engagement to co-selling in 2018 was arguably the culmination of an evolutionary process over a period of more than a decade – notably kickstarted by the BizSpark program introduced in 2008. Dave Drach, who had been part of the original BizSpark team, commented to me: “BizSpark was originally established to get startups on the platform. Now, everyone gets it. So, since that original problem has been solved, the question is: how to yield more value? The answer: through deep engagement yielding more business impact. Satya Nadella has made Azure core to Microsoft's strategy and is concerned with how to make it work for startups.”
During 2019, I came across various instances of Microsoft helping its current and alumni startup members to connect with large corporations, such as Walmart and Merck, in a way that was consistent with the new emphasis on co-selling solutions. In essence, Microsoft began connecting members of its startup community with that of more recent entrants to startup partnering in a way that was win-win for the two large corporations as well as the startups. That is, Microsoft could help its startup partners get a corporate client while the latter would be able to quickly get access to high-quality startups. As noted at the outset, in 2019, Walmart's CEO Doug McMillon was given a first-hand account of how Walmart was working with startups that were alumni of Microsoft's accelerator program.
Partnering with Social Ventures
In February 2020, the Microsoft Global Social Entrepreneurship Program, a new global initiative specifically targeted at social entrepreneurs, was launched. My account of Microsoft's startup partnering journey concludes with this announcement by Jean-Philippe Courtois,47 EVP and president, Microsoft Global Sales, Marketing, and Operations, warranting a final observation regarding social impact.
Even prior to the formal launch of this new initiative, social enterprises had appeared on the corporation's radar.48 This was evident during my research field trips to Africa. The Microsoft4Afrika initiative had been an avenue through which Microsoft was engaging with African startups, as I learned from Muhammad Nabil, the then head of ISVs and Startups Recruitment. These included social enterprises. During a field visit to Kenya – where Nadella had launched Windows 10 – I learned about Microsoft's efforts to partner with Twiga Foods, a social enterprise that was linking traditional fruit growers with retail outlets, and was using Azure technology.
Microsoft had engaged with social enterprises in other regions as well, such as the Indian subcontinent. To illustrate, Sehat Kahani is a Pakistani startup founded by Dr. Sara Saeed (CEO) and Dr. Iffat Zaffar (COO) that uses telemedicine to provide remote medical advice to patients while at the same time tapping the underutilized capacities of women doctors. In part through partnering with Microsoft,49 this social enterprise was able to scale its mobile app and gain traction owing to the Covid-19 pandemic, which greatly increased the need for telemedicine.
Through its Global Social Entrepreneurship Program, Microsoft would partner with social enterprises around the world that used Azure “to help create a sustainable, accessible and equitable world”50 by offering Microsoft Philanthropies grants, connections to other organizations, go-to-market support, and free access to Microsoft technologies including $120,000 of free Azure cloud and $1,000/month of GitHub Enterprise.51 Shaloo Garg, Global Lead, Global Microsoft Social Entrepreneurship Program, stated, “Our #1 operating principle for this program is simple. We want ‘Founders’ to be the center and their success is what drives us. When we designed this program, our key driver was to offer core components like Technology, Grants, Corporate Innovation (co-sell to enterprise customers) to help drive startup success. And we are absolutely jazzed about it.”
Three startups were announced as the initial participants: OmniVis, which had built a smartphone-based cholera detection system; Seabin, which tackles marine litter such as microplastics; and Zindi, which generates AI solutions for Africa through its web platform.52 Success would be measured both by profitability and social impact, including commitment to the ethical and responsible use of AI.53
Potentially, initiatives such as Microsoft's social entrepreneurship program have an important role to play in the post-pandemic 2020s decade as the world economy rebuilds and resumes its efforts to achieve the 2030 Sustainable Development Goals.54
LESSONS FROM THE MICROSOFT STORY
There are three important facets of Microsoft's startup partnering journey that are worth paying attention to:
1 Co-aligning with strategy – which relates to the why of corporate-startup partnering
2 Co-innovating with startups – which relates to the how of corporate-startup partnering
3 Co-evolving with ecosystems – which relates to the where of corporate-startup partnering
First, in terms of the why, two key observations can be made. There is an imperative for partnering with startups. Large corporations need to be entrepreneurial to cope with disruption and competitive dynamics in an era of digitalization – and one way this is manifested is through partnering with startups. Indeed, in the Microsoft case, managers like Dan'l Lewin, Zack Weisfeld, and James Chou, among many others, were especially key in driving startup partnering efforts. That said, there is also challenge in partnering because of the sheer differences between large corporations and startups. As seen in the Microsoft case, a concerted effort was required in order to better understand startups' circumstances, through talking to the startup community.
Second, in terms of the how, again a couple of points are worth making. It is important to identify a partnering process that is systematic and addresses the asymmetries between large corporations and startups. In the Microsoft case, a format that was developed that worked well was a cohort-based model that brought a set of high-potential startups together for a prespecified period of time. It is also important to build a partnering capability vis-à-vis startups. In the case of Microsoft, there was clearly a capability that had been built, which made it possible to sustain its startup partnering efforts. Key managers like Zack Weisfeld, Bala Girisaballa, and Dave Drach went on to facilitate corporate-startup partnering at other organizations in their post-Microsoft career.
Third, in terms of the where, for multinational corporations there is scope for partnering globally with startups. In the Microsoft case, important activity took place in a range of settings: North America, Western Europe, and Israel, as well as emerging markets – with strong leadership from headquarters. As Dan'l Lewin observed, “The direction from which all the actions were taken in the market (the subsidiaries) was crafted by the Corporate team (which I lead).” Emerging markets like China and India have continued to be leveraged for startup partnering. Finally, there is scope for partnering for good with startups. This was vividly seen in the case of Microsoft's work in Africa, but also elsewhere. By formalizing its efforts to engage with social entrepreneurs Microsoft has demonstrated an intent to contribute towards achieving the 2030 SDGs.
WHAT THIS BOOK IS ABOUT
In sum, the Microsoft story helps us understand the “why,” the “how,” and the “where” of corporate-startup partnering.
This gives the structure for this book.
This
