When Start-ups and Venture Capitalists Need Doorways into Microsoft, Emerging Business Team Helps Turn the Key

REDMOND, Wash., Sept. 13, 2006 – When technology provider Voltage Security Inc. launched its Internet communications encryption software in 2003, vying for the attention of prospective customers and partners in a highly competitive market sometimes felt like being the unknown guest at a cocktail party full of old pals.

Dan’l Lewin, Microsoft Corporate Vice President, Strategic and Emerging Business Development

Voltage executives weren’t always sure of how to engage specific Microsoft product teams for access to technical resources and development insights that could help keep its Identity-Based Encryption (IBE) technology smoothly integrated with Microsoft Office Outlook and Microsoft Office Exchange Server. Also, since the Palo Alto, Calif.-based startup company lacked a proven track record in the market, some of its sales prospects were wary about trusting Voltage to secure their Outlook and Exchange systems.

“A lot of large companies would want to know, ‘Before we put your technology into our infrastructure that we’ve carefully built up over the years, what does Microsoft really think of you?’” says Wasim Ahmad, vice president of marketing at Voltage. “They were looking for evidence of our credibility with the leading provider of server software.”

Voltage found the ally it needed in the Microsoft Emerging Business Team (EBT), which works closely with selected technology start-ups to nurture their success in building and marketing innovative products on the Microsoft software platform. EBT representatives helped arrange meetings for Voltage with the Outlook, Exchange and security developer groups to clarify how its technology aligns with Microsoft products. In addition, EBT linked the company to a variety of Microsoft partner support programs, including the SecureIT Alliance, that have helped raise its profile with key customers. Today, Voltage is consistently signing both Fortune 500 and mid-size companies. Its relationship with the EBT and Microsoft product groups has resulted in more than 100 customers adopting Voltage technology either directly or through Microsoft. Voltage’s Identity-Based Encryption technology is now a key component of the Microsoft Exchange Hosted Encryption service introduced in April 2006.

“EBT’s guidance and advocacy have opened some important doors for Voltage to tell our prospects as well as Microsoft internal teams about what we offer, why it is important and how we fit into Microsoft’s overall environment,” Ahmad says. “Without those contacts, our journey would have been a lot more difficult.”

As part of the Developer and Platform Evangelism division, “EBT evaluates thousands of start-up companies each year to identify those with leading-edge technology and the potential to become a changing force in the market,” says Dan’l Lewin, corporate vice president of Strategic and Emerging Business Development for Microsoft. Lewin and his team also meet regularly with venture capital firms to share insights on technology industry trends, explore Microsoft’s overall product and services roadmap, and compare notes on intriguing start-ups.

“Our team strives to be a champion for these start-ups and their single point of contact for navigating the Microsoft organization to help both sides mine as much value as possible from this partnership,” Lewin says. “We also look for ways to give venture capitalists and emerging companies a more transparent view of the direction that Microsoft is heading with its technology in order to help them shape their own future strategies.”

Start-ups invited to work with the EBT gain privileged access to joint sales and marketing opportunities, such as inclusion in Microsoft brochures and at company-sponsored events. The EBT also helps them streamline the process of becoming a Microsoft Certified Partner, which yields a broad range of technical and promotional assistance. In addition to connecting Microsoft product teams with emerging companies such as Voltage that are developing complementary technology, EBT can help start-ups engage in proof-of-concept and performance testing exercises at Microsoft Technology Centers and Microsoft Innovation Centers worldwide.

These and other EBT activities all tie strongly into Microsoft’s corporate mission of helping people and organizations realize their potential, Lewin says.

“You can’t get any closer to that mission than by supporting an entrepreneur with a great idea and the passion to make something big happen,” he says. “Everyone at EBT is just as passionate about discovering innovative companies and fostering their growth.”

Lewin joined Microsoft in 2002 to form the EBT after working with an array of start-ups and venture capital firms for more than two decades. His team comprises more than 20 people with comparable high-tech industry experience, which has proved instrumental in building trust and support among those whom the EBT serves.

Ann Winblad, Co-founder of Hummer Winblad Venture Partners and Member of the Microsoft Venture Advisory Council

“Dan’l and his team are recognized as having in-depth knowledge and an unbiased view of the software industry,” says Ann Winblad, co-founder of Hummer Winblad Venture Partners in San Francisco. “They understand the need for Microsoft to build long-term relationships with the venture capital community and newly funded startups that provide benefits for all sides.”

