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November 5, 2008 at 6:00 AM

Microsoft emerging business boss talks startups in the tough economy, new BizSpark program

Dan’l Lewin, corporate vice president of Microsoft’s Strategic and Emerging Business Development, has a good view of the tech startup climate from his post in Silicon Valley, where he helps get Microsoft’s tools into young companies’ hands.

He shared his observations and more about the announcement today of the “BizSpark” program, giving qualified startups three years of access to an array of Microsoft software for $100 (story, program site), in an interview yesterday.

Here are condensed excerpts:

Q: Given how closely you work with the startup and emerging business community, what can you say about climate right now considering what’s going on in the macro economy?

Lewin: I’ll quote the talking heads: Same as it ever was. Fast failure is all good, if you will. Tough economic times tend to accelerate that. There’s downside to that in the sense that companies do fail, but companies do fail. That’s a fact of the venture business and startup business.

Those that survive typically come out much stronger. There’s lots of historical precedent for companies started and financed in tough times being some of the best companies on the planet, so this is an unusual moment in time we’re living in given the political change and the financial markets and the scale of the issues at hand, but I don’t sense any slowdown in enthusiasm in entrepreneur community, at least here in Silicon Valley, where I live, work and play. The level of activity and the community events where startups and entrepreneurs gather is quite high. Obviously, people are a bit distracted given the personal tragedy of many things that have gone on through this financial cycle.

But tech has been — I wouldn’t say hardened — but basically as a result of the dot-com bust, people have been reasonably cautious, right. Startups these days, didn’t get caught up in some of the crazy things that occurred in and around the bubble.

So, I think we’re OK. I think there will be fallout, but I think we’re OK.

Q: Can you say how your announcement relates to the economy, knowing that this is probably going to be attractive now?

Lewin: Frankly, it’s coincidence. There’s no immediate correlation between the timing. We were targeting the [Professional Developers Conference] … and we brought all of our investments together with that in mind and it really is coincidence although it’s timely as we all know. This is not something we could have scurried together with 82 countries participating overnight, and for the most part, most people didn’t have a sense of pending economic crisis except for the last 60 days or so.

Q: How does the BizSpark program fit with the company’s Startup Accelerator Program that was launched a year ago?

Lewin: The Accelerator program is basically a hand-tailored program. We targeted 100 companies, typically venture backed, typically at the top of the pyramid, if you will, companies aiming for global market approach. So, you’ll pardon the parochial comment I’ll make here, but, if you will, companies that have been financed by venture capitalists in a Silicon Valley, best practices kind of way, whether it’s in Seattle, Israel, Paris, London or Moscow.

Through the Microsoft Emerging Business Team, we’ve been expanding our reach into about 15 countries around the world with the skills we’ve developed here, primarily in the States, working with venture-backed businesses, so whether it’s Ignition or Madrona in the Seattle area or whether it’s Sequoia or Kliener Perkins down here, whatever, we’ve been looking for the best of the best, and the Accelerator is about us tailoring a program for those companies that we think we can help globally. And we’ll continue to do that.

And those companies, should they meet the criteria, could also join this program.

Q: So BizSpark is potentially a much broader audience?

Lewin: Absolutely. … We expect thousands of companies to enroll in the BizSpark program and from that we will again see more and more interesting companies that will bubble up and we’ll create special programs for companies that have different areas of need and interest, where we can be mutually self-interested in helping them.

Q: Do these programs give Microsoft an early look at possible acquisition targets?

Lewin: Not really, in the sense that we typically end up buying companies that we have a business relationship with. It’s rare, it’s occasional that we will reach out and buy something that’s not adjacent to a current business, if you will. The Tellme acquisition recently was an example of a new space, if you will. The acquisition of Great Plains and Navison was a commitment to a channel and partner ecosystem.

But for the most part, we’re talking about the way our business is built from inception, from Bill’s original products around the BASIC compiler: others using Microsoft technologies to build interesting solutions and value for customers, and then Microsoft sharing in that upside. So, the program is really designed to drive a partner ecosystem and to encourage startup success. That’s why it’s more than just the technology, but this whole network partner community we’re bring together. …

A byproduct, of course, is as companies succeed and do well and find, if you will, niches and corners that fit into our product road map and business strategies, we will be an aggressive acquirer and we have been and we’ve proven to be an efficient and good acquirer over the last five or six years.

It’s really a by-product, it’s not the purpose.

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