THE INDUSTRY WEBSITE TM

Crowdsourcing and Crowdfunding

…A Global Industry Perspective

Digital Malaysia: National Crowdsourcing Conference

10 June, Kuala Lumpur, Malaysia

Carl Esposti, Founder & CEO

CROWDSOURCING:
THE NEXT DISRUPTIVE PARADIGM
LABOR – INTELLIGENCE – CAPITAL
 INSIGHTS. RESEARCH. ADVISORY.

YOUR VIEW OF OUTSOURCING, OFFSHORING AND CROWDSOURCING?

The world is full of willing people; some willing to work,

the rest willing to let them.

Robert Frost
American poet,
1874-1963

Computers are incredibly fast, accurate, and stupid.

Human beings are incredibly slow, inaccurate, and brilliant.
Together they are powerful beyond imagination.

Albert Einstein
Crowdsourcing visionary,
1879-1955

MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org PAGE 3

2012
VCs and Angel investment in crowd-
business assets $1.36 B

Digital-workers earnings for

performing crowdsourcing tasks $1B +

Funds distributed globally via

crowdfunding portals $2.7 B

Successfully funded campaigns 1.1m

 1714

1858

1886 CROWDS HAVE BEEN

MOBILISED FOR CENTURIES

THE STEAM ISN’T THE “THING”

…Jeff Howe
Technology 3 Billion People Micropayment
advances online by 2016 systems

Cloud-based Different workforce Community-

technologies structures based platforms
 CROWDSOURCING IS AN
ONLINE MODEL FOR
DISTRIBUTED PROBLEM
SOLVING, PRODUCTION AND
CAPITAL FORMATION.

PROBLEM SOLVING
–  IDEATION

PRODUCTION
–  MICRO-TASKS
–  EXPERTISE-BASED TASKS

CAPITAL FORMATION
–  CROWDFUNDING

INSIGHTS. RESEARCH. ADVISORY.

CROWDSOURCING: DOING WORK, SOLVING PROBLEMS OR

SUPPORTING CAUSES

POST TASKS OR HIRE WORKERS! DIRECT AND ORGANIZE WORK!

BROADCAST SEARCH! SEEK IDEAS, OPINION AND SUPPORT!

Daren C Brabham, Ph.D.

Assistant Professor, University of North Carolina at Chapel Hill

MAY 2013 © 2013 Crowdsourcing, LLC | research@crowdsourcing.org PAGE 10

 CROWDSOURCING: THE FUTURE OF WORK IS DIGITAL
CROWDSOURC

Outsourcing Offshoring Crowdsourcing

SaaS and Cloud

Development of Remote
Interactive Computing
expertise in 3rd party Infrastructure
Web
sourcing Management
Improved Workflow and
Micropayment Social Media Management Systems
governance
Systems for online workers
practices

1980 > 1990 > 2005 >

INSIGHTS. RESEARCH. ADVISORY.

THE EVOLUTION OF SOURCING INTO THE CLOUD

OUTSOURCING GLOBALIZATION CLOUD CROWD

IT Infrastructure Remote Infrastructure/

SaaS
Applications Applications Support > 68 Use Cases and
Scope Horizontal BPO BPO Specialties
BPaaS
growing
Platform BPO
Vertical BPO (e.g., CRM / F&A)

Defined and
Improved with shifting Standardized and
Processes selectively retained
end-to-end accountability externalized
Further optimized
and sourced

Sophistication systems Separation of systems from Highly scalable cloud-

Workflow, adjudication and
Technology monitoring, reporting and people (e.g., RIM / ERP based technologies
worker management
governance tools Integration)

FTE/Staff Augmentation
Pricing Can reach full variability
Input Based evolving to evolving to deliverable On-demand and
and up to 100%
output based based (sometimes with usage based
Model performance incentives)
performance based

Accountability Accountability at lower cost Scalability and improved Changes the paradigm for
Benefits Flexibility a Myth Flexibility still a Myth efficiency and speed existing and new scope

15%-20%
30%-40%
Savings ( up to ~30% for
(driven by labor arbitrage)
~30%50% ~30%-90%
transformational OS)

MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org PAGE 12

 INSIGHTS. RESEARCH. ADVISORY.

