coat? satya: that was my first valued possession in life, a winter coat, which is very important. unfortunately, i picked up this bad habit of smoking in india, in college. the one nice thing about going to school in milwaukee is you are a smoker, you have to go out in the winter and smoke. that one winter in milwaukee cured me of my smoking habit. [laughter] david: wow. good. so, you got a job after you graduated at sun microsystems. and what was your job there? satya: i was a software developer. david: ok. you got recruited to go to another company called microsoft. and that was in 1992? satya: that's right. david: so, but you also had applied to go to the university
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of chicago school of business, so how did you decide to do one or the other? satya: quite frankly, david, i was very committed to saying oh, i want to go to the business school, maybe even to wall street. david: the highest calling of mankind, right? [laughter] satya: says david rubenstein. [laughter] david: right, right. satya: and i thought, wow, maybe that is what i should do. but somewhere along the line, i started talking to people. and they said, why would you do that? you are in tech. you should really come back. it was an amazing time because windows nt was just starting out. and i subsequently went and did some combination of part-time and other courses, and that she finished my mba, which i find astonishing. david: you were commuting, working, and on weekends commuting to the university of chicago. that must've taken a lot of energy to do both. right? satya: it was crazy. david: so, you are beginning your ascent up, but dealing with some challenges. your first child was born with cerebral palsy.
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he is 21 years old. how did you realize that would change your life and how have you dealt with that issue? satya: yeah, even, i was 29 years old when my son was born. and if you had even asked me an hour before he was born, was going through my head, it was all about, oh, is the nursery going to be ready? what will happen to our weekends now that we have a son? when will my wife get back to a job, and so on. but obviously everything changed that night. he was born because at -- he was because of an undetected in euro eutero distress. he is quadriplegic now. the first, maybe even two years or more even, i was more about, why did this happen to me? what happened to us and all of
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these plans i had are now have all been thrown up in the air and changed? whereas my wife, what came naturally to her as a mother was she said, ok, i'm not going back to my job. i'm going to take care of my son, drive him around for therapy after therapy. and i watched that. without schooling me, i was schooled. nothing happened to me. what happened was to my son, and that it was time for me to understand that, realize that, see life through his eyes and do my duty as a father. that, to me perhaps, did not come to me in one moment. that is something that took time, but as i figured it out come it changed me -- but as i figured it out, it changed me as a parent, but also who i am today and how i approach everything. david: your wife is trained as an architect. she has given up doing that for a while? satya: that's right. david: and you have two
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daughters. one daughter has a severe learning disability as well. how did that affect you and your wife? satya: in fact, one of the things that happen because of our son is we built up a tremendous community of people, whether it is a therapist, or other parents of children with disabilities. and so we were involved in that community by the time our youngest daughter came into our lives. i must say, we had the richness of this community to support us, and when we recognized very early on, my wife and i, my wife in particular was quick to realize she would need additional help. and so, we found the school in vancouver, bc, which was all around neuroplasticity. the idea is you can train your
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brain to learn, instead of compensating. and so, we decided that we are going to move the family to vancouver. my daughters and my wife were going to live in vancouver and we were going to commute again over the weekends. but the thing that, quite honestly, that is where it came naturally to us. our son had taught us what it takes to give people with disabilities the best shot, so it is something we took on. david: and your son lives with you now? satya: yes. david: one of the qualities you say you got from all this was empathy. and that the result of having empathy made you a better ceo and a better person. is that fair? satya: yeah. in fact, when i think of empathy, and most people think that empathy is something you reserve for your life, your family, your friends and what have you, but the reality is, it is an existential priority for a business. because you look at it like what
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is our business? our business is to meet unmet, unarticulated needs of customers. there is no way our innovation to meet unmet, unarticulated needs is going to come about if we don't listen. not just listen to the words, but go deep to understand what the needs are behind it. so, i think empathy is core to innovation, and life experience, if you listen and you learn from, teaches you. i would not claim to have talked about it, but i would not claim any innate capability of empathy that i was born with. if anything, it is life that has taught me. if anything, my pursuit is every year, is there a growing sense of empathy for people around me? david: did steve say if you do this well, we will be happy. if you don't to this well, you might not get another job? satya: one of the things that is amazing about bill and steve is, their candor. they are very honest about most
