In this live episode of Founded & Funded, Madrona Managing Director Soma Somasegar sits down with Jay Parikh, EVP of Core AI at Microsoft, to unpack the company's evolution from a software factory to an agent factory Jay leads the team responsible for Microsoft's core AI stack, the systems that power Copilot, the tools developers rely on, like GitHub, and the infrastructure that makes large-scale AI possible. In short, his group builds the underlying tech that Microsoft and thousands of companies use to create AI-powered applications and agents. In this conversation, Soma and Jay dive into what Jay calls the Agent Factory, which is a new paradigm reshaping how software gets built in the reasoning era. They explore how AI changes the development lifecycle, why observability and evals are becoming mission-critical for enterprises, what it means to collapse traditional engineering functions, and how organizations should prepare for a world where models, agents, and human builders all collaborate in real time. This is a must-watch for founders, developers, and enterprise leaders who want to understand what's coming — and how to prepare for a world of real-time collaboration between humans, models, and agents. Full Transcript: http://www.madrona.com/microsofts-agent-factory-the-future-of-ai-software-with-evp-of-core-ai-jay-parikh Chapters:

Introduction

Jay's Background & Microsoft Role

The Reasoning Revolution

From Software Factory to Agent Factory

Building the Agent Factory

Impact on Microsoft's Future

AI Code Generation & Productivity

Shifting Engineering Focus with AI

Future of Software Development

Real-World AI Productivity Gains

Microsoft's AI Infrastructure Investments

Challenges with AI Evaluation & Observability

Model Choices & Microsoft's Strategy