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Establishing a Customized Startup-Friendly Partner Program

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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.

Gorillas Can Dance

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