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things in life for everything in life. if you do a good job, maybe you will have another job. if not, you won't. [laughter] ♪
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david: you are rising up in microsoft and running the business solutions division, but then they said, we would like you to run the search business, david: you are rising up incaly you can't compete against google, i do not want to do that? or did you say i am happy to do that? satya: i had just been promoted to lead our business solutions team. i mean, i was loving that job. it is something that i aspired to do. and steve comes around and says,
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hey, you know what, i have an idea for you. i think you should go run this group that has high attrition and we have a very tough task ahead. and i don't know whether it is a good career move, but i need help and, you know, think wisely and choose. [laughter] satya: and i was like, wow, this is an interesting choice in front of me. and i remember very distinctly going that night to the building, in which the bing team and our search team was housed. and it was maybe 9:00 or so, in the parking lot was full, and people were in. and i said, wow, what is the deal here? these people are working hard, inspired, so i said well, i have got to join this team. the fight that they showed, they caused me not to take the easy path and get in. david: did steve say if you do
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this well, we will be happy. if you don't do this well, you might not get another job? satya: that is correct. steve was -- one of the amazing things about bill and steve is their candor. it is not like they sugarcoat anything. they are very, very honest about most things in life, or everything in life. and you are lucky. if you do a good job, maybe you will have another job. if you're not, you won't. david: and you did a pretty good job, but then they came along and asked you to run another business, that was your cloud computing business. how did it happen that amazon, which was not a computer company more or less, became a giant in cloud and microsoft wasn't a giant there? satya: the interesting thing is what happens when a company becomes successful is is beautiful, virtuous cycle bank is created between your concept of product, your capability, and your culture, right? you really have all of these
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three things fall into gear and they are working super well, but then what happens is the concept that made you successful runs out of gas. it is not growing anymore. you now need new capabilities, and in order to have that new capability, you need a culture that allows you to grow that new capability. our solo business was growing strong double digits, a higher-margin business, and you look around on the other side of the lake -- here is a very low margin business called the cloud, and people look at that and say, why would we do that? why would we do that when we have such an amazing, fast-growing, high-margin business? and so, i think that is the challenge. to be able to see the secular trends before they become conventional wisdom -- change your business model, change your
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technology, and change your product, is the business. tech is unforgiving, but quite frankly, now that tech is part of every business, it is something we all have to deal with. david: you get to be ceo of this company, and are following two legendary figures. how did you say i am going to change things? satya: i was the consummate insider. i spent 25 years, 22 years or so when i became ceo. growing up in the company that bill and steve built, i understood like the back of my palm all the things we got right, and all the things we got wrong. and i had a point of view on what i wanted to do if i was going to become ceo. we need now to make microsoft thrive in a mobile first and cloud first world. it was not about trying to criticize or replace the past, but what we were going to do in the future? david: one of the things you try to do to change the culture was to change what was known as a very proprietary culture at microsoft. microsoft said this is the way we do things, and we don't want to cooperate with other firms.
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how did you change the culture? satya: i said look, let me not these things as zero-sum. if anything, let me approach, even our traditional competitors and say customers are hetero genius. they use some of what we do, some of what you do. let's figure out a way to combine forces where it is market expansive and satisfies customers. that is how i approached it. and it is a lesson i learned early on at microsoft. david: historically, windows and office were your two cash cows. they are the biggest source of profit? satya: absolutely. david: after those two, you have other things. you spent $26 billion, the biggest acquisition for microsoft ever, to buy linkedin. what does linkedin have to do with microsoft? satya: if you look at it, we have one billion users of windows and microsoft office 365.
