Shantanu Narayen: Generative AI Won’t Replace Human Ingenuity

Shantanu Narayen: The going gets tough and you really realize in a company who are the people you can really trust. You learn a lot of things more through adversity, frankly. Because when things are going really well, everybody thinks it’s because of their efforts. And perhaps when things are not going well, you think it’s because of somebody else’s inadequacies. In my role, there is nobody else you can look at and say it was their issue.

Sankalp Banerjee: Welcome to View From The Top, the podcast. That was Shantanu Narayen, CEO of Adobe. Shantanu visited Stanford Graduate School of Business as part of View From the Top, a speaker series where students, like me, sit down to interview business leaders from around the world.

I’m Sankalp Banerjee, an MBA student of the class of 2023. I had the great pleasure of speaking with Shantanu about his personal evolution as a leader, how he seeks opportunities in setbacks, and his sources of creative inspiration. He also shared his perspective on the future of digital experiences, including the impact of generative AI.

You’re listening to View From The Top, the podcast.

Sankalp Banerjee: Shantanu, it’s so a pleasure to have you here with us. Welcome to Stanford.

Shantanu Narayen: Thanks for having me. It’s good to see so many folks.

Sankalp Banerjee: Absolutely. Since we all know Adobe to be a leader in digital experiences and digital imaging, we thought it was appropriate to start with a few images from your own digital footprint.

Shantanu Narayen: As long as Photoshop was used in the creation or editing of that, I’m okay.

Sankalp Banerjee: So at first, I found pictures that one might expect, ones of you meeting with other tech leaders like Satya Nadella, appearances on CNBC, meeting with world leaders like Prime Minister Modi and Tony Blair. But then I looked further.

Shantanu Narayen: Okay.

Sankalp Banerjee: I also found you onstage with Fergie from the Black Eyed Peas, hosting Billie Eilish at Adobe, launching a collaboration with Lady Gaga. My question to you, Shantanu, is as you were building a career in tech, was there any part of you that secretly wanted to become a pop star?

Shantanu Narayen: Actually, that’s one that I can honestly say the answer is no. And true story, which this is Chatham House rules, right? And I know it’s going to be on YouTube, but you will never repeat this hopefully, which when Ann Lewnes, who is our CMO, came and told me that Billie Eilish was going to be at Max and we were going to be having Billie Eilish as part of Max. I said, “Oh really? I’ve never heard him.” And so that’s how ignorant I am of some of these new-age musicians. But no, I mean, I had no desire, no bathroom singing. The only thing I wanted to be was a professional golfer or an athlete. So that was very much part of it. But that didn’t transpire either [unintelligible].

Sankalp Banerjee: [Laughs] Well, in case you ever change your mind, we took the liberty of using your very own Adobe Photoshop to visualize what that might look like.

Shantanu Narayen: Okay.

Sankalp Banerjee: And here it is.

Shantanu Narayen: Should give me a little more hair. Maybe that would be, you know, more in line with the rock stars of the old.

Sankalp Banerjee: [Laughs] Right. Well, we can come back to the career that you did choose, and you’ve had a fascinating journey. I’d love to start at the very beginning. You grew up in Hyderabad in southern India. Your mother taught American Literature. Your dad ran a business in industrial plastics. Tell us about the Narayen household, and what were you interested in?

Shantanu Narayen: Well, it was a very happy childhood. As you said, my father actually went to school in Urbana.

Sankalp Banerjee: Oh, okay.

Shantanu Narayen: He studied electrical engineering here. And then he went back to get married to my mother. And you know, education was always something that was considered critical in the Narayen household. I have one elder brother. He’s also in the Bay Area. He works for a chip company here. And I went to this incredible school that we were talking about a little bit backstage where you could pursue anything from academics to extracurricular activities. And so, you know, I was the captain of the debate team. I participated in plays. I edited the school magazine. Anything but academics was sort of what I used to focus on. And it was a great city to grow up [in].

And my mother was, as you said, a professor of American Literature. So I wanted to be a journalist actually growing up. And I’ve said that a lot. But in India, the general wisdom or conventional wisdom at that point was that you either grew up to be an engineer or you grew up to be a medical doctor. And those were considered the two professions that most people followed. And I hated the sight of blood. So I guess engineering was the lesser of the two evils. So here I am.

Sankalp Banerjee: You were interested in journalism. You mentioned engineering. At one point, you were also on India’s National Sailing Team. As you were exploring these multiple passions, did that have any impact on your future aspirations?

Shantanu Narayen: Well, again, sailing was a fun thing. I mean, I grew up, as you said, in a city called Hyderabad. And Hyderabad has this lake. Hyderabad’s actually now become one of the larger software centers in India. I think Google, Microsoft, Facebook all have big centers. But it was this really small town. And sailing was, again, one way to not hit the books. I mean, anything to not hit the books was sort of the theme growing up honestly. But I think just doing these different things, in many ways, it teaches you what you like to do. And I think what’s an equally important lesson, it teaches you what not — what you don’t like doing. And I always tell that for people because I think career choices are what you do.

