CloudMade raises $12.3 million

CloudMade, a mapping database company that serves application developers, device manufacturers and wireless carriers, has raised $12.3 million in a Series B investment round led by new investor Greylock Partners, which joins existing investor Sunstone Capital.
CloudMade, which has offices in Menlo Park, London and Kiev, uses crowdsourcing to build its map database. Juha Christensen is CEO and chairman.
Greylock Partner Arnon Dinur has joined CloudMade's board of directors.
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Crowdsourcing Production Costs, Web Drama Hosts Web-a-Thon to Fund New Season

BY STEPHANIE SCHOMER Today

Web series Anyone But Me is launching its first-ever Web-a-Thon Tuesday to crowd source funding for its third season. The event is the first of its kind in the world of online TV, and will need to raise $120,000 in just three days to bring the show back.
The series, which calls Blip.tv home, has been praised as a teen drama for the ethnically and sexually diverse post-9/11 generation. It has received honors from both the Webby and Streamy awards, but the Web-a-Thon is its biggest hurdle yet. If successful, it could spark a new trend in the Web TV industry as shows search for funding.
“We ruled out the subscription model because we don’t want to limit our reach,” says Susan Miller, who created the show with Tina Cesa Ward. The series received private funding for the first two seasons. “Everyone’s scrambling to find a business paradigm to sustain the Web, and this is kind of a thrilling experiment. The best thing about the Web is inclusivity.”
To capitalize on the tremendous amount of support the show's 5 million viewers have expressed, the cast and crew of Anyone But Me are pulling out all the stops. In addition to original videos launching at 4 p.m. over the next few days (including a walking tour of New York City locations from the show, interviews with the actors, and an elusive cast competition), the team will host an online auction where fans can bid on prizes from a walk-on role to lunch with the creators, among others.
“We wanted to make something for our fans beyond their expectations, something to demonstrate how we regard them as collaborators, in a way,” says Miller, whose past credits include The L Word and Thirtysomething. “If we’re going to ask them to sacrifice even just a few dollars, then we have to show up for them in a major way.”
Should the show not reach its fundraising goal in full, Miller is hopeful that they’ll be able to attract financing or sponsorship to support their remaining needs. “There are companies out there who may not know us, but they’re going to hear from us,” she says. “I mean, five million views! For an original scripted drama! Come on.”

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Trada Raises $5.75M From Google Ventures To Crowdsource Search Engine Marketing

by Jason Kincaid - Techcrunch



Google’s AdWords may be one of the most successful products in Internet history, but it’s fair to say that most small and medium-sized business owners aren’t exactly experts when it comes to writing their ad copy or picking out keywords — in fact, there’s a whole industry of consultants and firms who specialize in doing just that. Enter Trada, a startup that launched in March that’s looking to help turn the industry on its head with the power of crowdsourcing. The company just closed a $5.75 million Series C round of funding led by Google Ventures, with participation from previous investor Foundry Group. Google Ventures Partner Rich Miner will be joining the board. And yes, this means Google’s VC arm is taking a dip into paid search marketing, which is sure to raise a few eyebrows.

The basic premise of Trada is to make running an online ad campaign as easy as possible: specify a budget you’re willing to spend on ads, decide which advertising platforms you want your ads to appear on (the site currently supports Bing, Yahoo, and Google), and enter how much you’re willing to pay-per-click or per acquisition. Finish those steps and you’re done — the site sources the heavy lifting, like choosing thousands of keywords to target and writing ad copy, to its community of experts.

At first glance, the fusion of crowdsourcing with online advertising campaigns sounds like a terrible idea — it’s easy to throw away money when someone clueless is managing your account. But Trada CEO Niel Robertson says that the company goes to great lengths to ensure that their “crowd” consists of a group of vetted, seasoned advertising experts. Each expert must be AdWords certified, and they also have to pass Trada’s own 45 minute exam. And users tapping into the platform can see the track record of each expert, so it should be fairly easy to tell if someone isn’t up to par.

Each ad campaign actually has multiple experts working on it, which Robertson says can help diversify the number of good keywords your campaign is targeting (an average campaign on the site has over 6,500 keywords and 110 ads). Each expert is incented to create ads that perform well, because they get rewarded for each click/acquisition their ad receives in the wild (Trada takes a 25% cut of this reward). Trada is also experimenting with incentives that will encourage experts to work together — for example, experts could receive a bigger cut of the proceeds if the aggregate click-through rate of a client’s campaign hits a certain threshold.

Given the fact that this directly involves Google’s bread and butter AdWords, the Google Ventures connection is obviously going to draw some scrutiny. Robertson says that Trada fully expects this; to stay as above-board as possible, it has gone through its policies and practices with Google account managers to ensure that everything is in order. That won’t silence the critics, but it’s a start.

Trada plans to use the money in part to grow internationally and also to work toward launching support for display ads. When the time comes to launch display, Robertson says that Trada will likely help solve another piece of the puzzle: you’ll be able to outsource both the placement of your ads and have another set of professionals working on creative.

Including this round, Trada has raised a total of $7.95 million since it was founded two years ago.
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Crowdsourcing documentary about Living off the grid

Off-Grid.net is crowdsourcing

–if you live or work off the grid (ie without utility power or water), upload a video to help build a global portrait of an off-grid day.

Your crowdsourcing contribution to the “Off-Grid Life in a Day” could be a brief think-piece like this clip of Beans of Maine author Carolyn Chute.

It could be a guided tour of your smallholding. It might even be a glimpse of the tasks your household performs during a typical day, from chopping wood to pumping water to relaxing quietly on the back porch

Ridley Scott has a project is called “Life in a Day,” a collage of a 24-hour period of human life. “Off Grid Life in a Day” is also a 24-hour snapshot, but focused on those people who are usually under-represented in the national media.

Those who live off the grid -off- are improving energy security, adding to diversity, and reducing the carbon footprint of America. But they do not have a voice because they are scattered and outside the mainstream, often out of choice.
The off-grid.net web site has a free LandBuddy service which connects you with people who are looking to live off grid, people who are currently living off grid and people who want to help others live off grid.

LandBuddy contains a map that allows you to locate others living off the grid in any geographic location. Current off-gridders can find and connect with their off grid neighbors. If you are thinking about living off the grid, this is the perfect place to look for advice and resources from people who are already living this way.

Please upload your videos as soon as possible to http://www.off-grid.net/videos
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Are you a Film Threat?

Nowadays, it seems like everyone is a filmmaker, or has a friend that’s a filmmaker. Everyone’s got that great project in the works, everyone’s going to re-define the state of cinema as we know it… but are they really? Are there any filmmakers or films worthy of being called a true “Film Threat” anymore? We here at Film Threat like to think that those filmmakers and films are out there, and we want to help find even more.

Are you a filmmaker? Are you currently in production and looking for funds via Kickstarter, IndieGoGo or other crowdfunding efforts? Let Film Threat know about your project and, once a week, we’ll showcase one project we deem to be worthy of being a “Certified Film Threat in Progress.”

That’s right, every Monday, starting July 25, 2010, we’re going to feature one film or film-related project in progress that we feel is worth your and our time. From there, it’s up to our passionate, film-hungry and film-savvy readers to decide whether they want to take that extra step to help make these projects in progress a reality. It’s then up to you, the filmmaker, to live up to the faith we’re putting in you and your efforts by giving you such lofty praise as featuring you and your project as a top story on our site (seriously, you want this; studio films and indies alike routinely angle for space and feature stories on our site).

So how to you get featured on Film Threat? How does your project become a “Certified Film Threat in Progress”? Simple, fill out the form below and send it on. We’ll begin reviewing the various projects that come in, and if you tickle our fancy and we find you and your project worthy, you’ll hear from us as we focus our editorial efforts on you and yours...
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Net worth: Filmmaker and Hamden native Dennis Peters wants artists to know that the Internet is a great funding tool

By Donna Doherty, Register Arts Editor
ddoherty@newhavenregister.com

Dennis Peters is about to release his first full-length feature film, and he wants to thank you and everyone else who made it possible.

