New Corporate Innovation Practices
In late 2011, Weisfeld met with Satya Nadella (head of Microsoft's server and tools division at the time) and highlighted the need for deep engagement with startups. Weisfeld cited Paul Graham's blog post “Microsoft is Dead”26 and recommended additional formats, such as corporate accelerators, to work with startups. Weisfeld and his team at Microsoft's research facility in Israel had recognized the potential for working much more closely with promising startups through an accelerator model. Managers in Microsoft's research unit in China and India warmed to the idea. Executives like Somasegar were highly involved in and supportive of this initiative as it unfolded.27
In 2012, Microsoft launched accelerators in Tel Aviv, Bangalore, and Beijing, housed within its research facility in each location. All of these milieus had promising startup ecosystems. The format of the accelerator program was that startups would be co-located for four months (initially six, in China) during which time they would have access to cloud computing and other technology infrastructure, mentoring, and opportunities to build networks with Microsoft managers and partners. The accelerator program would conclude with a demo day attended by Microsoft managers as well as select partners and investors. In 2013, using the same template, accelerators were launched in three important European startup ecosystems: Berlin, London, and Paris. And the following year, an accelerator was established in Seattle, Microsoft's own backyard. Global responsibility for running all the Microsoft accelerators was given to Weisfeld, who continued to be based in Israel.
Although the early accelerators explicitly focused on offering free credits of Azure, Microsoft's cloud computing service, a technology-agnostic attitude was adopted to the selection of startup partners. That is, it was not deemed problematic if startups preferred other cloud solutions such as Amazon's AWS. The first Microsoft accelerator I visited was the one in Beijing. I recall vividly my astonishment at seeing Apple equipment on the startup's tables in their co-working space. Mouth agape, I turned to my host, David Lin, the then-director of the Beijing accelerator. Lin smiled and said, “We want startups to know that we are interested in their success.” Although it was clear that Microsoft was incentivizing the use of its cloud tools, at that stage Microsoft did not make working on its own technology a precondition for joining its accelerators. This suggests that Microsoft was working hard to win the hearts and minds of startups.
During one research field trip to India, I observed a Wednesday afternoon session at Microsoft Accelerator, which had the strong support of CFO Amaresh Ramaswamy and the leadership of a former entrepreneur, Mukund Mohan. Initially, there were a couple of partners – one from Nokia and another from SAP – who gave brief talks about how they might be able to support the dozen or so startups represented in the room. Next, the startups engaged in some peer sharing with three startups, demonstrating some of the progress they had made – for example, one entrepreneur demoed his work-in-progress app – and received feedback from mentors and the other entrepreneurs. Finally, everyone trooped to a local pub for beer and pizza. Chatting with the entrepreneurs in that informal setting, I could sense a palpable buzz among them.
On a visit to the Tel Aviv accelerator, I noticed that an event for startup alumni was going on in the adjacent room. When I met managers and entrepreneurs at the London accelerator I was struck by the upbeat mood of the entrepreneurs who felt Microsoft's cloud offering was valuable to the startups there, a view echoed by a senior marketing director, Helen Litvak. On yet another field trip I met the heads of the Bangalore, Beijing and Tel Aviv accelerators who had come together to compare notes and share their learnings with each other.
Thus I observed positive vibes among Microsoft managers and entrepreneurs across multiple locations. The period and nature of engagement was not unlike other accelerators, but what appeared to make it work was the caliber of the startups, involvement of Microsoft executives, and the willingness of Microsoft partners from its wider network to engage with the startups as well. I was left with the impression that Microsoft was taking startup partnering seriously; it wasn't just paying lip service.
Tapping Emergent Startup Ecosystems
Before wrapping up the second phase of the story, it seems worth noting that the action was heating up in emerging markets, notably China and India – and Microsoft's strong presence in those markets was a great advantage.
As a company, Microsoft has historically taken emerging markets seriously, as seen from the scale and scope of its operations in China and India, and regular visits from global top managers. Not surprisingly, this is the case when it comes to startup partnering as well. The Skelta example from India demonstrates that although it required strenuous efforts from both managers at Microsoft India and the leaders of the startup, it was not impossible for an Indian startup to “dance” with Microsoft, even before BizSpark. And with the launch of BizSpark (and of BizSpark One), more such opportunities presented themselves, as illustrated by the case of Gridsum.
Beijing-based Gridsum was founded by Qi Guosheng, a young computer science graduate from Tsinghua University.28 While at college, Qi had spent a summer interning at Microsoft's research facility in Beijing. When he founded Gridsum after graduating, he used Microsoft technology to build software products, the quality of which impressed Johnny Xu, a Microsoft China manager working with startups. Gridsum became the first (and, for a while, only) Chinese entrant into BizSpark One. For Microsoft China's sales force, Gridsum became an attractive example of how a Chinese company could leverage Microsoft technology to build software products. And thanks to BizSpark One, Gridsum was also able to attract global attention from Microsoft.
In 2011, when Steve Ballmer visited Beijing, he gave a talk at an event that had two speakers – Ballmer and Qi. Thus Gridsum was showcased as an example of how a startup in an emerging market like China could have a mutually beneficial relationship with Microsoft.29 However, despite the examples of Skelta in India or Gridsum in China, most of the action during BizSpark One was in the West. For example, Microsoft produced a video showcasing some of the most promising BizSpark One startups; they were all from North America or Western Europe.30
In 2012, by contrast, the launch of accelerators in Bangalore and Beijing, on the heels of the original one in Israel, gave tremendous impetus to Microsoft's startup partnering efforts in the world's two largest emerging markets. When first launched, the Indian accelerator readily adopted the Israeli model of a four-month curriculum, but in China, with its linguistic differences and unique ecosystems, it was felt that a six-month program was required. Eventually Chinese cohorts also adopted the same four-month program.
The timing of the launch of the Bangalore and Beijing accelerators proved to be fortunate, as both China and India were witnessing the beginnings of the rise of the mobile Internet. (In China, for example, 2011 was the year that WeChat was launched, and it began to take off the following year.31 ) Microsoft was able to engage with some interesting startups and “catch 'em young.” For instance, Testin was a startup created in Beijing in 2011 to provide software testing services for mobile apps. Testin was part of the first cohort of Microsoft's accelerator in Beijing in 2012. It has since gone on to extend the Microsoft partnership with China to the United States, where it has an office in San Francisco, apart from also building partnerships with several other multinationals.32
In 2013, Microsoft reiterated its interest in a wide range of emerging markets when it launched the Microsoft4Afrika program,33
