What Is Crowdsourcing?
From a grammarian’s perspective "crowdsourcing” is an unnecessarily compounded word created by the promoters of the culture of the Internet of Things and the Collaborative Economy. They create compound words because it is trendy. Nonetheless, crowd sourcing by any other name is still crowdsourcing.
What is it, exactly?
It is exactly what it says it is. It is the practicing of obtaining goods and services from peers who are willing to give or share their goods and skills. The practice can be on a local, regional or even national scale. The original concept was much more localized than the current global movement which has shifted into an enterprise system that traditional business models are beginning to embrace to avoid being replaced.
What started it?
To borrow from the James Carville comment that became a campaign slogan for Bill Clinton’s 1992 presidential bid: "It’s the economy, stupid!” The rapid growth of crowdsourcing began with the convergence of advanced mobile technology, the Internet of Things and the catalyst of the world economic crisis in 2008. People were losing jobs and income faster than you can dial the operator connect to anyone else anywhere in the world on an electronic device that you can hold in your hand. People needed to find ways to earn a living. The inevitable alternative to sending out hundreds of resumes was to figure out, "What can I do with what I have?” In other words, "What assets (goods or skills) do I have that I can use to generate income?”
Answers to the question
I have a car. I can offer rides to people, or I could use my car for pickup and delivery service.
I can cook. I can offer a customized catering service, offering my home as a "micro restaurant” or cooking a gourmet meal for families in their own homes.
I can do both! I can cook gourmet meals, using my cooking skills, and deliver them, using my car!
I can write. I could offer my writing skills as a freelancer. I get to work from home and write everything from blogs to books and from press releases to PowerPoint presentations.
What a concept! Suddenly I am an entrepreneur.
The other half of the equation
We have discussed only the first half of the equation, which is "What do I have?” The whole equation is, "What do I have that someone else needs?” (It doesn’t really matter what you have if someone else doesn’t need it.) Conversely, there are people who are asking the equation from the opposite perspective, i.e., "What can I do to get what I need from someone else who has what I need?” Let’s rule out robbery as a legitimate answer by rephrasing the question as, "How can I find what I need by finding someone else who has what I need and who is willing to share it?”
There are times when we all have needs that cannot be met with our current financial resources. With the economy what it is today, you’d have a better chance of finding the proverbial pot of gold at the end of the rainbow than getting a loan from your bank, even if the banker is your brother.
Because of that, one of the fast-growing and most pervasive segments of crowdsourcing is Crowdfunding (See? They did it again.) It’s about getting the money we need for worthy projects and ventures from our peers rather than crying all the way to – and from – the bank. Part 2 of our blog on Crowdsourcing will deal with crowdfunding.
After 35 years in the corporate world, this is how I now make a living. I became a member of the Pathmaker writing staff when they connected with me through a popular Crowdsourcing website. It is an enduring relationship that was made in heaven.
What Is Crowdsourcing? - Part 2
What Is Crowdfunding?
Jeremiah Owyang is a globally-respected economic analyst. He offers one of the most concise and precise explanations that I have seen in response to the question, "What is Crowdfunding?”
"Instead of turning to traditional investment institutions, you can turn to regular people from around the globe to contribute money towards a good, services, or experience.”
As we concluded Part 1 of "What Is Crowdsourcing?” we commented that, "You’d have a better chance of finding the proverbial pot of gold at the end of the rainbow than getting a loan from your bank, even if the banker is your brother.” Unfortunately, that is reality. Therefore, we must accept the reality for what it is, and that it is drives us to find other sources for our financial needs.
How crowdfunding works
The concept is really very simple. You make your need known to your friends, to their friends and even to strangers. Thirty years ago, you might have called family and a few friends to see if they could loan you some money. You might have written some letters to friends who lived a considerable distance away. Fifteen years ago, you might have reached out to more friends with a single plea via email. Today there are websites devoted entirely to helping individuals raise funds through social media connections on the internet.
Sites like Kickstarter, Gofundme, and Indiegogo all exist to connect people with a financial need to other people who have the financial resources. These crowdfunding sites are being successfully used to fund independent recording artists and authors, mission trips and church building campaigns, college educations, and even to pay the expenses of Olympic athletes.
The most successful crowdfunding campaigns typically offer some kind of equity or other incentives for various levels of funding, depending upon the type of project. This is an excellent approach because it is human nature to desire to have some form recognition, regardless of how little. It’s akin to the traditional practice of church families paying to buy new pews. Some paid what little they could afford, but those who funded the price of an entire pew might have their names engraved on a plaque fastened to the end of the pew.
Crowdfunding can glean amazing results
A well-conceived and well-run crowdfunding campaign can yield astonishing results. Recently Pathmaker Marketing ran a crowdfunding campaign on Kickstarter for a client seeking to revise and republish a trilogy of children’s books. The goal was to raise $22,500 within 60 days. The campaign actually raised $38,316 from 144 different benefactors and it became the fourth most successful crowdfunding of children’s books out of more than 3,000 thus far on Kickstarter. We share much more of the details of that story and salient advice in our post, "Peeking Inside a Successful Kickstarter Campaign.” I direct your attention to that page for more information on how Pathmaker can help you.
Why crowdfunding works
In the same post where he defines crowdfunding, Jeremiah Owyang explains some of the benefits of crowdfunding, each of which accrue to either individuals or major companies:
Awareness of market receptivity. You’re going to have a fairly good indication of the interest the market is going to have in your project by the way investors respond.
Up-front payment. You can get your funding completed before you actually start your project. You can now focus entirely on the project.
Engagement. Offering incentives along the way help those who have donated funds to stay abreast of your progress and become a part of your dream.
Shared Success. Owyang says that an investment is far more powerful than word-of-mouth advertising. Investors have skin in the game. They want you to succeed and they will enjoy being a part of something special.
A personal observation
About a year ago, I personally contributed to a crowdfunding campaign to send a college student on a short-term mission trip. I checked the website every day to check the progress of the campaign, because I wanted her to reach her goal. During her trip, I prayed for her daily, because I was invested in the success of her trip.
I believe in crowdfunding, and it’s not just because I don’t like banks and bankers. It’s because I am like you. I want to help other people reach their goals and achieve their dreams.