A new type of investor is emerging — one who uses venture investments to push innovation internally. These new investors use investment as a tool for:

• gaining access to data that they otherwise would not have access to (e.g., consumption data for companies without direct end user access);
• getting closer to startups and founders who potentially will be disruptive in their industry (either directly or indirectly);
• gaining access to insights on new business models;
• finding new ways to interact directly with the end customers of their products; and/or
• reducing costs by using new technology that is more effective than what they currently use.

As it turns out, using investment can be a cost effective way to solve innovation and marketing problems. And, if done right, it can also be of great benefit to the startups receiving this investment. While strategic investing is not new, it seems that a new breed of investor is emerging. These teams are often not measured on financial return on investment — and the teams are staffed not with traditional investors but with entrepreneurial marketers and innovation managers. Emmanuel Seuge is the Senior VP of Content in North America for Coca-Cola, and one of the pioneers of Venture Partnerships. Emmanuel and his team, in collaboration with other departments within Coke, have used meaningful investments to create long-term relationships with startups that help them.

In our podcast, we discuss Coke’s relationship with various startups from their inception to their current state, as well as the mutually beneficial relationship startups and large companies have the capacity to create. Emmanuel also shares how an apparent meeting-gone-wrong transformed into a remarkable collaboration. You can listen to the podcast onSoundCloud and subscribe on iTunes. Below are a few selected highlights, as well as the full transcript of our conversation. (Disclaimer: prehype has worked with Coca-Cola on some of the deals mentioned in the podcast. We also run similar venture marketing programs for various companies in the PCG and Toy industry.)

Emmanuelle Seurge on the potential conflict between Marketing Venture and existing investment teams in a corporation:

“One of our chairmen in the 1920’s, Asa Candler, had this phrase that we use a lot at Coke today. It is: “staying permanently and constructively discontent.” This idea of staying permanently and constructively discontent is a responsibility we all have. It’s not about going around anyone, it’s about working very tightly with the finance team, with the M&A team, with the legal team and building those business models together. When we meet those startups for the first time, often the finance and M&A teams are with us in the meeting to ask the questions that we, as marketers, might not think of. Actually, the result of what we have done, is because of a great partnership with our M&A and finance team.”

On betting on founders vs startups:

“The reason we have started to embrace startups is actually because we believe that entrepreneurs — especially today because of the democratization of technology, because of the democratization of information — are able to bring so much speed, nimbleness, creativity and agility that it causes us to think about our business in a more innovative way.”

On being respectful of the founder’s time:

“As a team, we are paranoid of not living up to the expectations of the first meeting. We want to show excitement when we meet a startup. We know that when that entrepreneur goes back to his company, he’ll say he had a great meeting with Coke. Our biggest fear is not living up to that promise and that excitement. The only way to live up to it is to be choiceful, to dedicate the right amount of resources behind it and to learn how to be patient. Patience isn’t in the DNA of large organizations. We want results fast. It’s a small industry and if you burn yourself with one entrepreneur, you’ve burned yourself with a lot of them. You’ve got to be very careful.”

H: We’re at a conference and I’m sitting here with Emmanuel Seuge. Could you just give a little bit of an introduction explaining who you are and what you do?

E: My name is Emmanuel Seuge. I work at the Coca-Cola Company and I lead our content effort for North America. By, content, what we mean is the intersection of three dimensions. The creative work and all the work we do from an advertising perspective — social and digital. The entertainment work and all the partnerships we build with the entertainment industry — music, gaming and film. And then the third bucket, is all the content we build with our startup partners. We call that marketing ventures which is basically equity and marketing partners that we build with young entrepreneurs who work in an industry or in a business that relates to some of our business needs.

H: Obviously the thing that we worked on, and that I’m mostly fascinated with, is this idea — that I think in many ways you guys have pioneered — of using the marketing team and investments into companies to create long-term relationships with startups. Can you talk a little bit about how the marketing ventures idea emerged and maybe an example of something you guys have done that worked for you?

E: Yeah, I’ll give you an example. One of the very first startups we partnered with, actually you were involved in this, was in the sports-platform world. We were looking for Parade to engage on a more frequent basis — I’m almost tempted to say on a daily basis — with everyday athletes. And with Parade, on a global scale, we were very active around the World Cup and the Olympics, those tent-poles events, but we were lacking the tools to engage with that audience in-between those events.

