GBA 547: Management Information Systems Crowdsourcing

1. GBA 547: Management Information SystemsCrowdsourcing

2. Crowdsourcing What is it?

3. Definition of Crowdsourcing • “the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community rather than from traditional employees or suppliers.”

4. Who Coined the Term & When? • Jeff Howe, contributing editor of Wired magazine, coined the term in his 2006 article, “The Rise of Crowdsourcing.”

5. When Did the “Concept” of Crowdsourcing Begin? • The practice of tapping a crowd has long been used by governments & businesses. • Evidence from 1700s • Planter’s Peanuts - 1916

6. Current Utilization of Crowd Funding • List from Gofundme.com

7. Crowdsourcing Uses • 1) For Businesses • 2) For Entrepreneurs

8. Crowdsourcing For Businesses

9. 1 of 2 Practical Applications • Large companies are using crowdsourcing to complete big projects. This type of crowdsourcing involves “breaking down a project into tiny component tasks and farming out those tasks to the general public by posting the requests” on crowdsourcing websites.

10. Crowdsourcing Websites • Dozens of crowdsourcing companies exist. Two examples: Crowdflower & Amazon.com’s Mechanical Turk

11. CrowdFlower • How do you earn money? • Customer and Lead Data • Content Moderation and Creation • Sentiment and Opinion Analysis • Surveys • CrowdFlower

12. App for iPhone • How do you earn money? • Retail • Surveys/Research • Local Business Information • Real Estate • How much can I expect to earn? • $3-12 per job • Field Agent

13. App for iPhone • How do you earn money? • Field Audits • Photgraphy • Surveys/Research • How much can I expect to earn? • $4-100 per job* “based on “reputation” • Gigwalk

14. 2 of 2 Practical Applications • Companies also use crowdsourcing to access a large contingent of people to complete surveys in order to collect data that is of interest to the company.

15. App for iPhone and Android • How do you earn money? • Surveys/Research • Panel Surveys • Project Management • Survey Programming • How much can I expect to earn? • Reward points • iPinion

16. Examples of Practical Applications • Crowdsourcing Categories: • Individual businesses or sites that channel the power of online crowds. • Brand-sponsored initiatives or forums that depend on crowdsourcing. • Brand initiatives that allow users to customize their products. • Brand-sponsored competitions/challenges focused on crowdsourcing. • Crowdsourcing Examples

17. Online Surveys • Survey Demo

18. Benefits of Crowdsourcingto Farm Out Work or Conduct Surveys • 1) Speed • 2) Affordability • Crowdsourcing is faster & cheaper than hiring temps or traditional outsourcing firms.

19. Downside of Crowdsourcingto Farm Out Work or Conduct Surveys • 1) Quality • Vetting the Quality of Work and/or Data • Vetting Quality of Survey Methodology • 2) Potential Ethics Issue • Digital Sweatshops

20. Crowdsourcing for Entrepreneurs

21. Crowdsourcing For Entrepreneurs • Startup Seed Money • In this context often referred to as Crowd funding, Crowd Financing, or Hyper funding

22. Entrepreneur Crowd Funding • Platforms take contributions from a large group of individuals to accomplish some goal. • Donators typically are interested in the topic or desire to help a selected cause • Currently platforms for crowd funding offer contributors incentives such as a copy of the book, a T-shirt, recognition etc.. However, no equity. • Money donated is considered “goodwill” and is not considered a loan or investment.

23. Entrepreneur Crowd Funding • Entrepreneurs use various means on the platforms to get interest from potential contributors such as videos, personal stories, and demonstrations. • Many platforms (but not all) use an all or nothing approach where if the goal isn’t reached then they don’t collect from contributors and project gets nothing. • The platforms offer a variety of options for the service and usually charges from 4% to 9% depending on specifics of the fundraising campaign.

24. The JOBS Act and Crowd Funding Platforms • April 5, 2012 President Obama signed the JOBS (Jumpstart Our Business Startups) Act. • This Act relaxes some restrictions and requirements for crowd funding for equity. • Still awaiting direction from the Securities and Exchange Commission (SEC) • Platforms currently offering equity crowd funding must work with a securities broker and accept only from “accredited investors” • SEC regulations and direction was expected by December 31, 2012 but now 4th QTR 2013

25. Examples of CrowdFunding Websites • WeFunder (Over $35M Pledged) • Startup Addict (For StartUp Addicts) • RocketHub(Funding for Creative Projects) • New Jelly (For Artists) • CoFolio(For Local Small Businesses) • Kick Starter (Worlds Largest Crowdfunding Site)

26. KickStarter • Investors meet Entrepreneurs • Creative projects in categories: films, games, music to art, design, and technology • Launched April 28th, 2009 • Over $300M pledged by over 2.5M people with over 30,000 projects • All or nothing funding • Fee’s 5% Kickstarter 3-5% Amazon Payments • Run by 46 people in a tenement building in NYC • 43% Success Rate: Stats