The Hamden native, who splits his time between Santa Monica and New Haven, is one of a growing number of artists using the Internet to fund creative ventures. It’s a source of funding that’s been around for about two years now, but he’s been so happy with his experience that, “I wanted to share it with other artists, because I know a lot of New Haven artists, and I’m not sure everyone knows about it,” he said in the North Branford-based Inner Space Sound Labs of his friend and collaborator Scott Amore.

“New Haven is an arts town. There are so many people I know here that could use this type of crowd funding for their projects. Raising a small amount of money is difficult,” Peters says.

A steady, cooling rain drummed on the roof of the studio, where the two were working on some promotional videos for Dixon Drums of Bloomfield, one of the clients of Peters’ Heavybag Media marketing company in Santa Monica.

When “I’m Not Adam” is released in January, with premieres planned in Los Angeles and New Haven, Peters will have funded $6,000 of the projected $20,000 budget with money from people who found his proposal online on Kickstarter.org, liked what they saw, and coughed up some cash for the venture.

The Manhattan-based Kickstarter.org was founded last year by eMusic director Yancey Strickler and Perry Chen, who recently held their own Kickstarter Film Festival, the invitees selected from the more than 1,500 who’ve created projects using their site.

“I found out about it on Twitter,” says Peters, 53, who is a Hamden High School graduate and has a film degree from the University of Bridgeport. “Four months ago, I saw someone promote their Kickstarter campaign on Twitter. I clicked on and liked what I saw.”

What he saw was a group of creative endeavors looking for angels. “It could be a film, a book, a comic book, a live event. Kickstarter says yea or nay to it. Then you’re on your own. You can record a video explaining what your project is and what you’re doing,” he says.

Each project has a target money goal and shows a time frame in which that money must be raised. Kickstarter helps the clients decide on that time frame, which can span anywhere from 30-90 days.

Investors are encouraged with rewards that vary with the level of the pledge: things like tickets to an opening night, manufactured goods, plaques at sites, first editions.

Right now on Kickstarter, though it’s heavy on funding requests for short films and documentaries, you’ll see community ventures such as “Center Without Walls,” a cultural venture that “will bring arts programming to some of the poorest neighborhoods in the city,” a community Ping-Pong table, a cupcake business, a request to help students learn math easier (“Make Math Cool” video) and even a request to provide a haven for geeks, called “Uberdork Cafe: A Dork with a Dream.”

The Amazon.com-backed site has a couple of rules which make it different from some other sites such as IndieGoGo.com. One of those is that if a project doesn’t reach its goal money on Kickstarter, it doesn’t get any of what was raised, so there’s great incentive for the requesters to keep on top of the campaign, and push. Peters estimates he spent “about 6-8 hours a day,” doing just that, with Twitter his favorite networking tool of choice.

“About 50 percent reach their goal, I’m told. But they also say if you reach 25 percent of your funding goal, 90 percent will go on to reach the goal,” Peters says, which he did July 9.

It’s like a whole virtual fund-raising world that also, says Peters, has tremendous additional marketing benefits.

“... Funding is only one reason, and may not be the most important,” says Peters. “What you’re doing is building an audience for your project before you do it. If you get 100 people to invest even $10, those 100 people are invested in part of your project. When you’re done, you have 100 people talking about your project, they’re talking to their friends, putting it on their Facebook page or on Twitter or blogging.

“You’re building a big network, something which can be of greater value than money,” he says. “I have people invested in my film that will get the word out, people who are excited to see the film and who can say ‘I have money in that film.’”

That word-of-mouth buzz is no small deal, considering that, a Reuters article in June noted that, according to Baseline Intelligence, for the past seven years, for “every dollar spent on producing a major film, the studios have been spending 51 cents-58 cents to release and market it in the United States and Canada ...,” which means that “the average 2009 release had to gross $186 million to recoup production and domestic-releasing costs ...”.

That refers to major films, not small, indie projects such as Peters’, but by not having to invest so heavily in marketing (which can be an additional one-third) and by self-distributing, he was able to put the majority of his money into casting, thereby ensuring quality actors for his psychological thriller.

“I’m Not Adam,” which Peters wrote and directed, is the story of an ordinary guy who is mistaken for a celebrity that someone is out to kill. He is pursued through the streets and back alleys of downtown L.A., encountering a number of strangers who may or may not be connected to him. To survive, he decides he has to find his doppelganger.

Peters, who cast all L.A. actors, also has had the benefit of the generosity of friends, like Amore, a well-known New Haven area musician and producer who is donating his time as post-production music supervisor, and will be writing and recording the soundtrack here in the woodsy studio behind the log cabin he shares with his girlfriend; and Robert Sacchetti, a location scout, sound man and actor.

“I could not have made this film without a few key people who agreed to work on the film for no pay,” Peters readily admits.

He and Wallingford native Amore met at the New Haven Film Fest years ago, and were also neighbors in an apartment building as well as in a commercial building on Hamilton Street, where Peters had founded One Black Shoe, a TV commercial production company.

Heavybag Media, which Peters co-founded with his wife, Jackie (whom he married in Edgerton Park with arts maven Cheever Tyler serving as justice of the peace), is an online marketing company which caters primarily to entertainment and technology clients. His best-known are Sun Microsystems, Dixon Drums and Gibraltar Hardware. He films commercials for various clients and still maintains a small office for Heavybag in New Haven. Heavybag also marketed several Warner Bros. recording artists and the 2009 Miramax film “Extract,” starring Jason Bateman.

“I’m Not Adam” will travel to festivals to be determined, and Peters wants to make it available on Netflix, iTunes and DVD.
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Google-Funded Pixazza Raises $12 Million For Crowdsourced ‘AdSense For Images’

Pixazza, a Google-backed photo tagging service that has been compared to an “AdSense for Images,” has raised $12 million in Series B funding led by Shasta Ventures, with Series A investors August Capital, CMEA Capital and Google Ventures also participating in the round. This brings the startup’s total funding to nearly $20 million.

Pixazza allows publishers to identify, tag and match products found within online images on their sites and then link them back to the inventories of Pixazza’s network of advertisers. The service, which can be integrated in a site by adding a single line of code, allows consumers to browse the photos featured on a site and mouse over it to reveal information and pricing about similar products, and if desired, click to purchase.

The startup has a vast database of products to include images and tags related to the entertainment, fashion, travel, home and sports industries. Pixazza’s tagging technology is also compelling; the startup crowdsources workers to list products and tag them with the appropriate link to a retailer. Additionally, Pixazza shares advertising and affiliate revenues with publishers.

The company’s co-founder and CTO James Everingham thought of the idea for Pixazza after his wife was trying to find a pair of designer shoes that were worn in the movie “Sex In The City.” Upon realizing the astounding price of the shoes, Everingham’s wife ended up buying a similar-looking shoe in a store for half the cost. Everingham says that he felt that the experience of finding similar items you see in photos could be a valuable business.

Turns out he’s right.

The company has also announced that it reaches more than 25 million unique visitors per month through its 75-plus publishers, which include US Weekly and Access Hollywood. Of these visitors, more than 70% are based in the U.S. Additionally, Pixazza says that the startup delivers commerce-enabled photos at a rate of 8 billion image views per year, a 60% increase in the last three months.

Pixazza plans to use its new fund fuel product growth and expand to international markets. Already Pixazza has been launching new products in the past year to help make its technology more interactive. For example, Pixazza just launched Shopdot, a service for creating branded, hosted storefronts for publisher websites. And today, the company has announced the availability of a new self-serve publishing tool that allows anyone to turn static images into more interactive ones.

