Insiders share tips for partnering with Microsoft

Microsoft executives repeat their investment mantra to entrepreneurs: Don't count on our cash.

MOUNTAIN VIEW, Calif.--Microsoft's first tip for start-ups wanting to work with the software maker: Don't expect it to give you money.

Microsoft--particularly its MSN group--has been on an acquisition spree, but said it typically doesn't buy companies that it finds through its emerging business team. Rarer still is a minority investment from Microsoft, said Dan'l Lewin, the corporate vice president heading up business development for Microsoft's .Net group.

"I would never say never," Lewin told the 90 or so entrepreneurs who gathered at Microsoft's campus for a daylong seminar titled "Partnering with Microsoft: The insider's guide for start-ups."

"But we've done three or four over the last five years," Lewin said.

It's not a new message from Microsoft or Lewin, who has been offering the same cautionary tale for years . But, it is apparently one that bears repeating, given the number of companies that come calling for a piece of Microsoft's massive cash holdings.

With prospects of a pile of cash diminished , young companies did receive some advice from Microsoft executives and a group of outside venture capitalists on linking up with the world's largest software maker.

Sam Jadallah, a former Microsoft vice president and now a general partner of Mohr Davidow Partners, said working with Microsoft has its downsides. It can be difficult to find the right person to talk to, he said, noting Microsoft's notoriously difficult-to-navigate and frequently changing organizational structure.

"From the outside, it's kind of Byzantine," Jadallah said. And, decisions take time. He advised companies not expect to strike a deal before their next board meeting or funding discussion.

"Actually getting to a decision is probably the single most difficult, frustrating thing in working with Microsoft," he said.

But, he said, when companies do find a partner, it can be very lucrative.

"At the end of the day it's pretty rewarding to get them because Microsoft has enormous resources," Jadallah said.

The key to landing a partnership, he said, is to make sure that what you are doing lines up with one of Microsoft's key strategic initiatives. For example, he pointed to Microsoft's "Live" services as a good example of where the "parade" is headed.

"Jump in front of the parade," he intoned. If you are outside of the company's top priorities, "it is a lot harder."

One might wonder what does Microsoft gets from entertaining all these requests for cash. One thing, said Lewin, is that the company gets to see where start-ups are headed. Another is that Microsoft ultimately gets a lot of takers for its software platforms.

Of the thousand or so companies that Microsoft's emerging business team talks to each year, it has done some kind of business with about 200.

"Many are not going to pick our technology," Lewin said. "Most do."

Tags:
Applications
About the author

    During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina.

     

    Discuss Insiders share tips for partnering with Microsoft

    Conversation powered by Livefyre

    Show Comments Hide Comments
    Latest Articles from CNET
    How to do a clean install of Windows 10