The End of Biz Apps? AI, Agility, and The Agent-Native Enterprise from Microsoft CVP Charles Lamanna
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Companies which are struggling are the companies that don't have AI in everybody's hands every day. If you want to become an AI-transformed company, the only way to do it is all of your users, no matter where they are, technical, non-technical, need to be picking up and using these tools each and every day. If you don't have that, people will have kind of dreams of the magic AI can do, which isn't grounded in reality, or they'll be unnecessary skeptics for future projects.

Welcome to the Founded and Funded podcast series. I'm Soma, a Managing Director at Medrana, and I'm excited to have Charles Lamanna here with me today. Charles Lamanna is a Corporate Vice President at Microsoft, where he leads the company's business applications and business platforms, including Dynamics 365, Co-Pilot Studio, and the Power Platform.

In today's conversation, we are going to explore Charles' own journey from when he was an entrepreneur at Metrix Hub to how he came back to Microsoft when Microsoft acquired Metrix Hub and all the lessons he learned along the way. We are going to dive into how Microsoft is going to enable companies to deploy AI

and what the future of business applications are going to look like. With that, Charles, thank you again for coming here and let's just dive in. Sounds great. Thank you so much for having me. Now, Charles, you re-entered Microsoft or you came back to Microsoft when Microsoft decided to acquire your company, Metrix Hub. How was that entrepreneurial experience and then transition back to a large company? Any learnings that you want to share that you think other founders or entrepreneurs might find interesting or valuable from your experience?

Absolutely. I mean, I would say from my time on the outside of Microsoft, there were two big things that I really learned and internalized in a profound way. The first is true customer obsession. And that means even if you're the engineer writing code, really understanding exactly how your customers use your product, what problems they're trying to solve and kind of what they're looking to try to get out of it. And that obsession has really followed me since then.

And that's something that I've really tried to bring back and inject deeply into Microsoft. And we do things like customer advisory board. We just had one a couple of weeks ago with a few hundred customers came to town and we have great quantitative analysis of how people use our products, where they get stuck, what our retention and funnel looks like. Those are things which sometimes you forget or lose in a big company like Microsoft because you have this amazing go-to-market arm and you can kind of make money even if maybe you don't delight in your customers.

And that has been a huge change. And I think, of course, any startup is not going to be successful if they don't really understand their customer and the pain points they're going through. And the second thing is just this idea of complete ownership. And when you have this sense of complete ownership, it's no matter who's responsible for doing something, if it's necessary for the product or the business to be successful, you just do it.

And I think that is the biggest separation from a big company and a startup. 'Cause in a startup, you don't look around and say, "This is somebody else's job." It's your job. If you're a founder, everything is your job.

And whether that's responding to a customer support request or figuring out how to set up payroll or doing financing, all of that is just part of the job. And you never second guess it. You never think for a second, I need to hire someone to do this or this is somebody else's problem. And that's another thing kind of as you go into a big company like Microsoft, sometimes it's easy because there's such a robust support framework around you. You'll say, oh no, I don't do marketing. I don't do finance. I don't do this selling process.

But bringing back that extreme ownership has made it so much easier to create these successful businesses inside of Microsoft over the last 10 years. And things like Power Apps and Power Automate, they're really expanding Dynamics 365. It's that sense of total ownership. I love those two things, customer obsession and then complete ownership. Thanks.

As I was just mentioning, Charles, we've heard Satya or Microsoft publicly say this on many occasions, like, hey, business applications, as we have known, is dead. We know that with AI, there is a tremendous amount of reimagination of what business applications could mean or could look like that's happening, including places that Microsoft doesn't.

How do you think about this? As a guy at Microsoft who works on business applications, sometimes the truth hurts. But I would say business apps, as we know it, are indeed that. I think that's just the truth of it. The analogy I always make is it's going to be like mainframes. I'm not saying tomorrow there will be zero dollars spent on CRM and ERP and HCM inside the enterprise. People will probably spend the same amount of money they did before, maybe a little bit less.

but they're not going to do any innovation or any future looking investment in that space because a system of record designed for humans to do data entry

is not what transformation is going to look like in the world of AI agents and AI automation. Instead, what will probably happen is you'll see kind of this ossification of these classic biz apps, the emergence of this new AI layer, which is very focused around automation and completing tasks in a way which extends the team of humans and people with these AI agents that go and do work. And if I kind of break down, like what's in a biz app?

