by Dan Matthews - Thursday, 30th August 2007

My company was lucky to get this deal with Microsoft. But then, they’ve been lucky to get this deal with us.

We sell software that delivers "desktop alerts" - text, pictures, video and audio files - to computer desktops. Our list of notable customers, including Vodafone, the BBC and London Stock Exchange, has taken us to £2m turnover. Not too shabby. But by giving 10 per cent equity to Microsoft, we’ve gained exclusive rights to a software platform that lets us build quicker and cheaper desktop alerts.

It’s a great deal for them too. Microsoft set up its IP Ventures programme in 2005 to get products to market more quickly, by rolling them out through small business partners. Only one problem: since launch the scheme has completed just 12 deals.

A series of coincidences has to happen before deals like this can go ahead. We were at the right stage, had the right funding and shareholder structure, and the technology on offer was exactly what we needed. That’s why this deal is unique in Europe.

Now Microsoft gives us the kind of hospitality they usually reserve for global players. If we organise a conference call at 1pm, they’ll all be there on time. (There’s no overvaluing small graces when it comes to Microsoft.) They’ve invited us to present as their partners at big US conferences, and given us access to some of their most senior people.

Andrew Herbert, director of Microsoft Research UK, has joined our board of directors. This is a guy who reports to Bill Gates! Each company takes a genuine and active interest in the other’s affairs. Herbert is technically an "observer", which means he doesn’t bully us into doing things we don’t want to do. But since the deal completed at the end of May, he’s joined our team for presentations, taken us to Microsoft events and even offered us technical help from Gates’ formidable bank of geeks.

All this is just the icing, of course. The cake is the technology itself. In simple terms, they make the tracks, we make the train. At the moment, demand is so great that BBC alerts are taking ten minutes or so to get onto desktops. But with the new technology all customers will receive their information in real time.

Another benefit: right now all Skinkers users access videos from a single server. But with the new software, when you download a file, another user can pick it up from your network. Users won’t notice the difference, but it could save us 95 per cent on the cost of delivering video. We’re already ahead of the pack, but this will put us way ahead.

It was essentially luck that brought our two businesses together. At the end of last year, we were on the road courting venture capital houses for a cash investment. I heard about IP Ventures from one of the VCs, but shelved the idea when I was offered £2m from NewMedia Spark. I figured what we needed most was cash - to deliver new products, take on more staff and expand territorially.

But I saw potential in the Microsoft deal, so two months later I re-established negotiations with Microsoft. Two months after that the deal was complete.

The Microsoft agreement was about 15 per cent easier than the VC deal, because no money was involved. The nuts and bolts were the same. We had to make sure the legals were done properly and shareholder agreements were in place. The difference is money has an absolute value. Technology doesn’t. That grey area helps negotiation.

There’s something about hard cash that makes people more cautious, which is understandable. If Skinkers went bust tomorrow, our cash investors would lose a lot of money, but Microsoft wouldn’t. I guess they can afford to be nice.

Tags: microsoft, microsoft deal, microsoft agreement, microsoft events, microsoft set, microsoft wouldnt, deal completed, great deal, vc deal, microsoft research uk, bbc alerts, cash investment, cash investors, hard cash, london stock exchange, not too shabby, microsoft research, launch, vodafone, bbc, formidable, small graces, shareholder structure, computer desktops, bill gates, right stage, global players, sell software, software platform, coincidences, audio files, bully,