• Microsoft is offering buyouts to about a quarter of its workforce.
• In an internal memo, Microsoft's finance boss said the company expects "very few people" to accept.
• Employees had been questioning the rationale behind the offer, the memo said.

Microsoft expects 3,000 or fewer employees to accept the buyout it offered this week to more than a quarter of its workforce, a spokesperson told Business Insider.

The point was reiterated on Wednesday by Chief Financial Officer Amy Hood, who wrote in an internal memo that employees have been questioning the rationale behind the buyout.

"I know there have been some questions on the rationale behind the voluntary exit offer that we announced this week," Hood wrote. "Our intent is to offer employees agency if they choose to leave the company on their own terms. We expect very few people to select this offer because of the growth opportunities here at Microsoft."

The memo statement was part of a quarterly earnings email Hood typically sends internally to employees every quarter when Microsoft discloses its financials.

These memos mostly repeat what the company reports publicly, but this time Hood went out of her way to address the buyout offer, which caused quite a stir across the tech industry this week.

Earlier this year, Microsoft offered a different retirement buyout. In that situation, about one-third of eligible employees took the offer, and that helped Microsoft cut fewer employees in subsequent layoffs.

This week's buyout is getting a lot less uptake, according to the company.

Read the CFO's full memo

Team,

This afternoon, we announced our first-quarter financial results. We exceeded Wall Street expectations, growing revenue 19% and operating income 21%.

With the start of FY27, we also made an important change to how we report our business. We announced that we changed our reporting structure for the first time in 12 years, moving from three segments to two: Agents and Infra, and Devices and Consumer. This change better reflects how we are running the business today — from how we build products and allocate resources to how we create value for customers across the connected layers of our platform. To give you a sense of the two segments, looking back to last fiscal year, Agents and Infra would have represented about 81% of our revenue while Devices and Consumer would have been 19%.

A few highlights from the quarter across our two new segments:

• Agents and Infra grew revenue 23% this quarter
• Microsoft Cloud revenue was $63.9 billion and accelerated to 30%.
  Azure revenue increased 48% reflecting accelerating Foundry demand.
• Microsoft 365 commercial cloud revenue increased 18% in constant currency driven by growth in our premium seat offerings like Copilot and E7 as well as usage-based services across M365 Copilot and GitHub Copilot.
• Microsoft 365 commercial seats increased 5% and the number of customers with more than 50,000 M365 Copilot seats increased 8x year-over-year.
• Microsoft 365 consumer cloud revenue increased 17% with subscriber growth of 7%.
• Industry solutions cloud revenue increased 10% with growth in Dynamics 365 and LinkedIn Talent Solutions.
• Devices and Consumer declined 3% this quarter
• Search and advertising revenue ex-TAC increased 12%, with growth across LinkedIn, Bing, and Edge.
• Windows OEM and devices revenue decreased 22%, reflecting the prior-year benefit from Windows 10 end of support, inventory drawdowns by OEM partners, and weaker PC market demand.
  XBOX content and services revenue decreased 2%. Last week, we launched Call of Duty: Modern Warfare 4, as we continue to bring great games to more players across more devices.

Thank you for everything you did to deliver a strong start to the year. In particular, I want to thank our engineering and capacity delivery teams who are working to help us deliver more capacity faster and with high reliability. These teams are also using the capacity we have more efficiently to create room for us to better meet customer demand for the Azure platform, which continues to exceed our supply.

I know there have been some questions on the rationale behind the voluntary exit offer that we announced this week. Our intent is to offer employees agency if they choose to leave the company on their own terms. We expect very few people to select this offer because of the growth opportunities here at Microsoft. We'll continue to provide a broad set of options for employees to learn, gain new skills, and advance their careers here.

We have tremendous opportunity ahead of us. To meet the moment, we are focused on delivering great products and solutions that help our customers to achieve their many goals — security, innovation, growth — to name a few. Thank you for keeping positive, value-creating outcomes for our customers at the top of the list.

To hear more details about the quarter and our outlook for Q2, you can join live today at 2:30PM Pacific Time, listen on-demand, or read the transcript on the Investor Relations website. Finally, mark your calendars for Microsoft Ignite, on November 17-20, where we'll show how our innovation across AI, cloud, data, security, and Copilot is coming together to help customers transform their businesses.

With appreciation and gratitude,

Amy

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• AI coding startup Cogniton is fielding offers for a new funding round.
• The round could value Cognition between $70 billion and $80 billion, according to people familiar with the matter.
• The new offers come weeks after the company announced a $2 billion round at a $48 billion valuation.

