How Microsoft BizSpark Is Doing With Startups—And How It Can Do Better

5/11/09Follow @gthuang

Last November, Microsoft began an ambitious experiment. It would offer free software, development tools, and technical support to startup companies around the world, in exchange for getting its technology into the hands of young developers—and a small fee when startups exit the program. BizSpark, as the program is called (not to be confused with BigPark, the gaming company Microsoft said it is acquiring last week), seems like exactly the type of outreach the Redmond, WA, company needs to do to nurture local software clusters and get its stuff out there into the hands of innovative entrepreneurs.

Now, six months later, Bizspark has launched in nearly 40 countries and has hit 12,000 companies enrolled. “That’s slightly above our plan, and well beyond our expectations,” says Cliff Reeves, general manager of Microsoft’s Emerging Business Team. “We wanted to really push ourselves.”

I wanted to hear more about how the program is doing globally as well as in the Seattle area, where it still seems like relatively few startups use Microsoft’s technology (versus cheaper or free open-source alternatives). Worldwide, Reeves says, growth has been fairly constant and has been driven by big events like Microsoft’s Professional Developers Conference in late October, and by social networks like Twitter since then. “Strangely, there has been very little sniping,” Reeves says, referring to the feedback his team has received so far—one might have expected more complaints about terms, clunky features, or unresponsiveness from the Redmond behemoth. “One unique element is that we work through communities. Our network partner model has worked really well.”

Sixty percent of BizSpark companies are entering the program through these network partners, which number 1,300 worldwide (41 in Washington state). These are organizations that work with startup communities, like the Association of Shareware Professionals, TiE, Mashable, 47Hats, venture organizations, and nPost in Seattle. The approach seems to have kept Microsoft in better touch with its early startup customers, and has built up some good will. Reeves says hosting companies like GoDaddy, Peer1, and Rackspace also have provided support for the Microsoft platform, and are starting to enroll companies in BizSpark.

In terms of geography, the top six countries for BizSpark startups are the U.S. (with a third of them), followed by the United Kingdom, Brazil, Russia, India, and China. “Emerging markets are playing a major role,” Reeves says. “There’s tremendous demand for entrepreneurship there.” Within the U.S., the pattern fits what you might expect: a huge cluster in Silicon Valley, followed by smaller clusters in Boston, northern Virginia, Austin, TX, and Washington state.

Which brings us to the Seattle area. Microsoft has always had a global view, but most local developers I’ve talked to think it should reach out and take better advantage of the tremendous activity in its own backyard. Now it sounds like BizSpark is making progress at stirring up a pool of entrepreneurs who might be able to build more on Microsoft products. Reeves says BizSpark has enrolled around 250 startups in Washington, of which about 150 are active. These companies include DotNetNuke, SynapticMash, Jott Networks, Swype, and Gist (which announced a $6.75 million round of venture funding last week—more from this company in a minute).

So how well does BizSpark think it’s doing at engaging with startup communities and getting Microsoft’s technology out there? “We’ve made a change,” Reeves says. “It would be a gross claim to say we’ve really made a difference yet. We’ve got a ways to go, but we’ve made a good start.” He says his team is currently doing “a lot of tuning” and plans to update its portal this month. The biggest changes were made to make it easier for companies to enroll, and to keep better track of requests from startups.

Reeves also emphasizes that BizSpark is less about the software, and more about “software and the relationship.” He adds, “The interesting thing about this program is really the approach of working with the community. We’ve got a heck of a lot to learn, but it builds on work we’ve done before. It means working with governments, students, and educators—when we can give a boost, everybody wins. We’ve got a tremendous commitment to working with the community. It’s way more interesting than getting software to startups.”

So what can Microsoft do specifically to improve BizSpark, from a local startup’s perspective? T.A. McCann of Seattle-based Gist, who worked on Microsoft Exchange from 2001 to 2004 and was responsible for nurturing new business areas, has some recommendations. First, he says, BizSpark should provide what he calls “specific product alignment.” That means helping connect a startup to the key product owners within Microsoft who can give detailed feedback on the startup’s product and how it compares with Microsoft’s present and future offerings. “VCs or potential customers often ask, ‘Couldn’t Microsoft just do this?’” McCann says. “It’s good, for both the startup and Microsoft, to have a clear answer on the fit into the specific products evolution.”

Second, McCann says, Microsoft should provide access to a few potential customers. “The Exchange or Outlook team could look across their adopters and say, ‘T.A., you need to know these two customers. They’ve told us there’s pain in their company that Gist could solve.’” And then help the startup with a personal introduction. “It’s highly unlikely that I can get a meeting with the messaging guys at Exxon, GE, or Citigroup, for example, but a Microsoft field person could get that meeting,” McCann says. “Helping these early adopters to get the most of the Microsoft ecosystem—its product and partners— is a win for everyone.”

Reeves would agree with that. “In the long run, we want to knit all of this together into an ecosystem and value chain,” he says. “We should start thinking about long-term relationships with these companies. It’s super important to stay focused on startups. They represent tomorrow’s threats and opportunities. If we stop supporting these guys, it’s like stopping breathing.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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