CROWDSOURCING – THE NEXT DISRUPTIVE PARADIGM

The outsourcing industry is poised for a disruptive shift that has the potential to
be larger than the shifts that drove the outsourcing of work and the distribution
of work offshore.

Crowdsourcing is already being leveraged by leading enterprises across many business

activities and processes. Starting now, large elements of enterprise models will be
moved into crowdsourced models for service delivery will be managed very differently.

MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org PAGE 13

INSIGHTS. RESEARCH. ADVISORY.

REVENUE COMPOSITION BY CLIENT SIZE AND CROWDSOURCING CATEGORY

Percentage

!"#$"%&'()*)(+#,,)-&(./0((0()123456)./)7080/&0(9)
!+#,,)0/"0$'$.(0)13456)%)34556)./)7080/&0(9)
60:.&+)0/"0$'$.(0)134556)%)34;)./)7080/&0(9)
<#$=0)0/"0$'$.(0)1>34;)./)7080/&0(9)
2% 3%
23% 40% 10% 30%
15%
40%
21% 81%
5%
13%
35%
31% 53%
30%

24% 25%
20%

EXPERTISE- IDEATION MICRO- FREELANCE SOFTWARE

BASED TASKS SERVICES

Source: Crowdsourcing.org, 2011

MAY 2013 © 2013 Crowdsourcing, LLC | research@crowdsourcing.org PAGE 14

 ENTERPRISE
CROWDSOURCING
STRATEGIES

-  Identifying work / business needs

-  Selecting the model
-  Choosing the crowd
-  Identifying a qualified CSP
-  Selecting the use cases
-  Designing the POC and Pilot
-  Moving to production and scaling

CROWDFUNDING: THE DEMOCRATIZATION OF CAPITAL

 INSIGHTS. RESEARCH. ADVISORY.

CROWDFUNDING DEFINED

CROWDFUNDING IS AN ONLINE DISTRIBUTED MODEL

FOR CAPITAL FORMATION.
!  Both funding needs and funding purposes are communicated broadly, via an open call, in a
forum where the call can be evaluated by a large group of individuals, the crowd.
!  There are five basic crowdfunding models but hybrid are forming.
!  Donations: Crowdfunders donate money to campaign owners and do not expect to receive a
tangible benefit from the transaction.
!  Rewards: Crowdfunders support campaign owners and receive some kind of reward in return for
their contribution.
!  Equity: Crowdfunders invest in campaign owners and receive equity or equity-like shares in return
for their investment.
!  Lending: Crowdfunders lend money to campaign owners and expect the future repayment of a
principal with or without interest.
!  Royalty: Crowdfunders invest in campaign owners and receive a share of revenue earned in return
for their investment.

MAY 2013 © 2013 Crowdsourcing, LLC | research@crowdsourcing.org PAGE 17

WORLDWIDE DISTRIBUTION OF CROWDFUNDING PLATFORMS, 2012

 INSIGHTS. RESEARCH. ADVISORY.

GLOBAL CROWDFUNDING VOLUMES, 2012

MAY 2013 © 2013

2013 Crowd
Crowdsour
rowdsourcing
sour cing,, Inc.
cing
Crowdsourcing, Inc. | research@crowdsourcing.org PAGE 19
MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org

INSIGHTS. RESEARCH. ADVISORY.

MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org

20 PAGE 20
MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org
 INSIGHTS. RESEARCH. ADVISORY.

MEDIAN CROWDFUNDING CAMPAIGN SIZE, 2012

MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org PAGE 21

MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org

CROWDFUNDING’S TOP FIVE HIGHEST GROSSING CAMPAIGNS, 2012

 DEVELOPMENTS

-  Niche Platforms
-  Community Platforms
-  Hybrid Platforms
-  Enterprise Crowdfunding
-  For Economic Development
-  Live Crowdfunding

INSIGHTS. RESEARCH. ADVISORY.

