Ex-Microsoft Exec Trashes Former Employer — at a Microsoft Event

Photograph by Andrew Harrer/Bloomberg

Microsoft is looking to embrace tech startups, but a former company executive said it has a long way to go.

Microsoft assembled more than 200 tech entrepreneurs, investors and other industry types at its headquarters in Redmond, Washington, today for a series of presentations from members of the company’s business incubator. These events are designed to foster startups, promote Microsoft’s Windows Azure cloud services and bolster the company’s image among the cool kids.

But Damon Danieli, the event’s opening speaker and an ex-Microsoftie, set a different tone.

“Microsoft needs some help,” he said during his speech. “Just look at the title: `Microsoft Accelerator for Windows Azure Powered by TechStars, Startup Edition Service Pack 1.’” He was somewhat exaggerating the name of the program.

Danieli worked at Microsoft from 1994 to 2008 on products such as the Xbox Live online service (his “gamertag” is “d”) and ActiMates, a line of interactive plush toys that came out in the 1990s. After Microsoft, he started Z2Live, a game maker for Apple’s mobile platforms, and Appuri, a consulting firm.

At today’s event, Danieli said Microsoft has lost some of the hard-charging startup instincts that its developers had when he joined. Microsoft now has some 94,000 employees. Some of them had been working on tools that were similar to those from companies Microsoft has shelled out big money to acquire, Danieli said.

“It pains me to see what happens now where Microsoft pays $8.5 billion to acquire Skype or $1.2 billion for Yammer,” Danieli said. Microsoft has to forge stronger relationships throughout the startup community and draw more of them to the Seattle area, he said.

Some of the entrepreneurs at Microsoft’s demo day showed that the city’s startup ecosystem has a few tricks up its sleeve. Mobilligy helps consumers manage and pay bills on smartphones. Fanzo is a social network for sports fans that ranks users based on their online influence. (Paul Ingalls, the company’s founder, provided another awkward moment by bravely declaring — on today of all days – that his favorite team is Notre Dame.)

Microsoft managed to attract about 600 applicants, from as far away as Australia, France and Italy, eager to spend time in the Pacific Northwest as part of the incubator. One standout was Los Angeles-based Realty Mogul, which makes a sort of crowdfunding platform for real estate. Another was Sydney-based BagsUp, which aggregates social-media data about friends’ business trips and vacations.

After Danieli’s presentation, Microsoft Vice President Dan’l Lewin, who oversees the company’s outreach to startups, took the stage. “I’m from Microsoft, and I’m here to help,” Lewin said.

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