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Chris Capossela, chief marketing officer for Microsoft. (Microsoft Photo)

Startups were key to the early success of Amazon Web Services and most still favor the platform for cloud infrastructure. Microsoft thinks it has a strategy to win them over.

At an event in Seattle last month, Microsoft’s Chief Marketing Officer Chris Capossela took the big question head-on: “What’s your strategy to get more startups using your cloud?” asked Greg Gottesman, co-founder of Pioneer Square Labs.

Capossela proceeded to lay out the strategy, which boils down to two key elements: being pragmatic and giving lots of freebies.

Step #1: Be pragmatic

The first thing to know is that Microsoft doesn’t seem eager to entice startups to give up AWS. That’s because Microsoft thinks multiple players can be successful in the cloud at the same time.

“The cloud tech business is not going to be a single provider that wins it all,” Capossela said. “Office was that way for many, many years. It doesn’t look like the cloud is going to be that way.”

This approach is apparent in Microsoft’s venture capital group, M12: Ninety percent of the startups that it funds run on AWS, M12 Managing Director Lisa Nelson said in October.

“I’m not gonna try to convince you to move what you already have in AWS off of AWS,” Capossela added. “Instead, we’re going to pick some net greenfield opportunity.”

More often than not, that opportunity is in software-as-a-service, Capossela said.

Step #2: Give freebies

Microsoft is also luring startups through more direct incentives.

  • Venture capital: Startups funded by Microsoft’s venture arm can “use whatever tech stack [they] want,” said Capossela. “More often than not, eventually, we find that those startups end up trying our stuff.”
  • Free credit: “We have a startup program that is essentially free for startups to get started on almost every product we make,” he said.

Ultimately, Microsoft is doing what it can to get startups in the door and making the sale later.

“You really want somebody to try,” Capossela said. “The proof is in whether you deliver.”

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