KinectStars: Why Microsoft Drafted TechStars to Target Startups

The offices have been laid out. The applications are flowing in. And come next spring, 10 proto-companies will meet in Seattle for a three-month bootcamp focused on new uses for the Kinect, Microsoft’s breakthrough motion- and sound-sensing system.

For Redmond-watchers, that may not seem like such a big deal. Microsoft already cultivates startups through its BizSpark program, and is putting plenty of steam behind the Kinect as a next-generation user interface. I have no idea how much money Microsoft is paying to bankroll the new Kinect Accelerator program, but it’s certainly in the realm of a rounding error.

But the thing that makes this Kinect program really interesting is Microsoft’s partner: TechStars, the startup accelerator with branches in Seattle, New York, Boston, and Boulder, CO.

TechStars is a top-tier example of the startup incubator programs that are sweeping the country right now, a phenomenon that challenges the established education and entrepreneurship systems. Those programs have already gotten plenty of interest from entrepreneurs, the press, and early stage investors. But now, mammoth tech companies are taking a longer look, too—and doing more than just offering free software or a few mentors.

“Corporations have been trying to create innovation ecosystems forever. Historically, those that do it themselves have tended to struggle in general,” TechSars co-founder David Cohen says. “We believe we can help Microsoft get it right. It appears to be working so far—we have some amazing applications and the interest is very high.”

“Traditionally, it’ll be, ‘Hey, here’s a toolkit and here’s some terms and conditions, and, essentially, have fun. Good luck,'” says Microsoft Studios general manager Michael Mott, the company’s point person for the Kinect Accelerator. “Now, we’re saying, here’s that same set of technologies … and here’s a little bit of expertise and guidance, not only from us but also from this great incubator of startups, TechStars. In that case, I think it’s a little bit more of a wraparound approach and a little bit more hands-on than we maybe have done in the past.”

The Kinect Accelerator will look very much like a typical TechStars class, with 10 companies chosen to participate in an intensive three-month program of product-building, testing, and business development. At the end, there will be a big demo day party, where the entrepreneurs can show off their work to insiders and potential investors.

But this version is a wholly Microsoft endeavor, and focused on one technology, the Kinect. “This is Microsoft’s program,” Cohen says. “We’re powering it, which means we’re responsible for making sure it’s awesome.”

That’s a first for TechStars, which, like other independent accelerator programs, chooses its own class of entrepreneurs from a wide-open field of applicants. This year’s Seattle class, for example, produced startups tackling everything from smartphone-powered robot kits to international money transfers.

That’s a totally new way of thinking about something like TechStars: Not only does it run bootcamps of its own, but it can be hired out to help the world’s biggest companies develop their own entrepreneurial ecosystems.

It’s a huge validation for the TechStars model and its people, and there’s a more concrete upside as well. Just like in a regular TechStars program, the companies will get an investment: $20,000 from TechStars in exchange for 6 percent equity. (Significantly, Microsoft will not take a stake in the startups or their intellectual property.)

When it was announced last month, the Kinect and TechStars partnership instantly reminded me of Google’s recent two-year deal to be a global sponsor of Startup Weekend, the Seattle-based entrepreneurship program that has been steadily growing beyond its signature hackathons.

Google’s deal with Startup Weekend is more than just a check. Googlers will also host developer workshops ahead of Startup Weekend events, and bring promising entrepreneurs from the global Startup Weekend network back to Google headquarters for a week of collaboration. In short, it’s tapping into the Startup Weekend network of more than 250 events worldwide to find promising talent—and make sure they’ve got Google on their minds.

Kinect Accelerator is different on the details, but it has the same flavor. It’s probably a smart move for a lumbering technology giant that is often criticized for being too bureaucratic to get out of its own way and innovate. Not coincidentally, Xbox and Kinect are very prominent examples of consumer offerings that Microsoft has actually done very well.

The Kinect Accelerator will be directed by Dave Malcolm, a former longtime Microsoftie who has been a TechStars mentor in Seattle. The startups will operate out of Microsoft office space in South Lake Union, a block away from the growing Amazon campus.

Teams will get Xbox kits, Kinect hardware, and the upcoming Windows software development kit for Kinect, along with the usual array of developer tools and software. Products that might have phone and tablet interfaces or other applications are also welcome, Malcom says: “The solutions these 10 companies create simply have to leverage the Kinect in some form.”

“We are looking for the 10 teams who have the most compelling, big ideas that we think, post this program, they have the best chance of getting follow-on funding and building real businesses that scale and have an impact,” Malcolm says. “We would like people to think big when they come to us with applications.”

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