Previously, Pixazza was working on a client basis with its service. But today, the self-service platform, which is still in private beta, helps make Pixazza even more like an ‘AdSense for Images.’ Publishers can identify, tag and match products within the body of online images and immediately link them to Pixazza advertisers’ product inventories. Pixazza’s platform will aggregate datafeeds from merchants into a catalog of more than ten million apparel, home, electronic, sports, travel and automotive products. Pixazza also provides full text search to find similar products to those in the images on publishers’ sites.

There’s no doubt that interactive advertising technologies like Pixazza are catching on and even attracting the attention of search and advertising giant Google. Everingham declined to name exact numbers but says that click through rates are significantly higher than regular banner ads.

Everingham says that Pixazza is only at the beginning of what could be a very successful and profitable experience. “There’s currently three trillion images on the internet,” he sad. “We want to turn every one into an interactive experience.”

Pixazza faces competition from Like.com, Image Space Media, GumGum and others.
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How Communities Crowd Source On Search Engines

by Laurie Sullivan

PageRank is a community-derived ranking scheme for search. I find crowd sourcing campaigns fascinating, but hadn't thought about Google's search engine technology as a measure of community acceptance until Digg Chief Scientist Anton Kast mentioned it from the audience during a DigitalLA panel Wednesday night. The Grammy Museum in Los Angeles provided the perfect location for the discussion that delved into crowd sourcing and curating. I'll tell you why later.

Participating in DigitalLA's Crowd Source to Curation panel allowed me to turn the question to Kast when the topic switched to algorithms and semantic search queries. I asked Kast when Digg will provide these types of search option after panelist Chas Edwards, Digg's chief revenue officer, explained semantic search queries present a challenge for news curators.

Aside from "like," "share," and "digg," buttons that send signals from communities, algorithms determine most news content, even on search engines, Kast told DigitalLA attendees. Take Google PageRank, for example. The signal provides one of many unique insights into the value of the content on the page. Using PageRank and other factors helps to push up in ranking the content from Web pages and sites.

For Digg, having the ability to serve up content that community members want to read before they ask for has become "the holy grail," Kast says. Serving up queries based on personal information and semantics, rather than the relationship with people, presents difficulties. Google, Bing and Yahoo have tried to perfect this type of search for years. It takes sophisticated algorithms and lots of data. Google may have solved that roadblock for travel-related searches with the acquisition of ITA Software for $700 million.

Digg's problem is a double edge sword because if the algorithms get it wrong the error introduces mistrust and lack of credibility, Kast says. Incentives for humans to like, share or digg a piece of content provides a stronger connection between that piece of content and the brand.

Crowd sourcing worked well for The Recording Academy when it launched a marketing campaign called "We're All Fans." The campaign, completely constructed by social media elements from music fans, promoted this year's Grammy Awards telecast. Community involvement led people for the first time to send around content to promote the event. They talked and blogged about it.

The campaign demonstrated to The Recording Academy that the more respect, voice and involvement it gave to the community, the deeper the relationship companies will have, according to Evan Greene, chief marketing officer at The Recording Academy. Crowd sourced user-generated videos created the tapestry for the spots, he says. "It opened our eyes about how impactful it can be," he says, adding that ratings for the telecast rose 35% this year, but acknowledges "you can't contribute any one thing to the success. Everyone did their job."
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Crowdsourcing Films

by Conor Friedersdorf

...at a time when film financing is facing increasing budgetary constraints, even the most powerful directors are harnessing the power of the web to attract investment (financial or artistic) for their latest projects.

Ridley Scott, the director of Robin Hood - which opened the Cannes Film Festival this year - is producing a film that asks people to upload videos of themselves on to YouTube, which will in turn, form the basis of a documentary to be premiered at the Sundance Film Festival.

A growing crop of websites offer anyone willing to donate money to film projects an "executive producer" credit at the end of the film. One example is the collective effort in fundraising for the big-budget Spanish film, The Cosmonaut, a sci-fi movie that used online crowd-funding methods.

Rob Fletcher, a British film producer who is in the process of making a documentary called Driven, is employing a "people powered" form of funding. The film focuses on a couple who first fall in love in the 1950s, travel around the world in a black taxi cab and have a son, only to separate and reunite decades later. The film focuses on an eccentric 2,500-mile trip that the man, now in his 80s, makes with his estranged son. Fletcher said his production team was offering film credits for donations received in the shape of miles, so for $25 (or one mile), donors are given a film credit; for $100, they are given a credit and a T-shirt.

"Documentary films always struggle to find financing from the usual sources and this economy is making it even more challenging for us.... The normal paradigm of distribution is not working so producers are having to think of other ways," said Fletcher.

In 2008, the film Faintheart, partly funded by Vertigo Films and Film4, was hailed as the first to make use of online imput by selecting several cast and crew members from the web.
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driven-movie.com

Could the web reinvent film industry economics?

by ANGEL GAMBINO

Last week, my friend and prolific film producer Elliott Kastner passed away. I will miss tea at the Wolseley discussing future models of film financing and bringing my favourite book, When Nietzsche Wept, to the screen. His work was impressive, but his business plan to create an online film financing platform could have changed the fundamentals of film as we know it.

Crowd-funding is not yet a common choice for film producers, due to secrecy around how films are made, financial regulation and the fact that most don’t know how to effectively rally a crowd. The amount available through crowd-funding is too small to influence any film with a budget of over $100,000. Studios aren’t even sure how to use social media to convert marketing into ticket sales.

However, with viral channels and increasing knowledge through companies like Kickstarter and Sellaband in other sectors, we could see models emerge where financial and other incentives, such as your name in the film credits, prove exciting enough for some to pay big sums.

Films are largely financed through multi-party agreements including finance from banks, foreign distribution territories, local government tax credits, emerging and developing markets and, increasingly, high-net-worth individuals. Some investments generate returns of 50-100% and recurring revenue streams from royalties, digital distribution channels and merchandising. One of my favourite films, Saw, cost around $1.2m to produce but raked in $103m. However, fewer than 1% of films make money, and investors are the last to get paid if there is anything left after distributors fees, loan repayments and the like.

There are companies emerging, such as Slated, that are trying to increase access to data, which helps better inform investment decisions. Its CEO Duncan Cork has said: “Without access to data, no investor can expect to beat the 1/100 odds. Unfortunately, studios are notoriously proprietary about their data, and few, if any, investors have access to real data before making investment decisions.”

If these companies succeed in setting up online systems that forecast the likelihood of success for films based on additional audience and relevant data, investors should make better decisions. Certainly, many new digital music businesses are finding the data itself to be their most lucrative area. The combination of online data collection and existing methodologies could broaden the appeal of film financing.

Moreover, online analytics platforms should help films with a higher likelihood of success get the financing they deserve. Given current market conditions, Hollywood and the independent sector might embrace the internet more than ever before if it means additional investment in film. In the future, you might buy a piece of the picture with your popcorn and see your name in the credits.
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Crowdfunding app launches on iPhone

Ioumusic: New Artist Crowdfunding App Launches

How Does It Compare To Other Fan Funding Sites?

IOUmusic, in a similar vein as other grassroots, crowdfunding applications such as Kickstarter and RocketHub, is a new donation website that's focused on assisting musicians and providing them with alternative means to fund their creative projects.

As well, they are positioning themselves as a way for fans to pay artists for music that they have obtained for free. The founders of the company state that while this is their first incarnation, as a crowdfunding app, they are open to evolution of the site as the needs and wishes of artists change. From the payments to the artist, garnered from their fans, IOUmusic takes a 10% cut.

