Microsoft CEO’s Copilot Push, Cursor Acquires Graphite, Hurdles for Waymo & Humanoids | Dec 22, 2025

0:13Welcome everyone to the information's TITV. My name is Akash Basricha. It is Monday, December 22nd. We are three days away from Christmas, and we've got three exciting shows lined up for you this week. Today, we've got new details for you on how Microsoft CEO Satya Nadella has become the company's most influential product manager and is very much in the trenches with employees trying to accelerate co-pilot improvements. I'll speak then with the CEO of code review startup Graphite, which was just acquired by Cursor. We're then bringing on Madrona Ventures for a view of the software sector in 2025 and more importantly, what it looks like going into 2026.

0:55And we will wrap the show with a segment on robotics regulation and separately some analysis on Ford's decision to do away with some of its electric vehicles production. It's going to be a fun show, so let's get right on into things. A few months ago, Microsoft underwent a structural change that saw Satya Nadella give up some management responsibilities so that he could focus more closely on product research and big initiatives like data center buildouts. A new in-depth story from my colleague Aaron Holmes today reveals just how closely Nadella has been working with teams on the ground. I want to bring on Aaron to share what he's learned in his reporting.

1:35Aaron, welcome back to the show. It's great to have you. Thanks for having me. Right. So how is Satya Nadella spending his time these days? Yeah. So, I mean, as we reported in today's story, Satya Nadella has really been, I guess, diving into the weeds on product management of Copilot and other AI products. And, you know, specifically that looks like him being increasingly active in internal Teams channels that are focused on making Copilot a better product. You know, we've heard that he's been sending detailed emails to engineers who work on Copilot, pointing out specific flaws that he sees in the product right now.

2:12And he's also been having these weekly meetings where he brings in people at all levels of the company involved in AI development and will sometimes grill them on what exactly is going on with Copilot. And I think we're seeing this really kind of high level of attention because he feels that right now is a pivotal moment for Copilot and also for Microsoft more broadly and has shown that he really wants to devote his time to shaping how the company will approach that moment. So how is this different from, say, six months ago? Was he as active in the team's channels, I guess, six months ago? Is your sense that he's become more active given this change in responsibility that we've seen over the past few months?

2:55Yeah, I mean, so like you mentioned, he handed off some of his responsibilities to Judson Althoff, who earlier this year was named commercial CEO and basically is in charge of selling Microsoft's products, which gives Satya a bit more time to focus on the high ambition technical work. And just as one example, I mean, we've seen Satya be the keynote speaker at Microsoft's Ignite conference, its annual conference, every year for basically the last 10 years. But this year, he actually wasn't present at the conference. He let Judson Althoff handle the keynote speech. And I think that's just kind of one example of how he's being more selective about how he spends his time and devoting more of his attention to specifically building and refining the AI products that Microsoft is selling.

3:41Now, from the outside, what it looks like, and I wish there was a way to quantify this, maybe we should quantify it. I've been tracking the number of podcast appearances that Satya Nadella has been doing over the course of the year. And it seems like he's been on a bit of a, I don't want to say a book tour, but he's really been talking his book on every podcast, except for this. He's got to come on this show, I'm telling you. I mean, we got to get him on here. but I mean, he's really out there. Is this part of his strategy here to sort of, I don't know what it is, finding out what people are thinking about in these conversations?

4:21Is he trying to get his own message out? What do you make of this? Yeah, I mean, I've definitely noticed the same. I think that what we are seeing is that Satya has pretty strong opinions on some of the key questions that are facing the entire software industry. Things like when and where will AI prove really valuable for enterprises? What's going to happen with the scaling up of data centers to improve AI models? Who are going to be the beneficiaries of an uptake in AI software? And Microsoft is kind of uniquely situated at the intersection of all of those questions. And I think that what we're seeing is Satya wants to be out there really kind of like shaping the conversation that is happening across tech.

5:02But also, I think it reflects just, you know, how locked in he is on and making sure that Microsoft can win in this moment. So is Microsoft winning? You know, it's a complex question. I mean, Copilot itself has about 100 million monthly active users, which is a tiny fraction of the almost 900 million monthly active users that ChatGPT has. Google also has many more users of Gemini. And at the same time, we don't know exactly how much revenue Microsoft is making from selling AI software, but it certainly is making a lot of revenue from AI customers like OpenAI that are using its Azure cloud services to train and run their models.