So I think — and that’s the beautiful thing about undergrad education in the U.S. In India, when you do undergrad education, I think four years of engineering, I had one elective that I was allowed to take, I think, in my fourth year, second semester, something like that. But just getting exposed to all these things I think just teaches you to adapt and maybe think about different areas. So it was fabulous.

Sankalp Banerjee: Yeah. You eventually did hit the books. You did your master’s here in the U.S. and then came to Silicon Valley. You started off at an early-stage startup and then a much larger company in Apple. What lessons stuck with you across these two very different experiences?

Shantanu Narayen: Well, I think the entrepreneurial genes have always been a big part of who I am. And so as you pointed out, my first company was a company called Measurex Automation Systems. And this was in the mid ‘80s. And what they were trying to do was do for the process control industry and the discrete control industry, how software could be used in that particular case. And it was a fabulous experience. In terms of being at a startup, you get all this opportunity to do a lot of things. And then as you pointed out, you went to Apple, which was significantly different, and Silicon Graphics where they were much larger companies.

And I think in the much larger companies, I learned a lot about how you plan for the upside and maybe react to the downside. And in a small company, you just, I think, [rely on] this aspect of never taking no for an answer. And I think that’s something that hopefully is still the hallmark of how I like to manage, which is in small companies you have to overcome every single adversity that exists. And that continues to be one of the things that I’m very passionate about. How do you create in a company like Adobe this notion that anything’s possible because we artificially limit our own aspirations. And so it was — actually both of those were great experiences.

Financially, Measurex Automation Systems was not as successful. But I think also what makes the Valley such an amazing place is nobody cares where you went, as long as you get good experience. And I think that was the other learning, which is early in your career, get a whole bunch of diverse experiences. And I think that’s what makes the Valley such a special place. Nobody cares whether you were quote-unquote successful in that company. It’s all a question of how do you get more tools.

Sankalp Banerjee: And after Apple and Silicon Graphics, you tapped into your entrepreneurial genes. You started your own company, Pictra —

Shantanu Narayen: Yeah.

Sankalp Banerjee: — in the photo sharing space. And the company also faced some challenges over the next couple of years. As you look back on that experience, how do you think about responding to setbacks?

Shantanu Narayen: Well, it was the best thing that happened to me. I mean, Pictra was this company — in the early ‘90s the movement from analog photography to digital photography was just happening. And so we said to ourselves, hey, maybe people will want to share images and share videos, a new concept, correct? But we were way ahead of our time, so to speak, because the business model wasn’t there. And we sold the technology to Fuji. You know, Fuji and Kodak were the two large companies that we partnered with. But I really don’t look at it as a setback. I mean, I look at it as it was an incredible experience. We raised a lot of money.

At one point, my cofounder who was the CEO, I told him, “Listen, I don’t think there’s a business model, and we should return the money.” And he wanted to keep going, and so at that point Adobe was actually potentially looking to buy Pictra. They had decided against it. And I’m like great. Photoshop has this incredible brand. Let me go work at a much larger company. And so it was actually for me an onramp into a much larger company. Now truth be told, I went to Adobe thinking, okay, I’ll be there for 18 months, and then I’ll go off and start my other company again. And 25 years later, nobody’s given me a job, so I’m still at Adobe. [Laughter]

Sankalp Banerjee: Fair enough. And at Adobe, you led different divisions from product and engineering. As you were getting more and more responsibility, was there a moment when you knew you wanted to be CEO?

Shantanu Narayen: The answer is no. I mean, this is — a lot of people ask this question about, how structured were you in terms of ambition? And first, as you point out, I joined Adobe in January ’98. In August ’98 the company hit the wall. And Japan, at that point, we had some serious issues in Japan. So the revenue dropped precipitously. And as a result, they had to lay off 25 percent of the company. This was in August, I think, August of ’98. And John Warnock, the cofounder, and Chuck Geschke were running the company.

And on the — on one day they actually let the CFO, the Head of Products, and the Head of Marketing go because they felt like the company was not as functionally — they weren’t executing as much as they did, which is a massive move. I mean, think about it, right? It’s [staking]. And so they asked my predecessor Bruce Chizen to run a lot of the products. He wanted to reorganize. I’d just come in. I was the General Manager at that point, and Bruce wanted to make it completely functional, which was the right thing because we were trying to break down all the fiefdoms and get people to do stuff.

And so he asked me whether I’d be one of the engineering leaders because I had an engineering background. At first, I thought I’d be — you know, I was the new kind on the block, so I’d probably get let go of. Luckily, that didn’t happen. And when he asked me to run engineering for this one group — InDesign was the product at that point. Quark was the market leader in desktop publishing. And he said, “This is a very important initiative. Can you take that on?” And I said yes because I think way too many times, people think about is that good for my career. And for me, that was an important initiative that the company wanted to do. And I said, you know, if I do that well, things will hopefully work out.

Sankalp Banerjee: Mm-hmm.

Shantanu Narayen: And so I learned that very early on, which is people like to do what they think they’re good at, perhaps not as much of where the impact is required for the company or what a priority is. And I learned that very, very early on. And so I said, great, I’ll take initiative. And then that was luckily a successful project. And then from there, we did it, we did other projects. But — and then six months later, actually Bruce told me, “Do you want to run” — I still remember this. This was just before December of that year. And he had five engineering people, and he had five marketing folks reporting to him. And as I said, he had reorganized it. And he was clearly more on the sales and marketing side.

