“One of the things that I'm very gung-ho about is we all become, every firm will have a private eval benchmark, which is their core IP. And every model comes in and tries to sort of hill climb on that eval. And that to me is how a firm works.”
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch · Startups & Venture · October 2026
Nadella on the future of the firm in an age of AI, citing Hayek on local knowledge and Kenneth Arrow's information paradox. His worry is that companies leak value to model providers just by using them. He argues they should keep that surplus in their own data, context and evaluations.
Transcript
It may be, it may be open weights. Or as I said, it can also be cheap closed rates, right? Because there'll be lots of price competition, let me put it that way, right? Because if you look at my own usage inside a Copilot, we use a lot of closed source, cheaper models along with open weight models.
You said about kind of the importance of owning your own intelligence for some of your amazing customers that you have. You were talking about some in the UK. Is that the model environment that we have moving forward, specialized intelligence for companies with their own data?
…capturing that value for yourself. So I think one of the things that at least I ascribe is that we need to have, for this to be stable, more of that surplus that gets created by use of intelligence to remain at the firm. And by the way, it doesn't need to be only by embedding your knowledge in weights. It can be in context. It can be in your evals, right? You may have a benchmark. In fact, one of the things that I'm very gung-ho about is we all become, every firm will have a private eval benchmark, which is their core IP. And every model comes in and tries to sort of hill climb on that eval. And that to me is how a firm works.
I love this private evals, benchmarks for each company. This is for a rarefied era of companies, so it would seem. Your Harveys or your Lagora's or the kind of very forward-thinking AI companies. Will that disperse to every company in the world, you mentioned it? Yeah, it happens.
Yeah, it happens, Harry, always, right? Which is, you know, there was a day when I remember in the late 80s and the early 90s that the few companies that had deployed PCs and were doing forecasting, which felt magical, they were able to put it in Excel spreadsheets, send it an email, and avoid the…
we move into an implementation economy then? Because when we think about these customers, as you said, some of your very big customers, they will need heavy FDE support, much more so than they have done in traditional years when the last 10 years. Will we have a very heavy implementation economy to…
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