Two Alternatives

According to Maria Popova at Brain Pickings, “Kickstarter charges a flat fee of 5%, but also passes along the Amazon Payments transactional fees (3%-5%) to the artists who use the platform, for a total fee anywhere between 8% and 10%. RocketHub charges a flat total fee of 8%." Thus, depending on your goals, there are the fees to consider, but sometimes one site just feels better than the other.
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ioumusic.com

GE offers $200 million to crowdsource smart grid innovation; takes page from DARPA

By Andrew Nusca

Taking a page from the Pentagon’s research arm, General Electric on Tuesday announced a $200 million open innovation challenge seeking ideas for a better smart grid.

Chairman and CEO Jeff Immelt unveiled the Ecomagination challenge in a global broadcast, soliciting technologists, entrepreneurs and start-ups to share ideas that will help GE build a next-generation power grid.

“Green is green,” Immelt said. “We kinda think this is a good idea.”

Immelt said the challenge was intended to accelerate progress by taking advantage of the best ideas from everywhere and combining them with GE’s ability to deploy them on a massive global scale.

“We’re all about scale,” he said. “Our business would be a Fortune 130 company just in clean technology.”

The challenge starts with a $200 million capital pledge by GE and its partners.

From there:

1. An entrant’s business strategy is validated by GE’s technical and commercial teams.
2. Partnerships help GE scale the business globally.
3. GE gets its technical infrastructure and Global Research Centers in gear to accelerate development.
4. GE looks at its existing customer base to take the product to market.

The challenge will last 10 weeks. A $100,000 innovation challenge award is also available for entries demonstrating “outstanding entrepreneurship and innovation.”

Partners for the challenge include leading cleantech venture capital firms, including:

* Emerald Technology Ventures
* Foundation Capital
* Kleiner Perkins Caufield & Byer
* RockPort Capital

“How do we get ideas that can scale and implement quickly?” GE CMO Beth Comstock asked an audience in San Francisco. “How do we take new emerging technologies out of the lab [and] put them on the road and on rooftops?”

“[Ecomaginationj] is good for business, it’s good for GE and it’s good for the environment. Those benefits aren’t mutually exclusive. We want to make clean technology our reality.”
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Dell Teams Up with T-Shirt Design Website Threadless

Dell computers have quite a bad rep for championing ugly, clunky designs, but that seems to be all in the past now.

Call it couple tees for the technologically-inclined, but Dell has teamed up with the popular crowdsource t-shirt design website, Threadless, in a bid to make their products ‘cool’.

The Threadless collection is available immediately in the Dell Design Studio, where customers can choose from 11 designs to customize the look of their laptop.

Unlike vinyl stickers commonly used to personalize laptops, these images are “permanently imprinted into the laptop lid”, the company said.

So if it’s your thing, show your laptop some love and match your tee to your computer.

If you have other interesting design and art finds, cool websites, or anything that might catch our eye, share it with us at news@hillscreativearts.com

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The Future of Advertising

by John Winsor

The traditional advertising model is broken, argues John Winsor of new-model agency Victors & Spoils. It's time for the old guard to wake up

"The question for creative agencies is whether they can wake up, react to what's going on, engage the crowd, and make themselves a part of the new reality."

I posed this teaser in a Businessweek.com article published just over a year ago. At the time, the question was purely rhetorical. But in the ensuing conversations it quickly became obvious that the answer was a resounding "NO."

Realizing this inspired me to quit my job as executive director of strategy and product innovation at the advertising agency Crispin, Porter + Bogusky to co-found Victors & Spoils, an advertising agency based on crowdsourcing principles. Now I find myself at the center of the debate about the future of advertising, design, and marketing—even the future of work itself.

Seven months in, we've had the opportunity to work on everything from TV and radio to brand strategy, including digital and social media, product design, service design, and graphic design. We've done projects with clients including Dish Network (DISH), General Mills (GIS), and Virgin, with confidential clients in financial services, quick-service restaurants, and packaged consumer goods. As we continue to explore uncharted territory, we're learning every day. Here are some of the most important insights we've gleaned to date:

The Model Is Broken

Advertising is all about relationships, and at the heart of the client/agency relationship is trust. That trust has been eroded by a lack of transparency and, often, resistance to change. Over the past few months, I've spent a lot of time with the chief marketing officers of Fortune 500 companies. The theme is consistent. They tell me stories of being charged $10,000 per second of video editing for clips to go on YouTube, $1,000 for a single foamcore presentation board, and $25,000 for event banners; an unwillingness to collaborate; and myriad indirect charges for parties and travel.

Somewhere along the way, the big-agency business became a lifestyle. But clients, who want the best creative work, don't want to pay for it anymore. And they're figuring out that they don't have to. Smart agencies need to adapt their business models and fast, or they won't have the opportunity to rebuild these relationships.

The World's Your Creative Department

The old system of agencies employing a few creative teams to come up with agenda-setting ideas simply doesn't make sense in a digital era where ideas can and should come from anywhere. Digital tools can be used to tap into the wider world of creativity, and can do so with a lean infrastructure. It's a win for the client, who gets access to a diversity of ideas. It's a win for creative talent, who aren't bound to work on the particular accounts held by their agency.

Pick the Right Crowd

Mass collaboration, co-creation, and crowdsourcing are becoming increasingly important vehicles for clients looking to engage the voices of consumers with brands. At last count there were more than 100 crowdsourcing platforms available for some kind of design or marketing work. Picking the right one is key. There are many factors to consider, from who is in a particular crowd to how talent is paid or how intellectual property is handled. Many times success will come from breaking a project into smaller pieces and tapping different crowds for the various different elements. In general, it seems it's best to combine small private crowds (these days known as "expertsourcing"), where everyone working on the project signs a nondisclosure agreement, with bigger, more public crowds (crowdsourcing) to generate more ideas.

Stay Involved

In any management role, the key is to be actively involved. It's even more critical when directing a digitally distributed workforce. These days, people no longer have to move to the right city or work for the right company to participate. They can work where they want, with whom they want, and how they want. When harnessing the crowd for creative work, every participant deserves feedback and direction. That's easier said than done. But it's a big reason people get involved—and managing both expectations and rewards is the only way to see this type of business into the long term.

Help Clients Face the Challenge of Innovation

Clients need solutions that allow their brands to engage with their consumers and that get the results they need to move their marketing strategy forward. However, crowdsourcing platforms have proven unruly for many clients. In a recent corporate identity project we ran, we received 3,300 designs. The number of possible solutions created and the effort to keep things on strategy for a brand can be overwhelming. Curation and creative direction is the key to helping clients innovate.

A year after first asking the question above, the answer is still "No." Too many agencies still are not making themselves an integral part of the new reality. As the world becomes more digitally connected, we should celebrate the fact that marketing and advertising ideas are coming from everywhere. For me, it's inspiring to see the radical evolution of an industry and watch individuals take control of a once-closed society made up of Mad Men. The new world can be scary for people who still work in the old model. We get that. Change is scary. But it's also a reality.

John Winsor is author of Spark: Be more Innovative through Co-Creation and Beyond the Brand: Why Engaging the Right Customers is Essential to Winning in Business. The former executive director of strategy and product innovation at Crispin, Porter & Bogusky, he co-founded Victors & Spoils in 2009.
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David Lynch fans to fund latest film

by Nick Collins The Daily Telegraph

A documentary about David Lynch, the Hollywood film director, is to be funded by donations from his fans in the latest example of 'crowd funding'. Lynch Three, a documentary about the director, known for his cult films including Eraserhead and Mulholland Drive, will be financed in part by donations from members of the public.
To raise money for the film Lynch, who trained as an artist, has drawn a self-portrait and fans donating a minimum of $50 will be sent a print of it.
The move follows a growing trend for crowd-sourced films in Hollywood, with the film makers turning to the web to generate funding after finding it increasingly hard to get financial backing for their projects.
A number of websites offer financial donors the chance to have an "executive producer" credit at the end of a movie.
Jon Nguyen, producer for Lynch Three, told The Times: "A film can take a long time to finance so we had this crowd-funding idea. We went to David Lynch for his seal of approval and he was up for it.
"He ended up making an abstract self-portrait and we're going to give an original print of it to anyone who chooses to donate $50 towards the film, or a T-shirt featuring the print. We hope to raise part of the money in this way."
People who donate to Lynch Three, the third in a trilogy of documentaries about Lynch's career, will also have the opportunity to have a say in the content by suggesting questions to put to the director during the film.
The move follows the decision by Ridley Scott, the director of Robin Hood and Gladiator, to produce his next film from content uploaded to YouTube by members of the public.
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How to Crowd Source Your Lending Club Investment Criteria

A number of personal finance bloggers have posted the criteria that they use to determine which Lending Club loans that they invest in.