Sankalp Banerjee: Mm-hmm.

Shantanu Narayen: So in December, he came to me and he said, “I can manage five engineering people.” And I thought he was, in effect, letting me down and telling me, “I’m going to consolidate all engineering under one of the other four leaders,” because the other four leaders had probably a combined 75 years. And I said, “Okay.” And he said, “Would you like to run all engineering for Adobe?” And I said, “Let me think about it. Yes.” And so things work out. And you just sort of take the initiative. But I always wanted — I’m always fascinated by the business of technology. And so I said, “I’ll do that, but over time I’d like to run more product management and conceive of products and create products.” And he said, “Sure.”

And so I think taking the initiative always helped me get more responsibility. And yes, at some point, it became clear that hopefully I was being considered or groomed for CEO. But there are also things that come away. We bought Macromedia. Then it wasn’t clear because perhaps the Macromedia CEO at that point also wanted to do it. But you sort — you know, I’ve always gone with the flow.

Sankalp Banerjee: Mm-hmm.

Shantanu Narayen: And even when I did my MBA — I’m sorry, I went to the other school — but when I did my MBA, most people told me that, hey, now that you’ve got an MBA, you’ve got to stop doing engineering, and you’ve got to become product management, because product management and product marketing’s the track to becoming a CEO. And I’m like screw this. I like engineering, and I’m going to keep engineering. So it’s worked out for me —

Sankalp Banerjee: Mm-hmm.

Shantanu Narayen: — in terms of doing what I want to do and what I have a passion for.

Sankalp Banerjee: That’s fascinating. And as a result of your initiative, you were able to have disproportionate impact much before you were actually named CEO. That also draws a connection to something else you’ve talked about frequency, which is influence leadership. Give us a sense of what that means, and why is it important to you?

Shantanu Narayen: Well, again, the first role that I had at Adobe was what’s called the Engineering Technology Group. And we had divisions, and divisions ran different parts of the business. And we had this fundamental belief at Adobe that if you have a great technology platform that underlies all of your products, if color works the same and the user experience is the same and printing is the same, then we can deliver more value to our customers by saying if you learn how to use one product, you can learn all these other products.

But then to your point, it could be perceived as you had zero direct responsibility for a product. And most people like P&L, right? And I always tell people at Adobe, there’s one P&L. Get over it. And I run that P&L, or the CFO runs the P&L. But that was — for me, the fact that I could influence as many products and I could be a client of as many products actually gave me this birds eye view for how every product in the company worked. And I think people obsess too much about who’s in my direct line of responsibility and what do I manage. And I’m like if you liberate yourself and if you feel like, okay, through influence I’m impacting Photoshop and Acrobat and all these other products, it’s actually a very liberating feeling.

And so I think for me, the influence leadership is if you can convince somebody who doesn’t work for you that they’re part of your extended team, and conversely, if you can get gratification as a leader from what others do, whether or not they work for you, that’s actually one of the most empowering things. You know, people like to talk about, “This is what I did.” And if that team becomes larger and larger, then it’s more happiness. And so I think that influence leadership — and I encourage that a lot among my team right now. And I don’t like people saying, “This is mine.”

When I interview somebody for a new job, and people typically come in and I say, “What do you think the role is about?” it’s always an open-ended question. And some people will say, “Well, I think I’m responsible for this, and I have 80 people, and this is my P&L,” and I tune them out. And if they come in and say, “You know, I think my job is to create new products or serve this customer segment or innovate in this area,” I’m like, “Okay, tell me more.” So I think influence leadership for me is — it’s worked out. And so I think it’s liberating and I think it’s empowering.

Sankalp Banerjee: Speaking of working out, in your first year as CEO, Adobe had record revenues, extremely strong customer growth and customer retention. And then you run into the recession in ’08. Give us a peek into your mind at that moment. How do you navigate this rollercoaster?

Shantanu Narayen: Well, in retrospect, it’s great. I mean, in retrospect, it’s great. At that time, it was terrible because as you said, 2007 I take over. Luckily, I’d grown from within the ranks. And so I think the business, I had a really good sense of the business. I had a good sense of the products. But when you get record revenues your first year, you’re like oh my God, this is so easy! Even I can do it! And then when the recession hit, because at that point Adobe was a discretionary purchase, right? I mean, if you bought a previous version of the product, you could choose whether or not to buy a new version of the product. And so there were things about our business model that were fundamentally — now in retrospect, it seems so archaic, but opposed to the ability to innovate.

But again, the glass half full of that was, if that recession hadn’t happened, we wouldn’t have said we need a fundamental change in our business model. We wouldn’t have been the first company to really transition from the desktop to the cloud. So at that time it was hard. But I’ll tell you, so many silver linings from that. And I think in my role, you have to be an optimist. The first silver lining is when the going gets tough, you really realize in a company who are the people you can really trust, who are the people who are there with you, they’re not there just because things are —. And you know, that management team, we were together for ten years.