So we were looking for a platform that would help us achieve that. We met a lot of startups in that field and then we met Endomondo. At the time, they probably had six or seven employees based out of Denmark. They were growing very fast and had several million users already. But, everyday, those users utilized that platform as a way to track their sports activity. So, we thought that if we could build a sustainable partnership to help them grow and bring some of our marketing leverage to them, it would allow us to connect with their audience.

Interestingly enough, in that first meeting we asked them: “What would be the one thing that you would love to do at Coca-Cola?” Their response was that for a sports platform, the ultimate place is the Olympics. They said they would love for Endomondo to be embedded in what Coca-Cola did for the Olympics.

We met them for the first time in December of 2011. At the Olympic Games in London, in the Olympic Village, where the athletes go after their competitions, we set up an Endomondo booth where all of the olympians could go and get their count and track their activity. It was a great example that showed us what we could bring to a startup. And, at the same time, they taught us to operate more nimbly, quicker and creatively.

H: How do you see yourself working with startups?

E: About three years ago we started to look at our business and how we interact and engage with consumers. We were trying to find additional innovative solutions on how to do that. We started to talk with entrepreneurs and startups and looked at how they had disrupted some industries and brought innovation inside certain companies. We began thinking about how we could engage with entrepreneurs in a different way to address some of our needs.

It started with a very simple brief around music and our growing need for music content. As you know, buying and acquiring music can be a complicated process. We met an organization called Music Dealers who streamlines that process by going to an independent music creator and providing music solutions for almost any kind of content that you could be looking for as a brand or as a broadcaster.

We partnered with them and, as we partnered with them, they were at a stage where they were trying to build a more strategic, meaningful and sustainable partnership with us. That’s when we joined their venture by taking equity and ultimately, a more meaningful and long-term partnership. That triggered our thinking around venture marketing. That is: building partnerships with startups in a way that is meaningful and important and relevant for them, but also meaningful and relevant for us. At the core of that is sharing similar objectives.

H: You work on a sponsorship team. When we talk about venture and investing, that’s normally something that is in the CFO’s office. How did you get around that structure?

E: As we look at our 128-year-old business, it is at the place it is today because there has been constant innovation, constant disruption and constant thinking about how we can better ourselves. That is true for everyone — the marketing team, the finance team, the legal team. All of us who are holders and inheritors of the brand who are trying to leave it in a better place for the next generation of brand holders. We have the responsibility to continue to innovate.

One of our chairman in the 1920’s, Asa Candler, had this phrase that we use a lot at Coke today. It is: “staying permanently and constructively discontent.” This idea of staying permanently and constructively discontent is a responsibility we all have. It’s not about going around anyone, it’s about working very tightly with the finance team, with the M&A team, with the legal team and building those business models together. When we meet those startups for the first time, often the finance and M&A teams are with us in the meeting to ask the questions that we, as marketers, might not think of. Actually, the result of what we have done, is because of a great partnership with our M&A and finance team.

H: One of the things that I think is very unique is this idea of using venture and investment as a tool for innovation, rather than seeing it is a tool for financial return. I think most corporate venture teams very much think of investing in a company, looking at a ROI and focusing on making their money back. But, obviously, if you’re an incredibly good venture capitalist in the startup space, you might return hundreds of millions of dollars, but that doesn’t necessarily matter with an organization like Coke. What you guys did is use classic investment tools to get a lot of other things out of partnership that aren’t necessarily financial returns. You got partnerships with the startups and you aligned your interests — how did you convince people internally that this was a good idea?

E: I think it was a couple of things. One is that we’re very focused as an organization as to what kind of business we’re in — we’re in the business of beverages, we’re in the business of refreshing people. We’re staying very focused with our priorities. Which means the partnerships that we build are here to feed our core business and allow us to engage with consumers in a better, more meaningful, quicker, or creative way, depending on the type of partnership that we build. The reason we have started to embrace startups is actually because we believe that entrepreneurs — especially today because of the democratization of technology, because of the democratization of information — are able to bring so much speed, nimbleness, creativity and agility that it causes us to think about our business in a more innovative way.

Why do we take equity? Well, because it positions those partnerships in a more sustainable, long term and meaningful way. It shows our commitment to the startup. There is even more responsibility for us to be successful and to meet the promise that we give to the startups than the other way around. It is easy for Coca-Cola, or a big brand, to appeal to a startup or to a young entrepreneur. We have the skills, brand, history and the people. So, that puts even more responsibility on our shoulders to make sure that we live up the the promise of that first meeting.

