Microsoft's Dan'l Lewin explains how startups can work with the software giant

Microsoft has a somewhat complicated relationship with startup companies, especially those based in Silicon Valley.

On the one hand, the software giant has pummeled a long succession of young, valley-based software firms in the marketplace. Remember when Netscape was a fast-growing company, until Microsoft start giving away Internet Explorer? That history has led to a certain amount of skepticism among startup executives about opening up to the software giant.

Yet Microsoft has also acquired more than 100 companies -- stretching back to its 1997 purchase of WebTV and including recent high-profile buys of aQuantive and TellMe Networks. Those acquisitions have provided a lot of young companies and their venture capital investors with lucrative exits.

What's more, many people don't know that an even larger number of small firms have benefited from closely aligning themselves with Microsoft's technology platforms or marketing initiatives.

Since 2001, Microsoft corporate vice president Dan'l Lewin has been the executive charged with managing the software giant's interaction with startups and VCs. As the head of its emerging business unit, he also oversees development of the company's technology tools and its relations with the large community of independent software developers that use the Microsoft platform.

Based in Mountain View, Calif., within sight of the headquarters of the company's newest chief rival, Google, Lewin is Microsoft's point man in Silicon Valley.

Microsoft evaluates startup business plans the way traditional venture capitalists do, with a dozen portfolio managers responsible for specific technologies and markets. Yet when it chooses to work with a startup, it does so most of the time not by investing but by supplying it with other kinds of resources.

These include "sales and channel help, guidance, scalability work and marketing help," Lewin says.

And what are they looking for, exactly? 

When a startup's technology or business model aligns with one of Microsoft's technical or market-based initiatives or, "more importantly, can create business value for our end customers," they have a chance of partnering with the giant.

"The triage is pretty simple," Lewin says. "'Can we be helpful? If yes, how? If not, why?'" 

Two recent notable partnerships that Lewin mentioned during our meeting were NewsGator, the RSS  news aggregator which has worked with Microsoft since its early days, and a newer partner, the Internet voice service provider JaJa. 

Like any VC shop, Microsoft's portfolio managers say 'no' most of the time. Of the many deals they vet, Levin says there are about 200-300 per year for whom "we can do meaningful work and help them."

Of that number, 100 companies each year are selected to participate in Microsoft's new startup accelerator program, a global effort to identify and partner with promising young companies. For more information on that program, go to microsoftstartupzone.com 

While the effort will help many companies based in Silicon Valley, simply because of the number of startups based there, Lewin says Microsoft is keen on finding entrepreneurs in other startup hotbeds such as China, India, Israel, Europe and the U.K.