Microsoft's helping hand is self-satisfying

Microsoft plans to help out start-ups, because, at the end of the day, it's actually in its best interests to have them use its own products.
Written by Michael Lee, Contributor

Microsoft is targeting entrepreneurs that could change the world, or at least their relevant markets, not just to encourage innovation, but also because it would boost Microsoft's own products.

Speaking at the Microsoft Asia Pacific Entrepreneur Summit 2012, Microsoft corporate vice president for strategic and emerging business development Dan'l Lewin was frank with the audience, telling them that Microsoft does have a vested interest in helping start-ups, because it isn't necessarily the market leader when it comes to smartphones, cloud and other offerings.

"We're coming from behind, and we need all the help we can get," he said.

The idea behind Microsoft's entrepreneurial support program, BizSpark, is that Microsoft provides start-ups with its products free of charge for the first few years of the business. This means that start-ups can get on their feet, and, once they have the revenue to stand on their own, only then are they required to pay for Microsoft's services.

"For the first three years of your life, while you're exploring and shaping your business and your business model in a new modern distributed-systems world of cloud services and new device architectures, you don't pay. And that's, we think, the right investment for us to make at scale."

Selling the program to the audience filled with entrepreneurs and venture capitalists, Lewin promised that those that went the Microsoft route would be highly rewarded.

"If you pile on early, we're going to be very, very helpful to you," he said.

"Those that bet early in the old days of client server did well. People remember Siebel Systems are part of Oracle now, but they bet on Microsoft early and with other partners did extraordinarily well, so the early adopters will have the best opportunities."

Microsoft keep tabs on participants to make sure that they'll be able to survive when their time on the free service runs out. It looks at start-ups that are in the last few years of free access, or at start-ups that are going to need to scale up to see whether they need to move to BizSpark's premium program, BizSpark One.

"Those that reach that level, we know about you because we know how much you're consuming. I call the board members of the company and say, 'Hey, look, you're about to fall off a cliff if you're really going to start paying us over time, [because] you've been using it for free. Where are you at [with] financing?'"

But Lewin said that these calls aren't for the company to become a debt collector. Rather, they are to see whether it can help these start-ups get in to a position where they can afford Microsoft's services.

"They may join with the baseline offer, which includes some Azure and all the tooling and all the rest, but, as they need more and want to consume more, again, we're willing to offset the costs for the first couple of years and then have a natural migration into becoming a paying customer.

"We want you to live and survive and grow, because then you become a good customer of ours," Lewin told the room of entrepreneurs.

Lewin also touched on Microsoft's pending acquisition of Yammer, which itself is a BizSpark One member.

"They struck a chord using our tools, plugging in to SharePoint in a way that drove enterprise behaviour that we found intriguing. That's an example of a company that hit a market chord.

"They're not using our stack — that's a Linux infrastructure company — but they used our tools and they plugged in to something that we cared about ... which is sticky in the enterprise, [and] we make a lot of money in the enterprise, so we helped that company."

Lewin said that Microsoft's own product groups had thought about building something similar to Yammer in the future, but, given the existence of it in the market already, along with the ability for it to integrate well with SharePoint, it made more sense to acquire it.

Editorial standards