I always have thought there's basically three things. It's a basic form-driven UI GUI application on mobile and the web. It's a list of things and you can drill in and edit the individual things, whether it's orders or leads or sales items. It's a set of workflows which are statically defined that codify how does a lead go to an opportunity or how do you close a purchase order.

very fragile, not dynamic. And then it's some relational database to store your data. That's like what a biz app was. Those aren't the three elements of what a business application is going to look like in the future. Instead, it's going to be closer to business agents. You know, you're going to have a generative UI, which AI dynamically authors and renders on the fly to exactly match what the person's trying to do. You're going to replace workflows with AI agents, which can take a goal and an outcome and find the best way to accomplish it.

You're going to move from static relational databases to things like vector databases and search indexes and relevant systems, which are a whole new class of technology. And when we kind of fast forward 10 years from now, you'll look at those two things and it'll be so clearly different. But right now they're just beginning to separate. But the gist of it is, yes, indeed, biz apps, the age of biz apps are over.

You know, I should tell you when you mentioned like, you know, forms or UI in our workflow and database, you know, you literally transported me back to my VB days. Yes, yes. Because those were the things we were thinking about to help, you know, democratize application development kind of thing. And the fact that like, you know, 20 years later, we are still, you know,

At least today's deployed application world is like that. Tells me it is time for some disruption and some innovation. Exactly. I always joke, if you go and you look at like a biz app that ran on a mainframe, it looks remarkably similar to a web-based biz app of today. That's not going to be true in 10 years. So whether it was the internet wave or the mobile platform wave, it always takes time.

several years, many years before you would find what I call canonical applications that define what the platform is capable of. Okay?

I think in the AI world, I sometimes wonder whether that is still ahead of us as opposed to behind us. For all the hoopla and excitement that the world has seen around chat GPT, that's actually one sort of AI app that has gotten to what I call some critical mass in terms of adoption and usage. Now in the startup world, there's a bunch of other companies like Perplexity, Glean, Cursor, Runtime.

runway type phase and a whole host of other companies that are getting to some level of critical mass kind of thing, right? And so all these applications are targeted to consumers. Some of them are targeted to enterprises. Some of them have aspirations to go both directions kind of thing.

What do you think is going to be the time when we can look and say, this is what a modern business application is going to look like? And throw away all the mental models you have about what that could be. Do you think it's around the corner? Do you think it's a few years away? What do you think? Yeah, I would say I think we'll see what the shape starts to look like very clearly in the next six to 18 months. And I think because you already have glimmers of it.

And then I think it'll take longer to be mainstream. Just the refresh cycle of biz apps and core business process takes a little bit longer. But like in my mind is by 2030, this will be the prevalent pattern for business applications and business solutions. And in the next six to 18 months, you'll really have it codified. And I think we can look to some of the places which have moved faster.

uh like i'll use cursor as a great example uh if you take cursor it's a ai powered application tailored to provide an entirely ai forward environment for a coder or developer and if you think about that there's the same type of work that happens for sales or customer service or core finance like if it's budget analysis or reconciliation or for core supply chain

you're going to see things like Cursor or GitHub Copilot show up for each of those disciplines and be extremely tuned to just take what people used to do and reimagine it with AI. And just like how you have things like vibe coding that you can do, you'll have like vibe selling and vibe marketing and vibe legal work. So those things will all show up. And there's great companies out there, like Harvey is a great company on the law side. So there's a lot of companies that are emerging that are starting to do that. And of course,

I'm biased. I think we have a lot of great stuff at Microsoft. We have very broad adoption of our co-pilot offerings, but I think we're going to see that fill out by industry and by business process and by function. And then just the last thing I would say, which I think is probably one of the more interesting elements of all of this, is right now we're taking the way organizations are structured and just mapping them to this AI world, right? Oh, you have a sales team, so they need AI for sales. You have a customer support team, you need AI for customer support.

I actually don't know if that will be what the world looks like at the end of the decade. You'll have new disciplines, new roles. Maybe you don't have sales and customer support as two divisions. Maybe it's one. Maybe sales, marketing, and customer support all become one role and one person does all three. So I think we're going to reason through that. And that element is what will probably take the longest.

Because we'll probably have a wave of great technology, but the old way of working, then have new ways of working, then another second wave of great technology. But all I know is it's definitely going to be an exciting couple of years. Your last point particularly made me think about this, Charles,

Instead of AI for sales and AI for finance and AI for this and AI for that, do you think people are starting to think about like, hey, what do people need to do in a company to get their job done or to get their work done and start thinking about workflows that may or may not stay within a particular function or particular discipline and cross-discipline? And do you think there's enough of that push that's happening already or it's...

coming in the future? - I would say it's very early. I mean, what's amazing is startups are doing this because startups in a world where you have extreme ownership and you have to do whatever it takes to succeed, you don't feel constrained by disciplines and boundaries. So if you wanna see where like the enterprise world or where mid-size companies are gonna go in three to five years, look at what startups are doing right now. And that's exactly what they're doing. Different structures, different ways of working. And there's kind of like two things which I think are gonna really drive a lot of this transformation.

