GBA 547: MANAGEMENT INFORMATION SYSTEMS CROWDSOURCING.
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Transcript of GBA 547: MANAGEMENT INFORMATION SYSTEMS CROWDSOURCING.
GBA 547: MANAGEMENT INFORMATION SYSTEMS
CROWDSOURCING
Crowdsourcing
What is it?
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.”
Who Coined the Term & When?
Jeff Howe, contributing editor of Wired magazine, coined the term in his 2006 article, “The Rise of Crowdsourcing.”
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
Current Utilization of Crowd Funding
List from Gofundme.com
Crowdsourcing Uses
1) For Businesses
2) For Entrepreneurs
Crowdsourcing For Businesses
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.
Crowdsourcing Websites
Dozens of crowdsourcing companies exist. Two examples: Crowdflower & Amazon.com’s Mechanical Turk
CrowdFlower How do you earn money?
Customer and Lead Data Content Moderation and Creation Sentiment and Opinion Analysis Surveys
CrowdFlower
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
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
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.
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
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
Benefits of Crowdsourcing to Farm Out Work or Conduct
Surveys
1) Speed 2) Affordability
Crowdsourcing is faster & cheaper than hiring temps or traditional outsourcing firms.
Downside of Crowdsourcing to 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
Crowdsourcing for Entrepreneurs
Crowdsourcing For Entrepreneurs
Startup Seed Money
In this context often referred to as Crowd funding, Crowd Financing, or Hyper funding
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.
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.
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
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)
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
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
KickStarter’s Most Funded
Pebble-E-Paper Watch for Iphone/Android VIDEO
Similar Projects
RoBO 3D Printer FORM 1 Eventorbot!
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
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
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.
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.
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
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
References Continued
Crowd Funding 101. Retrieved on January 20, 2013 from. http://www.startupexemption.com/crowdfunding-101#axzz2IeHp6dft
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
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=
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
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
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/
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
References Continued
Crowdsourcing, Labor On Demand - CrowdFlower. Retrieved January 20, 2013, from http://crowdflower.com/?gclid=CKuSruCX-rQCFUxxQgodyV0AMQ