Just weeks after announcing a new round of funding at a $48 billion valuation, AI coding startup Cognition is fielding new investor interest at a much higher price.

The startup has received offers valuing it at between $70 billion and $80 billion and is seriously considering a round before the end of the year, according to sources familiar with the matter.

The talks around the financing are still early, and valuation targets could still change.

Founded in 2023 by Scott Wu, Steven Hao, and Walden Yan, Cognition is best known for Devin, an AI coding agent designed to automate software engineering tasks. The San Francisco-based company's existing investors include a16z, Accel, Founders Fund, Khosla Ventures, Elad Gil, and Pear VC.

Cognition's rapid valuation climb underscores the investor frenzy around AI coding, one of the hottest and most competitive corners of the AI market. As companies race to sell AI coding agents that can take on more of the work engineers do, investors are placing increasingly expensive bets on the few startups they think could emerge as leaders.

A $75 billion valuation wouldn't be so far-fetched, as SpaceX just acquired fellow AI coding giant Cursor for $60 billion a few months ago.

Last month, Cognition was drawn into a public feud with rival Factory AI, which accused Cognition employees of posing as job applicants to seek product information and faulted a former Factory adviser for meeting with Cognition executives. Cognition and the former adviser denied that confidential information was sought or shared.

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• The startup world is littered with companies that tried to become the next YouTube.
• Andrew Morse is trying it again, anyway.
• Morse's pitch: a curated app that gives creators incentives a reason to give it exclusive content.

Are you sick of the algorithms that serve you video on giant platforms like YouTube and TikTok?

Or are you a video-maker who's sick of the algorithms that don't serve your stuff to would-be watchers?

Andrew Morse would like to talk to you.

Morse, who spent years working in big media (Bloomberg, CNN) and most recently in local news (The Atlanta Journal-Constution), is building Phareo, a startup he hopes will one day rival internet media heavyweights. The secret sauce, he says: his own AI-powered discovery engine that will make both video-watchers and video-makers happy.

This is, to put it politely, a very tall order.

But it's still worth talking about, since Morse is homing in on a problem you hear a lot about in creator circles these days: the sense that people who make content are getting increasingly bad deals from platforms, because they can't control who sees their stuff.

Phareo (the name is an allusion to Pharos, the ancient lighthouse of Alexandria) says it can solve that problem by giving creators real incentives to make exclusive stuff for the company, via levers like revenue share and options. Morse plans to launch in January with an initial group of 25 creators. The app will start out as a free, ad-supported service, but he hopes to eventually offer a paid tier.

I talked to him this week about his plans, the shifting media landscape, and why he's increasingly worried about the creator economy — at the same time he's launching a creator economy app. This is an edited excerpt of our conversation:

Peter Kafka: You have a classic chicken/egg problem: Consumers are not going to use a new app unless it has compelling content they can't get somewhere else. 
Content-makers don't want to put their stuff there unless there's a big audience.

Andrew Morse: It is the most important question we have to solve.
It starts with dissatisfaction, and it starts with a belief from consumers and creators, that they're not being currently served as well as they could be. So we're working with creators who believe that there has to be a better alternative.

We don't really have anything to lose, given the direction that the platforms are taking and given the overreliance that their creative work has on algorithms that don't serve them. We're going to build with creators and try to build a super-passionate core and grow from there.

But YouTube, TikTok, Reels, etc do a great job of giving me tons of video. And they have unlimited content. How do you move me over from the platforms I'm already using?

It's an ironic conundrum — we're trying to solve the discovery problem, but we have to be discovered ourselves.

Over the years, I've seen many companies say they're trying to solve a discovery problem. 
But it doesn't seem like consumers have a discovery problem. It's the content owners who have a problem getting their stuff in front of consumers. What's the incentive for consumers to move to a platform content-owners like? 


There's an inherent assumption that consumers are satisfied with the platforms. I don't think that that's true. I think consumers are on these platforms because they have to be. Whether they're getting what they want in an efficient way is an entirely different story.

Any advice for your former CNN colleagues who are now working for David Ellison?

Stay focused on the work. It's always the journalism that matters. 
And the truth and the facts and great storytelling will always rise to the top.

We have seen a steady stream of journalists leaving places like CNN and starting their own thing. Do you think that trend accelerates or stalls out as people realize how difficult it is to do solo media for a living?