The first is these AI tools bring experts to your fingertips. So as a result, you can be a generalist with a team of expert AI supporting you. And like, that's how I feel every day. Like I have an agent which helps me with sales research. I'm not a salesperson. I'm an engineer. But,

I don't have to go out, talk to a salesperson to get ready for a customer meeting. I have a researcher agent which helps me go prepare a reason over hard challenges. I have a document like editing and proofreading agent, you know, make me a better writer. So I have all these tools which make me more of a generalist kind of overseeing these set of AIs. And what that translates to is probably

despecialization in the enterprise, despecialization in companies where you have less distinct roles and disciplines, more generalists powered by AI. So that's kind of item one. Then the second thing is what makes a team? We always think team is a group of people.

the big changes you're gonna have team is a group of people and ai agents that's really how we need to start thinking about how we organize uh organizations and companies and how even we go out and do hiring and if you think about who you work with you'll start to i think increasingly think of it as here are the people i work with here are the ai agents i work with to get a job done that means you have meetings you have calls you have documents you work on together those two things that will help go drive that transformation and it's not like a startup

sits down and says like, how should we structure ourselves for the future? They just, you know, they tackle this problem, that problem, that problem in the best and most efficient way. And it happens to look like that. So that

That is, I think, probably a lot of the changes that we'll start to see. You know, you talked about this notion of like, hey, think about a team as not just a bunch of people, but a bunch of people plus a bunch of AI agents. Can you take it one step further and say like, hey, every information worker or knowledge worker is really a human being plus a bunch of AI agents kind of thing at their disposal, kind of thing, right? Is that a good way to think about it? Yes.

Absolutely. So I think the way that we kind of approach it is every individual contributor, everybody who individually does work will increasingly become a manager of AI agents who do the work. And kind of we have like a thing we talk about internally at Microsoft, which is in the past, we built software for knowledge workers to do knowledge work.

In the future, probably most knowledge work, most information work will be done by AI agents. And knowledge workers' main responsibility will be the management, upkeep. To orchestrate, to manage. Exactly. And kind of that's where you get this idea that you can be much more of a generalist than an expert. And this is how you get a huge productivity gain. You're not talking about, oh, I'm 10% more productive. It's 15% more productive. We are going to have entire teams of AI agents working for us.

you can be five or 10 times more productive if you get that right. And that's what gets me excited because that's what starts to change the shape of the economy and really create, you know, abundance of doctors and lawyers and software and all of those things. You know, people fondly refer to 2025 as the year of agentic AI, okay?

First of all, do you agree with that? But then how do you see the role of agent-to-gay or AI agents as far as the next generation of business applications go? I'd say it definitely is the year of agents. I think everyone I talk to, from the smallest to biggest company, understands what agents are, and they want to get started with deploying agents in their enterprise. And you can see you have Google with agent space, you have

Salesforce with AgentForce. We have plenty of agents at Microsoft in and around Copilot. OpenAI is talking about agents. Cursor is talking about agents. Everybody's talking about agents. So it very much is beginning to diffuse. And kind of like how 2023 was probably the main year of chat AI experiences on the back of ChatGPT and Copilot's launch.

That's what 2025 will be, but for agents. And I think business applications in particular are going to be the ones most changed as a result. And I think you're starting to see it. Every company I work with, they tell me,

I'm excited by business applications with AI. That's great, but I really care about business agents. Tell me how I can get agents deployed in my back office, in my front office. How can I grow revenue, cut costs using agents? That is just a new conversation, which to me means it's the era of agents. Got it. That's helpful. You know, we've gone through like a major platform shift almost every decade or so.

And sometimes during these platform shifts, every sort of major player would go off in their own direction trying to figure out what it means for them and what they can do with that kind of thing. But if you go back to the internet platform wave, you could argue that HTTP was something that sort of came in pretty early on and everybody just sort of adopted and sort of said, we are going to be behind this kind of thing.