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what is the common thread? they are all professional. they are all people who are trying to get things done. so, we have the professional cloud and the professional devices in the world. and the vision was to combine that with the professional network of linkedin. in fact, if you look at some of the integrations that we have since launched, you can be in outlook, you can get an email from david rubenstein. i can go look up your linkedin profile, which i hope you have. david: i will get one today. [laughter] satya: and look at all the mutual connections we may have, so the idea of the professional network, and the professional content can be brought together. i think, ultimately, it can be a big driver of productivity. so that is why. one of the other big pieces that has been a real game changer for us is linkedin is the way people do business to business sales. if you want to be able to reach
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customers and sell, this integration is going to be a game changer. same with talent management. so, i think we have a lot of synergies between the products that are now coming to. david: you gave a statement about women's pay. satya: i gave such an absolute, nonsensical answer. when i talk to women who are very close to me, very senior, very successful women, that are key to microsoft and heard even their own personal experiences, that is when it struck me. david: did you hear from your wife about that? satya: absolutely, my mom and my wife. ♪
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david: almost everything you have done since you have been ceo, the last three and a half years, has worked perfectly. the stock is up, the market value is up, everybody likes you. the only thing that i could find that anybody criticizes you for is that you gave a statement about women's pay at one point, and you correctly, i think, changed your position the next day, but can you explain what happened? satya: absolutely. i was asked about pay equity and, in fact, i gave such an absolutely nonsensical answer, and i was corrected by the interviewer while on stage. i was answering a question literally using some past -- i
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mean, my own personal experience without understanding the broader context, the depth of the question, which is what is a person like me, who is the ceo of a company, doing to make sure that one, women can fully participate in our companies and in our economies, there is equal pay for equal work, and more importantly, there is an opportunity for equal pay for equal work? that was the real question. it was not about what about you, what career advice you have for me? it was a great learning moment for me. when i talk to women who are very close to me, very sr., and very successful women key to microsoft and heard their own personal experiences, that is when it struck me how the job of a ceo in particular is to make sure that everyone, whether it
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is gender diversity or ethnic diversity, can first come into the company, do their best work, so we can serve our customers. that is a realization which i thought i had, quite frankly, but i was glad i messed up so publicly because i think i internalized the lessons from it. david: did you hear from your wife about that? satya: absolutely. at that time, my mom was alive as well, so my mom and my wife. my wife had to give up her career because of our son. but even in my mom's case, she struggled. now, i realized it a lot more than i did growing up. the trade-off she had to make, where the system that she was working in, did not support her reentry into the workforce after she had both myself and my sister. david: so, you have about 125,000 employees, something like that. so, what percentage are male, what percentage are female, and
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how many senior women do you have? technology is not a place where a lot of women have risen to the top yet. relatively speaking. satya: in fact, one of the things we have made good progress on is on the women's representation, which we have a long way to go. you have to ever in tech, we have a particularly tougher issue because of technology disparity in terms of gender diversity, but let's start with the progress, which is that in the last year, we have gone from around -- we improved to 27.7% of women coming into the organization, which is two points more than historical. and in the technology side, where we have improved by four points. that, i would say, is movement in the right direction, but not enough obviously. one of the things our board also did was to change the compensation system for me as well as my directors, to say,
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look, progress despite all the work that we may do, programs we may have, let me tie compensation of the senior-most people, including the ceo, to real numerical progress. so, we are doing everything, but quite frankly, it is going to take continuous vigilance, a continuous push, and it is a top of mind issue for all of us. david: you have only been doing this 3.5 years, which is a relatively short tenure for microsoft ceos. how many more years would you like to do this? [laughter] satya: you know, i have been at microsoft now for 25 years. and i think the thing that i feel that gives me that source of energy, is really that sense of purpose of the company, because quite honestly it is not just i don't -- honestly, it is not just -- i do not know how it is up to me or how many years
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i will be there. i think it will be fun for me to do it each day and it is a real privilege to do it each day. ♪
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♪ >> i am emily chang and it is the best of bloomberg technology where we bring you the best interviews. tech earnings in. lincoln amazon reported sales of more than $43 billion in the third quarter and we will break down the results. on for thentdown is release of the iphone and 10. it can rise and fall on the key features and well the new facial recognition technology be the gold

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