27. KickStarter Structure • Pledge Amount • Clearly defined product, goal, timeline • Video demonstrating the implementation, benefits, use, and funding required • Text description of the product with any prototypes, images, etc • “Rewards” • FAQ’s

28. KickStarter’s Most Funded • Pebble-E-Paper Watch for Iphone/Android • VIDEO

29. Similar Projects • RoBO 3D Printer • FORM 1 • Eventorbot!

30. Benefits of Crowd Funding • Gives more great ideas a chance to develop • Utilizes the powerful tool of networking on the internet • Each donor has very small exposure and one entity isn't put at great risk • Entrepreneur stays in control of the project • Opportunity for feedback from the entire online community on the project • Free Marketing

31. Disadvantages of Crowd Funding • Many Entrepreneurs need an experienced investor that can offer more than just the startup money. • Entrepreneurs often lose their drive on the project itself when they are trying to please conventional investors that have large stakes • Often the funding needed is not met • Risk of exposure of your ideas online • Lack of long term viability

32. 5 Force Model • Industry Rivalry: (high) “Revenue of business-focused crowdsourcing firms grew 74% between 2010 and 2011.” (WSJ Jan 2012) • Threat of New Entrants: (high) “It's demand from start-ups that is driving rapid growth in the crowdsourcing sector, which has more than doubled in size since the recession.” (WSJ Feb 2012) • Threat of Substitutes: (Low) Not one on the horizon; outsourcing can’t compete in price.

33. 5 Force Model Continued • Bargaining Power of Suppliers: (high) “It’s not unusual for the contribution of a crowd to be worth millions to a company,” especially when complex algorithms have been used to distill the information. (Crowdsourcing 101) • Bargaining Power of Buyers: (Low-Med) The demand for crowdsourcing companies is high, however, WSJ Feb 2012 article mentions only 33 crowdsourcing companies so still not a lot of companies available worldwide.

34. References • 5 Key Points To Know About Equity Crowdfunding. Forbes January 15, 2013. Retrieved January 20, 2013, from http://www.forbes.com/sites/tanyaprive/2013/01/15/5-key-points-to-know-about-equity-crowdfunding/ • Crowd funding.Retrieved on January 20, 2013, from http://en.wikipedia.org/wiki/Crowdfunding

35. References Continued • Rosenburg, J. (2012) New Crowdfunding Law Helps Small Businesses Find Investors. The Huffington Post. Retrieved January 20, 2013, from http://www.huffingtonpost.com/2012/04/12/new-crowdfunding-law-help_n_1420708.html • Crowdfunding for Everyone. Retrieved on January 20, 2013 from. http://www.gofundme.com/?aff=cwr

36. References Continued • Crowd Funding 101. Retrieved on January 20, 2013 from. http://www.startupexemption.com/crowdfunding-101#axzz2IeHp6dft

37. References • Brown, J. (2012, June 15 ). Federal crowdsourcing may solve problems fast. Public CIO. Retrieved from http://www.govtech.com/pcio/Federal- Crowdsourcing-May-Solve-Problems-Fast.html • Crowdsourcing [Def. 1]. Merriam-Webster Online. Retrieved January 18, 2013, from http:// www.merriam-webster.com/dictionary/ crowdsourcing

38. References Continued • Crowdsourcing 101(2006). Retrieved January 18, 2013, from http://www.chaordix.com/ crowdsourcing-101/ • Howe, J. (2006, June). The rise of crowdsourcing. Wired Magazine. Retrieved from http:// www.wired.com/wired/archive/14.06/ crowds.html?pg=4&topic=crowds&topic_set=

39. References Continued • Loten, A. (2012, Feburary 12). Small firms, start-ups drive crowdsourcing growth. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052970204653604577251293100111420.html • Planters Historic Timeline. Retrieved January 18, 2013, from http://www.planters.com/history.aspx?section=timeline

40. References Continued • Silverman, R.E. (2012, January 17). Big Firms try crowdsourcing. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052970204409004577157493201863200.html • Vaunt Design Group (February 2005). Planters Peanuts. Retrieved January 18, 2013, from http://www.ideafinder.com/history/inventions/plantnuts.htm

41. References Continued • Field Agent: A Search Engine for the Real World. Retrieved January 20, 2013, from http://www.fieldagent.net/ • Gigwalk: Instantly Mobilize People to Do Work A nywhere. Retrieved January 20, 2013, from http://gigwalk.com/

42. References Continued • iPinion: Research, Now Mobile. Retrieved January 20, 2013, from http://www.ipinionsurveys.com/ • Crowdsourcing Examples. Retrieved January 20, 2013, from http://crowdsourcingexamples.pbworks.com/w/page/16668404/FrontPage

43. References Continued • Crowdsourcing, Labor On Demand - CrowdFlower. Retrieved January 20, 2013, from http://crowdflower.com/?gclid=CKuSruCX-rQCFUxxQgodyV0AMQ