Now we know why Microsoft bought LinkedIn

Six months later Microsoft has announced plans to pay more than $ 26 billion to LinkedIn, now we know more about why the career-focused social media site is so valuable. Today, Microsoft revealed that LinkedIn founder Reid Hoffman has joined its board. Can’t overestimate the importance of this move for Microsoft. CEO Satya Nadella has had three years of change that few believe is possible. When he was promoted to CEO in February 2014, Microsoft was in a bad position. Six months earlier, the company posted its first quarterly loss. Steve Ballmer announced he would resign, but before he left, he pushed for the purchase of Nokia. That is a costly mistake. Microsoft paid $ 7.9 billion to the Finnish mobile phone maker, according to SEC filings in April 2015; The company wiped out almost all in the last quarter of 2015.

Microsoft’s main problem is: Even though Redmond-ites makes a lot of money, the company’s core business is in decline, a dynamic that was kicked in by more than a decade ago, when nearly every business. both own and run Windows computers and servers. . Microsoft has put itself in the middle of the Creator’s Dilemma. The company has little incentive to invest in future businesses that could disrupt business it already has.

It also has a bad reputation, especially in Silicon Valley, where close friendships and collaboration are signs of the advancement of technology and every major player prefers hostility to the competition. its. Microsoft is not an outsourced company. It despises the open source community and despises emerging technology companies. In a public conversation with Marc Andreessen in October 2014, investor Peter Thiel called Microsoft a “against technological innovation” bet.

In an analyst’s first call, Nadella quoted philosopher Friedrich Nietzsche, told his listeners that Microsoft must have “courage in the face of reality.” Three years later, this courage paid off. Microsoft has been profitable for the past four quarters, and in January it surpassed analysts’ expectations, doubling its revenue from the cloud service offering, Azure. Its search engine, Bing, has one stop 1/5 of the search market (even more, if you add AOL and Yahoo search, provided by Bing). With the launch of Microsoft Teams, it was aimed directly at competitor Slack. It is on its way to transform into a company that sells services in the cloud. Meanwhile, they have invested $ 35 billion in R&D for ambitious projects like mixed reality headsets, HoloLens, trying to establish themselves as a company that can deliver credible innovations. depend on the market.

However, to be successful, Nadella has to do more than fix the company’s business. He has to revolve around Microsoft’s reputation of slack, bragging, and going alone – especially in the club’s Silicon Valley, where transactions are over-dinner, the most talented entrepreneurs often choose. Investors with names and talents are difficult to attract. In the constant rivalry between engineers, designers and product managers, Microsoft must establish itself as a smart place to do great jobs. In other words, in Silicon Valley, that’s great.

Without a doubt, Nadella has improved the company’s relationships with developers, partners and investors outside of the Redmond headquarters – especially with those in the Valley. The company made peace with the open source community, and one of its top engineers even said that one day Microsoft could create open source code as the foundation for the company’s Windows operating system. ty, its jewel. Nadella has also spent a few years getting to know startup founders the company has ignored. In October 2014, I went to hear him speak at a developers conference in London and saw firsthand the new gracious approach in which he is progressing. Since then, he’s just amplified his efforts. But even as they have received more warm reception in recent years, Nadella’s top executives and board members are, for the most part, not insiders. (The exception would be former Symantec CEO John Thompson, who was chairman of the board of Microsoft and helped with many Valley rollouts very early on.)

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