Now, going back to not getting distracted, we always remember the reason that we exist as an organization, what drives our bottom line, is selling beverages. Even some of the startups we have partnered with have grown tremendously since the time we initially invested in them. But, the financial upside that we could potentially make will be minimal compared to the business that we make every single day, every single hour, selling our beverages. So it is very important that we stay focused in that respect.

H: That’s refreshing in a lot of ways. We work with a number of organizations and some have different views than you. Some people say they would like to find a way to make their existing business better. I think that’s similar to what you do. How do we deliver our marketing message better? How do we engage with customers in new ways? I think there are some who are saying that they want to use cost reductions and use a startup to accomplish that. I think the third category we work with are people who are looking for their next growth engines, especially companies that are in industries with flattening growth lines.

When you are doing these deals, how do you measure success? Do you literally look at how many more sodas you are selling? How do you measure internally if you’ve accomplished something?

E: It varies by startups. All of those partnerships we build start with a common thing which is a clear business need or a business reality that we have as an organization. The example I gave you earlier, of finding the right music for our needs at the right price and at the right pace is a business need. That is a business need we have today, we had three years ago and that we knew we were going to continue to face, three, five, 10 years from now. Because we have more brands and those brands have more needs for music. Music remains a very important part of our marketing mix and we know 10 years from now we will continue to live with music.

H: Do you think that it was easier to make that partnership because it’s a “not such a sexy-type of business?” Music rights is a little bit of a nerdy thing.

E: I have to be very honest. A lot of it happened through the test and learn. We didn’t know we were going to start marketing ventures when we did that first partnership. We wanted to create more meaningful partnerships andMusic Dealers wanted to raise more equity and were looking for a partner. We believed in their business and wanted to take a risk with them. That triggered it and we learned from it.

So, back to your question about measurement. The measurement we do on the program is tied to the particular objective of that program. The partnership with Music Dealers was measured by how much music we sourced, the productivity driven by sourcing it through them instead of sourcing it through other forms and the number of projects we do. We have celebrated over 250 projects with them in two years around that world. It doesn’t all come from the United States; 50 percent of the projects are from places like Russia, South Africa, Asia, Latin America and Europe. That’s one way to measure it. Other startups we will look at how much we increased brand affinity or brand preference, with a certain target group. Each of them is very different, but it’s not too scientific. It is thought through, but when you work with entrepreneurs, you are forced to be agile and flexible. You have no choice. You partner with some of those startups and six months later the business that they are in looks very different than what they were in six months earlier. We have to adapt to that.

H: One thing I have been very impressed with when I’ve worked with you guys is this very respectful way you interact with entrepreneurs. I guess, as an entrepreneur and somebody who works in the space between big companies and startups, it can be a little weird to parade startups in front of corporations. The startups might have a skeptical attitude because they have been burned before. A lot of companies make very big programs offering money and then have startups parade in front of their people. You have chosen a different path. You work with people who have access to proper entrepreneurs and then spend real time with them. Obviously, I’m a fan of that kind of a approach. It’s an approach that doesn’t get a lot of credit. Why do you think it was important for you to do it in that kind of way?

E: As a team, we are paranoid of not living up to the expectations of the first meeting. We want to show excitement when we meet a startup. We know that when that entrepreneur goes back to his company, he’ll say he had a great meeting with Coke. Our biggest fear is not living up to that promise and that excitement. The only way to live up to it is to be choiceful, to dedicate the right amount of resources behind it and to learn how to be patient. Patience isn’t in the DNA of large organizations. We want results fast. It’s a small industry and if you burn yourself with one entrepreneur, you’ve burned yourself with a lot of them. You’ve got to be very careful.

H: I think a lot of companies are looking to partner more in this space. If you’re someone who sits in a brand and has either an innovation or marketing role and you want to get entrepreneurship much closer into your DNA, how do you go about that? You seemed to have used some of your sponsorship budget. What’s your trick to move things ahead?

E: I don’t think there is a trick. Today, it’s part of the ecosystem of doing business and bringing innovation into an organization and thinking innovatively. Working with entrepreneurs is not the same as working with other large organizations, working with Sonny Vo at Misfit, is not the same as working with the International Olympic Committee or FIFA. Those are different sized organizations; they don’t have the same history.