Almost similarly today, when I think about this agentic world, I look at a protocol like MCP or a protocol like ADBA and say, hey, there is a tremendous amount of industry consolidating. In fact, the thing that surprised me is the anthropic MCP case, right? Sort of came out with MCP. And within a few months, pretty much anybody that mattered

talked about like, you know, how they are all in on supporting MCP and sort of, you know, came out with their own offerings kind of thing, right? That level of industry consolidation around like, you know, something is both, I think, exciting and fantastic. How do you see that? Yeah, I'd say it's probably like 30 years since we've had such an industry-wide convergence on an open standard, like back to really the original open web, you know, HTML, HTTP, JavaScript.

It's incredible because that means more opportunity for startups because there's really not some strong incumbency advantage as a result of open standards. And also for customers, I mean, I can buy 10 solutions, 10 different agents and have confidence that they'll work together. And like we even at Microsoft, we support a two way

We've announced that just a couple of weeks ago. We have MCP support for a couple months and we've even contributed back changes to MCP that have been accepted and merged with a bunch of other companies for like authentication to make that work well with MCP. So this is going to be great because a typical company

has so many, say, SaaS applications and databases today, in the future, they're going to have a ton of these different agents and tools for agents. That's what the future is going to look like. And if you think about what it's like to be in an IT department that has 300 different SaaS apps, it's so painful to integrate them. I don't think it'll be as painful in this world of MCP and A2A. And I think that's a huge opportunity for

for lots of these startups, which can be so fast and agile using these AI tools and can interoperate with the big kind of footprints that exist in a typical user's day, whether it's consumer or commercial. I want to go back to one of the earlier things you talked about, which is customer obsession. You mentioned that you had a customer advisory board and a couple hundred customers come through kind of thing. When you talk to enterprise customers, where do you think they are in the journey of adopting AI?

whether it's in form of business application, next-generation business applications or co-pilots or what have you. Do you think they are in the early stages, mid-stages, later stages? And what are you hearing from them? It's a big spread out there right now. So some companies are almost like a tech company in terms of how aggressive and ambitious they are with the AI transformation. Usually that comes from a very top-down investment focus from the CEO, the board, plus having business and IT and tech resources equally engaged.

But a lot of companies are very early and they're looking for that first big win. Maybe they have a few POCs, a few prototypes, a few experiments. They don't really have that big top line or bottom line moving win. And what's interesting is if you went back a couple years ago, it was all about building things yourselves. Everybody had dev teams calling APIs, using models. I think we're kind of coming out of that because people realize how hard it is to assemble these things and get business outcomes.

So it's kind of the era of these like AI finished solutions, you know, whether that's in an agent or this new type of AI application like cursor, that is starting to be the main place that companies are looking to get that value quickly. And if I were to kind of take a step back, and maybe do like a pattern match of like, what are we seeing for companies that are being most successful enterprises are being most successful, kind of three main things when it comes to the AI transformation. First,

They are being very focused on driving real resource constraints into the organization to drive the productivity improvement. Because if your budget grows every year, you don't feel a lot of pressure to improve your unit performance inside the organization. And that's a hard thing to do, particularly if a company is growing. Second thing is having a big focus on democratizing access to AI.

Companies which are struggling are the companies that don't have AI in everybody's hands every day. If you want to become an AI transformed company, the only way to do it is all of your users, no matter where they are, technical, non-technical, need to be picking up and using these tools each and every day. If you don't have that, people will have kind of dreams of the magic AI can do, which isn't grounded in reality, or there'll be unnecessary skeptics for future projects. Get AI in the hands of

Everybody. And the third and last bit is don't spread yourself a mile wide an inch deep. I mean, for companies that are successful, they don't do 100 projects. They do five projects.

very well with a lot of force and with continuous improvement in mind. That's what I see is showing up as the most successful enterprise organizations. That's great. Did you hear the Shopify CEO make a pronouncement a few weeks ago about how everybody should be thinking about that? Yes. That updates with what you're saying about, hey, make sure that everybody has access to AI tools. Exactly. I go out and tell my team this year, you won't be promoted unless you use AI tools if you're an engineer. Because how can you really say that you're on the cutting edge

of AI software development if you yourself are not using AI. That's great. Charles, earlier on you talked about customer obsession and complete ownership, some of the learnings that you had from being a startup founder to coming back to Microsoft. Going hand in hand with that, how do you think about agility? One of the things I worry about, and I was part of Microsoft, so I can sort of say that I've been there kind of thing, but

as the company gets larger, sometimes you sort of wonder whether the agility is what it needs to be, the level of urgency is what it should be kind of thing. How do you encourage your teams and Microsoft to say, hey, I want to operate with the same level of urgency and agility that a startup does? There's like three big things that we've done which to help go and still that. The first is

For the most intense period since I've been back at Microsoft, it's mission oriented. Everybody understands what the mission is. All of our software, all of our technology, all of our products is going to be completely disrupted by AI.

