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MICROSOFT: A CASE STUDY IN STARTUP PARTNERING

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In October 2010, Microsoft organized an event, billed as the One Summit, at its Silicon Valley campus in Mountain View, California. While Microsoft was well known for its partner-related events and activities, this summit for startups was a first for the company. The event marked the soft launch of a program called BizSpark One, a partnering initiative through which Microsoft partnered with 100 of the most innovative startups that used its technologies, selected from over thousands that had signed up to its BizSpark program launched in 2008. The majority of the startups in that room were from North America and Western Europe.

Fast-forward to April 2019. Walmart CEO Doug McMillon was in Shanghai, China, and one of the local initiatives that he spent time learning about was Omega 8, a partnering program through which that retail giant could work with local startups to solve their pain points. A few startups that had gotten to work with Walmart in China through this program demonstrated their solutions. Apart from the apparent prowess of those startups, the win-win outcomes for them and Walmart, and the high-level executive attention the program had attracted, there was something else that was striking: most of those Chinese startups were alumni of the Microsoft Accelerator program.

I was fortunate to be present at both those meetings as an academic researcher. For well over a decade, as part of my ongoing research program I have studied how Microsoft (and many other corporations discussed in this book) partnered with startups. For me, Microsoft's journey of partnering with startups across time and locations is an excellent case study for three reasons.

First, Microsoft took startup partnering seriously, yet had to work hard to figure things out – therefore there was plenty for me to study, over time and across space. Partnering has been in Microsoft's DNA, as acknowledged by Steve Jobs. Yet, even Microsoft has had to work hard at startup partnering. A key point of the story is that Microsoft's current status as a partner of choice for many digital startups didn't happen overnight; it has been effortful, not effortless.

Second, I was fortunate to gain access to relevant Microsoft managers across several regions, over a considerable period of time – therefore I could observe an unfolding journey. My exposure to Microsoft began in June 2003 during a fortuitous visit to its headquarters in Redmond, Washington. Since then, many Microsoft managers, startup partners, and other ecosystem members have been generous with their time and stories with me over the years, as I embarked on a study of corporate-startup partnering. Spanning over a decade and a half, my research on Microsoft covers multiple geographies including China, India, Israel, Kenya, South Africa, the UK, and the United States, among others. On occasion, I have even found myself telling Microsoft managers stories about the past that they weren't aware of!

Third, it is a story about a learning journey – and thus offers lessons for all companies that are committed to partnering with startups, even traditional ones. Today, startup partnering is relevant to corporations in all industries. As seen, traditional companies like Walmart could partner with startups alongside a technology company like Microsoft. Moreover, in this era of digitalization, all companies are becoming software companies, as Microsoft CEO Satya Nadella often says. Everyone can learn from the Microsoft story.

Before getting into my narrative, I wish to make it clear that I am a neutral observer; despite the warm professional relationship I have had with many current and former Microsoft managers, I deliberately declined taking on any commercial or consulting role while my research was ongoing, a stance that has been graciously accepted by all my informants. (This holds for all the other companies I've studied for this book, as well.)

In presenting my account of Microsoft's startup journey, I describe three broad phases (see Figure P.1). The first culminates with the launch in 2008 of BizSpark, Microsoft's large-scale programmatic initiative to engage with young startups; that was also the year Bill Gates exited day-to-day operations at Microsoft, leaving Steve Ballmer fully in charge. The second phase covers subsequent startup partnering initiatives that had a global footprint, including an accelerator program originating in Israel, and were brought under a single umbrella, Microsoft Ventures, in 2013. The third begins around 2014, when Satya Nadella became CEO, when startup partnering had become increasingly “mainstreamed” into Microsoft's corporate strategy.2

Figure P.1 Three Phases of Microsoft's Startup Partnering Journey

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