by Genie Z. Laborde
- USA -
It's hot because most people don’t know about it yet and it's cool because it makes money. Crowdsourcing is a way for companies to enlist the help of their own Internet clients to produce their products. Utilizing the "wisdom of the crowd" to its advantage, crowdsourcing attracts customers, content and "clicks" or traffic to a website or online company. The amateur producers in the “crowd” wish to see their creations and this turns them into customers or producers of "clicks," both of which are valuable roles on the Internet.
The boyish looking, fast talking Jeff Howe, contributing editor to Wired Magazine, chaired the five-person panel of enthusiastic CEOs and quiet venture capitalists, encouraging them to discuss the rewards and hazards of this new strategy. Howe shared his own feelings on the significance of this subject: "Crowdsourcing has the potential to upset the entire apple cart—the ways in which work is organized, talent is employed, research is done, and products are made and marketed."
According to Howe, crowdsourcing "Tak[es] a function performed by people in an organization, and, in effect, 'outsourc[es]' it through an open-air broadcast on the Internet."
Divine Caroline, a new web site founded by Real Girl's Media, uses crowdsourcing for its educated women's material, as does Invincibelle, another site developed for women in business who are changing cultures and adapting their behaviors to a new set of mores. Yelp, Digg, Wikipedia and Amazon are successfully utilizing the crowdsourcing strategy as are Predictify, Cambrian House and 8020 Publishing – the CEOs of which were on the panel. 8020 Publishing owns Everywhere Magazine, a crowdsourcing-based publication.
Addressing the challenges of crowdsourcing, the slender and athletic CEO of Everywhere Magazine, Mitchell Fox, ruefully noted how one must "coddle" the client/contributors to the magazine. He elaborated, "If one leaves, then ten leave, then ten more, and each of those takes away ten more and so on."
Another hazard of this strategy is loss of control, which the entire panel agreed, makes business decisions difficult. This problem was nicely balanced by Jeff Howe's story of the T-shirt company, Threadless, which rapidly became the third largest in the United States by seeking input from its customers before choosing graphics for its shirts. Each batch of printed shirts sold out.
Jeff Howe and the three CEOs displayed the greatest enthusiasm for crowdsourcing. The two VCs on the panel, Bill Reichert of Garage Ventures and Saar Gur of Charles River Ventures, seemed to be more interested in what the panel members were reporting than in making any investments based on this new strategy. If their facial expressions reflected their internal dialog, their position seemed to be, ‘Let's wait and see if this holds up over time. Crowdsourcing is a new, difficult approach to running a money-making business.’
In contrast, Michael Sikorsky of Cambrian House became so animated when discussing both the pros and the cons of this strategy that his hair practically stood on end. This man has passion!
Mike Agnish gave the opening address about his four-month-old company, Predictify, and their strategies for attracting people who both want to be right and believe they are right in forecasting future events. Rewards for those who guess correctly are a significant part of Mike Agnish's approach because they keep his customers posting their predictions and visiting his site. For those who guess correctly, the dollar rewards are substantial. People who firmly believe they can predict the future with accuracy are both his sources and his audience. They return to see who is right and who wins the dollars. He has already attracted some large accounts, such as Coca-Cola, for the market research this approach produces.
VLAB, sponsor of this crowdsourcing event, provides a forum to support the success of entrepreneurs by helping them connect ideas, people, technology, and investment experts. In this case, the ideas propelled by crowdsourcing are perhaps so new that the investment experts present didn’t seem quite ready. On the other hand, the audience of students, geeks, professors, engineers, computer architects, net marketing experts and novices were obviously enthralled with the concept and its potential for the Internet.
Strategies that change the way Internet sites do business have international significance simply because of the far-reaching power of communication on the web. The fascination of engineers, retailers, and marketers with what is happening in Silicon Valley will spread the crowdsourcing strategy - not to thousands, but millions of people.
As the audience filed out of the auditorium you could almost hear the wheels turning in the creative parts of their intellect. Don Hunter, an entrepreneur who just started his own mortgage company, muttered as we exited, "Now how do I use this strategy to help my mortgage clients?"
About the Author
Author of Influencing with Integrity, Genie Z. Laborde is the founder of I.D.E.A. Inc. whose seminars have been taught to over 50,000 employees of corporations around the world. IBM, Chase Bank, Dell, Intel, HP, Wells Fargo and Dow Jones are among her clients. The interpersonal skills she and her 200 trainers teach have recently been adapted from business to the arena of personal relationships. Her new venture, 2 in Sync, Inc. utilizes e-learning skills for good relationships.
Mother of six (including an adopted child), Genie also has 15 grandchildren. She holds a doctorate in psychology and education initiated by a Ford Foundation Grant for Innovative Education from the University of California at Santa Barbara. Her e-books (Spellbinding, Fine Tune Your Brain, Influencing with Integrity for the Internet, and Selling Financial Services with Integrity, can be found on her websites.