TopCoderDeveloping software through crowdsourcing

How TopCoder came about?

Jack Hughes

Tallan Inc. (Business Data Services)

Sold for $920M

Lessons learnt from Tallan?

Not happy with the operations of TallanExpensive and time consuming recruitment process

Evolving technologies results in high employee turnover rate

More can be done to save clients time and money

Crowdsourcing was the solution!

TopCoder v1.0Consulting Business Model

Host competitions with monetary rewards from sponsors

Build community strength

Gain popularity

Winner gets a job with the sponsorHR firm

• Looking to hire

Client

• Held Competitions

TopCoder • Winner got

hired

Crowd

TopCoder v2.0Competition Based Model

Crowd sourcing Software Development

Tasks of Software Development Process

Task Conceptualization

Specification

Architecture

Component Production

Application Assembly

Certification

Deployment

v.2.0 PM PM PM COM PM PM PM

• Looking for software application

Client

• Held Competitions

TopCoder • Winner got

rewarded

Crowd

TopCoder v2.1Competition Based Model

Dissatisfied with $20 mil in revenue

Platform Managers costs too high

Tasks of Software Development Process

• Looking for software application

Client

• Held Competitions

TopCoder • Winner got

rewarded

Crowd

Task Conceptualization

Specification

Architecture

Component Production

Application Assembly

Certification

Deployment

v.2.0 PM PM PM COM PM PM PM

v2.1 PM & COM PM & COM COM COM COM PM PM & COM

No. of Clients vs. No. of PMs

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

0

10

20

30

40

50

60

No. ClientsNo. PM

Total Revenue vs. PM Cost

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

0

1

2

3

4

5

6

7

Total Revenue PM Cost

Why was there a decrease in revenue?Switched from hourly based consultation to monthly fee

Distributed revenue over months instead of concentrated billing

Increase of prize moneyBecause of more contests

Revenue/PM vs. Revenue/client

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

0

0.05

0.1

0.15

0.2

0.25

0.3

Revenue/PMRevenue/client

Types of Competition

Algorithm CompetitionAttract new members

Retain existing members

Software Development CompetitionProvide clients with specific solutions

Expand TopCoder’s catalog

Algorithm Competitions

Timed competitions

Available in Java, C#, C++ & VB.Net

Single Round Match consists:Coding Phase

Challenging Phase

System Testing Phase

Example of an Algorithm Competition

Example of Algorithm Competition

Input - 123210122

Output - 011100011

Encrypt by adding to each digit to the sum of the adjacent digits

[0+1], [0+1+1], [1+1+1] etc.

How does it attract & retain the TopCoder Community

Think about your lab practices/testsChallenging

Prove your worth

Self improvement

Motivating members

Money is the most attractive thing

TopCoder ratings

Peer reviews

Community

TopCoder Community Activeness & Earning Distribution

Latent Pool

Other Earners

Active Pool

82.5% 17.5

%

95%

5%

How to motivate the latent pool?

Monetary Award$50 for successful compilation of code by latent pool (for 5 rounds)

1.5 times prize money if they are the winner

Prospective Jobs

Advantages

TopCoderIncrease Profit

Higher Product Quality

Happier Customers

Increased Catalogue Size

Community(Crowd)Better Feedback for their work

Enrichment

Flexible time

Flexible Income

Advantages cont’d

ClientsReduced cost

Increase efficiency

More ideas

Better quality

EconomyCost savings of the client will be passed on to the consumers

Disadvantages

TopCoderHigher cost incurred for evaluation

Possibility of lost of community

Higher cost incurred to manage projects

Community(Crowd)Reduced prize money

Possible little or no credit

Disadvantages cont’d

ClientsPossible lost of IP

Possible lost of security

Possible lost of control of project

EconomiesWhat happens to companies using the conventional model of sourcing?

Examples

Future Of Crowdsourcing

The increasing complexity of problems has caused a rise in mass collaboration

Big problem broken into small problems for a huge group of participants to solve

Supplying a way for companies to engage with and harness the crowd for help

More ideas

More efficient

More creative

De facto standard for prospective employee evaluation

Musician Pete Seeger: Participation is the only thing that is going to save us from global warming