We need to be as good of a partner with FIFA and the IOC as we are with Sonny at Misfit, or Jeff at Spotify, or Eric at Music Dealers. Internally, that requires us to structure ourselves with a different skillset. You want people who are going to be great at working with large organizations and we want different people who are going to be great at working with entrepreneurs. At the core, what those two people need to share is that they need to work well inside Coke. They need to remind themselves that we’re working for Coke and ultimately we are here to engage with consumers and sell more beverages in the right way, at the right time, for the right occasion, for the right consumer.

H: This might sound like a bit of a weird question, but you’re based in Atlanta, which has some cool startups but isn’t necessarily the hub of the startup community. How do you practically engage? Do you travel a lot? Do you invite a lot of people over?

E: First of all, I would say that Atlanta is getting more and more dynamic. I would say also, there used to be the Valley and nothing else. Today, you have all these hubs around the world — New York or LA or Tel Aviv or Berlin or Paris or Sydney. When we were looking to find a partner in the wearable field who gives people the tools to be more active and monitor their activity and balance, we met a lot of organizations and startups. It was two days of back-to-back meetings with all of them. The last meeting of the two days was a meeting with Misfit. We had just seen an Indiegogo video they had done. We were all a bit tired and jetlagged. I wondered if we even needed to do the last meeting, but Basir told me we should go. We drove to southern San Francisco and the address that we had was a small suburban house. It didn’t really sound like the HQ of an up-and-coming startup.

Anyway, we rang the bell and the guy that opened the door had a dog barking next to him. The guy was wearing a complete basketball outfit — long shorts, a jersey, a cap. I told him that we were with Coca-Cola and were there to meet with Sonny. Sonny wasn’t there and he directed us to the basement of the house where there was an old-fashioned table with three chairs and three cans of empty competitive sodas on the table. It’s like it was staged. We were wondering if it was a setup. We waited for 20 minutes and then the guy who answered the door came back and said Sonny wasn’t coming in, that there was probably a misunderstanding about the meeting time. But, he put Sonny on the phone. We spoke with him for two minutes on the phone and he tried to understand why we were interested in talking. We ended up meeting at South by Southwest in Austin two weeks later. We spent three hours with him and that was it. Then we sealed the deal. If Basir hadn’t pushed me to go and if we didn’t pursue it, those things wouldn’t have happened.

H: It seems like you’ve also been very focused on the founder and the core team. I remember when we worked with Endomondo, you really liked the founder team and those were the people you were backing.

E: Totally. We have a philosophy that looks at three things. We call it the three P’s — the people, the product and the promise. What we mean by that is who are the founders? Are they people we’re going to want to spend time with and share values with? Is the product not only something we believe in, but does it work with our brands? And then, the promise, is where does this company want to go? What is their long-term plan? For example, we investigated digital music streaming companies to find a better way to connect with the younger generation since digital streaming is the number one way they consume music. We met all these companies and they were all fascinating and great.

But, the reason we picked Spotify is one, the people, Jeff, the chief business officer and Daniel. Not only did we believe in them, but they spoke about Coke and why they believed in a partnership with us. They believed in the partnership with us as much as we believed in the partnership with them. One of the main differentiations of Spotify at the time is that it was social at heart, it was all about sharing music. Using music to bring people together is what we like our product to do. It was the only one of the companies we met that said they wanted to expand internationally and transform music into a global, accessible and affordable currency around the world. That democratic approach and international growth were very important to us. So, while we look at those three criteria, it starts with the people.

H: You’ve done things in music rights, you’ve done streaming, you’ve done activity, you’ve done measurement. What are some of the spaces you are fascinated by these days?

E: Gaming.

H: You’ve been in gaming for a while, right?

E: Yeah, we just hired a head of gaming. We’re doing a lot of things. We started a partnership with eSports two years ago. We’re learning a lot and testing a lot.

H: What is it about gaming? It’s one of those things that everyone has seemed to be talking about for forever. You don’t really know how many people are gaming, but everyone says a lot of people are gaming. It’s never really been a thing that a lot of brands have integrated with.