Own the Dollar looks for borrowers with “C” credit ratings or lower, longevity in the borrower’s job and borrowers that request smaller loan amounts. He also looks for borrowers with low credit utilization ratios and doesn’t invest more than $50.00 in each loan. Steadfast Finances doesn’t place more than $25.00 in each loan and accepts borrowers that have credit scores of 679 or above and are taking out loans for specific purposes. He also looks for borrowers with job security and a low amount of existing debt. Five Cent Nickel has posted his own lending criteria.

Most Lending Club investors will eventually settle on their own strategy for finding the best borrowers to loan money to, but what if you could find the best loans without digging through the 300+ loan listings which are on Lending Club at any given time? By using the correct selection criteria, you can find the loans that Lending Club lenders are most excited to invest in.

The easiest way to see which loans have expressed the most investment interest from lenders is to compare what percentage of the loan has been funded versus how much time in the lending process the loan has left. If a loan is more than 90% funded and there’s still more than a week to go on the loan listing, there’s probably a reason why investors have been quick to fund the loan. To find these notes, go to the “Browse Notes” section in your Lending Club account, and sort by “% funded” descending and you’ll see a list of which notes have the highest percentage funding. You can than see loans that have a large number of days in the “time left” column to find notes which also are already close to being completely funded.

Finding popular loans isn’t the only criteria that you should use when choosing Lending Club loans to invest in. However, using this sort mechanism can be a good way to find some of the “cream of the crop” loans to review.
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Chevrolet turns to the crowd for new TV ad script

LUTON UK/CAPE TOWN, SA: Chevrolet UK will be using Idea Bounty and MOFILM, two of the world's largest crowd-sourcing platforms to create a new European TV commercial. The new brief "Passion & Practicality TV Ad Produced By Jon Landau" has now gone live and calls on creative individuals within the Idea Bounty community to submit a 30 to 60-second script or screenplay for a new television advert that will be directed by Jon Landau of Avatar fame.
Chevrolet is offering a bounty of US$7500 (about R57 500) for the individual with the best idea. Once the client has chosen and awarded the winning TV script, it will be handed over to MOFILM who will then recruit their most successful crowd sourced TV director to create the commercial in conjunction with producer Jon Landau.

According to Jeff Howe, author of Crowdsourcing - Why the Power of the Crowd is Driving the Future of Business, "Crowdsourcing activates the transformative power of today's technology, liberating the latent potential within us all".

"It's a perfect meritocracy, where age, gender, race, education and job history no longer matter; the quality of work is all that counts; and every field is open to people of every imaginable background," Howe writes. "If you can perform the service, design the product, or solve the problem, you've got the job."

Idea Bounty, founded by Cape Town digital advertising and marketing agency Quirk, employs crowdsourcing to address briefs submitted by big businesses.

Companies approach Idea Bounty with a specific marketing problem they need solved. Idea Bounty then produces a brief, which it publishes to the Web, soliciting ideas from people around the world. The best ideas are then scrutinised by Idea Bounty's clients, and the best idea is then paid a bounty, or fee.

Brief basics

Chevrolet now offers a full range of cars across all size categories, designed with European customers in mind and the advert must therefore work to challenge notions of Chevrolet being about big, fuel-guzzling American cars and showcase the full portfolio of new cars that Chevrolet is bringing to market this year.

Daniel Neville, MD at Idea Bounty says, "Most of the ideas we receive are no longer than an A4 page and we get input from everyone from students to stay-at-home moms, but most often from people who work in ad agencies and PR companies," Neville says, "What we are looking for are those fresh ideas that you find in the strangest places."

To participate, simply register on www.ideabounty.com, read more about the brief, and send in your most original idea.
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Ridley Scott to crowdsource documentary via YouTube

Director of Gladiator, Alien and Blade Runner asks public to post snippets of their life – and offers co-directing credit

Ridley Scott, director of films such as Gladiator and Alien, is to crowdsource a feature length documentary by getting members of the public to post snippets of a day in their life on YouTube.

Scott, who is collaborating with the State of Play director Kevin Macdonald and YouTube, intends to create a feature length documentary based on the clips called Life in a Day. The project aims to get individuals to upload to YouTube footage of a moment in their lives on 24 July.

Individuals whose footage makes it into the final film will be credited as co-directors and 20 will be flown to the Sundance Film Festival in January where the film will have its premiere. Life in a Day will also be shown for free on YouTube.

"Life in a Day is a time capsule that will tell future generations what it was like to be alive on 24 July 2010," said Macdonald, who will direct the project. "It is a unique experiment in social filmmaking, and what better way to gather a limitless array of footage than to engage the world's online community?"

The project will be executive produced by Scott and produced by his company, Scott Free Productions.

Life in a Day follows two previous crowd-sourcing projects by the Google-owned videosharing website. The YouTube Symphony Orchestra gathered together classical musicians and a tie-up with the Guggenheim took artist submissions from around the world.

"Over the past five years, You Tube has changed the way media is created and consumed," said Eric Schmidt, chief executive of Google. "We're thrilled to give our community the opportunity to work with Kevin Macdonald and Ridley Scott and are grateful to our long-term partner, the Sundance Institute, for their support of this global initiative."

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The new face of venture capital: Crowdfunding’s big bang

By Kevin Lawton

Crowdsourcing and crowdfunding are on a rise, as the returns produced by conventional VC networks continue to be lower than expected. They are, in fact, growing so fast that a “big bang” seems imminent as startups become a public asset class.

And when Wall Street starts to get involved, things move quickly. Ultimately, this could be a 1000x force-multiplier for crowd-funding.

This presentation (the first part of which can be found here and the second part of which can be found here) is meant to assist both Limited Partners and entrepreneurs alike and has been wrought from a life in startups and studying the business of innovation.

This is Part 3 of "The New Face of Venture Capital". It talks about the imminent "big bang" of crowd-funding in startups and content creation due to startups becoming a public asset class. When Wall Street gets involved, things move. This could easily be a 1000x force-multiplier for crowd-funding.

Check out this SlideShare Presentation:

The Big Bang of Crowdfunding: Startups as a Public Asset Class

View more presentations from trendcaller.

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Crowdfunding start up FashionStake Inc. has raised $400,000 out of a targeted $600,000 equity offering.

BOSTON -- According to an SEC filing, FashionStake Inc. has raised $400,000 out of a targeted $600,000 equity offering.

New York-based FashionStake is a crowd funding platform for fashion designers. The site, led by Harvard Business School MBA students Daniel Gulati and Vivian Weng, aims to put designers and companies together with consumers on two levels, financially and critically. Financially, an investment in a designer will return the ability to apply credits toward purchasing that designer's garments.

According to the filing, one of the executive officers received $24,000.

President Weng and CEO Gulati are named in the filing.

