The “Power of Crowds” panel at Silicon Beach Fest Spring 2013 addressed crowdsourcing and crowdfunding for entrepreneurs and investors by showcasing 5 companies incorporating crowd data in their business models. What can crowdfunding or crowdsource marketing and product design mean for your business? Is there wisdom in the crowd? With increasing ease of access to crowds through social media and mobile technology, combined with the growth of big data, can your enterprise achieve marketing nirvana by tapping into the crowd?
Moderated by Cross Campus Co-founder Ronen Olshansky, the hour-long talk included crowdsourcing and crowdfunding professionals across a slice of tech companies in different verticals of industry, but with the common thread of doing business in crowdsourced data of various kinds, crowd participation, and crowdfunding.
- Adam Chapnick, Principal at Indiegogo – together with Kickstarter , the most popular commercial crowdfunding portals for entertainment producers, startups, and entrepreneurs to raise money from the crowd.
- Clark Benson, CEO of Ranker.com, – provides top 10 lists for (practically) everything, as voted by the crowd.
- Chris Rising, Principal at real-estate crowdsourcing company Rising Realty Partners, deals in real estate crowdfunding, crowd-ownership of property.
- Greg Lucas, Founder of Creative Allies – where the crowd votes for designers’ items that will make it to stores, and
- Shaun Abrahamson, Founder of Mutopo – a marketing firm that heavily uses the crowd for brand strategy and product design.
The moderator opened by citing an early 20th century study conducted by Francis Galton, a pioneer in statistics and psychometrics. Galton had a hunch about the crowd and at a county fair in England offered a prize to the person who correctly guessed the exact weight of an ox weighing 1,198 pounds. More than 800 guesses were wrong but Galton analyzed the data and found the average of the guesses was 1,197, within one pound, and the median was within 0.8% standard deviation at 1,207 pounds. Is the crowd inherently wise? The panelists at Silicon Beach Fest by their mere existence and the fast growth of the “crowd industry” – which crosses into the “Big Data” market – prove there is demand for the crowd.
The Wisdom of the Crowd and Profit in Big DataL.A. Tech & Media Law Frim Tweet @LATechLaw
The crowd isn’t always right in marketing, product design, and advertising for small businesses, tech startups, fortune 1000s, and entrepreneurs…but the crowd is an ally. Ad agencies on Madison Avenue have long valued data from the crowd, using focus groups to pre-test new products and ad campaigns for decades. Hollywood studios routinely pre-screen feature films and sometimes edit them before a nationwide release. Washington D.C. politicians infamously (over) rely on voter polls, and more recently scientists at MIT are using the crowd to map the brain and solve the mysteries of protein folding. There’s value in the crowd.
On Indiegogo, where thousands of small businesses, startups and film producers seek funding for projects, principal executive Adam Chapnick says “the crowds on our site become paying brand evangelists for your product or project.” I agree. If an entrepreneur or producer is seeking funding from an equity investor or strategic partner for a venture, pitching an angel investor or raising venture capital, or looking to work with a startup incubator, support from the crowd is a strong form of market validation for fundraising and sales. When it comes to making something people want listen to the crowd.
This panel illustrated 5 companies’ brokering in the crowd’s wisdom in different verticals of industry, either using it or delivering it to their customers who are companies or entrepreneurs tapping into the power of the crowd.
If you are:
- Launching a technology startup with a product, website or mobile application idea and are looking for initial funding or Series A financing, coupled with an enthusiastic market base;
- A passionate feature film, documentary, or web content producer, looking for production or post-production financing; or
- A major brand working on product differentiation and new product launches…
Use the crowd.
Legal note: crowdsourcing and crowdfunding startups and entertainment projects, whether donation / reward based, or equity based crowdfunding under the Jobs Act, trigger a host of legal issues ranging from confidentiality for a startup with a marketable idea, to trademark violations, to not getting sued by your own backers, and even the right and wrong way to collect crowdfunded capital from a tax perspective. Some of these issues are generally discussed in my Crowdfunding Startups blog. Consultation with an attorney experienced in crowdfunding law and intellectual property protection is highly advised prior to launching a crowdfunding or crowdsourcing campaign. See disclaimer below.
Author: David N. Sharifi, Esq. is a Los Angeles based intellectual property attorney and technology startup consultant with focuses in entertainment law, emerging technologies, trademark protection, and “the internet of things”. David was recognized as one of the Top 30 Most Influential Attorneys in Digital Media and E-Commerce Law by the Los Angeles Business Journal in 2014. Office: Ph: 310-751-0181; firstname.lastname@example.org.
Disclaimer: The content above is a discussion of legal issues and general information; it does not constitute legal advice and should not be used as such without seeking professional legal counsel. Reading the content above does not create an attorney-client relationship. All trademarks are the property of L.A. Tech & Media Law Firm or their respective owners. Copyright 2013. All rights reserved.
Ox photo is in public domain, Wikicommons.