5:45Rentals of cloud servers have been spiking thanks to AI. So I think Microsoft kind of has the benefit of having this diverse business that can show that it's winning in a lot of areas, even if maybe its software progress is still a little bit unknown. And what about coding? Yeah, that's another interesting one. I mean, GitHub Copilot was basically the first AI coding tool on the market. And third-party estimates showed that as of a year ago, it kind of had the entire AI coding market on lock. But since then, competitors like Cursor and Anthropics Cloud Code have been eating up market share, which is actually something that Satya has basically acknowledged, saying that he loves the competition and that he still thinks that GitHub Copilot overall is on top, even if it is losing some market share.

6:36But I think that's another space where we're seeing that, you know, he wants to shape GitHub Copilot and make it this tool that people are going to want to use regardless of which model that they're using to generate AI code. And that's, I guess, another area where the company is seeing really tough competition. Great. Well, Aaron, it was a great story and a fascinating look at how he's managing things on the ground. I want to thank you for coming on. That is Aaron Holmes, our Microsoft reporter here at The Information. Okay, Cursor has made another acquisition. The company has bought code review company Graphite, which counted Excel, Menlo Ventures, and Andreessen Horowitz among its investors.

7:18Cursor has made a number of acquisitions as of late, but I want to bring on the co-founder and CEO of Graphite to talk a bit about his decision to sell the company, Merrill Lutzke. Welcome to TITV. It's great to have you here. Awesome. Thanks for having me, Akash. Well, congrats on the acquisition. This is a big news to end off 2025. Thank you. Yeah, we wanted to end the tech news cycle with one last bang here. Yeah, well, it's exciting to have you on here, certainly because we had you on when we first launched this show about six months ago, and we talked a little bit about what makes Graphite different from the coding platforms.

7:57But tell me a little bit about the decision as to why you decided to sell the company. Yeah, yeah. No, it was an interesting journey because we really came into it not with the intention to sell. You know, our metrics have been as strong as ever. We added more revenue last quarter than we did in all of 2024. Like, you know, everything was going about as well as it ever has in the company's history. So it really came out of what felt like a national partnership where back in the summer, we started talking with the cursor team about integrating their background agents into Graphite. So our users could launch cursor background agents from Graphite's code review surface.

8:37So, you know, you can kind of create, review and merge code changes all from one place. And from there, I think the more that we got to talking, the more we realized that we shared a really common vision for where the future of software development is going. We think about building our companies in a lot of the same ways. Both of us are five days a week in person. We both really value high talent density, high craft. A lot of the same ways and approaches that we have, we share it in common. So it felt like a really natural partnership. But I think we both saw the ability to combine the best of both platforms and create something really phenomenal, which is this like end-to-end experience for building software with AI, where you go from an AI-powered IDE into the pull request and the code review surface into like testing and the merge queue.

9:30And that's just like all one connected, cohesive experience. And now with combining Graphite and Cursor, that's exactly what we'll be able to do in the coming months. One of the things that you had said when you came on the show about six months ago is I had asked, and I watched the tape last night, actually. I asked the question, why isn't this code review feature something that something like a cursor could just add on and compete with you? And the point that you made was you said, well, it's not always great to have the fox watching the hen house. And it's actually beneficial to have a third party that is assessing and reviewing the code from all these different coding agents, whether it's Claude or cursor.

10:14Now you're part of Kurser now. So, I mean, what happens to that, you know, unbiased review? Are you still going to be reviewing code from all these different agents? Or, I mean, how does the story change? Yeah, absolutely. I think one of the key things to emphasize about this is that we're continuing to run Graphite as an independent product through this. We're still actually building background agent integrations with tools like QuadCode and Codex and others. We want to meet developers where they are and work with all the tools that the teams are using in order to build with AI now. Obviously, there's some things that will be more tightly integrated with Cursor's tools, but we very much want to keep this as something that works with every single tool out there.

