Crowdsourcing andCrowdfundingPaul Dombowsky – January 25, 2012

Time: 12:00 to 2:00

Speaker:Paul DombowskyFounder and ceo of Ideavibes / Fundchange

Agenda:

Workshop Overview

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• Defining Crowdsourcing and Crowdfunding • How to tap into the conversations that are already going on to make

better decisions?• Making crowdsourcing pay for itself - the business case.• What are the restrictions around crowdfunding things like bands,

businesses, charities, etc.? • Best practices and how to implement in your organization. How to

overcome some of the negatives?• How social media fits into the success of crowdsourcing and

crowdfunding?• What part does social media play?

Opening

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“…the world is becoming too fast, too complex and too networked for any organization to have all the answers inside.”Yochai Benkler, Yale University from the Wealth of Networks

“Peer production is about more than sitting down and having a nice conversation… Its about harnessing a new mode of production to take innovation and wealth creation to new levels.” Eric Schmidt, Google

CROWDSOURCING

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DefinedAn engagement process whereby organizations seek input from either open or closed communities of people, either homogenous or not, to contribute ideas, solutions, or support in an open process whereby the elements of creativity, competition and campaigning are reinforced through social media to come up with more powerful ideas or solutions than could be obtained through other means.

Why Bother?Organizations have a difficult time engaging with their communities to strengthen their relationship and be crowd focused. Internal or external, the community has ideas that can be harnessed that come from diverse backgrounds, experiences and education.

Crowdsourcing

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• When looking for expertise from a range of sources.• When funds and/or time are limited.• When your target audience is largely online.

When does Crowdsourcing Work?

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BMW’s Virtual Innovation AgencyReceived over 4000 ideas within 7 days for products and designs at minimal cost

Why Social Matters?

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According to Forrester Research (2010),71% of people say they trust the opinions of family, friends and colleagues (their crowd or their tribe) as a source of information on products and services.

Where the conversations are happening?

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Official & Unofficial• Facebook• Twitter• Google Groups• Forums• Wiki’s• User Groups• Podcasts• Blogs• User Voice• Epinions• Cnet• Reviewsarena• Buzzillions• Tribe Smart

Why not tap into the conversations that are already happening?

Get the crowd working for you.

Where the crowd comes from

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Sources of Innovation

Internal R&D

Customers

Experts

PartnersSuppliers

Prospects

Other internal

team members

Does participation require a reward?

Do people contribute for the good of the brands they like?

How do you democratize the input?

InternalExperts

Emergent Experts(online community leaders,

product advocates)

Everyone Else

The Emerging Expert

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EngagementTargets

Where Innovation / Crowdsourcing Fits

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Community

Open SpaceHow we gather

Social MediaHow we talk

LeadershipHow we inspire &

enable

Open Innovation

CrowdsourcingWhere ideas come from

Growing Online Participation

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Millennials (born ’91 and after)

Gen Y (born ’81-’91)

Gen X (born ’65-’80)

Boomers (born ’46-’64)

Civics (born ’45 or earlier)

Product or Policy Roadmap

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Discovery Exploration Scoping

Build Biz CaseDevelopmentTesting

Launch Discovery…

Crowdsourcing or Ideation

The Appeal

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• Crowdsourcing surfaces new perspectives• Invites participation from nontraditional

sources • Infuses real energy into the process of generating ideas • Empowers people when they feel their voice is being heard• Technology can enable participation by disenfranchised

(ie. PCs in libraries can help those not connected at home)• Builds engagement and relationships with new audiences

Example 1: Salesforce

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What do your current customers want to see on your roadmap?

What features are needed to turn prospects into customers?

Democracy?1 vote = 1 customer

IdeaStorm was created to give a direct voice to Dell’s customers and an avenue to have online “brainstorm” sessions to allow them to share ideas and collaborate with one another and Dell. Their goal through IdeaStorm is to hear what new products or services you’d like to see Dell develop.

In almost three years, IdeaStorm has crossed the 10,000 idea mark and implemented nearly 400 ideas!

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Example 2: Dell

Quirky is an all in one product development shop for inventors.

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Example 3: Quirky

Threadless’ business model is social product development and they run regular campaigns to select designs that are then produced and sold to a ready-made market that participated in the product selection.

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Example 4: Threadless

Starbucks uses the same platform as Dell and Salesforce.com for their social product development.

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Example 5: Product Selection by the Crowd

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Example 6: Open Innovation with Citizens

City of OttawaHave a Say Sustainability Campaign

• No. of Engagements = 6700• Goal: 1500• Drivers: Twitter, Facebook, Media

Event (related)• Number of ideas: 200• English and French

San Francisco Engage4change Citizen Engagement Program(2 weeks)

• No. of Engagements = 2252• Referrals = 64% from Twitter• Cost = 500 ice cream cones ($1,000)• Humphry Slocombe’s Crowd

= 320,000 twitter followers and Facebook Friends

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Example 7: Citizen Engagement

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Questions?

CROWDFUNDING

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DefinedA type of crowdsourcing where the efforts of the crowd are focused on raising funds for worthy causes, start-ups, community projects, the arts, etc. The crowd also plays an integral role in spreading the word about the funding initiative. Crowdfunding is a peer to peer funding model that is not new but has accelerated in importance with the growth of social media.

Why Bother?The funding landscape is changing due to demographics, government debt, entitlements, shrinking family foundations, disappearing corporate foundations. There is also a growth in those involved in the creation of arts and culture, enterprises, etc.

