I began recruiting for what became Azure in Jan 2006. I was chief software architect / cto at the company. Amitabh Srivastava and the legendary Dave Cutler were the leads, with Dave focused on the hypervisor. (I'd met Dave in the 80's when he was at DEC and I was at DG.)
The project was in my team (CSA labs) but was cross-funded behind the scenes by Kevin Johnson, the president of Server & Tools. KJ & I did this because there was passive-aggressive resistance to a 'cloud first' design/architecture philosophy from within his org, where there was a deeply-rooted belief that enterprise servers and ops management tools would adequately scale-up.
KJ bought in and was all-in, as was the 'tools' part of his org (Soma & ScottGu). SteveB initially didn't quite know what to make of my desire and myriad efforts to fundamentally transform the company from packaged products toward services, and he had to cope with some of the wake I was leaving. It wasn't all smooth. But he believed in me and helped me to recruit internally, which was essential.
My explicit cross-funding agreement with KJ, my peer, was that when I decided it was the 'right time', I'd hand off my Azure org and it would be re-merged into S&T in more-or-less a 'reverse merger', with cloud leadership taking over server.
I launched Azure at PDC 2008 with what today we'd call lambda's (functions-as-a-service based on .net) & blobs & cloud database as the core services. Why no linux or windows VMs? They were absolutely part of day 1 plans, but a major political ploy from within KJ's team ('this will kill the server business') resulted in an active decision (mine) to defer until post-launch. It wasn't a technology issue, nor was it an OSS issue; the team believed in OSS & Linux. But shipping was top priority, and we shipped.
When I ultimately left the company in 2011, it was time to do the reverse merger that KJ and I had planned. A proven, super-talented manager from Bing that everyone loved, Satya, was chosen to lead the org as it was moved into S&T upon my departure. James Hamilton, the architect of Azure's relational DB, left for AWS.
Ultimately, under Satya, ScottGU & co ended up re-plumbing much of the original code with a by-then-ready Windows hypervisor, VMs & Linux, and all that you see today. By then the org finally was aligned and 'believed', and SteveB was genuinely 'all in'.
Getting products from 0 to 1 is sometimes a challenging process involving incredible people and stamina from believers at every level. In this case I'd say it was worth the effort.