Software Vendors – Stages and Success

I’ve been heads down working with some emerging Azure partners for the past year and only resurfacing to find that the technical landscape for Azure has changed. Its got to be twice the size and perhaps more than twice the footprint of when I last looked in any depth,.

As I look back, I wanted to reflect on the various stages of some of the software vendors I have worked with and the identification of those that are successful.

Success, as far as I experienced from Software Vendors, is a combination of:

  • Urgency   - Does this business have a pressing need to deliver yesterday. Do they have clear timelines? Are the immediate goals, immediate?
  • Capability – Does the business have a technical team that is capable of delivering a quality product
  • Investors – Does this business have an experienced and deep pocketed backer that will guide the business to success or limit its failures.
  • Leadership – Can the leadership team efficiently explain why they exist, who their customers are, and where they want to be in the medium term

You might be wondering why there is nothing about the customer or the market here?  What I have learned is, almost without exclusion, a business has multiple backers that have already approved the business case. These business smarts, if actively involved, will limit the liability of any rogue element of a new business and promote appropriate risk taking.

Questions to ask to understand success:

    1. Are you building a product?
    2. Have you or are you acquiring initial customers ?
    3. Have you short term plans to go global?

Things you can do to confirm this without meeting or socially stalking them.:

  • Size/ open job descriptions
  • Understand the executive team and location
  • Research the company history and ownership
  • Understand from company website the business model/product description

At Microsoft  this stuff is important. We have an arsenal of people and resources but have learned to make sure we align well - really connect the two businesses for increased marketing/sales and improved technical delivery. This means true co-selling, promotion through marketplace, development of launch plans, connection to global development teams and side by assistance to launch or release the next version of the product or solution suite. see So, you want to build a cloud service?

The stage of a business is important as to what help you can bring:

At the larger end of town:

  • Angel or Seed - Build the product, define the market and user base (250K - 2M)
  • Series A (1st) - Scale the product -  Master the business model (2M - 15M) and scale beyond one market.
  • Series B (2nd) - Scale the business - Business Model and UserBase stable now growing nationally (15M and greater)
  • Series C (3rd) - More Capital to Scale - Possibly buying other companies and going international

Here is some of my interpretation of various early business Stages and approximate money investment in 2014/5:


Launch                                                           IPO/ Trade Sale Will have public expectation of results  
Series A   2m+ ** Will have a mandate for results  
Seed VC    0.5-2m Will want to see results ANU Connect Ventures
Angels                                                         Equity early but long term committed Angels Sydney
Accelerator Equity time limited, mentoring MS Ventures MuruD Griffin Accelerator Starfish Ventures
Incubator Small budget company formation, innovation focus BlueChilli
Innovation Hub /Working Space   Partnership first year/s Fish burners

Its also worth considering that BizSpark+ now provides budding start-ups up to 120k of Azure credit

Given this stage “ladder”, what attributes (or “Viral Coeffient”)  can point at future success? I suggest the following:

  1. Born in the cloud - Created or funded in the last 5 years
  2. Delivering SaaS in their market effectively – Do they have happy customers?
  3. Yet to reach its potential – the pool of customers is the tip of the iceberg
  4. Have money to fund growth – In my experience companies asking for money from a partner don't often succeed
  5. Are in a blue ocean  - the competitive landscape is negligible or the solution is unique

Naturally I am bound to say Azure can assist any business… but this is certainly true if the company is bound for success or high growth. Microsoft Azure’s powerful higher level services help our partners design a model that works with their business rather than just “hosting” what they have already. The higher level services can help our partners business overcome growing pains in terms of scale, deployment, operations and operational management. Of the 60 or so unique platform services I’d highlight:

For further insights into stages and start-ups I’d refer to the experts rather than anecdotes. You can obtain further reading through great resources such as the LeanStartup Case Studies (Dropbox, Wealthfront, Imvu) and Venture Deals -Brad Feld and Jason Mendels