Bios of principals taken from Creative3 Web site

Daniel Gulati - CEO

Daniel Gulati is CEO and Co-founder of FashionStake, a revolutionary crowd- funding platform for fashion designers that changes the way fashion is conceived and commercialized. FashionStake has already received support from top international designers and has been featured in numerous publications around the world, including Reuters, WWD, The Washington Post, The Huffington Post, Fast Company, ReadWriteWeb, PC Magazine, The Los Angeles Times, The Globe and Mail, The Straits Times and the International Business Times. Daniel believes in the democratisation of previously closed industries and speaks regularly about using Web 2.0 technology to connect creative talent with the power of crowds.

Prior to co-founding FashionStake, Daniel was the former Art Director of an international luxury bath and body products company based in Lucca, Italy. He sold a founding stake in an advertising company and founded a pop-up urban apparel company featured regularly on Big Brother. He is currently co-authoring a book titled Reimagining Leadership, scheduled for international release in May 2011.

Daniel worked at The Boston Consulting Group as a Senior Associate from 2006 to 2009, assisting numerous international consumer goods clients with brand management. Daniel has also spent time at Macquarie Bank. He is currently pursuing an MBA at the Harvard Business School, where he serves as a George F. Baker Foundation Fellow.

Vivian Weng - President and Co-Founder

Vivian Weng is President and Co--founder of FashionStake . Vivian has worked with several global luxury fashion houses, including ESCADA and Elie

Tahari. Vivian is also the Founding CEO of Mittenberry, a modern accessories company.

She actively volunteers at Dress for Success, a non--profit organisation that provides interview suits and workplace apparel to disadvantaged women.
Most recently, Vivian worked at McKinsey & Co. as a Senior Associate, primarily serving the consumer goods and retail industries. Prior to joining McKinsey, Vivian worked in the Derivatives Structuring and Marketing team at Goldman Sachs. Vivian holds a B.S.E. with High Honors in Electrical Engineering from Princeton University. She is currently pursuing an MBA at Harvard Business School.
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Can the Titans' crowdsourcing model work for downtown Torrington?

By KEVIN D. ROBERTS

TORRINGTON -- Downtown revitalization is a topic that has been on the tongues of Torringtonians for over 50 years. Revitalization has become even more of a hot topic with the work of the Torrington Development Corporation, especially given that the organization has unveiled the first step in their plan. The Register Citizen recently asked whether a relatively new concept known as crowdsourcing can play a role in the revitalization of downtown Torrington. Crowdsourcing has seen success under the auspices of Our Baseball Haven, an organization that brought summer baseball back to the city this year. The Torrington Titans, formerly the Peekskill Robins, play in the Atlantic Collegiate Baseball League. OBH’s members raised money to purchase the Robins, then renamed them the Titans. OBH partner Brett Orzechowski read about the concept in a book by Jeff Howe called “CROWDSOURCING: WHY THE POWER OF THE CROWD IS DRIVING THE FUTURE OF BUSINESS.” Howe defines crowdsourcing as “the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call,” according to his website. “We took this concept of crowdsourcing and we took stock in our community,” Orzechowski said during a recent phone interview. OBH gave area residents the chance to buy into a baseball team for $100 apiece. That fee gives the member voting rights. Members voted on the team’s name, the team’s logo, and seating arrangements at Fuessenich Park. “They’re really taking an active role in the organization,” Orzechowski said. Recently, the members voted on whether to bring the Canadian National Team to the city for an exhibition game on July 13. The members have discussions through chat rooms and have helped organize events surrounding the team. “That’s the beauty of having open discussions,” Orzechowski said. “It’s been completely civil on the message boards.” Can this concept, however, be applied to the revitalization of downtown Torrington? Warner Theatre marketing director Steve Criss sees positive aspects of crowdsourcing that can applied to the efforts to transform downtown. "I think crowdsourcing could work if it is used to build consensus first and the details are then developed by the (Torrington Development Corporation) and our local government officials,” Criss said in an e-mail. Criss added, however, that final decisions should rest with officials. “Nothing goes well when it is built by committee so I don’t think crowdsourcing would work when it comes to the finer details or execution of the plan,” Criss said. “There are so many variables about why downtown does or doesn’t work, that crowdsourcing can only be used to build consensus and paint broad strokes about what downtown should be.” Overall, Criss still sees crowdsourcing as a tool that can be used to flesh out ideas. “I do think crowdsourcing could serve as a powerful tool for the city/TDC to identify what the public perceives as the problems with downtown are so that TDC and the city can work on a plan to address them,” Criss said. Some people who took a survey on the subject would agree with Criss. Several feel that involving the community would be a positive way to flesh out ideas about what should be part of downtown. Orzechowksi did not speak directly to the use of crowdsourcing in the downtown revitalization, but added that he would like to see the effort succeed. “I think there’s some value in collective problem-solving,” Orzechowski said. Northwest Connecticut Chamber of Commerce President JoAnn Ryan, a member of OBH, said that crowdsourcing has worked for OBH, though she said she could not comment on whether the concept could work downtown. Ryan said her knowledge of the concept only comes from her membership in OBH. “I give them credit for trying it because people are not accustomed to change,” Ryan said.
Several people who took the survey did see crowdsourcing as a good vehicle for fleshing out the feelings of the community at large. Some see crowdsourcing as a way to find out what stores and restaurants should be considered for downtown. Criss said that using crowdsourcing can’t be used to implement an actual plan because of variables that are involved. “There are so many variables about why downtown does or doesn’t work, that crowdsourcing can only be used to build consensus and paint broad strokes about what downtown should be,” Criss said. Funding through crowdsourcing, however, is an option, he added. Criss theorized that TDC or downtown redevelopment “members” could contribute money and get benefits, including discounted admission to downtown attractions. Criss has seem a form of crowdsourcing work. The general public helped to rejuvenate the Warner Theatre by raising money through events, or just by buying tickets to concerts or shows. Eighty percent of the theater’s operating budget comes from ticket sales, Criss said. Patrons have stepped up time and again to invest in the theater, whether it’s the theater itself or the Carole and Ray Neag Performing Arts Center, Criss said. “The Warner’s success has been because people have bought into that concept,” Criss said. The success of downtown revitalization may depend in part on how involved, and how invested, the community becomes in the effort.
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What To Do When You Don't Know What To Do Next

When Procter & Gamble found itself running short of product ideas in the early 2000s, then-chairman and CEO A. G. Lafley began pushing the company to look outside for some fresh thinking. A full 50% of its innovations should be externally sourced, he said. P&G, meanwhile, wanted sales to grow by at least 4% a year, recalls chief technology officer Bruce Brown, the company’s point man on innovation initiatives, “and it was clear we couldn’t do all that ourselves.”

The board supported Lafley, now 62, even though doing so broke a longstanding tradition at P&G (and just about every other company, come to that) of keeping shortcomings and new-product strategies out of the public eye. Soon company managers were joining the scouts P&G already had in the field, trolling trade shows, venture capital forums, and pretty much anywhere else, letting it be known they were looking for nascent products and new ways to make and market them.

The Cincinnati-based consumer-products colossus formed partnerships with a number of small outfits, such as a Japanese company it encountered at a trade show that now produces an Asian-style Pringles snack. Other times P&G simply bought the means to make something itself, including a patented peptide technology developed by a small French firm it met at a European supplier conference that is now a key ingredient in Olay Regenerist, a new, best-selling anti-wrinkle face cream.

P&G also turned to the Internet, inviting a global community of scientists and weekend tinkerers to propose solutions to various problems it faced—or to offer innovations (that is, products and processes) of their own. One example: Syntopix, a small British firm, submitted an unsolicited proposal via P&G’s website that led to a deal in which the company supplies P&G with proprietary antimicrobial technology for use in various skin-care products.

