The Software Abstractions Blog

Crowdsourcing Charity: Sustainable Innovations

Paul Buchheit (founder of Gmail and Friendfeed) wants to donate money to charity. He's trying an interesting experiment in collaborative charity, where he's planning to crowdsource the list of ideas he should consider funding. The ideas he gets are only recommendations, he says, and he will ultimately choose the best idea that appeals to him and that makes sense.

In that spirit, let me make a suggestion for Paul and others like him in Silicon Valley, one that takes a different perspective. If you're a successful tech founder or VC who likes philanthropy, consider this a free "business idea for giving back" that you can adopt as your own if it interests you. [Now I'm no VC, nor am I a rich, successful tech founder, so I have no idea if the approach below has any appeal to these folks; nevertheless it is an interesting thought exercise.]

Silicon Valley skills

In general, anyone with a bit of time or money and the inclination to help, can donate to charity, and many people do (bless 'em!). The most effective donations, however, leverage the unique skills and perspectives that one can bring as an individual, using one's own talents and gifts in addition to money, to help others.

So what could Silicon Valley entrepreneurs do? How about this: instead of donating money directly, why not use it as seed funding to build an organization that can keep on giving? After all that is what tech founders (and VCs) do best: they fund startups that take some initial amount of money and then leverage it massively to create a disproportionate impact on a target market - or die trying. Why not take the same approach to charity? Build an organization that leverages other people's time and money, and creates massive impact, much bigger than the pure monetary donation would create.

But what type of organization? There are already many, many charities, of many different types. How do you make a difference?

Third level of Abstraction

Give a man a fish, it is said, and you feed him for a day; teach him to catch fish, and you feed him for a lifetime. Extending the metaphor, what if you could create a construct that continuously spawns ideas, technologies and approaches for teaching everyone to catch fish?

What the world needs more than direct charity, is locally-sustainable ideas that allow populations in underdeveloped areas to take care of their own core needs - clean water, sustainable food production, cheap education and economic development - by themselves. As a philanthropist, what if you were to establish an organization to crowdsource innovations and ideas to bring about these very changes? You could create a mechanism to encourage such attempts and to reward successes.

The idea: So the idea I'm proposing, in a nutshell, is this: instead of making a direct monetary donation to charity, set up a recurring contest or start an organization that encourages and rewards innovations in technology, design, reuse, financial models, human factors or ecology conservation, for the social good. Most important, these innovations must lead to local, self-sustainable solutions that do not depend on ongoing external help to keep going.

Real-Life Examples: Business Models and Innovations

There are many examples of business models for encouraging innovation through crowd-sourcing:

• Competitions, such as the Netflix prize for improving their recommendation algorithm (which seems to be beaten) or NYC's design competition for post-disaster provisional housing
• Paul Graham's Y-Combinator micro-funding model for seeding startups
• Social incubators like socialedge

I'm sure there are many others that are not listed here, feel free to list them in the comments if you know of any.

What kind of innovations should such an organization look for? Ideally, these would be locally-managed, self-sustainable or reuse-based product design ideas, original approaches or creative financial models.

Here are some examples of innovations of this type:

• Clean water powered by playgrounds: Playpumps International
• SHRIMP Refugee Housing, which folds up so small that four of these can fit into a standard shipping container, and each one provides shelter and fresh water for a family of 4. [A slide show from Wired Magazine has a whole list of innovative shelter designs for providing emergency housing to disaster areas and refugees.]
• Buy a pair of chickens for AUS $10 and help a family get started in sustainable chicken farming. [via Darren Rowse of Problogger]
• Lighting up remote villages in India, using technology and innovative financial models: SELCO [via Sramana Mitra]

The world needs many more innovations of this type. Why not explicitly encourage them?

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VLAB Event: The Rise of Crowdsourcing

Last week I attended an event on Crowdsourcing, presented by the MIT/Stanford Venture Lab (VLAB). Given the high caliber of the speakers and panelists, it was no surprise that it was a sell-out!

The panel moderator was Jeff Howe, who is a contributing editor at Wired magazine, and the person who has been evangelizing the Crowdsourcing phenomenon through articles and on his blog. In his opening remarks, Howe explained the definition of Crowdsourcing, giving particular emphasis on the fact that it involves an undefined group of people, gathered together through an open call. One rationale, he explained, is that crowdsourcing allows us to tap into the expertise of a distributed group of people; he referred to a quote by Bill Joy:  "Wherever you work, most of the smart people work somewhere else!".