I'm concerned about this creator economy — which is really about about businesses that have built themselves on the back of YouTube. If you go back to 2016, 2017, a number of really clever, really creative businesses were built on the back of social platforms. When the algorithms changed, it became almost impossible for these businesses to stay afloat. It was hard for us at CNN, but we had a big enough business that we were able to mitigate and ride the wave. For these other companies, it was disastrous. 


I think you're going to see more and more people trying to go out on their own — and that's what scares me. 
Because I think that the sands may begin to shift a little bit.

• Dalet Labs, an AI commerce startup, is coming out of stealth mode with a $7 million pre-seed round.
• It's launching a new app called Scene, where you can scroll through shoppable, AI-generated images.
• Read the 5-page pitch deck the startup used to raise capital — months before finalizing its product.

Would you shop from a feed of AI-generated images?

The startup Dalet Labs is betting you will.

The AI-commerce company exclusively told CMO Insider that it raised a $7 million pre-seed round led by Lightspeed Venture Partners and is launching its first product, a shopping app called Scene.

Founded by Omer Bar-Tal in 2025 after he left the AI video startup Runway, Dalet Labs recently came out of stealth mode. The startup raised its pre-seed in late 2025, before finalizing its product road map. In addition to Lightspeed, venture capital firm SV Angel and individual angel investors participated in the round.

Lisa Han, the Lightspeed partner who led the round, said that Bar-Tal has a combination of "video AI research expertise" and a "deep understanding of what consumers want."

Scene, which became available on the Apple App Store in the US on Wednesday, lets people scroll through a feed of shoppable AI-generated images. The app will be invite-only at launch, and isn't yet available on Android. While the images of people or scenes are AI-generated, the products themselves come from real brands across categories like fashion, home decor, and sports.

Bar-Tal envisions Scene as a tool people can turn to when they want to buy something but are still uncertain about exactly what they have in mind. It's similar to scrolling through Pinterest or TikTok in hopes of being inspired to buy something, but Bar-Tal said there's a key difference: You come to Scene to shop, not be entertained.

Bar-Tal sees Scene as a virtual "mall" where users can window-shop, save items to their cart, and make purchases.

Commerce has become an increasingly attractive use case for AI tools like chatbots and agents (including Meta's Muse). However, Bar-Tal argues that AI shopping tools are missing something.

"AI is amazing when you know what you want, but it's really important to actually have an ability to discover and to see things," Bar-Tal said. Agentic commerce, he added, "misses the point in shopping — which is essentially a delightful experience."

As a Scene user scrolls and interacts with products linked in the app, the feed adapts to what type of brands or items the user is interested in. Then, Scene uses AI to generate scenes with people wearing or using those items.

Bar-Tal did not comment on which third-party models Dalet Labs uses.

Bar-Tal said Dalet Labs doesn't see its product as replacing influencers, but rather as "complementary."

"The content here is AI, but it is not aiming to replace creators because we are not aiming to create entertainment," he said.

However, even if Scene isn't competing with influencers for entertaining content, it's still competing with their business model: making money by promoting brands' products and ultimately driving sales.

Scene has a catalog of hundreds of brands and retailers, Bar-Tal said, and is making more partnerships. The company did not share further details on what brands Dalet Labs has already established relationships with.

Bar-Tal said the company is also leveraging affiliate marketing to monetize the app early on, working with affiliate networks to earn from each in-app transaction.

Dalet Labs' Scene is entering a crowded market of apps offering people ways to discover brands and goods, like TikTok's growing Shop presence in the US or Pinterest's visual search prowess. Startups like Doji and Alta have also raised millions on the promise of tech that lets people try on clothes using AI-generated versions of themselves.

How will Dalet Labs get people to download an entirely new app?

Using influencers and social media to promote the app will be a core part of Dalet Labs' user acquisition plan. It also plans to roll out a coupon campaign during the holidays, offering new users discounts on purchases made through the Scene app. Bar-Tal didn't share whether the discounts would be funded by Scene or by brand partners.

The New York-based startup, meanwhile, is using its pre-seed funding to hire more engineers and researchers to build out Scene.

Read the 5-page pitch deck Dalet Labs used to raise its $7 million pre-seed:

The deck starts with background on the technology

Here's what the slide says:

For over half a century, every major shift in computing has been driven by an interface revolution.

The move from terminals to graphical user interfaces (GUIs) transformed computers from expert tools into mass-market products.

The rise of the web and mobile extended that pattern: each new medium made digital interaction more visual, intuitive, and consumable.

Text, by nature, demands active cognitive effort; Visual interfaces go a step further by allowing users to grasp high bandwidth information almost instantly with minimal cognitive effort.

