Shameen Prashantham - Gorillas Can Dance

Skelta fostered a very strong link with Microsoft India on multiple levels. They quickly recognized that Microsoft is a big company and will have its own agenda. And so smart people like them very quickly align themselves to this [agenda] because then, they have the whole subsidiary standing behind them. What happens as a result is that it's not a very distant point in time when they start getting elevated to global levels. 11

In 2006, Skelta received an award from Microsoft recognizing it as an ISV “making waves.” 12 This reflected Skelta's progress, with support from Sodhi and other Microsoft managers, including one who had moved from the India subsidiary to global headquarters, in building bridges with actors in other parts of the Microsoft ecosystem, including at the corporation's global headquarters. This enabled Skelta to gain go-to-market support from Microsoft in the United States and also led to Skelta's building a partner network comprising other fellow Microsoft partners to act as their resellers in international markets around the world, including in Europe. In all, 80% of Skelta's revenues accrued through international business, with the bulk of this resulting from Skelta's engagement with the Microsoft global ecosystem.

In 2007, a Microsoft conference in Beijing showcased an example of good practice in reaching out to young firms by tailoring the existing ISV apparatus to local conditions. The person behind this, Vaqar Khamisani, was an entrepreneurial Microsoft manager in Pakistan, who had found that promising small enterprises needed rather more structured guidance than the ISV partnering program allowed for. He therefore proactively modified that program into a “journey” of sequenced activities through which small firms could develop technical and market capabilities that would ultimately make them far more effective in leveraging the Microsoft partnership. 13

What is perhaps most impressive about the Skelta-Microsoft partnership, and the work of managers like Khamisani, is that these occurred prior to the commencement of more systematic partnering efforts that were specifically targeted at startups. When a more structured partner program for startups did emerge, many more Microsoft managers were galvanized into partnering with startups. That initiative was BizSpark, launched in 2008.

The 2008 launch of the BizSpark program was a major milestone in Microsoft's journey of partnering with startups. The program's stated goals were to “develop and support a global ecosystem of startups, learn how best to provide value to these partners in the rapidly changing technology industry, and foster innovation, opportunity and economic growth around the world.” 14 It was the crystallization of a programmatic way to partner with startups on a large scale, and entice them onto Microsoft's technology platform by providing software, along with support and visibility, virtually for free to privately held startups that were less than three years in existence and made less than $1 million annual revenue. 15

Pulling off the BizSpark launch called for two key sets of actions. First, Lewin made robust efforts to persuade Ballmer of the importance of BizSpark, got his boss to underwrite the program, and navigated the challenges of introducing a complex program like this in the middle of the company's financial year. Second, to understand their perspective, Lewin created a team to engage with the entrepreneurial community and promote platform technologies such as the .NET platform to startups.

Dave Drach, who was part of that early Microsoft team, described to me the interactions they had with Techstars, a startup accelerator in Boulder, Colorado. Through his relationship with Brad Feld, Lewin and a small team met with the very first Techstars cohort, and talked to startups for feedback as to why they were using open source rather than Microsoft technology. They were told that startups couldn't deploy Windows server software because it was not available with the appropriate license rights to run web-based software. Feedback from startups at other accelerators was consistent. The bottom line was that even if they wanted to, startups could not license Microsoft software without a special service provider's license agreement (SPLA), which was only available to the telecom industry though a dedicated sales force. Then the team worked on figuring out how to address this issue and came up with a scheme to limit the use rights via a click-through license from a special website and to limit the market focus through partner (e.g. VCs) nominations of private companies less than three years old with less than $1 million in revenue.

Within less than a year of BizSpark's launch, more than 15,000 startups had signed on. 16 The following year, this number was over 35,000, 17 and five years from the launch of that program, the number stood at more than 85,000. 18 BizSpark was strategically important to Microsoft because it had simultaneously achieved two things. First, it paved the way for harnessing the potential of getting startups onto Microsoft's platform technologies. Second, the provision of free software tools helped stave off the threat from the open source software movement. (Since then Microsoft has become much more of a supporter of open source, 19 a shift that Lewin and his team advocated.)

While BizSpark was a breadth program, depth engagement was still going to be needed, and the early success of the BizSpark program created a large pool of startups that had chosen to adopt Microsoft platform technology. As one entrepreneur said to me, “We are taking a big bet on Microsoft … we are betting the farm on their technology.” From this pool, Microsoft now had the opportunity to partner more closely with a select group of promising startups. And this was exactly what Microsoft sought to achieve through the BizSpark One program.

In 2009, a new depth program called BizSpark One began to take shape. This initiative was an invitation-only “depth” program for the 100 most innovative startups, hand-picked from the member base of the BizSpark “breadth” program. As Lewin put it, “The idea behind BizSpark One is to cast a finer net using Silicon Valley best practices, and then lift the net up to find the startups that are most likely to succeed in the market and shape the industry's future.” 20

This elite startup partnering initiative was managed by Microsoft's Corporate startup engagement team, led by Matt Clark (who reported to Lewin), based in its Silicon Valley campus in Mountain View, California. The program provided startup members with a designated corporate account manager from that team in order to build a one-to-one relationship with Microsoft over a 12-month period, with the end goal being joint go-to-market strategies. The account managers' role was to help startups gain access to the right people and resources from relevant business units within Microsoft, as well as the corporation's wider partner ecosystem.

These efforts being driven by Lewin's team were indicative of broader strategic changes within Microsoft, with the mobile Internet and cloud computing becoming of strategic importance, ultimately leading to, especially vis-à-vis cloud computing, a business model change over time. S. Somasegar who was then a senior vice president in the server and tools business, commented:

Whenever there is a platform shift that happens – cloud computing being one of the biggest platform shifts that we have seen thus far – figuring out ways to engage with different parts of the ecosystem to drive adoption and usage of the platform is critical to the success of the platform. One of the important components of the ecosystem was startups. We wanted to ensure that we started to engage with the startup ecosystem both as a way to learn how to make our platform more relevant to startups as well to get feedback as startups starting to use our cloud platform.