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Microsoft is throwing the kitchen sink at artificial intelligence – and so are Google, Amazon, Facebook, IBM, and Apple. For Microsoft, this is neither a fad nor a new vertical: the tech giant believes AI has reached an inflection point and will soon become integral to every company’s business.

Bala Girisaballa, who took over as CEO of the Microsoft accelerator in Bangalore four months ago, likens it to the start of the dotcom era. “Time was when dotcom was a strategy – a slap on to your business model, not an integral part. Today, it’s bizarre to ask if you’re a dotcom.”

I’m the fixer between small startups and large companies.

Bala thinks AI will one day be just as ubiquitous. We will no longer have a category like AI startups because every company will have AI – just as we no longer talk of dotcom businesses as something esoteric.

“We are at the cusp of a new era where everything is about intelligence. It’s no longer about automation, it’s about tons and tons of data and what we do with it… Give it another ten years, I think artificial intelligence and data analytics will be in the DNA of every company,” he explains in a freewheeling interview with Tech in Asia on the road ahead for Microsoft and its engagement with startups.

See: Startups react with hope and fear to AI alliance of Google, Facebook, Microsoft, IBM, and Amazon

Alignment with Microsoft vision

The AI theme manifests itself in multiple ways at Microsoft. It’s building an open-source natural language processing platform called Luis.ai that startups can plug into. And it recently got into an alliance with Google, Facebook, Amazon, and IBM to create a range of open source AI libraries and frameworks that startups can use.

More than half the startups in the latest batch of startups at Microsoft’s Bangalore accelerator are into AI or data analytics. Bala believes the analytics startups will also adopt the self-learning AI mode at some point.

One shouldn’t chase in tech, it’s better to leapfrog.

The accelerator’s mandate is to help the startup ecosystem grow in a tech-agnostic way, but Bala admits it is also aligned to Microsoft business. So, if a startup wants to move to the Azure cloud, Microsoft engineers will help it do the fork-lifting. Cloud credits and Azure’s linkages with Microsoft’s AI platform act as carrots for startups to make the move. But there’s more at stake here than the optional adoption of Microsoft tools and tech.

The tech giant’s preoccupation with its license game blindsided it to the internet and mobile wave. It lost its mojo; its stock declined. But there’s been a resurgence in the last couple of years under Satya Nadella.

See: AI is a recurring theme in Microsoft Accelerator’s latest batch of startups

Microsoft stock hit an all-time high in October and has kept rising. It could soon catch up with Alphabet (Google’s holding company) and even overtake Apple to become the first tech company to reach a trillion dollar market cap. Its recent release of the Surface Studio PC had all the [coolness one earlier associated with Apple]http://ift.tt/2eB7kkA).

The push into AI is another manifestation of the new Microsoft. Bala puts it in historical perspective, as is his wont: “One shouldn’t chase in tech, it’s better to leapfrog, and Microsoft is in that process,” he elaborates. “The first version of the mobile internet war is settled, now let’s look at the next one: the platform game. Everybody is starting from scratch, so it’s fair game.”

You have to have a certain size to be able to dance with an elephant.

It’s not just about selling software anymore; it’s about finding new ways to use it, and engaging with the users over a long term. Hence the open source platform model for AI at Microsoft. It enables startups to create value on the platform for users to consume, connecting the two. This is a participatory mindset, radically different from how Microsoft used to think.

It’s an enmeshed ecosystem where Microsoft is tracking startups, partnering with the best of them, and helping them grow faster – even if some of them may turn into rivals one day for some parts of MS business. Some could also be absorbed into Microsoft through acquisitions.

The Microsoft accelerators in both Bangalore and Seattle thus serve the mothership’s twin strategic objectives: working with startups, and betting on AI. Earlier this month, Microsoft Ventures – the tech giant’s VC arm – also announced a new fund for AI startups as well as investment in Element AI, an incubator in Montreal co-founded by deep learning pioneer Yoshua Bengio. It even funded an AI butler in China – a rare investment by Microsoft into a Chinese startup.

See: Microsoft Accelerator ties up with Indian IT titan to help startups grow

The fixer

Wanting to work with startups and actually doing it are different cups of tea. Here’s where Bala’s “ping-pong career” – shuttling between corporations and startups – comes in handy.

He was the product strategy director for Oracle in the Bay Area, helping to build its CRM (customer relationship management) product line. He returned to India and launched two startups. The first one, a portal for managing outsourcing relationships, NineMotion, got sold to one of its beta customers in the US. And Bala roped in his wife, Meena Girisaballa, to take over the second one, PurpleFront, which helps small businesses go digital.

The structure of a big company doesn’t allow it to go after small, risky bets.

That was because Bala was getting sucked back into the corporate world as a management consultant for research and advisory firm Zinnov. Then the offer came from Microsoft Accelerator, where he finds himself in the perfect spot between startups and corporate firms.

Even at Zinnov, he was helping Fortune 100 companies which saw startups as a critical part of their innovating and moving forward. “I’m the fixer between small startups and large companies,” he says about his new role at Microsoft Accelerator, where he keeps changing hats – sometimes donning the corporate top hat and at other times equally comfortable in the startup founder’s golf cap turned around.

See: A ranking of 151 enterprise-ready startups in India

It’s not easy for a startup to be accepted within a large corporation. “One team looks at it as partnership, another team looks at the same thing as competition,” points out Bala. “But what choice is there?” he asks the dissenters.

Clayton Christensen pointed out in The Innovator’s Dilemma that the structure of a big company doesn’t allow it to keep going after small, risky bets. Startups are well-placed to do that. But they need validation and support to scale up. Hence the new imperative of partnerships.

Everybody is starting from scratch, so it’s fair game.

Bala, who likes to draw analogies, talks of the large companies being like big tankers and the small startups being fast boats that dart off to find treasure. Then the big tanker can move in through acquisition or collaboration.

It’s to increase the chances of such outcomes that the Microsoft Accelerator has shifted to working with later stage startups that have a proven product-market fit. The average revenue of the current cohort in Bangalore is US$725,000. They are ready to go global and find bigger customers – an area where Microsoft can pull in its vast resources. “You have to have a certain size to be able to dance with an elephant,” is how Bala puts it. He hopes the new year will see the dance fall into a rhythm.

See: 13 biographies every entrepreneur must read in 2017

Hit Refresh is the title of Satya Nadella’s autobiography being published next year, where the CEO will articulate his thoughts on Microsoft’s repositioning with new cloud and artificial intelligence technologies. Bala and his cohort of startups are part of that refreshing change.

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