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.
PHASE 2 EXTENDING AND DEEPENING STARTUP ENGAGEMENT
Engaging in Selective One-to-One Partnering
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.
The BizSpark One program was in effect seeking to foster the development of startups that could be put forward as examples for the thousands of other startups vying to partner with Microsoft, as well as turn into potentially significant partners in the future. Since all of the selected startups came from the BizSpark partner program pool, they were all young (less than three years old) and had built their software offerings on Microsoft platform technologies. As Matt Clark observed: “Startups are the next generation of partners for Microsoft. Our whole business will rely on how well they succeed. BizSpark One extends the BizSpark program. We try to find the highest potential startups and provide technical and business support that helps them grow and succeed.”21
In 2010, when I attended the One Summit, a soft launch for the program in Mountain View, California, it was apparent that, for many of the startups selected to be on the program, there was a strong sense of being fortunate to have the opportunity. The majority of these came from North America and Western Europe. (One Chinese startup, Gridsum, did benefit greatly from BizSpark One, as discussed in the next section on emerging markets.)
In 2011, at Microsoft's annual Worldwide Partner Conference (WPC) in Los Angeles, which took place about eight months after the One Summit, some of the BizSpark One success stories were showcased at this event, which brought together approximately 15,000 delegates from the company's formidable partner ecosystem. As the then-president of the server and tools business, Satya Nadella gave a stirring speech about the importance of cloud computing.22 Indeed, a few BizSpark One startups were finding that betting on the cloud was paying off for them. For example, at the 2011 WPC, StorSimple, a Silicon Valley startup offering cloud-integrated storage solutions,23 was named BizSpark Startup of the Year. It was later acquired by Microsoft.24
The 2011 WPC was also significant for another BizSpark One startup, called Calinda. This French startup's efforts to enter the US market received a big boost when it was showcased along with a few other BizSpark One startups in a booth at the WPC that would have otherwise been well beyond their means. Through the networking that occurred at that event, it signed up its first resellers in the US market, who were themselves members of Microsoft's partner network. A magical moment at the 2011 WPC happened one evening when I was sipping drinks outside the venue with these entrepreneurs: Microsoft's BizSpark One team had arranged for these startups' logos to be flashed on a big neon screen outside the convention hall. The entrepreneurs excitedly grabbed their phones to take pictures and post on social media. The mood that night was electric.
However, there wasn't a happy ending for everyone. Later in 2011, a BizSpark One startup called Huddle began to publicly position itself as a rival to Microsoft.25 This came as a bit of a surprise to Microsoft, since this British company had been previously showcased as a poster child of BizSpark One. It was not the only startup whose relationship with Microsoft soured or became indifferent. Some startups were simply not proactive enough to grab (or create) opportunities for creating value within Microsoft's ecosystem. Others built good relationships with the startup engagement team but found the going hard once they started interacting with the (less sympathetic) business units – which is where the real opportunities for joint value creation are.
Israel provided a noticeable difference in the composition of the BizSpark One portfolio of startups between the One Summit in October 2010 and the WPC in July 2011. A manager called Tzahi (Zack) Weisfeld at Microsoft Israel had been proactively looking for ways to promote startup partnering in his locale. He and his team found Lewin's efforts through BizSpark One to be highly relevant to Israeli startups. A set of Israeli startups became an important subset of the BizSpark One portfolio. Indeed, with corporate involvement and support from leaders like Lewin and Somasegar, Israel would play an influential role in Microsoft's startup partnering journey.