Crowdfunding

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• A crowd

• Business challenge / problem / question you want answered – ideas

• A process and tool for engagement

• Trust and commitment in your crowd to take action

• Key performance indicators – what does success look like?

• Proof of action – your crowd wants to see what happened

Crowdfunding - What do you need?

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Donor Generations

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Millennials (born ’91 and after) - ?

Gen Y (born ’81-’91) – Average Donation $325

Gen X (born ’65-’80) – Average Donation $549

Boomers (born ’46-’64) – Average Donation $725

Civics (born ’45 or earlier) – Average Donation $833

Where Donors are Giving

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Checkout DonationFundraising Event

Tribute GiftCharity Gift Shop

Online via WebsiteMailed Gift

Monthly DebitIn Lieu of Gift

PhoneThird Party Vendor

SMSSocial Network Site

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

“Fundraising Trends and Challenges in the Canadian Direct Marketing Sector”- a research paper from 2009 by Cornerstone Group of Companies shows:

• Donors who make their first gift to an organization online as opposed to via direct mail have a much higher average gift

$73 vs. $30

• There are now more than 4 times the number of new donors, per organization, from online initiatives than 5 years ago (9M to 40M).”

Online Giving

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Who is your crowd?

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DonorsProspectsEvent AttendeesMailing Lists Donors’

NetworkProspects’ NetworkEvent Attendees’ NetworkMailing List’s Network

The crowd you know The crowd you don’t know

Social Media Makes the Connection

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Projects or Doable Asks

• Easier for most people to wrap their head around a smaller project as opposed to a ‘cure’ or a ‘hospital wing’

• Examples:• Piece of medical equipment• Stream revitalization• Education program• Conference attendance• Sports equipment for a couple kids

Financing Enterprise

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No restrictions on who posts projects or the type of projects.

Costs:4% Fee on money raisedUnmet goals = 9%Not ‘all or nothing’

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Examples: SponsorMe (UK)

No restrictions on who posts projects or the type of projects.

Funding is All or nothing

Costs:3% Fee on money raised

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Examples: Please Fund Us (UK)

PostPromoteFundReport

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Examples: Crowdrise (US only)

PostPromoteShareSearch/FilterFundReceiptReport

Costs:$99 + hst to join

includes 2 postings3.9% processing fee

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Examples: Fundchange (Canada only)

• 83% of new funders come from Twitter or Facebook• Average amount of funding is $190.00• 100% of projects have received funds from new funders• Unlike Real Estate – Location is becoming less important

What We’ve Learned

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• It’s social – the crowd promotes projects it likes• It’s social – the crowd won’t promote projects that aren’t

shareable• Success comes to those that actively build a crowd • A challenge for organizations new to social media

• It’s the free market at work• It’s the free market at work

• Build stickiness to the project• Need to pay attention to write-up to inspire funders

Benefits & Challenges

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Things to keep in mind: • Crowdfunding success comes quickest to organizations that are social –

media-aware and engaged. If your organization is not yet social media-enabled, it will take time and human and financial resources to do so.

• Because your efforts are only as good as the crowd you are able to mobilize to your cause, it makes sense that your organization strategically manages and promotes its brand online.

• Make sure your target audience is online and will give online• If you opt to post your projects on established crowdfunding sites, do your

homework – be careful of the company you keep.

Integrating Crowdfunding into Your Organization

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Worth a Look

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See how Fiat used the crowd and the desire to be ‘involved’ to research and build the Mio…

http://youtu.be/hg0b8Z51YC0

Ideavibes has developed a white label crowd engagement platform that allows organizations to easily launch branded crowdsourcing or crowdfunding initiatives on their own websites. By engaging focused or broad crowds through social media, our platform makes open innovation, crowdsourcing and citizen engagement easily accessible at less than $1000 per month.

Ideavibes also runs one of Canada’s first crowdfunding websites for charities called Fundchange (www.fundchange.com) where have raised over $50,000 in funds for various charity and not-for-profit projects. Ideavibes has partnered with TELUS (www.telus.com) to bring about a new way to fund change in our community through social media and the power of the crowd.

Who is Ideavibes?

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Where does Ideavibes fit in the market?• Enterprise Collaboration or Idea Management– Large – multi-functioning platforms for Idea Management– Integrated into change management and process improvement lifecycles

• Middle-tier Focused Crowdsourcing Apps– Purpose-built customizable platform focused on crowdsourcing– Departmental or Sub 1000 employee corporations– The only SAAS Crowdfunding App with customizable payment gateway

• Ad-hoc website widgets– Developed by web teams with basic functionality– Functionality as opposed to business process driven

The Ideavibes web application is a hosted secure solution designed to fit into an existing internal-external website or be part of a customized destination website.

The app can be deployed by a web team without requiring input by IT.

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On Demand Crowdsourcing

Unique deployment with custom payment gateway attached at the back end.

Can be configured with your own payment gateway solution such as Paypal, Beanstream, etc.

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On Demand Crowdfunding

• Donor stats, etc. came from “The Next Generation of Canadian Giving” – Nov. 2010 – by Vinay Bhagat, et al

• “The Wisdom of Crowds” – book by James Surowiecki• “Crowdsourcing” – book by Jeff Howe• “Fundraising Trends and Challenges in the Canadian Direct

Marketing Sector”, a research paper released in 2009 by Cornerstone Group of Companies

Resources

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Thank you

Paul Dombowsky | +1.613.878.1681 | paul@ideavibes.comwww.ideavibes.com | blog.ideavibes.com | blog.fundchange.com