There are few people in Silicon Valley as connected to its heart as Hoffman. (The exception would be former Symantec CEO John Thompson, who chairs Microsoft’s board and helped with many Valley introductions early on.) But even if they’ve enjoyed a warmer reception in recent years, Nadella’s team of top executives and board members are, for the most part, not valley insiders. Since then, he has only amplified his efforts. In October 2014, I went to hear him speak at a developers’ conference in London and witnessed firsthand the new amiable approach he was advancing. Nadella has also spent the past few years getting to know the startup founders the company once ignored. The company made peace with the open-source community, and one of its top engineers even said it wasn’t out of the question that one day Microsoft could open-source the code that underpins the company’s Windows operating system, its crown jewels.
There’s no doubt Nadella has improved the company’s relationship with developers, partners, and investors outside its Redmond headquarters-particularly with those in the Valley. The company had little incentive to invest in future businesses that might disrupt the business it was already in. Microsoft had parked itself in the middle of Innovator Dilemma-land. Microsoft’s chief problem was this: Though the Redmond-ites made a lot of money, the company’s core business was declining, a dynamic that was set in motion more than a decade ago, when nearly every enterprise owned and ran Windows-powered PCs and servers. Microsoft ended up paying $7.9 billion for the Finnish cellphone maker, according to an April 2015 SEC filing the company wrote off nearly the entire sum in the final quarter of 2015.
Steve Ballmer announced he would step down, but before leaving, he pushed through the acquisition of Nokia. Six months earlier, the company had posted its first-ever quarterly loss. When he was promoted to CEO in February 2014, Microsoft was in a bad place.
CEO Satya Nadella is three years into a turnaround that few people believed possible. It’s impossible to overestimate the significance of this move for Microsoft. Today, Microsoft revealed that LinkedIn founder Reid Hoffman has joined its board. Six months after Microsoft announced plans to pay more than $26 billion for LinkedIn, we now know even more about why the career-focused social networking site was so valuable.
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