Though less expensive than directly funding research and development, all this outreach still requires money and effort. P&G won’t supply specific figures, but it has invested in sophisticated Web portals that enable its people to interact with the outside world, trained some of its 9,000-strong R&D staff to manage the process, and added a special dealmaking organization to help individual business units negotiate contracts with outside contributors.
The investment is paying off. Organic growth at P&G has hummed along at 5% most years since 2001, when Lafley, who stepped down last year, pitched his idea to the board. (Former chief operating officer Robert McDonald, 56, took his place as CEO.) Today more than 50% of the company’s new products have what Bruce Brown calls “an external component,” a technology or other innovation generated by outsiders. “We think we’re getting access to about two million inventors and innovators around the world,” he says. “It’s key to how we grow.”

P&G is far from alone in embracing what’s known as open innovation. With R&D costs skyrocketing and new products and processes tougher to come by, even companies with deep research benches lack the internal know-how needed to solve every problem they encounter and keep their product-development pipelines full. Best Buy, Dell, Eli Lilly, and IBM are among the growing number of companies that regularly turn to outsiders for new ideas and technical help.

“Companies used to think they could hire the best people in the world, lock them in labs, and get the best innovation,” says Karim Lakhani, an assistant professor of technology and operations management at Harvard Business School. “That’s not the case anymore. The problems are so complex and knowledge is so widely distributed in society that no one organization has a monopoly on ideas.”

It’s a trend that demands board attention and oversight, particularly given the cost-cutting benefits of open innovation in today’s unforgiving business environment. It also represents a dramatically different way of achieving corporate objectives, one that is beginning to give its adherents a competitive advantage. Ultimately it has the potential to speed along a redefinition of the corporation from a stand-alone entity into a locus for a series of supplier, partner, and customer relationships.

While companies have long indulged in joint ventures and the like, the Internet has accelerated the need for outside thinking. Eli Lilly, the Indianapolis harmaceutical giant, regularly contracts with small firms in China and India to develop compounds that become part of new drug products. Lilly also partnered with Daiichi Sankyo Co., a Japanese pharmaceutical company, to develop Prasugrel, an antiplatelet drug for patients with acute coronary disease that is now on the market.

The pharmaceutical industry is under huge pressure to fill development pipelines, and even Big Pharma companies can’t do that on their own, says Lilly director Alfred Gilman, 68, chairman of the board’s three-member science and technology committee. (The other two are J. Erik Fyrwald, 49, chairman and CEO of Nalco Co., an Illinois maker of water-treatment products, and Franklyn Prendergast, 63, a professor at Mayo Medical School in Rochester, Minnesota.) “A lot of the interest is economically driven, but it’s mostly about talent,” says Gilman, who is chief scientific officer of the Cancer Prevention and Research Institute of Texas, which helps fund research projects. “We need to reach out and find the best ideas wherever they are.”

Netflix, the Los Gatos, California, movie-rental outfit, also did some reaching out in order to improve its Cinematch recommendation system, which uses customers’ rental histories to suggest other films it thinks they will like. The system already scored well with Netflix’s busiest renters, 90% of whom said they liked the recommendations. Netflix aimed to raise that satisfaction level by 10% and in 2006 announced a global online competition to find a better forecasting algorithm. It posted a sample of more than 100 million customer ratings for techie contestants to play with, and offered $1 million to whoever could hit the improvement target first.

“We wanted to make the best better,” says vice president Steve Swasey. “By throwing the challenge open in a worldwide contest, we got thinking from some of the best computer scientists in the world, and it cost us relatively little. We could never have afforded that much talent and work internally.” Three years and 40,000 entries later, Netflix announced in September that it had a winner: a seven-person team of software and electrical engineers, statisticians, and machine-learning researchers from Austria, Canada, Israel, and the U.S. The winners, who had started off as members of different teams and then got together online, came up with a solution that plugged that missing 10%.
The Netflix contest was the brainchild of CEO Reed Hastings, 49, “but it wouldn’t have happened without the board’s support,” Swasey says. The company has since launched another $1 million contest to improve its recommendations for more sporadic movie renters, this one using demographic information.

Not every company wants to advertise its needs or shortcomings quite so publicly, nor are many ready to invest the millions it can take to set up Web portals and train people to operate a direct online solicitation. Enter a growing legion of middlemen, outfits that hook up companies (anonymously, if that’s what they want) with individuals or groups that might be able to solve specific problems. InnoCentive, based in Waltham, Massachusetts, has a network of some 180,000 “solvers,” about 60% of whom have master’s degrees or Ph.D.s, says CEO Dwayne Spradlin, 43, though “anyone in the world is free to join.” They can visit the business’s website to check out the challenges posted on behalf of various companies—“seekers,” in open-innovation parlance—and the rewards being offered. InnoCentive, which takes a 40% cut of the winnings, claims a success rate of about 50%. Colgate-Palmolive used the company’s site to offer $25,000 to anybody who could dream up a better way to inject fluoride powder into a tube of toothpaste.

A few weeks later a Canadian hobbyist with a background in physics suggested imparting an electrical charge to the powder and grounding the tube. He won the reward, and InnoCentive collected its cut.

Other middleman organizations work in pretty much the same way. TopCoder, a Glastonbury, Connecticut, company, helped Lending Tree, an online mortgage originator, build its website, posting the specs of what the financial concern wanted on a site open to a global network of 225,000 software writers and graphic designers. Lending Tree also uses TopCoder to conduct regular “bug races,” in which it pays sums that can run from $10 into the thousands to the first techies who can sniff out and repair recently discovered software bugs. “It’s find it and fix it. Whoever does it first gets paid,” says TopCoder CEO Jack Hughes, 48. “This marks a significant shift in how companies get work done.”

It’s also cheaper. Lending Tree would need to employ a whole team of experts to address the thousands of small glitches TopCoder’s techies have identified and fixed. Relatively low costs have enabled some smaller companies to innovate on a shoestring. Example: SunNight Solar LLC, a tiny Houston manufacturer of solar-powered flashlights for the developing world that wanted to make an affordable solar-powered device capable of lighting a whole room. Mark Bent, 52, SunNight’s founder and CEO, took the problem to the InnoCentive site, offering a $30,000 reward to whoever came up with the best idea. After culling more than 40 viable responses, he picked a design from a New Zealand engineer that combines a polycrystalline solar panel, an environmentally friendly rechargeable battery, and high-efficiency light-emitting diodes. “Getting access to that wealth of talent from around the world is a game-changer for a company like ours,” he says.

There’s no other way we’d be able to do it.” The company is now making solar-powered room lights that sell online for $39; nonprofit organizations pay less. Boards eyeing open innovation need to be aware of potential pitfalls. One big worry: Who actually owns an idea submitted over the Internet? And how can a company make sure that a competitor doesn’t steal an idea floated in an open forum?

Many companies, including P&G, try to protect their intellectual property by breaking down their needs for large projects into smaller components to disguise the targeted, complete-picture outcome. Middlemen can also help on this front. InnoCentive posts specific needs and will protect a client company’s identity if asked to. It also requires its solvers to sign nondisclosure agreements and transfer all their rights in their ideas to the seeker, including the right to develop derivative products, says CEO Dwayne Spradlin. InnoCentive offers various protections to its solvers as well.

Open innovation may ruffle the feathers of a company’s in-house R&D teams, whose members might well feel threatened and could try to block or sabotage it. P&G’s department heads and developers were initially “incredulous that this could work,” recalls CTO Bruce Brown. “We’re a company that had incredible success developing things internally. Getting people to believe it could be done differently and still win was a major challenge.”
To overcome such resistance, some companies start small, by encouraging more idea-sharing among internal business units. They also work to get in-house researchers to think of themselves “less as inventors and more as managers of networks of outsiders involved in the innovation process,” says TopCoder’s Jack Hughes. “The No. 1 issue is change-management—getting people acclimated to the idea that the old ways are being replaced.”

