How to Use Crowdsourcing for Your Business to Gain a Competitive Edge

Running a startup usually involves doing a lot of the work yourself. It’s slow, inefficient and you really should be concentrating on other things. But if you don’t do the work, it’s not going to get done.

After all, those TPS reports aren’t going to fill themselves out.

Enter crowdsourcing.

Crowdsourcing (coined by Jeff Howe in 2006 for Wired Magazine) can apply to a wide range of activities and can be a powerful tool for startups, new businesses and even well established businesses. There are many types of crowdsourcing activities known by a variety of newly coined terms such as crowdsourcing, crowdfunding among many other variations.

Here are Google’s definitions of the two:

  1. Crowdsourcing: To obtain (information or input into a particular task or project) by enlisting the services of a number of people, either paid or unpaid, typically via the Internet.

  2. Crowdfunding: the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

Crowdfunding websites like Kickstarter.com and Indiegogo.com have become launch pads for novel ideas that would have little success if they were pursued through more conventional means of fundraising. These websites allow backers to watch pitches for individual projects and then pledge money to help the project meet its goal. However, while these sites use crowdsourcing mainly to raise funds for artistic projects, such as short films, inventions, self-published novels, and paying to record the album that’s going to get your band out of the garage and onto the Super Bowl Halftime show, crowdfunding can be a powerful tool for entrepreneurs, startups and new businesses.

Let’s suppose, instead of seeking financing for your introspective art house film you’ll be using crowdsourcing to be more productive, more efficient and to make money.

Crowdsourcing Can Allow You to Run Your Businesses More Efficiently

While crowdfunding through websites like Kickstarter is analogous to asking for donations, crowdsourcing for a business is all about hiring out small bits of work to make your business more efficient. By exporting tasks to micro-contractors, you free up your time to work on the business itself. Websites like 99designs.com and Odesk.com have made it extremely easy to outsource any size task to a qualified individual or team. While Odesk is based on a more traditional outsourcing model, 99Designs is a true crowdsourcing site that allows you to literally source work performed on your project before you have to pay for it. It sounds backwards, but crowdsourcing sites like 99Designs have received huge investments from major internet players; to the tune of $35 million dollars for series A capital, with major global expansion plans.

For example, you need to have some code written for your website. Nothing fancy, just some basic maintenance that needs to be done. Writing it yourself wouldn’t be hard (in this scenario, your business has the skillset to write code for websites) but it would take time. Instead of doing it yourself, or having one of your hot-shot web developers spend time on it, you send the project out onto the internet, where dozens of people contribute to the project, for a very reasonable amount of money. Your time is now free to pursue other opportunities that will make your company more profitable while essential but time intensive work requiring relatively low skill is done by the crowd.

Crowdsourcing is the new outsourcing of the internet age: cheap labor that requires very little supervision or time. However, this example illustrates some of the potential drawbacks to crowdsourcing. The first and largest is deadlines. Deadlines on crowd sourced material are, by the nature of the process, long and rarely strict. How quick it takes a particular task to get done is up to the crowd, and the workers of the internet conforming to your strict timeline is unlikely. The second potential downside of crowdsourcing for a business is the relatively low level of complexity a given task can rise to and still be successfully completed. The limited amount of supervision over crowd sourced tasks serve as a limit to how complicated a project can be; If you’re spending 10 hours a week supervising a crowd sourced project, you’ve lost the advantage of crowdsourcing and should probably just do the project yourself.

However, while the complexity of projects is limited by the very nature of crowdsourcing, what it can accomplish is still very valuable. Things like designing logos, basic programming, writing blogs and articles, transcribing or translating, website optimization and customer support can all be sourced to the crowd, giving the business more flexibility and freeing up valuable man hours.

Are there any Potential Legal Issues with Crowdsourcing?

Crowdsourcing can be a valuable tool for new businesses and small startups. However, it must be utilized and implemented properly to avoid problems. For example, who owns the code you contracted out? What do you do when the crowd uses the code it developed for your company to perform a similar function for a competitor? There are legal issues that need to be dealt with when considering implementing crowdsourcing. The business attorneys at Albuquerque Business Law are experts in the legality of new technology for businesses. Our attorneys can help you integrate crowdsourcing into an existing business or help you formulate a new business to take advantage of this new technology.

If you have any questions, about crowdsourcing for small or new businesses or about business formations generally, please give the attorneys at Albuquerque Business Law a call.

Albuquerque Business Law, P.C.
1803 Rio Grande Boulevard Northwest AlbuquerqueNM87104 USA 
 • 505-246-2880

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About James T. Burns

Prior to the practice of law, James was a corporate manager with a large market research firm. Like many of our clients, James has started and successfully managed businesses of his own, primarily in the area of technology start-ups. James was also a prize winner in the UNM Business Plan Competition and has completed numerous consulting projects to help clients achieve their legal and business goals.