REDMOND, Wash. — Microsoft commemorated the launch of its Teams “chat-based workspace” for Office 365 in 181 markets around the world today with a small gathering at the company’s headquarters, which was webcast to the world. Microsoft executives and customers such as Trek and WeWork showed off the new all-in-one collaboration product, which will now compete with heavy-hitters like Slack, Facebook, Google, Amazon and others for control of the enterprise communications market.
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After the event, GeekWire got a chance to catch up with Office Corporate Vice President Kirk Koenigsbauer. We talked about Teams’ competition, how Microsoft’s cultural shift under CEO Satya Nadella made the new program possible, and the balancing act of continuing to invest in core products like Word and Excel while still promoting new programs like Teams. Our conversation has been edited for style and clarity.
GeekWire: Do you feel that you are coming into the enterprise chat market early or late?
Kirk Koenigsbauer: I’d say we are very, very early in the sense of Office 365 itself. We’ve been delivering this service for the last seven years, it depends on when you start counting. We’ve been in this collaborative space for a long, long time, even back in the on-premises days of course, so from that perspective, we feel like we’ve got a pretty good handle on collaboration. We’ve had Skype for a number of years, previously Lync, so we’ve been in the enterprise commercial real-time communications space for awhile.
We feel like we’ve got something unique here; we are not just delivering a persistent chat tool. That would have been pretty easy for us to go do. We see this notion of creating a digital hub for teamwork as one of the core differentiators in the product itself. There are a lot of conversation-oriented tools in the marketplace. Certainly in the consumer space there are a zillion of them. We feel like we can bring this sort of Office-ness into conversations to create unique hubs for teams to work together, and we feel very strongly about that position.
Being able to ride the momentum of Office 365 — I mean, 85 million active users is a huge number — and being able to enable Teams by default as part of the service, we think will be something customers will be able to discover and find. Because it is this notion of a hub it will feel familiar to them. They’ll see the Office Web Apps, they’ll see Sharepoint, they’ll see Planner, they’ll see all this stuff, and they will have email integration. So it will feel like a natural element of their workflow, but again it creates this new notion of a hub.
A lot of these conversation tools out there were born from the consumer space or have not invested in the security and compliance that enterprises expect. With Office 365, a big driver is our complaint, secure cloud, the fact that we’ve got local data centers, sovereign cloud, we have a pretty robust enterprise grade platform. Teams is part of that and inherits all those standards. We’ve got all these things that we know our customers care about. When I go to groups and companies they want to deliver these great end user tools but they want to make sure they are also secure because they have seen enough horror stories.
GW: Who is your top competition?
KK: In some ways, I’d say our top competition is really introducing the product to the user base and getting users to work in this new way and discover the product. A lot of workers are maybe entrenched in email, or maybe they are using other collaboration tools. We recognize we have such a good-sized footprint with Office 365, so how do we communicate the value, how do we create awareness that we have this thing and encourage users to go try and use the product? Yeah, we’ll watch the competition, but at the end of the day, I think the number one challenge we have is driving usage within our current base, that’s the key thing we want to go get done.
GW: How do you balance building new tools like Teams with investing in legacy programs like Word and Excel?
KK: The usage of these products is still really high — Word, Excel, PowerPoint, SharePoint — all these products we’ve had for a number of years. We have a new way to envision and deliver these products by transitioning them as cloud services. We are definitely continuing to invest deeply in authoring experiences, in email experiences, in SharePoint. Skype is the backend for our real time communications services.
We have a good-sized percentage of folks imagining and envisioning new experiences like Teams. We’ve introduced a number of small business apps, including a product called StaffHub, for deskless or front line workers who are maybe in the hospitality trades or manufacturing, or retail professionals who have to track their hours and time and schedules and so forth. It’s a crazy paper-based product today, and that’s a whole new scenario that we are building. There are a lot of things we are working on besides just the core, but the core remains important and we are continuing to innovate with that.
Microsoft shareholder at the company’s 2016 annual meeting in Bellevue, Wash. (GeekWire Photo / Todd Bishop)
GW: How has the new culture at Microsoft under CEO Satya Nadella encouraged you to move faster on things like Teams than you would have been able to in the past?
KK: It’s awesome, it’s so great. Right now, for example, with Office and Office 365, we ship Office every single month. In the old days, we would do a two-and-a-half to three-year release cycle. Every three years, customers would get a big buckets of bits. And then they would get service packs in the interim. But that was the cadence, every three years for Office. Now literally everything — Word, Excel, Powerpoint, Sharepoint, Exchange, OneDrive, Outlook — we are shipping at least every single month. The Outlook team, they will deliver new value every couple of weeks. What that means is we can deliver value much more rapidly to customers, and customers love it.
I sometimes find myself in these environments with some customers that were perhaps more conservative, and where they used to beat us up and say ‘hey you guys are so slow, you’re only shipping every three years,’ and now they are like, ‘you are shipping too quickly, can you slow down? We can’t keep up with your changes.’ It has allowed us to be a lot more innovative and frankly take a little more risk. We can ship something, and if it doesn’t work, we’ll pull it out. We will can the feature if it’s a total dog.
By delivering as a service as opposed to on-premises licensing we have real-time feedback like we’ve never had before. We have real-time telemetry on how people are using Teams. We know what they are clicking on, we know what is not being used, we know if there is a crash in the beta or the preview. That data is an incredible way to help us better direct where our innovation goes. We could go and do a focus group with 10 customers, but we have 85 million users on Office 365. There is going to be plenty of diversity and long tail in that customer base.
Satya, I credit him, he’s done an amazing job of changing the culture of the company over the last three years, through things like growth hacking and creating a much more diverse and inclusive way of approaching work at Microsoft. Obviously the faster cadence, betting on the cloud. People love him right now. We just went through our Microsoft poll, and I can’t wait to see the results. I’m sure it’s going to be higher than they’ve ever been at the company. I think the company is on a real high internally.
GW: When did you know you were on to something with Microsoft Teams?
KK: I credit a couple of people. Dr. Qi Lu, he ran what was referred to as the Apps and Services Group for Microsoft, he came from Bing, and Brian MacDonald, who worked for Qi at the time. Qi really recognized the importance of conversation as a new modality of people communicating. This was probably two years ago. He set off Brian and said, ‘go reinvent what a conversations-oriented experience would look like,’ and so Brian spent a bunch of time, built great team. Mira Lane, she was one of the original thought leaders for the team.
It was probably a year ago this time, we demoed the product at what we refer to as the Exec Retreat. Literally, the room lit up. We actually had some customers there, and they saw the demo and they wanted it immediately. They are huge customer, and they were like ‘I want it; I want it now; give it to me now; I want to try this; I love this idea and new way of working.’ That for me was the moment when I thought, ‘We’ve got something here.’
We worked really hard over the last year to get the product finalized, the value proposition, the naming, the road map, what’s ahead, the business model. That’s my moment, last year at the Exec Retreat, which by the way is not really a retreat. There’s no spa. We are in a conference room for three days. That is the moment I realized, ‘wow we’ve really got something unique here.’
