‘Each Startup Is A Bespoke Engagement’: How Microsoft Is Tapping Indian Startups

With around 34% share, AWS currently enjoys the lion’s share in the global cloud infrastructure space. However, the AWS lead in the market is now constantly being challenged by other big players which include Microsoft, Google, IBM and Alibaba. This is not just true for the global cloud market, but also for India. And the rise of startups has a big role to play in this tight market.

In fact, Alibaba Cloud with 19.6% market share has already topped the Asia-Pacific market. Speaking to Inc42, Dr Feifei Li, VP, Alibaba Group had even commented, “Being an early entrant in the Indian market, it gives AWS a certain edge, but at the same time, that doesn’t mean their position is gonna be stable forever.”

Globally as well as in India, Alibaba Cloud, however, lags far behind AWS, and it is Microsoft Azure which has captured the number two spot, after AWS.

With a market share of 17%, Microsoft Azure has, in fact registered the fastest growth among its rivals in the last few quarters. And amid the Personal Data Protection Bill which advocates data localisation set to become a norm this year, cloud companies are bound to benefit from the upcoming law in multiple ways, and so will Azure.

Microsoft Counts On Startups In India

As has been the case with Amazon and AWS earnings, Microsoft India too has reported 50% of the company revenue from cloud and cloud services, according to Tofler. Being an early mover in the Indian market, and having a huge network across the business entities, Microsoft Azure is counting big on the India market.

And, this clearly shows in Microsoft’s initiatives from the ScaleUp programme, EmergeX to M12, Microsoft keeps Azure on the front and centre in all these programmes. The company has selected 54 startups from five states for its mentorship, acceleration and engagement programme.

On the sidelines of Microsoft’s “Highway To 100 Unicorns” event, Inc42 spoke to Gayle Sheppard, Corporate Vice-President, Azure Data, Microsoft and Lathika Pai, country head, Microsoft for Startups – MENA and SAARC.

Edited excerpts.

Inc42: Over 70% of data currently goes unutilised — what use-cases can we expect with increased data utilisation?

Gayle Sheppard: A couple of use-cases.

One is the continuous intelligence that we get from streaming data. And I think this is a great opportunity for startups. 

Preventive maintenance and medicine are some other areas to build business models around streaming data and the convergence of streaming data with the more traditional transactional data.

So, continuous intelligence is something that a lot of people are talking about, no one’s really doing it very well yet. And, it’s not as easy to do as it might sound. The opportunity to find new and emerging patterns with streaming data unified with other existing data is fairly significant. I think particularly in areas of unplanned events. Unplanned events occur everywhere; they occur in asset management, healthcare, airlines operations and so on. Applying continuous intelligence into unplanned events and other things, it’s really a new opportunity space. We have just discussed this with one of our participants today.

Inc42: Currently, various companies are offering different cloud models such as public cloud, hybrid cloud. What is going to be the future, in this regard?  

Gayle Sheppard: I think, a customer needs choice; it wants choice and it deserves a choice. So, the customer will move applications and parts of its business to the cloud as quickly as it makes sense for them to do so. The approach we’ve taken at Microsoft is very vast. It’s very complex for these large companies. It is in SaaS, it’s in Azure, it’s in the IoT and it’s on-premise. The data state has the opportunity to combine analytics from all of those sources, has the opportunity to govern all of those data sources properly, and regardless of where the data lives.

This has been our understanding because we’re an enterprise software company, because we have a history of working with customers, both on-premise and now on cloud. We understand what this journey looks like. We’re providing them all the tools they need to migrate to the cloud, but at the same time, we also understand that there is a time required to do that. And so we support different models and will continue to do so. And, I think at the end of the day, though, the most important thing I just said was choice. The customer has a choice as to what they move [to the cloud], when they move it and how they move it.

Inc42: Compared to other cloud services available in the market, how costly or cheap is Azure’s offering for startups?

Lathika Pai: Whether it is credit or price, it is not fair to compare, unless you’re doing an apples to apples comparison. So when we work with startups, we actually could go in and do an optimising clinic. We then understand what exactly the startup requires, and we have seen many times that there is a lack of knowledge in terms of how they need to deploy on the cloud. They don’t know all the nuances. So our optimisation has shown that there have been instances where startups find a better pricing model in Azure. I do not want to state that it happens all the time. It really depends.

Whether you buy a car for $10,000 or $100,000, it’s up to you to decide where that sweet spot is. You have the same thing with the cloud hosting audience. 

Inc42: As the Indian market is diverse, which are the startups, you want to enter into a partnership with?  

Gayle Sheppard: Well, I can speak from the data perspective. We are looking for startups that are wanting to build products, particularly around analytics, new forms of analytics. And, example would be, from my perspective, sensemaking. Sensemaking is an overused term, but what it means in analytics is the ability to combine data from all sources, but they’re structured data, text data, visual image data, transactional data, etc. And to combine those sources together so that we can take, we can understand the patterns that exist when we are able to connect the dots between these different data sources, and potentially using new forms of learning like one-shot learning, fuchsia learning and unsupervised learning, along with deep learning in some way.

These are things we’ve not been able to do before, without a tremendous amount of human effort involved in doing it. And so, new business models like that around data are quite interesting. The continuous intelligence business model we talked about earlier. These are all startups who have powerful ideas for how to use data in new ways, making data more useful. If we can take that 73% of data that’s not used and get to the data that would be useful within it. That’s an interesting proposition to consider. So, that would be my interest from a data leader perspective. Lathika, you want to add to that?