11:07There are a lot of users that run Cloud Code in Cursor, for instance. I think we will continue to be really flexible about the tools that we support. And even from a model standpoint, I think you'll see the models and the pipelines that go into generating our review comments are not going to be the same as the ones that go into generating code in the Cursor IDE, for instance. So I think as long as you continue to approach those two as separate entities and make sure that the review experience that we build is flexible and supports all the different ways that engineers are writing code with AI now, I think that you'll continue to avoid that problem going forward.

11:53So you're going to be still working full-time on Graphite as sort of an independent product and an independent business in some ways from Cursor? Yeah, exactly. We see, you know, one of the things that we've emphasized with this deal is that Graphite is going to continue independently as a product. The entire Graphite team is continuing to work on Graphite as part of this. We really want to make sure that we keep the best aspects of Graphite. And another thing to note there is that some folks have been worried a little bit about, like, oh, is Graphite going to get shut down or is Graphite going to focus entirely on the AI side of things?

12:36And one thing that the Cursor team and we've talked about is that really the value of Graphite is in a lot of the interfaces and infrastructure and features like our merge queue and stack PRs that aren't necessarily as AI native, but help to accelerate the code review process dramatically. And we're only going to double down on those as a result of this acquisition partnership. And I think they really see the value of Graphite as like a strategic asset that teams like Shopify and Snowflake, Robinhood, Datadog, all depend on every single day for code review. So that's not going anywhere. It's very much going to continue as an independent product.

13:21That said, obviously, there's some amazing opportunities for integrating the two surfaces. Like we've talked about having the chat history from the cursor IDE showing up in the pull request as additional context and letting you just like pick up where you left off. And it really should be like we've always thought it was it was silly that the agents that you're working with locally to create a code change can't really talk to the ones that you're then working with and review and the rest of the process. And if we can just connect all of those services and make that super seamless and have a consistent agent that's helping to guide that change through review, through testing and out to production, that's really the best possible developer experience that we can create here.

14:04Let me ask you a question here. How much did Cursor buy the company for? Sure. So we're not sharing details of the economics of the deal, but I mean, I will say that all of our investors and our team are thrilled about the outcome. It's a very strategic acquisition. It's a fantastic outcome for us. And I think the main thing to emphasize here is that there's so much. I think we're all really, really excited about the upside potential here. And once you combine these two companies, what can we create together? What does that future code review platform look like? Where we've connected everything from local development, background regions, pull requests.

14:45I think the value of that that is left to be unlocked is really phenomenal and something that everybody here is really, really excited about unlocking in the coming years. Great. Wow. Congrats on the acquisition. Like I said, it's some great news for your team to end 2025. And I'm looking forward to seeing how the product continues to evolve next year. That is Merrill Lutsky, the co-founder and CEO of Graphite here on TITV. Okay, the software sector has undergone tremendous transformation this year with everyone trying to gear their product suites towards AI. Madrona Ventures had a front seat to it all with a portfolio of companies of every size, stage, and subsector.

15:29The company also does a ton of investing in the biotech sector, which I'm hoping to get into. I want to bring on Matt McIlwain, Managing Director at Madrona, for a conversation about all that. Matt, welcome to TI-TV. It's great to have you here. Thanks for having me on the show, Akash. So I want to talk a little bit about software investing broadly right now. And, you know, we're in the spirit of predictions here, and I know we're making predictions for 2026. I've sort of been thinking about how the structure of the software market is going to change over the next couple years. And, you know, as it relates to the public companies, the working theory I have, and I want to run this by you, you tell me what you think of it.

16:07You know, we've got these, I don't know, 80, 90 top public SaaS companies right now. They've been on the market for a while. I think over the next three years, you know, what we might see is the number of those top 90 companies. It might shrink a bit because some companies will go private. There'll be some consolidation because a lot of these companies are starting to sort of step on each other's toes. And then you'll, let's say it goes from 90 to, I don't know, 60, right? The other 30 will be these top AI startups that start to go public as they grow. And I think what you might be left with is some of these big, chunky software businesses that do a lot of different things.

16:49They buy some things they didn't know they needed. And then you have the faster growing cohort. Is that kind of the way software investors see it broadly from your perspective? too? No, look, I think that we are in both a time of disruption and we're in a time of questioning the durability of any business. And so that's both true about these larger public SaaS companies, as well as it's true about the seemingly fast growing private companies. And why is that? Well, it's because every layer of the stack is changing. The user interfaces are changing. The data models are changing. The workflows are changing.

