What Happens When David & Goliath Team Up

The Internet age has been a story Davids and Goliaths: small, scrappy startups overtaking established industrial titans. Recognizing that innovation often favors startups, PepsiCo decided to outsource part of its marketing R&D through a startup competition, the PepsiCo10. Through the competition, Pepsi gains up-to-the-minute knowledge, and startups gain the resources of a powerful company.

The process is all about "getting to see the trends," Joshua Karpf, who is part of PepsiCo's digital marketing team, told Fast Company during SXSW. "Imagine if someone was early with Facebook?" he muses, longingly. The opportunity to get in on the ground floor of a potential game-changer would give a company like Pepsi an edge against other big companies that may be slower to adapt. 

Among his favorite entries in the PespsiCo10 competition was Evil Genius Designs, which creates interactive experiences while customers stand in long lines, at, for instance, a theme park. Creating coupons and games to entertain them can make eager, grateful customers out of what would otherwise be frustrated and bored patrons.

Evil Genius Design CEP Tracy Brown says that large companies wanting to outsource their R&D need to create an "ethos of fail." Being on the edge brings with it the baggage of startup success rates, which can be considered quite iffy for a more conservative conglomerate.

James Dejulio, president of Tongal, another PepsiCo10 winner, had advice for startups looking to target larger corporations: Get to know the right person on the inside. After one of his ideas was rejected at a big corporation, he went above this particular employee's head and got approval from the boss. In particular, it helps to target people who have a "secure" job, as they’ll be more willing to take more risks.

Finally, rising social media stars can also a great match for R&D partnerships. At SXSW, Brisk Tea is using popular photo sharing site Instagram to put photos on the cans. Contestants are incentivized to see their own works on tea drinkers throughout the conference, and Brisk get some buzz for savvy social marketing.

Cooperative partnerships present powerful opportunities, in this way, for both David and Goliath.

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