And so I think you learn a lot of things more through adversity frankly, because when things are going really well, I mean, everybody believes it’s because of their efforts. And perhaps when things are not going well, you think it’s because of somebody else’s inadequacies. And in my role, there’s nobody else that you can look at and say it was their issue. And so you look in the mirror and you say, okay, we can either be paralyzed by what’s happening in the macroeconomic environment, or we can look at it and say, what are the fundamental changes that we need to make?

I’ll give you one. You know, a lot of tech companies are now laying off people. And I was so impacted by the fact that, at that point, we had to let people go. It was a macroeconomic situation. We were a discretionary purchase. The revenue dropped 25 percent. Our revenue dropped 25 percent. And in a software company, most of your costs are your fixed — people costs. And I resolved to myself, which is like if I’m not prioritizing things or if I’m not making the changes that are required. So when the pandemic first came, we’re like let’s prioritize the heck out of our stuff. And shame on us if we find ourselves where we’re overinvested in areas.

So again, a longwinded answer to say you learn things. And maybe this is the Asian part of my culture in growing up. You take the long view of things. And then what’s the worst thing that can happen if things go badly in a company? You get fired.

Sankalp Banerjee: I love that optimism.

Shantanu Narayen: That I will get fired, or that everything will be fine? Everything will be fine, exact

Sankalp Banerjee: You spoke earlier about an entrepreneurial gene that’s always been within you regardless of the size of the company that you were working for or leading. At Adobe, with a 200-plus billion-dollar market cap, how do you drive innovation without running into bureaucracy?

Shantanu Narayen: It’s hard. I don’t think we’ve completely solved it. I don’t think we’ve completely solved it, but a couple of lessons come to mind. I mean, one is when you look at Sand Hill Road, the world’s wealth, so much has been created by Sand Hill Road. And there’s so much to learn from Sand Hill Road. And I think the first lesson is, you talk to any great investors — and you can learn so much from them — they invest in people. So I think the first thing you do is, when you’re trying to innovate and you’re trying to create a new project, you sort of look at it and say, do I trust implicitly the person who’s heading up that project, because antibodies do come out from every part of the company because all the power in an organization tends to be in the products or in the groups that are making money today, right?

And so I mean, the first thing you have to say is, first, all software, there’s an S-curve. Businesses have a natural life cycle, and if you don’t invest — some people call it Phase One, Phase Two, Horizon One, whatever you want to call it — but you have to have a portfolio of products. So that’s I think something that we fundamentally believe in. For the earlier stage products, you need to provide sponsorship. So that’s a big part of what I do, which is going back to the people — is it somebody that I trust, because even by assigning somebody that you trust, you’re sending a message to the organization that that’s important.

Different cultures — you can say let a thousand flowers bloom and let the best idea win, or you could say, no, I want a few top-down. I believe in the few top-down. So I said these are three or four areas that we’re invested in, so let’s innovate in those areas. And so at least we have a philosophy, and we have a point of view on what we want to do. You take the Sand Hill Road approach a little bit about saying let’s give them a little money. Most companies — I think one of the pitfalls could be we have annual product — annual planning cycles.

Sankalp Banerjee: Mm-hmm.

Shantanu Narayen: So you tend to incubate these products only at annual cycles. And what [Sandal] does is if there’s anybody whoever comes up with a good idea, they’ll find money, right? I mean, that old adage of in a large company, you have to get — if there are ten people who are decision makers, you have to get all of them to say yes and none of them to say no, whereas on Sandal you can get one person to say yes, and who cares if the other nine say no. So we’re trying to replicate some of those things. And I want somebody on my staff to be passionate about each of the new incubation projects. And if somebody’s passionate about it, then they’ll drive it. And if there isn’t, then I — it’s okay.

And the other, I think, realization that you come up with after a while is it’s okay if a company like Adobe, you don’t have to create everything within the company. You can buy products. You can acquire. Early on in my career, I would say when we acquired something that people looked at and said, “Hey, why didn’t Adobe create it?” you feel bad. And now you’re like it’s okay. I mean, you have the capital. You have the brand. Go acquire it, because great ideas come from everywhere. And so I think those are a couple of ways in which we incubate.

And then maybe when we buy a company, we leave it isolated for a little while because, way too often, I think companies do the let’s acquire something; okay, now we’ve got it. But you bought that company because you didn’t have it, right? And so I think how you manage the company and that leadership is — those are a few of the lessons I’ve learned. But we’re always trying. It’s hard.

Sankalp Banerjee: That’s so interesting to hear the whole suite of approaches that you would take to drive that innovation. So over the 15 years that you’ve been CEO, Adobe revenues have increased 7X. You’ve navigated recessions, geopolitical turmoil, regulatory —

Shantanu Narayen: Are you saying I’m [older than the truth] or something here?

Sankalp Banerjee: Your experience — you’re very experienced. As you look back over your tenure, how have you personally changed as a leader?

Shantanu Narayen: You know, I’ve changed a lot. I’ve changed a lot. I think when you grow from within the company, I think the first — and I’ve talked about this a fair amount, so —. But when you grow up first, I was an engineer by background. I sort of knew everything. And since my previous role was the Chief Operating Officer, in many ways my role was keeping everything humming. And when we moved to the cloud and the subscription model, you sort of realize that the job of a CEO, it’s both doing the flag planting, as we call it, and the road building.