As a framework for thinking about Crowdsourcing, Howe explained the four ways it's manifested:

1. Collective Intelligence, aka Wisdom of the Crowds
2. Participation of the Crowd
3. Opinions of the Crowd
4. Crowd-funding
    

The Predictify model

Mike Agnich, co-founder and CTO of Predictify, described their business model. He classified Predictify users into two types: Information Seekers - who pose deterministic questions about future events, events with finite measurable outcomes; and Predictors - who research and discuss events, then submit predictions. Predictors are scored and rewarded on accuracy, enabling them to build a reputation over time. In turn, Information Seekers get a data set of predictions, as well as the demographics of the voting. This allows companies to track the distribution of beliefs, how things trend over time.

The most interesting part of the presentation for me, was Agnich's observation that it wasn't purely for the data that companies engage in these types of activities, although Prediction Markets are traditionally considered to be part of Market Research. Instead, companies may promote these prediction activities to engage users into the brand message and create buzz about their brand and their new products.

The Panel

There were some amazing people on the panel, and they discussed Crowdsourcing from various perspectives.

• Mitchell B. Fox, President & CEO of 8020 Publishing, explained their unusual business model (hint: it's similar to that of threadless ). 8020 has a large and vibrant user community that submits all types of original content and then votes on the best ones; the company then publishes and sells glossy magazines that include this content. What struck me was how strongly Fox was focused on supporting his community and providing its members with the best user experience possible; practically every comment he made on the panel reaffirmed his faith in letting the community make all the choices and control its own destiny.
• Michael Sikorsky, CEO of Cambrian House, was his usual articulate self, a passionate advocate and evangelist of Crowdsourcing. At the event, he announced an agreement to sell certain assets to Spencer Trask, and that Cambrian House would be directly supporting several "portfolio companies" in future.
• Bill Reichert, Managing Director of Garage Technology Ventures, explained the virtuous cycle of content and advertising: if the paid content enhances the product, as in the case of Google, then that attracts more users to the site, which in turn enables more income, which allows the site to further enhance its content. Thus, the ad content should fit the users' actions to be effective; otherwise, as is the case with Facebook, the ads just get in the way.
• Saar Gur, VC from Charles River Partners, touched upon people's fundamental need to contribute; Crowdsourcing is successful because it recognizes this need. His focus in investing is to look for companies with a compelling, driving advantage, whether for the team, company, product or something else. In other words, is this an inevitably successful company?
   

Overall, it was a very interesting and informative evening. One of the main conclusions I came away with: regardless of how companies in this space do in the short term as business models are still getting worked out, Crowdsourcing is here to stay!

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Two Emerging Memes: Freenomics and Crowdsourcing

Silicon Valley has always been fascinated by new technology memes, radical new ideas and business models that take off and capture the popular imagination - often changing the world of technology in the process. Valley memes quickly become the jargon of leading-edge VCs. For example, the phrase "it's a Freemium model, based on UGC and Wisdom of Crowds" requires no explanation in certain circles; it's as meaningful to these players as the phrase "it's a RESTful Web Service based on a 3-tier J2EE architecture" is to a Web Applications Architect.

(For the uninitiated: Freemium is a term popularized by VC Fred Wilson to mean a free service with an upsell to paid premium subscriptions; UGC stands for User-generated content, a relatively new concept in which the audience or readership helps to craft creative or original content; and Wisdom of Crowds is a term popularized by James Surowiecki's book of the same name.)

How does a technology meme start? When does an interesting new idea or concept tip over into a meme?

WebGuild Web 2.0 Conference: Issues and Challenges for Crowdsourcing

I attended a really interesting session at the WebGuild Web 2.0 Conference and Expo last week: The Power of Crowdsourcing - moderated by Jeremiah Owyang of Forrester Research.

Participants on the panel were:

• Aaron Strout, Vice President, New Media, Mzinga
• Michael Sikorsky, CEO, Cambrian House
• Anil Rathi, CEO, Idea Crossing

This was one of the best panel sessions I attended at the conference, part of the reason being the bang-up job Owyang did as moderator. He took a very active role, bringing up provocative questions, directing those at specific members of the panel and not being shy about treading into the concerns and difficulties of using crowdsourcing and social media - this prevented the session from degenerating into a "Rah, Rah, Crowdsourcing is all good!" type of discussion.

