Traditionally, Apple purchases small companies under the radar and within a year the acquisition pays off with a new feature for the iPhone. A good example of this took place in 2012 when Apple acquired biometrics company AuthenTec for $356 million. The next year, Touch ID debuted on the iPhone 5s. Even before then, back in April 2010 Apple purchased SIRI for an undisclosed amount. ...
Microsoft wants to make its cloud the platform 'for every workload on the planet,' and one way it's doing that is helping startups win bigger customers (MSFT)Cache
When Chad Fowler, general manager of startups at Microsoft, initially joined the company through its acquisition of the Berlin-based productivity app startup Wunderlist, he felt that Microsoft was an "unlikely suitor" because it was a "sales-y company" that "didn't really get startups."
"I would describe myself as one of the least likely eventual Microsoft employees," Fowler told Business Insider. "I grew up in the '90s in technology companies, and I was very much on the open source side of the world. Microsoft's perception and resonance with that community is pretty well known historically."
Fowler meant that back in the 1990s, Microsoft often fought with open source, or software that's free for anyone to download and contribute to. Former Microsoft CEO Steve Ballmer even called the popular open source operating system Linux "a cancer."
Fowler says that he still had these misconceptions, even after he joined Microsoft initially, but since then, Microsoft has made a turnaround. Now, he's leading a program called Microsoft for Startups, which was launched in February 2018. It helps startups sell their products to Microsoft's customers and teaches them how to scale up.
"I think of myself as a startup person first and an open source person second, and here I am doing that stuff in the context of Microsoft where I never thought I would actually be, but the company is different now," Fowler said.
The startup program underscores the radical shift at Microsoft in the five years since Satya Nadella took the CEO reins, leaving behind old hangups and propelling the company to a trillion dollar market valuation. For Microsoft, forging close ties with startups represents an important market opportunity as it tries to make headway against Amazon in the booming cloud computing market.
Charlotte Yarkoni, corporate vice president of commerce and ecosystem in the cloud and AI division at Microsoft, says that while startups have talented engineering teams, they often need help selling, so that's where Microsoft is uniquely positioned to help.
Startups on their own may have a harder time getting in front of enterprise customers in fields such as health care or manufacturing, but Microsoft for Startups gives them access to Microsoft's customer base. It also gives startups credits for Microsoft's cloud, Microsoft Azure, making startups likely to pick Azure as their cloud of choice to run their software. As a result, Microsoft sees helping these startups as an investment.
"Startups are important because they do represent a lot of the innovation, whether it's building new workloads or even developing new trends and technologies that are more forefront in terms of business models they're contemplating," Yarkoni told Business Insider.
'Help first, sell last'
It's a win for Microsoft, too. Yarkoni says these startups may end up becoming partners in the future.
"What we really wanted to do is build more of a startup ecosystem that represented a partner ecosystem for us, a budding partner ecosystem," Yarkoni said.
Microsoft also offers these startups credits for its cloud Microsoft Azure and helps them onboard onto it. If these startups sell their product on Microsoft's cloud, it also benefits Microsoft, and Microsoft gets to see "interesting new solutions" running on its cloud, Yarkoni says.
"We aspire for our cloud to be the platform for every workload on the planet," Yarkoni said. "These newer workloads and the innovations they bring are fantastic for us to have on our cloud."
Still, Fowler says helping startups is his top priority. His mission is to "help first, sell last."
Yarkoni says that startups who are part of the Microsoft program see an immediate increase in their businesses, with an average deal size "north of six figures."
"We continue to hear from startups that the most valuable thing we can do for them is help them win customers," Yarkoni said.
'These startups today are the big enterprise customers of the future.'
Fowler worked on the Wunderlist team at Microsoft for a while, but he missed the startup world. When he met Yarkoni, she pitched him the idea of leading startup teams and advising founders, which he thought would be "the best of both worlds."
"Startups are small companies usually," Fowler said. "You can think of it as an investment. Not every startup that we work with goes on to become a unicorn and eventually IPO, but we do believe that Microsoft was a startup one day as well. These startups today are the big enterprise customers of the future."
Now, he leads the startup team, helping startups land deals with big companies and guiding them through technological and business expertise that they will need when selling to enterprise customers. The team is staffed with people who have gone through the pains of growing startups, such as having to completely rewrite their technology as the company grows.
Fowler recalls that at Wunderlist, when a large customer contacted it to buy a large license, the team had no idea how to address things like disaster recovery and data privacy standards. He recalls that when Wunderlist was first building a sales team, the team "had no idea what we were doing."
"We hired the wrong sorts of people," Fowler said. "We were doing the wrong processes, all kinds of classic mistakes. What we do at the Microsoft for Startups program is become that trusted adviser that helps startups through that time."
Yarkoni says Microsoft plans to continue its investment in this program, including in its presence around the world and also in female founders. She says the number of startups coming into the program is growing.
"Thes startup ecosystem is a great representation of meeting these communities where they are. It's very much the cornerstone of our startup philosophy," Yarkoni said. "Helping Microsoft get more engaged in the community is really something we're quite proud of, and we obviously want to share our journey as we go."
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