And I was, I think, a better road builder in those days than maybe a flag planter because I sort of had this engineering mind. I was trying to connect the dots. And you realize when you’re talking to a group like this and you want to make a big change, there’s half the people in the room who probably tune you out if you talk about just the road building because they want to know what hill you want them to go conquer. And conversely, there’s probably half the room tunes you out when you all talk about, hey, I want to go win a World Series.

And they’re like, but what about next game, and what are we going to do, and how do I participate in that? And so I think that’s been one of the big changes that I’ve made, which is the — people amaze you, amaze you with their ingenuity. And I think part of our roles is creating unreasonable expectations. And I try to do that all the time, which is if you can create unreasonable — what you consider unreasonable expectations, people amaze you with their ingenuity. So I would say that’s one big area where I’ve sort of changed what I do.

I think the second big area I would say — and this is — everybody tells you this, but you focus on people. And the time that you spend on your leaders, that’s how you spend more and more and more of your time on leaders and hopefully coaching, that’s a big change from where you would do execution reviews to where you spend time with people and hopefully both get inspired by them and inspire them. So I think that’s a big change that’s happened. I think the third thing is where I look at it and I say I don’t like it. And if I don’t like it, how do I find somebody else who’s more passionate about that area to do it?

John Warnock, again, I’ve learned so much from the two founders of the company. And John said something to me the day I took over as CEO. John said to me, “If you don’t like your job, Shantanu, you have one person to blame.” I said, “Is that you, John? Hey, I’m just kidding.” [Laughs] And so when you take that on, I have this incredible, incredible opportunity to do what I want, right? And so I focus on the things that I like. And previously, I would be like, okay, I’ve got to do a little IR. and I’ve got to do a little PR, and I’ve got to do product, and I’ve got to spend —. I’m like, yeah, I’m going to focus on where I want to have impact, and that feeling far more comfortable about that, which is where do I want to spend my time because it’s my most precious commodity.

And last but not least, I’m way more comfortable than I was 15 years [ago] and knowing that I’m going to be wrong a lot of the time. Hopefully I’m not doing the same thing wrong over and over again. But it’s very rare in these senior roles, not just CEO, that people come to you. I mean, I can’t remember the last time my team came to me and said, “All ten of us are unbelievably aligned on this. We all want to do this. What do you think?” You know, they typically come and it’s like five want to do this, four want to do this, one’s undecided. Make a call, Shantanu, right?

And so I think that dealing with ambiguity and uncertainty and being just completely comfortable that, yeah, I’m going to fail a whole bunch of times and I’m going to get it wrong, but I can change it. I think that’s the part that I’m very much more comfortable with that. And so that’s part of the journey.

Sankalp Banerjee: That’s fascinating to hear. You mentioned planting the flag and setting the vision. In your seat, you have a very unique vantage point into the future of technology, the creative economy, digital experiences. What gets you excited about the future?

Shantanu Narayen: Oh, there’s so much. I think the most recent thing I would talk about — and clearly, it’s the buzz — is what we’ve done. If you haven’t heard, we introduced this produce called Firefly recently. It’s our generative AI. And I mean, at the end of the day, if you think about Adobe’s purpose and what we are focused on, we believe in this notion of creativity for all. Everybody has a story to tell. And if we can help them tell that story on any medium using any device, then we’re serving a larger and larger set of community.

And right now, I think thinking about the role of how we can use artificial intelligence to make our products more accessible, more productive, more fun, I think we’re just at the very, very early stages of it. I think we took a very unique approach because we said we’re only going to license our [marbles] based on the data that we have — we’re only going to train based on the data that we have license for. And I think that’s one in which, if we can get billions of people to use our software, I’m really excited about that. I love the word impact, and if we can have impact through that, that’s one exciting thing.

And there’s the other part of Adobe’s business, which is all about any digital experience that you have, engaging with any enterprise. Hopefully there’s a piece of Adobe software that’s used in the creation of that, whether it’s the website, the email campaign, the analytics associated with it. And the reality is, when everybody talks about digital transformation, they’re talking about engaging with a customer digitally and getting that personalized experience that they expect. And so from the Adobe perspective, those are the two things that I’m most, most fascinated about.

On the personal side, I’m on the board of Pfizer. And I think if I were starting my career right now, I think the confluence of technology and medicine and the ability to really get these incredible new therapies to market, that’s one that I’m particularly fascinated about.

Sankalp Banerjee: I’ve got one final question before we turn it over to the audience.

Shantanu Narayen: Okay.

Sankalp Banerjee: Shantanu, you’ve led large companies. You’ve led startups. You’ve served on boards. You’ve invested in sports teams. You’ve basically done it all. As you look out into this room of many soon-to-be graduates, what’s one piece of advice you’d like to leave us with?

Shantanu Narayen: Well, I was — you know, I was saying this earlier, which is the world’s your oyster. I mean, it’s just — think of where you are. You’re at Stanford University in Silicon Valley. And if you have a great idea, it’s just — the world’s really your oyster and trust your instinct. I mean, again, the thing — when people ask me for advice, I say I’m not very good at giving advice. And be careful about asking for advice because you’re getting what you’re paying for. But the thing that I would say is what we can be are sounding boards. And when people say, “Do you think I should do this or not?” it’s like be true to yourself.

