Microsoft (NASDAQ:MSFT) CEO Satya Nadella admitted that the company’s size is a significant obstacle in the race to develop AI at the speed of startups.
Nadella Hails Startups For Speed
Speaking with Mathias Döpfner, CEO of Axel Springer, at the “MD MEETS” podcast aired on Saturday, Nadella revealed that he spends his weekends studying how startups build products. He explained that Microsoft’s vast size has become “a massive disadvantage” in the AI race.
Nadella pointed out that startups move faster because everyone involved in building the product is "all sitting in one little table," enabling rapid decisions across product, science, and infrastructure. By comparison, Microsoft has "three divisional heads who manage those three things," which naturally slows the process.
As of June 30, the software giant had 228,000 full-time employees globally, with offices in 60 countries.
He emphasized the need for big organizations and their leaders to adopt a “learn-it-all” approach, rather than a “know-it-all” mindset, to thrive in the AI era. Nadella also stressed the increasing importance of empathy and emotional intelligence in the AI era.
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Major AI Reorganization At Microsoft
Nadella’s acknowledgment of the challenges posed by Microsoft’s size comes after a series of strategic moves to position the company for the AI era. In November, he appointed a veteran, Rolf Harms, known for shaping Microsoft's cloud strategy through his 2010 "Economics of the Cloud" paper, to lead a business model overhaul for the AI era.
Meanwhile, as a part of a major reorganization, Microsoft promoted Judson Althoff to lead its commercial business, with CMO Takeshi Numoto reporting to him. The Wall Street Journal reports the shakeup is not tied to Satya Nadella's succession plans, and Nadella plans to stay closely involved in AI and data-center initiatives.
In his 50-year AI plan, Nadella warned that AI models can be easily copied and quickly commoditized, arguing that the real competitive edge won't come from the models themselves but from the underlying infrastructure, identity, storage, security, databases, and everyday tools that make those models useful.
Microsoft holds a momentum rating of 62.97% and a growth rating of 98.59%, according to Benzinga's Proprietary Edge Rankings. The Benzinga Growth metric evaluates a stock’s historical earnings and revenue expansion across multiple timeframes, prioritizing both long-term trends and recent performance. Check the detailed report here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
