Mondelēz Intl, Formerly Kraft, to Spend 10% on Mobile

Mondelēz International, formerly Kraft Foods, is betting on a risky leap into mobile with an initiative to find funded mobile tech firms to incubate and work directly with its brands.

A global consortium of major food brands is launching a mobile start-up initiative, seeking to match young startups with up to 10 of its brands to facilitate rapid pilot testing, incubation and investment. Mondelēz International, formerly Kraft Foods, is launching an open call for its Mobile Futures initiative this Wednesday for existing mobile startup talent in retail, social TV and location.

“We so incredibly believe in mobile as a strategic connection point and lever with the consumer that in 2013 our goal is to spend 10 percent of the (global marketing) budgets on mobile. That’s quite aggressive, but we feel that that is right now where it should be. We’re looking for that 10 percent spend to really leverage our other media,” said Ed Kaczmarek, director of innovation and emerging technology at the company behind brands such as Nabisco, Jacobs, Trident, Triscuit, Ritz and Oreo. The Mobile Futures initiative is “above and beyond that 10 percent” commitment, he added.

After the open call for startups closes November 9, Kaczmarek and his team will whittle down the submissions to 20 startups that will then present to all of the brand teams. “We”re expecting eight to 10 brands to participate, so we anticipate matching eight to 10 startups with brands,” he said.

“The kinds of startups we’re looking for are four years or younger. They have to have a fully baked technology,” said Kaczmarek. “We also are asking that they have at least $1 million in funding and/or they are participating or graduated from an incubator. Our reason for doing that is to make certain that someone other than us believes in this startup and has vetted what they’re doing.”

Throughout the first phase, Mondelēz wants its brand teams to capture the “entrepreneurial spirit of the startups” and then carry that through to new concepts and development for scale. “Brands are connected to startups, but it fizzles out and nothing happens. So we hope we’re doing that a little differently,” Kaczmarek said.

“By tapping into the mobile startups, we’re basically expanding and touching innovation in a much broader perspective by going to the outside. But at the same time, what we’re trying to do with this program is build a culture of innovation on the inside,” he said. “We’re basically teaching our marketers how to evolve into entrepreneurs.”

The second 90-day phase of Mobile Futures is expected to kick off by February with some pilots likely getting off the ground before those first 90 days. Mondelēz International’s incubation partners Prehype and Kicklabs will then work with the startups and brand teams to develop a business plan, a working business model, fully working prototypes and build a management team. Mondelēz International and each respective group will then pitch those new concepts to a group of angel investors and venture capitalists that have joined the Mobile Futures effort. Potential VC investors include First Round Capital, New World Ventures, Commerce Ventures, OCA Ventures, Intel Capital, BlueRun Ventures and Transmedia Capital.

“We’re hoping that one of those new concepts comes away with seed funding,” Kaczmarek said. “We’re not going to fund the startup at that point… What we will bring, which we think is just as valuable, is we’re going to be bringing [them] customers from our brands.”

Mondelēz International understands that there is no certainty over what ideas will come out of the Mobile Futures program. “We realize it’s very risky what we’re doing with the venture in phase two,” he said, but added: “If any new venture has a chance to be funded, it should be one of these coming out of this program. We’re obviously nurturing it as much as we can.”

The company already has two convenience retailers and a grocery/mass merchandise retailer on board, but it isn’t mentioning any names yet. The focus areas for Mobile Futures falls directly in line with where Mondelēz International plans to spend at least 10 percent of its global marketing budget by next year: retail, social TV and location.

“You can’t do it any more in baby steps,” Kaczmarek said. “It’s got to be a big leap.”

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