How Microsoft Is Working with Tech Startups to Build Win-Win Relationships

Over time, established tech companies can begin to lose relevance to the multitude of strong startups in their field. In this episode of Mastering Innovation on Sirius XM Channel 132, Business Radio Powered by The Wharton School, Tereza Nemessanyi (WG’97), entrepreneur-in-residence at Microsoft, discussed ongoing cultural and corporate shifts driving change in the tech sector, and how Microsoft is working with startups to create a better product for everyone. Nemessanyi also spoke on this topic at the Mack Institute Spring Conference 2018.

To help recapture their influence amid a field of up-and-coming tech startups, Microsoft brought in Nemessanyi, a seasoned media and technology entrepreneur with experience at various firms including Disney, Unilever, and Symphony IRI. At Microsoft, Nemessanyi was tasked with creating mutually beneficial relationships with competing startups. She emphasizes the importance of always supporting the ecosystem of Microsoft’s evolving cloud platform. She also discusses the importance of public opinion, sharing examples on how to change that opinion for the better.

An excerpt of the interview is transcribed below. Listen to more episodes here.


Tereza Nemessanyi (Entrepreneur-in-Residence, Microsoft)

Saikat Chaudhuri: Tell us a bit about how easy or hard it is to set up a program like yours in an established company like Microsoft. It says something that they reached out to someone like you to help set up this program.

Teresea Nemessanyi: Interesting question. It pays to be entrepreneurial, whether you are out in the world or inside a big company. What’s key is to figure out what your powers are, what they’re not, who has powers that you might need, and whether there are things that you, in fact, don’t need in order to try something out. That was an important insight that I figured out along the way. Initially, I was going around kind of asking people for permission. There were a lot more people that were empowered to say no and very few people that were empowered to say yes. It was a little kooky to go ask someone for permission if they’ve never done this thing before and they couldn’t have told me yes anyway. The best I could have gotten out of that conversation was a neutral or, “Good idea, I have no idea how you’re going to do it.”

I had a broad mandate to try new stuff. I had a few powers, which included some sort of program offers, and I was handed some partnerships. They said, “With these ingredients, see what you can do.” I began with a linear approach to combining those and sort of used the set playbook. I quickly discovered that some of it worked and some of it didn’t; some was sort of pulled together by someone at Corporate and they haven’t necessarily brought these things through to fruition in an actual market on the ground. I started to think, “You know what, do I need to apply these levers or powers using the playbook, or is it okay if I kind of mix it up?

“There were a lot more people that were empowered to say no and very few people that were empowered to say yes.” – Tereza Nemessanyi

I was like, “You know what, let me just mix it up.” I’m pretty far from Redmond, I’m always ethical, and really follow the true north of making our startups and our partners delighted. Sometimes it was doing something that was vanilla, then stretching outside of the bounds of that, and then going and asking for a little something special. I did find that there was this huge power that I had — which I didn’t know I had — which was helping them to navigate Microsoft.

Chaudhuri: That’s an interesting point, right, that these relationships are meant to be mutually beneficial. Microsoft can benefit as well as the startup. Can you give us some examples of some of the startups you’ve worked at, or types of startups you’ve worked with, and how you’ve made those connections where both sides have benefited?

Nemessanyi: Sure, sure. I’ll preface it by saying, with this new Microsoft and with the move to the cloud, it really isn’t an understatement to say that it’s a profound difference in how we work with customers and partners. In the licensed software world, we would hand over our license and they would pay us for it, right? In the software-as-a-service world, especially if you imagine people are building rocket ships, we want our stuff on the rocket ships and in particular our cloud. Then their growth becomes our growth. It becomes very, very much in our interest for them to grow and to grow as quickly as possible, to be frank. That’s only one example because Microsoft is huge. We have a ton of other assets, too, but that’s sort of like the hero assets.

I’ve worked with a few startups. A favorite of mine is GreatHorn. They are a security solution, which is sort of an anti-superior phishing solution. A super smart, seasoned team exited several times, the security space is a hard one, and it’s super insular, super technical. I actually came to it thinking, “I don’t even know if I can be helpful because I don’t know if I understand the technology,” but you know what, they understood it, and the key was that I could be complementary to them. The bottom line is, they were going to be really attractive to a lot of our customers and they already had a solution that could deploy in 15 minutes on our competitors’ email and productivity platforms. A lot of people use Office 365. A lot. What if you spent a little time configuring for that? Because we know that we’ve got lots of sellers that are landing Office 365 and lots and lots of customers and end users that are using it all the time. If your solution can plug in in the blink of an eye, that’s great for them, great for GreatHorn in terms of its rapid-fire distribution. By the way, the analytics that run off of it happened to hit our cloud, It actually was kind of funny that if they deploy elsewhere, it’s still hitting our cloud, which is kind of a funny quirk.

“It becomes very, very much in our interest for them to grow and to grow as quickly as possible.” – Tereza Nemessanyi

Chaudhuri: If I’m hearing you correctly, for the startup, for instance, they get a lot of scale very quickly and Microsoft’s ecosystem and platform gets a lot more usage out of it as well, right? A tremendous benefit.

Nemessanyi: It does, it does. It’s even bigger than that. It’s just better: the experience is better for our consumers, for our customers, for everyone involved. So yes, there are the numbers that hit, but the goodwill that’s associated with it, people just feel better, they trust more. That kind of stuff is important.

Chaudhuri: Would it ever be in Microsoft’s interest to take some of these startups and make them their own? I’m thinking a bit differently about corporate venturing in the traditional case where you might see some that you like and then you eventually exercise the “real option,” so to speak.

Nemessanyi: Yeah, yeah. We do it. Our approach to corporate innovation is really multilayered and yet open to innovation coming from wherever it might come from. This is a big shift culturally in the company, that great innovation truly can come from anywhere.

About Our Guest

Tereza Nemessanyi is Microsoft’s entrepreneur in residence in New York, helping high-growth startups go further and faster by leveraging frontier technologies and scaled distribution channels. A seasoned media and technology entrepreneur and executive, Tereza’s breadth and depth of experience spans high-growth startups and the world’s largest enterprises. Companies she has worked with, at senior levels, include PWC, IBM, The Walt Disney Company, Unilever, Symphony IRI, Interpublic Group, and the InterAmerican Development Bank (IADB). She was a ground-floor member of a startup team which IPO’d (CETV). She’s been named a Forbes “Ten Female Entrepreneurs to Watch” (2011) and a “Top 40 over 40” (2015). Tereza is a sought-after speaker (TED, SXSW) and blogger (Reuters, Huffington Post). She holds an MBA from The Wharton School. She lives in New York with her husband and two daughters.

You can find more at @terezan

Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.