The other reason was that the panel members were all knowledgeable, articulate and open in their remarks; the conversation never flagged, as it did with some of the other sessions I attended.

To kick off the session, Owyang put up a few slides entitled Social Technographics that were intriguing, but more on that in a future post.

One of the panelists, Michael Sikorsky of Cambrian House, listed the three legs of crowdsourcing as follows:

• Wisdom, which can be explicit (e.g. voting in American Idol) or implicit (e.g. links used for calculating PageRank)
• Participation, such as item submissions or code check-ins
• Funding, such as a prize or project funding

The Challenges

Based on the discussion at this session, I've compiled the following list of challenges in implementing crowdsourcing solutions and ways of addressing them.

• Wisdom of Crowds: How do you keep the input quality high?

For any crowdsourcing activity, the first step is to pick the right crowd! Equally important, you must ask the right question.

The next step is to use statistical methods to prioritize high-quality input. Finally, a self-policing community (possibly, with some moderation) can help weed out low-quality input and spam.

• Is there an inverse relationship between those who have the time to contribute, and the quality of the ideas presented?

One caveat to keep in mind is that the vocal minority may not be representative of the majority of users. But this type of forum may act as a funnel for identifying talented people who have not yet been discovered.

By providing rewards or incentives consistent with the value of the ideas being submitted, you can get greater participation from qualified users and a higher level of confidence in the quality of the ideas being submitted. Another alternative is to use some type of game mechanism; games have built-in rewards that encourage participation.

• What if some people don't want to be outsourced?

Tara Hunt, of Citizen Agency, recently wrote a blog post titled: Please Stop Crowdsourcing Me , questioning whether crowdsourcing is a good idea. She has a point - some users may not want to contribute or be involved in a crowdsourcing exercise, especially to benefit a large corporation.

The panelists agreed, and pointed out that you should carefully consider which tasks should be outsourced in this way - for example, product users love to help each other out with solving problems and difficulties, but if participants get the feeling that the company is simply using them to reduce customer service costs, then they will stop being helpful.

Any crowdsourcing program has to be thought through and managed carefully; you don't want to risk users having a bad experience.

• How do you manage and lead a crowd, to create a positive experience?

For the community to be truly engaged, it is extremely important for the company to be very transparent.

One key point to think about, especially for large companies, is that you have to be careful about what you share with the crowd. On the one hand, the more you share, the better the ideas you will get; on the other hand, you risk letting out corporate proprietary secrets.

Finally, some activities simply may not be amenable to crowdsourcing.

• How much control do you want to retain? Do you need a Product Manager as an expert?

A community of users can generate a lot of great ideas, but those don't all necessarily fit together; having an expert in place as a product manager can provide guard rails to keep things on track. The product manager can bring a single, unified vision and - this is critical - can communicate back to the community why a particular idea is not being used.

It's important to find a balance: the community generates the ideas, but the company or organization picks the ones to be used, refines them and implements them. Even the nuggets of ideas can be leveraged to create lots of value.

 

Successful Examples

The panelists also offered examples of actual crowdsourcing implementations:

• The Longitude Prize - one of the earliest examples, was a reward offered by the British government through an Act of Parliament in 1714 for a simple and practical method for the precise determination of a ship's longitude.
• Procter & Gamble has raised the level of outside design and significantly increased the success of product-related improvements.
• Intelpedia from Intel, is an example of crowdsourcing in the Enterprise space. The idea is to look internally for ideas, share best practices and preserve common knowledge. According to reports, Intelpedia has up to 20K pages already.
• Ace Hardware created a community for 300 dealers, whose ROI was measured at 500%; as a result, the community was rolled out to all 5000 of its dealers.
• The Hopelab Foundation created a global competition for kids of all ages and received submissions from 429 teams.
• American Idol has produced highly successful artists, some of whom have sold over 10M CDs; even the worst idol winner has sold 500K CDs.
• Innocentive is a well-known example where companies post complex problems and offer rewards for their solutions.

[Update :  An alert reader pointed out that the P&G name should be spelled with an "&" - this is now fixed. Thanks, John!]

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