Although traditional corporations and hip and innovative startups may be seen as being on opposite sides of the barricades, they often make steps towards each other. Corporate accelerators, entrepreneurs-in-residence and other forms of collaboration between the two have become a normal thing for the community in Europe and the US in recent years.
The Web Summit 2014, which took place in Dublin in early November, showed us another initiative in the field of putting startups and corporations together. The Coca-Cola Company, which has been partnering with mature startups for a while, went public with its year-old platform called Coca-Cola Founders, a new approach that involves working with particular founders before they actually launch a startup.
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“There are two things that every company needs, scale and agility. Ironically, every startup got plenty of agility and what they’re looking for is scale,” David Butler, Coca-Cola’s VP of Innovation and entrepreneurshi told The Next Web. “And what large, established, successful companies have is scale, almost nothing but scale, and they’re looking for agility. This way of connecting those needs together is what I think every large successful company is looking for, Coca-Cola included.”
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What comes as a surprise is that the platform’s website clearly states that it does not accept applications. Coca-Cola sees it as a way to attract experienced founders, hand-picked by a team led by Butler. The corporation provides access to its various assets along with some seed stage funding in the form of convertible note, while the chosen founders are free to solve any problems around them, no matter if they’re related to Coke directly or not.
As of December 2014, Coca-Cola has founders working in nine cities around the world, including Sydney, San Francisco, Berlin, Tel Aviv, Singapore, Bangalore, Buenos Aires, Mexico and Rio de Janeiro. The tenth city will be London, where the company has already picked founders, whose names are going to be announced publicly very soon.
Coca-Cola chooses the cities with “either the most established or the fastest growing startup communities,” Butler explained.
“We’re in 207 countries out of 209, which means we have local operations in almost every city on the planet,” he continued. “There’s no aggressive approach here, we just literally go to the startup community [in the chosen city], present what we’re looking for, and if the timing works for experienced founders, they come in and [become part of the platform].”
The founders that Coca-Cola is after are described internally as “disciples of the lean startup method.”
“We’re not here to train first-time founders,” Butler said. “Believe me, we get a lot of inquiries in this space. That’s why we don’t call it a program, it’s a platform for experienced founders to come in and leverage what we’ve got. I think that every company is trying to find that interface to work with the startup community, and [Coca-Cola Founders is] our approach [to it].”
Among the assets, access to which the founders get, Butler listed the corporation’s reach, resources, and relationships. In addition to that, the platform itself can be seen as a network of successful entrepreneurs who can help each other and share some resources, including expertise and talent pool.
Talking about examples of how Coke helped its Founders, Butler mentioned a Brazilian startup called Winnin, which has created a web service for human-curated playlists with videos from different distribution channels.
“From the very beginning they figured out that they needed heavy influencers, cultural icons to bring content to their site. People would want to look at their playlists, right? What Coke has is deep relationships with influencers in every area — think entertainment, sport, music…
“What we’d been able to do is connect those people with Winnin from day one, and that really helped them out a lot. They launched it just before the World Cup in Rio, so the Coca-Cola company ran a campaign on Winnin around the World Cup, they got huge exposure and PR,” Butler said.
Another startup, Berlin-based Home Eat Home, is focusing on providing customers with recipes for evening meals together with all the ingredients to cook them. What differentiates the project from competitors is that the groceries can be picked up in one of refrigerators installed throughout Berlin — and that’s where Coca-Cola was able to help out.
“It’s the same type of refrigerators that we use for our beverages,” Butler said. “What they’ve been able to do is to leverage that. We have 10 million coolers around the world, we know how to provide those coolers to them, we know everything about it.”
What Coke receives back from the startups participating in the Coca-Cola Founders platform is fast and inexpensive access to new technologies and new markets. In case of Winnin, the company got an opportunity to run a native advertisement campaign targeted at teenagers in Latin America. Home Eat Home, meanwhile, is working on technology that allows the contents of refrigerators to be remotely managed over the internet, which Coca-Cola might use in the future for its own coolers.
Time will tell
Same as any other investment body, Coca-Cola hopes to get a return on the money injected in the startups at some point, but Butler points out that it’s too early to say that the model it has employed is the silver bullet for corporations to embrace startups.
“We made a commitment to learn by doing,” Butler said. “We fully intend to make mistakes, and pivot, and change, and so forth. We’re not taking a victory lap here, no one’s saying we’re proven successful. There was no model that we followed, there was no other company doing this, we didn’t read a book and come up with this.
“The next step for us is to move two or three of our startups to Series A round, to that level of success where we can prove that our business model works. We’re in that process, we hope [to get to that point in] early 2015.”