Then it explains Dalet Labs' thesis

Here's what the slide says:

Today, artificial intelligence represents the most profound computing shift since the PC. Yet, paradoxically, our interface to AI remains stuck in the terminal era.

We converse with models through text prompts and receive text streams in return in synchronous manner. Our product thesis is simple and inevitable: AI requires a native GUI.

We believe the GUI to AI will not be code-based, but rather generated by media models.

It then outlines the competition

Here's what the slide says:

The core product of AI consumption platforms is inseparable from their textual chat interfaces.

For example, the OpenAI brand is strictly associated with the chat interface of ChatGPT.

Moreover, by decoupling the user interface from any specific model provider, we can integrate multiple frontier models (OpenAI, Anthropic, Google, or open-source systems) and focus our innovation on the new media generation GUI platform. This modularity becomes increasingly valuable as AI models are commoditized. In addition, their technical stacks are anchored in the code generation paradigm, in contrast to our focus on Media Models.

Finally, it introduces Dalet Labs' founder

Here's what the slide says:

Omer Bar-Tal

• Research experience from Weizmann Institute.

  • Built the first method for editing real-world videos using text
  • Papers in CVPR, ECCV, ICML, ICLR etc.
• Trained video foundation models (Google, Pika, Runway)
• Built creative applications with media models (eg video editing, reference-to-video, etc.)
• Led applied research teams and product launches

• A version of this post appears in CMO Insider.
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Hugo Veiga and Diego Machado — the former AKQA global chief creative officers — spent two decades building brands at some of advertising's most storied creative agencies. Their next bet: a new type of agency that wants to be paid not just in cash, but in a share of the businesses it helps build.

Veiga and Machado exclusively told CMO Insider this week that they have launched !F Creative Capital, a company that combines conventional commissions with equity partnerships and revenue-sharing arrangements tied to clients' sales.

Rather than charging an upfront fee alone, !F Creative Capital offers creative consultancy in exchange for equity in companies it believes can grow. For example, it took a stake in the superfoods brand Authentic Fruits in a deal that includes a three-year creative engagement, a share of sales, and additional equity tied to sales performance. It has equity in CheckMy.Music, an AI platform that scans songs for plagiarism, and an equity partnership on a new project led by former Chelsea FC and Real Madrid manager Carlo Ancelotti.

A long-held complaint on Madison Avenue is that agency holding companies prioritize businesses such as media buying — and, increasingly, data, technology, and AI services — because they are easier to package, measure, and sell repeatedly than bespoke creative work. Veiga and Machado said that !F Creative Capital was born out of a desire to create a model that more effectively ties the value of creative ideas to business results.

"In many of the creative industries, everyone is too busy doing decks, doing keynotes, and losing the connection with the final thing," Machado said.

!F Creative Capital has also launched its own brands, including SNIFF, a pet company that lets dogs smell food before their owners buy it, and Baitts, a toothpick brand.

Elsewhere, the company is coproducing a feature film set for release next year, and it's preparing to launch an eight-week "School of Creative Entrepreneurship" to help people turn their ideas into businesses.

While !F Creative Capital has taken on commission-based creative work for brands including Corona and Cristiano Ronaldo's Globe Sports Award, Veiga and Machado said they are reinvesting that money into the equity-focused side of the business and their in-house projects. !F Creative Capital is self-funded and has a team of around 15 people spanning seven countries, along with a broader network of contributors.

'You have an idea, and you give it for free'

Veiga said the long-term vision is for !F Creative Capital to become independent from commission work as it builds its own brands and effectively becomes its own client. The result might look more like a holding company for brands than the creative agencies where the duo made their name.

"A lot of times you have an idea, and you give it for free, or you push to make it happen without owning that," Machado said of the agency business.

Adland's creative agencies have explored similar equity-focused business models in the past. Uncommon, the London-based studio in which Havas acquired a majority stake in 2023, took equity in the compostable coffee pod company Halo and the finance app Communion. In 2010, former Deutsch exec Mike Duda cofounded the hybrid early-stage venture firm and creative agency that later became Bullish. Anomaly, now owned by Stagwell, began incubating and acquiring stakes in brands in the 2000s.

Brian Wieser, CEO of the advisory and consulting firm Madison and Wall, said that while the equity model still persists in the agency industry, the practice isn't common and mostly ties to the individuals running those companies because the skill sets are different.

"Most people who can do venture well focus on venture capital," Wieser said. "But the right person with the right relationships can make this happen."