In-Depth

Setting Up Shop Near Seattle

Opening an office near Microsoft's corporate HQ can help you get inside information and access to the right people -- or simply drain your bank account. Here's what to consider before deciding whether a Redmond branch is right for you.

• By Rich Freeman
• July 01, 2007

"I was coming to Microsoft once or twice a month anyway," says Kim, who is chief technology officer at FullArmor Corp., a Boston-based maker of group policy management software and a Gold Certified Partner. "Based on the strategic nature of the relationship, I decided to bite the bullet."

It's a move he's never regretted. Working full-time near Microsoft has provided access to a multitude of conferences, training sessions and other activities that he didn't even know existed. "I was amazed by the amount of things happening on campus," Kim says. Even better, meeting with corporate employees more regularly has strengthened FullArmor's already close ties to Microsoft. In fact, since November 2006, Microsoft has been distributing FullArmor's group policy conversion software through its Web site. "Because we were on campus, we were able to get that deal done very quickly," Kim reports.

His story isn't unique. Many ISVs and solutions providers based beyond the Seattle area eventually open a permanent branch near Microsoft's global headquarters. Many say that doing so helps them beef up their roster of Microsoft contacts, gain greater insight into future product directions and obtain resources that simply aren't available to more distant partners (for additional benefits, see "More Reasons for Redmond Residency" below). But they also warn that establishing a presence in the Seattle area is neither cheap nor easy: Only companies with deep pockets, realistic expectations and a concrete set of goals should take the plunge.

"I've seen companies come through that wanted the [Redmond] presence as a status symbol," says Kim. "That's a waste of money."

Cultivating Personal Ties
Many of the benefits that partners cite when discussing their Redmond area office boil down to a single word: relationships. Phone calls and e-mails are no substitute for the frequent, direct contact with Microsoft personnel that a location near corporate headquarters makes possible. "Relationships are built face to face," says Albert Wang, CEO of Certified Partner IdeaBlade Inc., an Emeryville, Calif.-based vendor of .NET development tools that has had an employee stationed near Redmond for the last three years. "If you're just one of the hundreds of thousands of partners out there sending mail to Microsoft, it's hard to distinguish yourself from the noise."

Kim agrees. "Positioning our products with the right product teams is significantly easier" since his move, he says. What's more, he adds, while partner-company executives who periodically visit Redmond from elsewhere also get face time with Microsoft employees, they miss out on the ad hoc conversations that come with being on campus daily. "We get more business done in the hallways than by having formalized meetings once a month," Kim says.

The upshot of those informal interactions is easier access to opportunities that many partners never even hear about. IdeaBlade, for example, has used its Redmond-based connections to secure invitations to exclusive ISV conferences, and to get in early on offerings such as Microsoft's NXT program, which provides funding, technical assistance and marketing support to ISVs migrating their products onto the Microsoft platform. "That ended up being a really nice program that we wouldn't have known about if we hadn't had someone working with Microsoft right in Redmond," Wang says.

Cultivating personal relationships with headquarters staff can also help partners get the inside skinny on Microsoft's next moves. Before the release of Visual Studio 2005, for example, a corporate contact gave IdeaBlade an advance look at the edition names that Microsoft planned to use. That peek enabled IdeaBlade to have updates to its own products bearing the same edition names ready by the Visual Studio launch date.

For his part, Mark Barrett likes being able to give clients the authoritative scoop on not only what Microsoft is doing, but why. Barrett is president of Invoke Systems, a Gold Certified Partner, solutions provider and Microsoft CRM specialist with headquarters in Baltimore, Md., and a satellite office in Redmond. If a customer asks why Microsoft didn't include a certain feature in one of its programs, he notes, Invoke can pass along the reasoning it received straight from the product group. "That's not a competitive advantage, but I think it's a credibility-builder," Barrett says.

Having a presence near Redmond also builds credibility with Microsoft's field organization. It helps partners demonstrate commitment while simultaneously building familiarity with the corporate objectives that Microsoft's district teams are responsible for fulfilling, Barrett says: "Understanding Microsoft's goals as a company makes it easier [for the field] to work with."