Lathika Pai: Yes, emerging markets, for the most part, are really solving problems for their markets. In fact, sometimes at the hyper-local level. So a startup in Gujarat will be sorting out problems, which are not necessary for Karnataka and the other states. At the same time, we will see a huge trend in more B2B startups that are coming out of India and are actually looking to go global. They start for the Indian market, and then they go global.

At Microsoft for Startups, we look at both. We look at promising startups. We are sector agnostic. So in EmergeX, we have got 100-plus applications from each state. We want to work with each of them. But to start with, we have shortlisted 10 to 12 startups from each state and we want to take them, go deep, make sure that they scale their businesses and emerge winners.

Having shortlisted 54 startups under EmergeX, we are going to introduce them to VCs, startup media and hopefully the startups will get the traction they deserve. But the beauty is that we’re in month five and two of them have already been funded. They’re already on the eyeball and one of them is now getting like literally a 15x valuation. They know unit economics very well. 

However, they don’t have the money. What do they need from Microsoft? They need technology. They don’t quite understand the power of Azure — the data analytic services, AI, ML. All of those services that we provide, startups are not aware of. They think cloud is just for hosting.

So, this is where these programmes [Highway to 100 Unicorns, EmergeX, Scaleup] are useful. The founders don’t need to work on HTML services, algorithms from the scratch. These are available for them. So bit-by-bit with a very focussed plan.

Inc42: Many of these startups find it very cumbersome while shifting from one cloud to another. What are your thoughts?

Gayle Sheppard: I really focus every day of my life on data; I wake up worrying about data. I have a wonderful team of partners who focus on infra, which is compute, storage and networking, and together, we provide a solution to the customer.

If the startups are using SQL database, there would be no difficulty. The difficulty comes when you’re moving from one type of technology to another. This is why we provided a full suite of databases, data warehouses, data lakes, analytics within the data services integrated with our AI and machine learning team’s work, as well as with Power BI on analytics.

So, we have this environment that’s robust, includes open source technologies, proprietary technologies OLTP or relational databases and SQL databases or no SQL databases. When you come to Azure, regardless of your starting point —  another cloud or on premise — we have migration tools that help you move from your point of origin to the new the new modern approach, that we take in Azure Cloud.

Inc42: Microsoft has run 12 cohorts as part of its acceleration programme in the past. What is the thinking behind the ScaleUp programme? 

Lathika Pai: It is just the way the ecosystem has evolved. The accelerator was to invent, evangelise, engage with startups and help them. Now, where we are in the ecosystem is that startups that are Series A funded, they need to scale up their growth. And each startup you can’t really go in the typical accelerator mode of doing a cohort, putting 10 to 15 startups together and training them on various aspects. Each startup is a bespoke engagement. So when I bring a startup into our programme, each founder has different requirements. They come into the programme because they want to be on Microsoft’s startup programme. Our typical deal flow comes from the VCs directly or star founders speaking to others. So, because of the kind of engagement we’re doing, we’ve moved into ScaleUp.

We spend time analysing their technology. If it is version one of their technology architecture, we get them to version two. If they are market-ready, we will work upon getting them enterprise-ready. And so on.

We talk to them about their business where they are, what they need? Do they have enough runway, there’s no point in opening markets if they don’t have a runway. If you are running out of money in the next four months, you better not be sending your staff all the way to the US.

So, we talk to them and coach them through that. The most important element is what we call a co-sell solution, which is where we take the startups to our enterprise clients. We get them on to the marketplace once they are market-ready. All of this requires a lot of engagement.

Inc42: Is ScaleUp limited to B2B startups Only?

Lathika Pai: Not exactly. It’s just that we don’t necessarily have a clear go-to-market strategy for B2C. Our portfolio is phenomenal. We have cleantech, agritech, fintech. Anything you ask me I could name a startup from our portfolio.

Inc42: What’s the engagement level with other Microsoft arms such as M12? 

Lathika Pai: M12 a completely separate branch. But you’re right, we have one Microsoft, so, we have Microsoft for Startups and also we have M12 which is the investment arm of Microsoft. Sometimes, they send us deal flow, sometimes we send them deal flow, and that’s how we work together. And then we have the sales and marketing arm.

Today, everyone is together, when it comes to engaging with startups. As you see, here, Gayle comes from Azure side, others are from the engineering side. And some come from the sales and marketing side. And I’m there from Microsoft for Startups. So we work extremely well to leverage the global reach of Microsoft.

Inc42: India is set to hit 100 unicorns by 2025. What’s the number that you are looking at?

Lathika Pai: We are looking at at least 80. That’s why we’re doing this programme. It’s not just that we want participation from them. We should be able to engage with them to make sure they get there. But on a more serious note, unicorn is a mystical term.

If a startup is able to move from $500K to $10 Mn with a sustainable revenue model, then they are successful and can expand. They are able to create more jobs.

Gayle Sheppard: There are 500 Mn new apps coming online in the next five years. The programmes that Lathika runs aim to help build these apps by our traditional ISP partners as well as on our servers. And many of them will be built by companies that participated in today’s programme. That’s phenomenal. That’s why we’re here.

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