17:23And we're going from systems of record to systems of intelligence. And what does that mean? Well, it means that we're dealing with both structured data and unstructured data, structured workflows and unstructured workflows. So you've got to be pretty nimble if you are Salesforce or ServiceNow or Atlassian. And I think that some of those will excel in this cycle and some of those will not as much. And the same thing can be true of private companies. We do this intelligent application 40 list. We've been doing it for five years. It's the 40 top private AI companies with an emphasis on applied AI.

18:00And what's interesting is that no company except Databricks, which is one of the 10 enablers in that list, has been on the list all five years. So that tells you that even within private companies, there's a challenge in durability. The last thing I would say is that, well, I think we are going to see, here's a prediction for 2026, we're going to see more private-to-private mergers. We already saw that uptick in the back half of this year. Two of the companies in our portfolio, for example, Clary merging with SalesLoft, and then Statsig being bought by OpenAI, two private-to-private companies.

18:35I think you're going to see, because of the thesis you have, that not all are going to survive, that one of the ways you're going to define the winners is by mergers, both private-to-private mergers, and then public-to-private mergers. Right. I want to ask you if we sort of take a step out of startup land, you know, to the extent that you could call some of these multi-billion dollar company startups, you know, let's go over to the land of hyperscalers. You are based in Seattle and we've got Amazon and Microsoft there. And it's a story I'm sure you've been watching closely. You know, I wonder what your senses of Amazon and Microsoft's current place in the AI race.

19:14We've all this news about Google, right? And we just had this story published this morning about Microsoft, how Satya Nadella is really taking a really boots on the ground approach to helping them accelerate their AI adoption. I mean, how do you think the story around those two hyperscurs particularly is going to change in 2026? Well, we do know both those companies. And, you know, it is also interesting to think of a year ago, there was a lot of skepticism about Google. Totally. There's nearly that much skepticism right now about Amazon and AWS in particular, or Microsoft, but I think they're both a little out of favor right now.

19:48But let's disaggregate two things. One thing I'm highly confident they're going to continue to excel in is in the cloud service provider layer, the infrastructure as a service layer. And this is where there's a massive tailwind that AI is pulling. If you talk to Matt Garman, if you talk to Satya, what they're going to likely tell you is because of AI, we're getting way more workloads coming into the cloud. And that's why you see re-accelerating growth at AWS, for example, and continued strong, you know, 30 plus percent growth at Azure. The strategic question though is, can I infuse, if I'm Microsoft or for that matter, AWS, can I infuse not just the infrastructure, but the AI models into workflows, into agentic workflows and intelligent applications up the stack.

20:39Microsoft has a clear advantage position here with all the co-pilot 365. AWS, if you listen carefully to Matt's speech at the reInvent, his keynote, he was reshifting, moving the debate between frontier models to frontier agents. Now, logically, they took frontier agents that were in areas like security and DevOps and coding, but how much further can they go up the stack to create and capture value at the applied level and in the agentic level? And I think the same question exists for Microsoft. The one that does it, I think they both will do a good job personally, but the one that does the better job is going to capture more of that pie.

21:19And, you know, we had our AI reporter on last week. We were doing predictions. One of the predictions she had is that Amazon, AWS might seek to acquire a major AI lab to sort of help kickstart that growth. like you said, they've sort of fallen into this bucket where people don't think of them as having the best models right now. Could you see that happening in 2026? I think that's unlikely. So why is that likely? You know, they are emphasizing the classic things that AWS emphasizes, price, convenience, selection. So selection in this case comes in the form of bedrock, which is their, you know, use any model you want, including ours.

21:59They have their Nova models, including the very close relationship they have with Anthropic. And now it would appear that they're going to have better and better treatment, you know, in partnership with OpenAI. You know, so that's an area that I think they're doing quite well already, you know, on selection. You know, they're always going to be driving for being the lowest cost. And that's why they come out with things like Subtranium chips, things like the Nova models. So I think they've got a pretty good playbook there. I don't think they need to, and I think it'd be highly unlikely that they would buy one of the big model companies.

