Every year, Microsoft hosts a VC Summit involving 100+ Microsoft senior executives and 200+ venture capitalists with a stated objective of sharing the strategic roadmap of the company, highlighting the famous "white spaces" in their plan (i.e where they don’t plan to invest R&D efforts in the next 12 to 24 months) and creating a unique networking opportunity. The latter is the most obvious benefit of the event, because of the concentration of senior executives (VPs and Corporate VPs) leading the different business lines. Whilst there is a large proportion of Silicon Valley VCs, a number of East Coast and European ones also make it to the Mountain View campus.
Most large technology vendors have VC relationship programs, facilitating access to corporate resources for partnerships, development support and M&A. But the scale at which Microsoft does it is unique. And the fact that they fly 60+ executives from Redmond to meet us here, as opposed to organizing the event in Redmond, is also a sign of commitment to engaging with VCs "where things happen".
One of the most interesting features of the event is Steve Ballmer’s intervention, during which he shares elements of his strategic agenda and then opens up to the floor. I have included a few points I noted during the session: "Open Dialogue with Steve Ballmer". Jeff Bussgang also wrote a summary post regarding his take away points – (note that I disagree on his assessment that Microsoft has slipped farther behind Google than they were a year ago). A couple of other VC bloggers were there: Steve Jurvetson – here with Robert Simon, Brad Feld – who I met for the first time but unfortunately could not hang out with, he had to fly straight to Chicago for a FeedBurner BOD.
After welcoming everyone, Ballmer reminded us that his goal in organizing this event is for Microsoft to share their product and technology plans with the VC community, get an open feedback, and clarify (aforementioned) "white spaces". He also stated very clearly that Microsoft would be acquisitive this year, pointing to the recent Groove acquisition, as well as two smaller take-outs that were announced just before the summit: MessageCast and TSSX (in China). The stated price sweet spot is less than $300M when buying their entry in a market, and (quite a bit) less when acquiring technology.
Microsoft is compiling quarterly statistics of VC investments, and maps them to the Microsoft 7 business lines. This allows them to highlight where the differences in investment areas are, and whether any major gap is appearing.
Microsoft major core bets are: software development platforms, information navigation & integration, communications, entertainment, security. Ballmer also commented on the critical nature of patents, and how Microsoft was often spending more money on buying or creating patents than developing the actual technology. And they will spend $6B in R&D this year. A few areas of growth perceived by Microsoft:
- Windows: Software Assurance, Premium functionality, Music, Security
- Information Worker: Realtime Communication, Business Information, License acceleration (read: go after pirated versions of Office), Vertical applications (project management, note taking,…)
- Server: Premium CAL, Management tools, Mid-market functionality
- MBS: Platform for small verticals, Enterprise presence with a large number of vertical solutions
- Home Entertainment: Xenon – XBox 3, TV platform
- MSN: Search, Content, Mail/Instant Messaging, Storage
Congratulations to Dan’l and his team for organizing this event (and for inviting me again).