E: It’s the fastest growing entertainment industry right now. It’s double the size of the film and music industry combined. There are more people watching the final game of League of Legend online than people watching the NBA finals. What is interesting and fascinating about gaming right now is that it’s not only about gaming or playing the game, but it’s about watching people play the game. Twitch was bought for just under a billion dollars by Amazon. Gaming is the second currency on YouTube after music. So, people are playing, people are watching and now people are attending. People are buying tickets. My immersion into this world was two years ago at the packed Staples Center with 30,000 or 40,000 other people who paid an average ticket price of $55 to watch other people play a game.

H: That’s incredible.

E: The multi-faceted dimension of gaming and how the gaming industry is reinventing itself is fascinating.

H: I used to run MTV games outside the U.S. and one of the things that was complicated was that you had a lot of cool kids at MTV and then you had a lot of pretty nerdy kids in the gaming space. The culture of those two was always an interesting thing to try to fit. Do you think sometimes it is hard as a marketer to understand the subculture of gaming? Is that one of the reasons you invest?

E: It’s very hard, but what we do is bring in gaming experts to our team. Matt Wolf, our head of gaming, has worked in the gaming industry for 25 years. He has brought inside our organization, the knowledge, the network and the understanding of what would be the right way for us to engage with gaming. Matt hired on his team, to work especially on eSports, a guy who is an eSports anchor in regional events in Georgia. On the weekends, he is the anchor of the League of Legends event in Georgia, and during the week, he works for us. He is bringing a ton of knowledge inside the building. So, when it comes to those specific passion points, we believe music is the same, we bring in expertise inside the building, rather than trying to do it ourselves.

H: That’s really fascinating. What do you think a startup who thinks they have something to offer you guys should do? You’ve been going out and finding them so far? Are there people who come to you?

E: Yeah, there are. Sometimes they work, sometimes they don’t. I would say the key is a good understanding of our business problems. If a startup has an answer to some of the problems we are facing business-wise, then they have a higher chance of engaging in a positive conversation with us then if they’re in a business that is fascinating and growing, but is not connected to our core business. Earlier this morning we met a young entrepreneur with amazing energy who is working in a very interesting industry, but there is no way that we can connect it to the beverage industry or the business of consumer engagement. So, it’s not necessarily the right fit for us. That’s why it’s important to not get distracted and to stay focused and remind ourselves why we are doing those partnerships.

H: I’ve got a bit of a nerdy question that I always ask. I think a lot of us who are interested in entrepreneurship are also interested in life hacking and making stuff more efficient. Do you have an app or service you’ve discovered recently that is actually really cool and you’ve started to use?

E: There is this app that I started using two days ago that I’m really intrigued about. It’s called Plague. It shows you, through a very simple mechanism, how content you’re watching is spreading around you. Depending on whether you browse the content up or down once you watch it, it’s going to spread in one direction or the other. It shows real time the virality of a piece of content based on where you’re located. I’m not sure I completely understand it yet. We have a 24-year-old guy in our team who does analytics of real-time marketing and he told me about it, so I downloaded it. I’m really intrigued about it. Everyone talks about the virality of content, and all of a sudden I have it here. I can track it, I can see it.

H: I’ll try that.

H: Final question. I started to do this Prehype podcast and I guess I’m learning as I go along. Is there a subject you think that people are not talking about. Something you’re passionate about that isn’t being talked about in the entrepreneurship marketing scene, but it’s an area that someone should talk a little bit more about. Beth Comstock from GE was talking about philosophy, a guy who is very integrated in the Quantified Self movement was talking about what happens after we die — do you have an area that you think would be interesting for us to explore that no one is really talking about?

E: It’s cooler today for a smart kid to work at a startup than to work at a large organization. The model has flipped upside down. So, I’m fascinated and intrigued by what that means.

H: How do you attract people? How do you get that entrepreneurial spirit inside the organization?

E: We try to create an open culture where hierarchy isn’t really relevant and where everybody has a say at the table.

H: I think the coolest thing about being an entrepreneur is that you get to work with people you like on problems you think are worth solving. I think you still have that in some organizations and you can still offer that promise. Then, if you give entrepreneurs or young people tools to allow them to be a little bit independent, they can actually be pretty entrepreneurial within big organizations.

E: Totally, absolutely.

H: I think that’s a good end.

E: Thank you for having me.

H: Appreciate it.

More info on:Emmanuel: goo.gl/DLY0NcPrehype: prehype.comHenrik: twitter.com/werdelin and hellohenrik.com