And do we want to be the people that watch that happen? Or do we want people that do it to ourselves? So the energy is off the charts. I've not seen folks at Microsoft working as hard and pushing the limits and boundary and innovating as much as like in the last 10 years I've been there as there has been over the last couple of years. So that's kind of item number one. Number two is when you're in a big company, there's always this incredible inertia that

And it's incredible layers of bureaucracy and process and layers of, you know, decision makers and consensus building that slows everything down. And that's where extreme ownership and kind of this desire to grind through anything is really critical because anything you want to do, if you want to innovate, there'll be a hundred reasons why you cannot do it.

You have to find the one reason why you can and how you can. So that extreme ownership, like grit to really push through all these barriers to go be successful. And the third piece is really encouraging experimentation and being willing and rewarding failure if it produces learnings.

And so we kind of have these interesting forums at Microsoft where folks will come in and say, here is a product experiment we've done, or here's an AI model experiment we've done. We have these every week and they share in good or bad. You know, here's what we tried.

it didn't work for these reasons. Here's what we tried. It did work for these reasons. And it's almost like the cloud postmortem culture that you had to develop, you know, with the do repair items and a blameless postmortem. It's kind of like this continuous experimentation, innovation, feedback loop around model and AI products and doing both of those because those are both equally important is how we're really starting to drive this culture of

It's not build a plan for six months and we're gonna run the plan no matter what. It's build an experiment, run it in a day,

learn, run it another day, learn, because that's what all the good AI companies are doing. So those are just a few of the things. And like, I think if you go look at the pace of innovation, definitely Microsoft is moving faster than we've ever moved before. That's a super helpful framework to think about as teams and organizations are thinking about like, now, how do they operate with the same level of urgency or...

that is required in today's age. It's not a nice to have or a, hey, someday I'll do it kind of thing. If you want to survive and if you want to be ahead of the curve, you need to do it today. Now, coming to the personal side a little bit, Charles, I'm sure AI is impacting your life in a positive way, whether it's at work or outside work and I think, are there one or two tools that you use on a daily basis and can you talk a little bit about what those tools are and how they change what you're doing? Yeah, so I

I will exclude all my Microsoft tools that I use all the time, just in the interest of being different a little bit because I use a bunch of those. One of my favorite features out of

kind of been released lately is like the deep research functionality and uh like between o3 and deep research you can get some really amazing insights and like a big thing i like to try to do is really have a good view of the market um to try to go find blind spots so what startups are out there being successful and how are the big competitors doing when they do their earnings or announcements or conferences

And what I can do with deep research is I can basically have a very specific question, like, and I run this basically every week, like I'll give an example, like, help me understand the financial performance of business application companies, and who is accelerating versus decelerating? And what are some interesting facts and terms around usage that they've announced, I can basically describe this nice little big healthy prompt, send that off, come back 10 minutes later, and I get

a beautiful little view. And this is a way that I stay on top of what's happening in the market every week. And in the past, I could do this, you know, I read various places, you know, Hacker News and on X and stuff like that. But this gives me a really in-depth view report as almost I truly had a competitive researcher full time just doing work for me. And so,

That I use and that has been game changing. And my poor team is probably tired of me sending screenshots to these reports. 'Cause I use that for a lot of public information. Second thing is like, I'm a big user like for image generation tools. So like I subscribe to Midjourney and you know, I would say that that's just so much

because I would say I never was a great artist, but I'd say I can create lots of fun images and pictures and I share them with like family and friends. You know, that's kind of like a relaxing thing for me to do. And, you know, I would never,

Like I've never, I don't have Photoshop. I would never would have opened up and drawn free form, but I can have that feeling of creation and creativity in a way I wouldn't have before. It's interesting. You know, it's a new kind of hobby and new accessibility. Again, back to the generalist specialist thing. I'm definitely not a specialist artist, but you know, I can use AI. - But it's a good outlet for your creativity. - Exactly. - So yeah, that's fantastic. - So, and I cannot wait.

companies like runway, like as you know, they mature capabilities to be more than just images to videos. Like, you know, I can't make a film or a movie today, but I bet in the next 10 years, I'll be able to make like a 60 minute film. Like really? So that'll be fun. That is great.

On that note, Charles, thank you so much for taking the time to be here with us today. I really enjoyed the conversation and we took it in like multiple directions and it was fun to be able to hear your views and your perspectives and your experiences. Thank you so much. Thank you for having me.