Weighing the Drawbacks
Of course, not everyone is bullish on the value of a Redmond office. "Our belief is that you've really got to be focused on the field," says Robert Beatty, senior vice president for business development at Scalability Experts Inc., a solutions provider that specializes in Microsoft SQL Server and is a Gold Certified Partner. Headquartered in Coppell, Texas, the company has maintained a Redmond-area presence for three years, but uses it primarily to keep in touch with Microsoft's Pacific Northwest district office. That the Redmond office also makes his periodic meetings with product group personnel and other corporate staffers a little easier is merely a nice bonus, says Beatty, who believes that many partners have exaggerated hopes for what a Redmond address can do for them. "Just because you have four walls and a roof in Redmond doesn't mean that's going to change the way you do business with Microsoft or they do business with you," he says.

Indeed, even people who talk up the advantages of a Redmond office discourage some partners from bothering with one. For example, Barrett argues that while ISVs need to keep up with the latest scuttlebutt from Microsoft's product groups, most resellers and solutions providers can get all the product roadmap information they need online or through their partner account managers. "It's not imperative that you have a relationship with someone on the product team to know that stuff," he says.

Similarly, VARs and integrators with purely local client bases won't benefit much from a Redmond location, says Brent LaBier, vice president of sales for enterprise solutions at Gold Certified Partner Statera Inc., a solutions provider that's one of a few dozen nationally managed Microsoft partners in the United States. Based in Englewood, Colo., the company opened its branch office near Microsoft in May. "If you're a locally managed partner in, say, Minneapolis, I'm not sure what value an office in Redmond would have for you," LaBier says. Unlike Microsoft's field staff, employees at corporate have little interest in companies that operate solely in one market. "They don't care what you do in a single city," LaBier notes. "They care about what you do across the country."

Perhaps, but maintaining a presence near Microsoft headquarters can pay off for smaller firms just the same, says Dwight Nishida, president of High Performance Systems Inc., a Honolulu-based Gold Certified Partner that resells networking gear and business applications. The 12-person company's Redmond-area "office" is actually the residence of a developer who moved to Seattle for personal reasons in May 2006. Rather than lose a valued employee, Nishida suggested that the developer telecommute from his new home. Although the company continues to focus on personal relationships with Microsoft employees based in the Southern California sales district, having someone near corporate headquarters gives High Performance access to a slew of technical and sales readiness offerings it didn't have before. "There are a lot more training and partner meetings held [in Redmond] than in Hawaii," notes Nishida, who recently added a second Seattle-based employee.

Running a satellite location near Redmond isn't without its logistical challenges. First, there are the start-up costs associated with leasing office space and then either hiring locals to staff it or moving existing employees to a new city. In addition, opening an office near Redmond means mastering a whole new array of local and state tax laws, labor regulations and business-license requirements. "It's another set of record keeping you have to do, and another set of payroll taxes to pay," notes Nishida. For many partners, it's also an additional time zone to juggle. "I can very easily get a call at 8:30 or 9 at night, and the folks on the West Coast periodically get pulled out of bed at 6 a.m.," Barrett says from his office in Baltimore.

Patience Is a Virtue
Many partners that have set up shop near Microsoft advise anyone thinking of joining them to test the waters in Redmond before signing leases or hiring workers. "It's very easy to take a flight into Seattle once or twice a month," notes FullArmor's Kim. "That gives you time to scope out the area and decide whether it's beneficial to be here [full time]." If you opt to proceed, start by drafting a strategic plan specifying a concrete set of goals for your new office. You need to know up front exactly how you expect a Redmond branch to help improve your development, marketing or sales efforts.

Securing office space is often the next step, though many partners based elsewhere choose to save money by having Redmond-based employees work from home. To further trim costs, many partners hire new staff locally, rather than relocate existing employees. If you go that route, though, be prepared for some hard bargaining.

The Seattle tech market contains an unusually large concentration of top-flight programmers, marketers and salespeople. All that talent attracts scores of aggressive recruiters from big-name companies, so landing your top candidates may require offering competitive compensation and benefits packages, Kim warns.

Above all, partners say, don't expect your initial outlays for employees and office space to deliver immediate returns. "It's going to take years to develop all the contacts you want," Wang notes.

That may be longer than some partner companies are willing to wait. But others, including IdeaBlade, maintain that they simply couldn't afford not to open an office closer to Microsoft: "It was a significant expense, but one that we knew we had to take," Wang says. "They're our biggest partner."