22:29Now, on the other hand, they have struggled consistently. There are outlier examples like their Connect service, but they have struggled up at the application layer. And I could see them buying more of a horizontal application style of company, you know, like let's say a Notion, just to pick an example, you know, or something that's kind of a horizontal, helps you connect the dots of workflows and processes across applications that are historically systems of record. Which is basically what Microsoft, I mean, Microsoft has the applications. AWS doesn't necessarily have that consumer facing or enterprise facing sort of application layer, you're saying.

23:06That's correct. And I think that's where they, you know, keep in mind that the important thing about the applications is that they accrete in value over time. So if I have a innovative interface, you know, some voice, some text, so the modern interfaces of AI native companies. And then I have models I'm using. I mean, no application company in the AI world uses one model alone. They use a mix of models from a mix of model providers. And then you've got the data that is both initially used and then the outputs of that data from people using your application. This becomes a reasoning flywheel. And you need the application layer to drive the total reasoning flywheel.

23:49That's why AWS started with things that they have a reasoning flywheel in, like security, like DevOps. And so you've got to keep moving up that stack. And I know Notion is just a name that we threw out there, but if you were to think of names, area, who could you see AWS going after in that bucket? The reason I mentioned Notion was because I was on the board of Smartsheet that got taken private at the beginning of this year by Blackstone and Vista. And I thought that that would have been a good one for Amazon to buy. And they did just fine with that acquisition on the private equity side. But there's these horizontal workflows that exist across applications that I think are very interesting candidates.

24:37Now, I don't think that they would buy an Atlassian. I think that's too big of a bite or a service now for that matter. But something like Airtable, Notion, these kinds of companies seem to me to be more likely to be in the category of things they'd be interested in. The one other area would be things that enable identity. You just saw ServiceNow by an identity company in Visa. So some of the identity layers, possibly in Okta, that would be an interesting place to enable, again, cross-process, cross-system of record workflows that could be living very easily and leveraging from all of the underlying AWS services.

25:21Back to my earlier point, they re-accelerated. I mean, they are growing the business well over$20 billion a year. There's not many software companies that have gotten to$20 billion in revenue a year. And AWS grew last year over$20 billion. Right, right. Well, Matt, I want to thank you for coming on. There was another category of things that we didn't get to talk. I wanted to talk about your observations from 25 years now at Madrona. I was reading your bio this morning. 2000 is when you started. So I'll tell you what, come back on the show in 2026, and we'll talk about some of your reflections from 25 years in venture, because that is definitely a topic I want to get your taste on.

26:05And happy holidays. We'll talk to you again very soon. Happy holidays. Thanks so much, Chakash. Talk to you soon. Okay. Humanoid robots became one of the most closely watched technologies in 2025. But over the past few months, one angle of this story that has started getting a lot more attention is the safety element of these robots possibly walking around all over the place. The information is out with a new story today on how regulatory groups are thinking about setting these standards and how startups developing the robots have reacted to things. turns out not everybody is necessarily on the same page i want to bring on our robotics reporter rocket drew to tell us more about what he's found rocket welcome back to the show it's great to have you here hi akash great to be here so let me let me understand this uh robots walking around could be dangerous i i is that's what i understand that's right that's right i think to understand it helps to have a little bit of a mindset shift so when we think about typically buying gadgets to put in our own homes, we're used to them being very safe, right?

27:08The Roomba. The Roomba. Yeah. The Roomba. Exactly, exactly. I buy a light bulb. I buy a vacuum cleaner. I buy a Roomba. You know, I don't expect it to short circuit and catch on fire or blow up on me. We're used to these things being very safe. But imagine instead that you're a factory worker. And when you go to work every day, you're surrounded by machines like giant stamping equipment that punches out sheets of steel and big industrial arms that swing around at rapid paces and welding robots that have welding torches on the end of them. It's a very different environment, and it's an environment where, you know, a lot of people have gotten hurt over the years.

27:43And so the industrial world has built up a set of very robust safety standards to ensure that workers don't get hurt by these robots on the job. From that mindset, now you imagine introducing a new robot that walks around on two legs, it can carry all sorts of things, it can move around your facilities, and it can perform different kinds of work, and it's likely powered by AI, you can start to imagine why it would raise some alarms. People would have questions about how do we guarantee that these things are going to work safely. So have there been issues yet with these giant honking humanoids knocking people over?