I mean, I’ve always said people do their best work when they resonate with the mission of the company. So we always talk about changing the world through the digital experiences and when you resonate with the values of the company. And that’s not value judgment on different values. Different companies have different values. But if you can do that, if you can wake up every morning and feel like, wow, I resonate with the vision and the values speak to me as a human, you’ll do your best work. Otherwise, it’s a job and it becomes a nine-to-five. So do something that gets you excited about waking up in the morning.

Sankalp Banerjee: With that advice and with you as a sounding board, we’ll turn it over to the audience.

Shantanu Narayen: Great.

Sankalp Banerjee: Please raise your hands. Mics will be passed to you and you can ask your question.

[Shir]: Hi, I’m Shir. I’m a second-year MBA. Thank you for being here. As CEO, you have the unique perspective of establishing partnerships with — across the tech industry. And one such extreme that happened many years ago was the controversial public disagreement with Apple over the use of Adobe Flash. But on the other hand, you’ve also led very successful open-data collaboration with companies such as Microsoft and SAP. So my question here is, what do you think causes some partnerships in tech to succeed and others to struggle? And how might we as future leaders here go about thinking — building that right toolset and establishing the right power of partnerships in what seems to be a very highly competitive tech environment?

Shantanu Narayen: It’s a good question, and a couple of thoughts come to mind. I mean, the first is — first go back to this assertion that I have where some will work and some won’t work. So be comfortable with it. It’s worse not trying partnerships than it is trying partnerships. And Apple’s a very good partner. So for the record, while we may have had in the past sort of questions about Flash and whether or not it should be supported. I mean, the MacOS and iOS are where we deliver most of our flagship products. And so the first thing I would say is you’ve got to try them because the ecosystem and the ability to step on the shoulders of other giants, it’s a good thing.

The advice that I would give is think about is the business model fundamentally where they can make money and you can make money over time and you’re serving customers because those are the partnerships that tend to stand the test of time. I mean, press releases are cheap, right? I mean, with any event, everybody’s trying to do a press release about how the two companies are going to get together and transform the world. But at the end of the day, if there’s a good economic incentive, right, where the joint customers or customers of both of you make money.

I’ll give you an example. You pointed out Microsoft. We were one of the first companies that sort of partnered with them on Azure before Azure became this incredible giant that it has become. And we were like, hey, we need multiple cloud providers. We were on AWS as well, Amazon, so we needed Microsoft. And they said they would get their entire field organization to [co-sell] ours. So we were validating it. And so there was a good economic argument. We were helping them with making sure that Azure met our needs. And so when there’s a good business objective.

It’s the same with Google or Apple for us on their devices. When Apple comes out with a brand new MacOS, if we can take advantage of those incredible features that they have, then we’re serving our customers well who are on Mac, and they make money and we make money. So I think really putting yourself in the shoes. Way too many times, the mistakes we made are when we think, wow, this is so good for us, but we don’t take the trouble to understand is it equally good for the other partner. And if that’s not the case, then it’s going to die on the vine because the other company’s going to start off with good intentions, but it’s not going to go anywhere.

So I think I would say take that time to understand the economic incentives because all of us, at the end of the day, we have less time than we think, and we’re going to do the things that are going to yield the best results. So that’s what I would do.

Female Voice: [Unintelligible]. I work in strategic partnerships, and I had a question that you just answered.

Shantanu Narayen: See, that’s my AI at work. [Laughter]

Female Voice: So my question was really next on AI. Adobe has been a great company who led the world in enterprise transforming to the cloud. So now we are on the next phase of disruption, generative AI. And it impacts greatly on Adobe products. So what’s your vision to transform the next phase of artmaking and creating art for the companies and for people?

Shantanu Narayen: Well, I first have this fundamental belief, at least in my professional lifetime. Generative AI in the creative and in the art space is going to augment human ingenuity and not replace it. [Jensen] is a good friend. I had breakfast with him recently. And it’s one of those great pleasures that I have, privileges, that you can spend hours with somebody that you respect and talk about where you see tech going. And we were talking both about these models, whether it’s autonomous cars or generative AI, that at the end of the day, the companies that are going to win are those who recognize that there’s a complete workflow associated with it and understanding because this notion that I’m going to come up with an idea and just describe it completely and get the final output, that’s going to be a miniscule percentage of what people do.

And so if we can think about, okay, you’re going to augment human ingenuity, how do you make it. And the notion of copilot that everybody talks about, I believe that as well, which is we have the footprint with all of our applications. How can we help people with that? And so we sort of approach generative AI as, again, if you have this vision of creativity for all, if you believe there are billions of people, the biggest thing that most people fear is the fear of a blank page. You have this idea, you want to create something. I recently became a grandfather. And so when I became a grandfather, I was like, okay, I’ve got to do this announcing my grandson. And I’m like, oh my God, I — you know.

And people have higher expectations of me. If I’m working at Adobe, that piece of content has to be great. But — so you use it as an onramp to start doing it. So we’re really looking at it first from how can we design this to be commercially safe. I think that’s a big issue. And then how can I also use that as a business model, which is if we ‘ve designed it using Adobe software, if I go in to a company like Disney, how can Disney create a model that’s only specific to Disney where it’s their content and the Adobe license content, but only available to Disney. So that’s a business opportunity.

