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:
- Collective Intelligence, aka Wisdom of the Crowds
- Participation of the Crowd
- Opinions of the Crowd
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.
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!