Given the imposing size and scope of today’s software industry, “no company can operate as an island,” Winblad says. “Most of the best product innovations result from collaboration by established technology companies and emerging innovators, which I see as a core element of what Microsoft is seeking to foster through the EBT.”

Providing a clearer view of Microsoft’s future roadmap is one of the most valuable assets that the EBT brings to venture capitalists, says Winblad, whose involvement in the Microsoft Venture Advisory Council enables her to receive periodic updates directly from various Microsoft business units. “With that insight into what’s coming down the pike and who the key contacts are within Microsoft, I’m much better positioned to spot emerging partnership opportunities for the companies that Hummer Winblad Venture Partners supports,” she says.

Vladimir Jacimovic, a partner with New Enterprise Associates in Menlo Park, Calif., and a fellow member of the Venture Advisory Council, says he appreciates that EBT representatives invest time in not only talking about Microsoft’s plans but also paying attention to what venture capitalists consider interesting. “They have helped Microsoft make great strides in aligning its interests with those of the venture capital community, so we can both set our sights on supporting start-ups in technology areas that have the most compelling mutual benefits,” Jacimovic says.

Thanks largely to extensive sales and marketing support that the EBT has helped garner for PolyServe, which provides software that helps businesses reduce the number of servers needed to run their mission-critical software applications, “Our revenue from the Microsoft side of the business has grown 300 percent since last year,” company CEO Mike Stankey says. After Microsoft featured the Beaverton, Ore.-based company in a 2004 pamphlet, “we received at least 100 customer inquiries that led to new sales,” he recalls.

In building its virtualization technology on the Microsoft platform, Stankey says PolyServe has also benefited from the EBT’s ability to “plug us into the right development organizations when we have questions or need to resolve an issue for one of our customers.” He adds that gaining immediate access to these types of technical resources has enabled PolyServe to bring new products to market at least six months faster than if the company had been left to seek out the same help on its own.

“That’s a tremendous competitive advantage for an emerging company with a constrained development budget and staff,” he says. “Plus, the development tools that Microsoft provides have enabled PolyServe to simply create a better product.”

Tapping the resources of the EBT can even help a start-up break into entirely new customer markets, as emergency notification systems provider AtHoc discovered in 2002. At the time, AtHoc’s technology ran on Microsoft Windows Server technology but used a different vendor’s database product.

Vladimir Jacimovic, New Enterprise Associates Partner and Member of the Microsoft Venture Advisory Council

“Two of our largest customers actually approached us to suggest that we move onto the Microsoft SQL Server database platform, because they wanted the efficiency of having a unified environment,” says Guy Miasnik, president and CEO of AtHoc Inc. in Burlingame, Calif. One of the companies also wanted AtHoc to incorporate Microsoft Live Communications Server into its network-centric emergency alerting and notification software.

“Microsoft assigned an EBT representative who lined up the SQL product engineering resources that we needed to make the switch, which enabled us to not only satisfy the needs of our existing customers but also win others who required a comprehensive Microsoft platform,” Miasnik says. EBT also connected the company with Microsoft’s government-sector sales organization and helped introduce AtHoc to representatives of the U.S. Air Force, which became AtHoc’s first major government customer. “The fact that our technology ran completely on the Microsoft platform was a major factor in the Air Force selecting AtHoc, which represented a multimillion-dollar relationship for us,” he says.

Since then, AtHoc has landed roughly a dozen additional software contracts within the U.S. Department of Defense as well as across other segments of the public sector industry. “Microsoft has worked hand-in-hand with us to approach these customers and explain the value of using AtHoc technology on top of their existing Microsoft platforms,” Miasnik says. Also, he says, building its products with Microsoft developer tools has accelerated AtHoc’s time to market by as much as 40 percent compared to using other platforms.

“Our company, our customers and Microsoft all benefit tremendously from the relationships that the EBT has helped create,” Miasnik says. “That’s about as good as a partnership can get.”

When individual companies such as these are thriving, the state of the overall technology industry improves as well, Jacimovic and others say.

“There clearly is a larger benefit,” he says. “The inside knowledge that EBT can provide around the margins of Microsoft’s business definitely can spur innovation by helping VCs and start-ups to make better decisions or look where other guys are not looking.”

Related Posts