That’s where the board’s commitment to doing things differently is critical. “You can’t just throw things out there and think you’re going to get cheap labor,” Harvard’s Karim Lakhani says. Doing open innovation right “requires money and management and board attention. There has to be a top-down mandate.”

And the board has to stay involved. At Eli Lilly, the science and technology committee meets regularly with management to “discuss the nitty-gritty of things in the pipeline or a new approach to a technology or outsourcing in China,” says committee chairman Alfred Gilman. That level of involvement signals to the workforce just how important open innovation is to the company’s strategy. At P&G, the board’s six-person innovation and technology committee helps oversee all kinds
of development, including the so-called connect-and-develop program. Headed by Ralph Snyderman, 69, chancellor emeritus of Duke University, the committee also comprises Scott Cook, 57, chairman of the executive committee at tax-software maker Intuit; Rajat Gupta, 60, a senior partner emeritus of McKinsey & Co., the consulting corporation; Lynn Martin, 69, a former professor at Northwestern University’s J.L. Kellogg Graduate School of Management; Johnathan Rodgers, 63, CEO of TV One LLC; and Ernesto Zedillo, 57, former president of Mexico.

P&G’s committee members have gotten involved in some demanding exercises, such as figuring out how to create metrics to measure the success of open-innovation projects. “They push me really hard on this,” says Bruce Brown. “They’re asking, are we sure we’re getting access to the best technologies? And when ideas come into the system, are we truly open to evaluating them objectively?” The committee—and the full board—leave him to make his own final calls. Nevertheless, this kind of board-level attention has gone a long way toward helping to “create a culture that values innovation and is self-confident enough to look outside to get it,” Brown says. “The board has really walked the talk on its commitment to doing this.” In the end, shareholders could be the primary beneficiaries.
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Should we trust the wisdom of crowds?

A problem shared is a problem halved, goes the old saying. But what happens if you share a problem with millions of people? Are you left with a millionth of a problem? Or just lots of rubbish suggestions? Both the British government and BP have recently called on the public to help them sort out a mess. Chancellor George Osborne asked for tips on programmes to be cut to trim the huge budget deficit, while deputy prime minister Nick Clegg wants us to suggest "silly" laws that can be repealed. And the ongoing Deepwater Horizon oil spill in the Gulf of Mexico prompted BP to call on Joe Public for ideas to stem the flow of oil after its in-house solutions failed. So far BP's corporate May Day has elicited more than 20,000 suggestions. This is the most ambitious online crowd sourcing exercise ever attempted by any British government. It is an entirely new way for government to engage with people.Clegg calls for law repeal ideas Public 'want quangos and aid cut' In trendy parlance, such appeals for outside help are known as crowdsourcing, a term that Mr Clegg made sure to name check in his appeal. So what is crowdsourcing? Anthony Williams, co-author of Wikinomics: How Mass Collaboration Changed Everything, says examples are everywhere. Open source computer operating systems, such as Linux and Google's Android, the big rival to Apple's iPhone, are written and refined by members of the public. Another good example of such collaboration is Wikipedia, which allows users to write and edit entries for its online encyclopaedia: "For the first time millions of people can aggregate their talent and expertise," says Williams. "Previously the assumption had been you had to create a company. Here is something completely different." There are numerous modern examples of how collaboration has transformed businesses, Williams says. One good recent example is that of the Canadian mining company Goldcorp, which was struggling financially and unable to find gold on its land in northern Ontario. When a new chief executive arrived he put all its geological data online, asked for help on where the gold was located and put up $500,000 in prize money for accurate suggestions. "They got submissions from people all over the world, including people using 3D computer modelling techniques. They found $3bn worth of gold on the property and Goldcorp became one of Canada's biggest mining companies." Is crowdsourcing just the old employees' suggestions box reinvented? One famous legendary business story - which may be urban myth - relates how an employee suggested to the matchmaker Swan Vestas that they could have one instead of two sandpaper strips on the matchbox
The company listened to the lateral thinking and reaped the benefits in lower costs

It's just one of a number of examples of how opening a problem out to the public and away from a small pool of workers can lead to huge gains, Williams says.

"These things happen a lot. You're making a problem accessible to a large range of people with a diverse range of skills. And it turns out it's not just for companies it applies to government as well."

The idea is gaining traction in the normally more conservative corridors of the public sector, says Natalie Evans, deputy director of think tank Policy Exchange.

"We now have the technology to reach a huge pool of talent and ideas from the general public in way that simply wasn't possible before. Done properly, this means we can leverage mass collaboration in a way that fosters a sense of 'public buy-in'.

"This can be particularly important where - say in the case of deciding where the axe must fall in terms of cutting public spending - there are difficult decisions to be made."

Seeking ideas is one thing? But how willing are those in power to act on the public's suggestions?

The point is neatly made in the findings of a survey published on Monday about where spending cuts should be. Some 2,000 members of the public were asked for their suggestions and one of the most popular targets was Britain's overseas aid budget. Yet this, along with healthcare, is an area the government has pledged not to touch.

Perry Walker, head of participation at the New Economics Foundation, believes crowdsourcing works well for ideas, less well for how you develop them.

"Brain storming works best when people don't talk to each other because people inhibit each other. But then what happens when you've got the ideas? You could have 30,000 ideas on what laws to repeal."

At this point smaller groups of committed citizens must be given a chance to filter and discuss the ideas, he says. Transparency and feedback are also crucial if the public is not to become cynical, he warns.

Geoff Mulgan, commentator and director of think tank the Young Foundation
'Crowdsourcing is already being used extensively - the World Bank used it in Haiti, the firm Innocentive now has hundreds of thousands of scientists on tap to solve problems for a fee, and New Zealand briefly tried it for police legislation. So far reality hasn't caught up with the promise - and good strategic policy making involves deliberation, which the existing crowd-sourcing models aren't suitable for. But for more discrete and practical problem-solving it undoubtedly has a lot to offer.'

In fact, there is a question about whether what Mr Clegg and BP have done is genuine crowdsourcing at all.

Crowdsourcing, says Stephen Overell, associate director of the Work Foundation, is really about using looser, freelance forms of commissioning tasks, allowing an organisation to tap into a much wider pool of knowledge or specialist skills.

BP's effort is more about public relations - appearing to be responsive, says Overell.

"BP has handled the oil leak atrociously. So its priority is public relations first and the need for high quality information second, in that order. 20,000 ideas is unmanageable, you'll need all sorts of procedures for sorting through them. Solving this sort of issue is a profoundly technical issue that the vast majority of people are ill equipped for."

And asking for ideas in this way is not new - the employee suggestion box has been around for years and is actually far more useful than what either the government or BP is up to, he argues.

"The best ideas of how to solve a problem usually come from employees, although it's probably best done through technology now rather than a box."

But it only works if there is a genuine interest from management - "too often over time it becomes a silly gimmick that you feel you have to do."

Another sceptic is Peter Kellner, who as president of polling company YouGov, is well used to listening to the views of ordinary members of the public.

He doubts Nick Clegg's call to arms will elicit anything civil servants couldn't have come up with. And what's worse, the government will end up with egg on its face.

Populist open-ended gestures like this normally end in embarrassment, says Kellner.

"The last government allowed people to put up petitions on the Number 10 website and it quickly got out of hand with Jeremy Clarkson for prime minister. It's an invitation to idiocy and madness and an opportunity for lobby groups."

Surprisingly, Anthony Williams, whose follow up to Wikinomics is published later this year, agrees.

"The White House tried crowdsourcing when Obama first came in. They asked the public what its main priorities should be. Legalising marijuana came up number one."

For that reason, the term crowdsourcing has become unpopular with some of those like Wikipaedia founder Jimmy Wales who one would expect to support it.

"The problem with the term is the notion of a crowd - this amorphous crowd has no individual perspective. There's value in mass participation but where possible the people need some expertise. We just call it collaboration frankly."
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