For the consumer, it’s a business opportunity because it enables them to be more productive and creative. For the person who wants to create art, maybe now they are able to generate more art and make that a business, right? I mean, Adobe is also ion the Adobe stock business. So I think the advantages are so much. And then last, the big area that we’re focused on is what we’re calling this content authenticity, which is it’s an initiative — we now have 900 companies. It’s all about the provenance of content and how do you understand, when somebody creates that content, how can you actually monetize it effectively?

So I think with all technologies, one of the things we talk about at Adobe’s purpose — we have three things: We talk about Adobe for all, creativity for all, and technology to transform. And you realize that technology has this incredible power. But there are potential users of that technology that are potentially harmful. And that’s a responsibility that a company like Adobe has to just take and say let’s understand that. We can’t have our head in the sand and say it’s not going to happen and ignore it because then somebody else is going to experiment with it.

So I’m a big believer that generative AI will actually bring more people into creative. It will require more differentiation at the end of the day. But in a way, how is that different from we have this online community called Behance. Think of it as LinkedIn for creative professionals. Tens of millions of people, they all product stuff. People get inspired by that. And so I think generative AI also has the ability to be inspiring. Certainly, there is going to be disruption. I’m not in denial of that. But if you come up with these assertions, that’s again — one of the ways we run the company is let’s have some core assertions. And even for a startup idea, I want the core assertions.

If somebody says, “Hey, I need an hour to explain my idea,” I’m not interested. And so I think if you have these core assertions clear. But I’m very excited, and I think we’re in the early stages of what that can be. The generative AI is new. AI is not new for us. I mean, if you’ve used our products, we have features like Content-Aware Fill and things that you look at it and say, oh my God, that’s magic. And so it’s just a different kind of magic. That’s my belief.

Male Voice: I’m [Unintelligible]. I’m a second-year MBA student here. Looking back at your life, what are the ways that you have found creative inspiration? And how does it nourish you today?

Shantanu Narayen: Well, the reality is you get creative inspiration from so many things. So it’s hard for me to look at one aspect. At Adobe, I’m a big believer in, you know, we hire a lot from college. And it’s like go spend time with them, right? I mean, the ability to — I think one of the attributes, I hope, that people will say about me is that I’m intellectually very curious. And if you’re intellectually curious, then you’re learning something in every aspect of what you do. But I think for me, a lot of it comes from people.

So the inspiration from people is, when you sit with a product team and they’re talking to you about the stuff that they’ve been working for — this morning before coming in here, I was like, okay, there’s a product called Adobe Express. I want to sit with that team and I want to really understand what that is. So inspiration comes from them. I have my self-help group. When I took over as CEO — that’s one other piece of at least learning for me, which is find people with whom you can share what’s going on. These jobs become lonely. It doesn’t matter what the job is. And one of your own alum, John Donahoe, I would say is one of my best friends. And John took over as CEO of eBay, PayPal when I took over as CEO of Adobe. Brad Smith took over as CEO of Intuit at that time.

And so I have this self-help group where I can go tell them anything that’s on my mind, and there’s no BS. And so that’s inspiration, right, because you hear about what they’re doing. But most of all, it’s my family. I mean, at the end of the day, that’s where you get incredible inspiration. But there’s — I’m an optimist by nature, and if you look at every one of these, even if something doesn’t go well, I always go back and look at it and say, did I learn something, and if I can learn something from it. But you get inspiration from so many —. And thank God, I mean, again, I know you didn’t ask this question, I’m a big believer in work at work, okay?

Adobe has never taken attendance. We’ll never take attendance. We trust people. But I don’t know how you build culture. I don’t know how you grow somebody’s career if they’re completely remote or hybrid. And so thank God that we’re mostly behind all of this and we are back at work, and I get inspiration from people. That’s what I get inspiration from.

Sankalp Banerjee: I think we might have one more question?

Male Voice: Hi, I’m a student in the Graduate School of Engineering. I also had a question about generative AI and the Firefly suite of products. So there’s a lot of questions about the copyright for these [unintelligible] and who owns it. On the input, on the output, do the artists own it? On the training, who owns that? And there are a few lawsuits also going on with other companies.

Shantanu Narayen: Yup.

Male Voice: So as a business leader, as these products exist out there in the world right now. But there is also this uncertainty on we haven’t decided a lot of issues about the ethics with these products yet.

Shantanu Narayen: Mm-hmm.

Male Voice: So as we — as Adobe continues to deploy these models, how do you deal with these issues?

Shantanu Narayen: It is one of the — if you actually think about where I spend my time in this area, it’s also — it’s probably 80 percent of time on the technology and sitting with the engineers, again, that inspiration, learning all about training models and inference models and sampling and image-to-text stuff. It’s been fascinating in the technology. I’ve also spent as much time really trying to understand derivative work and transformative work and the legal implications. We do have a paper, so if you’re interested, you can read about AI ethics and what Adobe thinks about AI ethics and biases and all of that.

And so I think successful businesses, you have to navigate all these aspects. You have to navigate the technology. Your technology better be good if you’re a product company. You have to have a monetization model; that’s what I learned at Pictra. You didn’t have a monetization model at that point. And you have to engage with your community. But the lessons that I also learned from the community — in fact, when we moved to the cloud — I’ll give you that example. When we moved to the cloud, Adobe was the first company that said we’re going to move to the cloud boxes. We’re not going to do it. We got ranked as one of the greenest companies in the world because we shipped box — we stopped shipping boxes.

I was — we were the number two company, the greenest company in the world. And I’m like we don’t even do any manufacturing. How come we’re the greenest company? PDF, I know, is green because we help you not kill trees. But you know, you look at all of that legal stuff in that community, the community didn’t want us to move to the cloud. The community actually said that this is a way that Adobe’s trying to do it. They had a petition. There’s this petition at Oracle, or whatever that is, and there was a petition. I always said there was a petition to eliminate senior management, and then I clarify it was a petition to fire as the CEO. So luckily, I survived.

But engaging with the community on that and recognizing that even when there are people who are opposed to it, go really deeply understand what their issues are. And are their issues fear? Are their issues well-intentioned? If they’re well-intentioned, then you’ve got to go address it. If their issues are fear, there’s not much you can do about some of that stuff. So specifically on Firefly first, our model is completely trained. We didn’t train it on Behance data. Even though Behance is an Adobe site, we did not do that. And so we’ve identified what our model is. You’ve got to be transparent with your customers on that. You’ve got to understand where the law is going to head. And you’re right, there’s some uncertain part of it.

But you have to have your north star as a company and be clear about which lines you’re not going to cross. And if you can do that and if you can communicate that to your customers, things work out. If you’re ambiguous about that, then I think bad things happen in companies. And so our job is to assert where we are going and then help navigate it. And it’s an uncertain time, but frankly, in the uncertain times, good companies should get stronger. And that’s where opportunity is, right, for us. And I think we are coming at it from the absolutely right intentions. So I’m confident about what we are going to do.

Male Voice: Thank you, Shantanu. I’m from Stanford LEAD Program. My question is I’m just borrowing a concept I heard long ago from a book called The Zen and Art of Motorcycle Maintenance.

Shantanu Narayen: Robert Pirsig.

Male Voice: Robert Pirsig.

Shantanu Narayen: We all grew up reading that in India. [Laughter]

Male Voice: So there’s this classical versus romantic, classical being the engineering, the number crunching, the romantic being somebody who appreciates creativity, art, and so on and so forth. You with [R-O-B] are in a unique situation where you encounter these two [unintelligible]. So how does — how does you exert your creative juices to come, and how do you appreciate the creativity or the art part of R-O-B?

Shantanu Narayen: You know, I’m a big believer — everybody talks about STEM. I’m all about STEAM. I mean, think about it. The world without art would be an incredibly boring place. And so it’s how I run the company. You have to get inspired, right? And whenever we have business reviews, since this last — whenever we have business reviews, I always say give me the narrative and give me the data. So actually, I have the best job in the world where if somebody comes in and all they are doing is giving me data after data after data, then, you know, what you talked about in terms of the data, then you lose that essence of the Zen of AI. In fact, I use that expression all the time in the company: What’s the Zen of what you’re trying to do, inspired by that book?

But if people don’t have that narrative of why this is going to be different, better, et cetera, then something’s missing. And so I actually am maybe trying to blend the two. And so the way I like to manage is tell me the Zen of what we are trying to do. And I think that’s at the end of the day how you make things different. But make sure you have the right metrics of data because that’s what we’re all expected to do to understand if you’re making progress, because otherwise it’s far too easy. And so I think that book inspired me to actually try to find a happy balance between both of them.

Sankalp Banerjee: Before we close, Shantanu, it’s a view-from-the-top tradition to end with a rapid-fire round.

Shantanu Narayen: Okay.

Sankalp Banerjee: So I’ll ask a series of quick questions, and you can respond with the first couple of things that come to mind.

Shantanu Narayen: Okay.

Sankalp Banerjee: First one, two words your wife would use to describe you.

Shantanu Narayen: Two words. Family man.

Sankalp Banerjee: Two words your kids may use to describe you.

Shantanu Narayen: [Laughs] These are tough. I hadn’t heard this. Okay. Competitive golfer.

Sankalp Banerjee: Two words you would use to describe yourself.

Shantanu Narayen: Blessed individual.

Sankalp Banerjee: And last but not least, two words that Billie Eilish may use to describe you. [Laughter]

Shantanu Narayen: [Laughs] Who is this guy?

Sankalp Banerjee: Shantanu, it’s been an honor. Thank you so much for sharing your time and your wisdom.

Shantanu Narayen: Thank you.

Sankalp Banerjee: Thanks a lot.

Shantanu Narayen: Thank you.

Sankalp Banerjee: You’ve been listening to View From The Top, the podcast, a production of Stanford Graduate School of Business. This interview was conducted by me, Sankalp Banerjee, of the MBA Class of 2023. Lily Sloane composed our theme music and Michael Riley and Jenny Luna produced this episode. You can find more episodes of this podcast at our website gsb.stanford.edu or wherever you get your podcasts. Follow us on social media @stanfordgsb.