DEVELOPING A CROWDSOURCING STRATEGY

IDENTIFYING SUITABLE WORK SELECTING THE RIGHT MODEL SELECTING THE RIGHT CROWD IDENTIFYING QUALIFIED CSPS

!  Process analysis, task identification !  Hire workers !  Task Assessment (e.g., access to !  Market Assessment
and prioritization systems, privacy issues, etc. (Universe of 2,000+ Vs. 118 enterprise-
!  Post tasks ready CSPs)
!  F&A Process Category Example: !  Worker Assessment (repeatability,
Process groups: 9 / Processes: 26 !  Pay for contribution or results capacity, skills, certification, etc.)
ENTERPRISE OPERATING PROCESSES

DEVELOP VISION DEVELOP MARKET DELIVER MANAGE

AND STRATEGY AND MANAGE
PRODUCTS AND
AND SELL
PRODUCTS AND
PRODUCTS
AND
CUSTOMER
SERVICE
!  Collaboration, aggregation, curation or
SERVICES SERVICES SERVICES
competition
Post Tasks or Hire Workers Direct and Organize Work

MANAGEMENT AND SUPPORT SERVICES

DEVELOP AND MANAGE HUMAN CAPITAL

MANAGE INFORMATION TECHNOLOGY

MANAGE FINANCIAL RESOURCES

Broadcast Search Seek ideas, opinion and Feedback
ACQUIRE, CONSTRUCT, AND MANAGE PROPERTY

MANAGE ENVIRONMENTAL HEALTH AND SAFETY

MANAGE EXTERNAL RELATIONSHIPS

Private Crowd Public Crowd
MANAGE KNOWLEDGE, IMPROVEMENT, AND CHANGE

Enablers:

!  Structured methodology for analyzing work/processes and matching to crowdsourcing Use Cases

!  Knowledge of crowd engagement models

!  CSPs strategies, quality, performance and stability

!  Navigation of the market landscape and knowledge of market maturity

For more information on how to develop a crowdsourcing strategy contact

research@crowdsourcing.org or visit: http://crowdsourcing.org/research.
MAY 2013 © 2013 Crowdsourcing, Inc. | research@crowdsourcing.org PAGE 24
 INSIGHTS. RESEARCH. ADVISORY.

2013CF CROWDFUNDING
CROWDFUNDINGINDUSTRY
DEFINED REPORT

Purchase the report visit: http://crowdsourcing.org/research.

!  Reliable and comprehensive insight into the size,

composition and outlook for the crowdfunding industry.
!  100 pages of in-depth analysis:
!  Extensive data on crowdfunding in 2012
!  Analysis of the composition of the global crowdfunding market
!  Market growth, composition and funding volumes
!  Best performing industries, geographies, and market segments
!  Crowdfunding dynamics and campaign characteristics
!  Location of platforms globally and breakdown by region and
category
!  Web 2.0 Financing
!  Legal frameworks
!  Market outlook and forecasts ...and more!

MAY 2013 © 2013 Crowdsourcing, LLC | research@crowdsourcing.org PAGE 25

ABOUT MASSOLUTION

Industry think tank, massolution specializes in research, design and in the delivery of
crowd-business models for nations, governments, enterprises, and institutions.
massolution also operates The Industry Website™ Crowdsourcing.org.

For crowdsourcing, massolution provides research and For crowdfunding, massolution provides research and
analysis covering Crowdsourcing Service Providers analysis covering Crowdfunding Platforms (CFPs),
(CSPs), use cases, model design and implementation, campaigns and offerings, model implementations,
and the adoption of crowdsourcing. transaction data and analysis.

massolution’s unique data assets, fact-based research and proprietary intellectual property, drive forward-looking and
actionable insights that inform the strategies and operations of business leaders and market stakeholders in
governments, enterprises and institutions..

Crowdsourcing Inc.
Carl Esposti, Founder and CEO +1 310.948.1258
48.1258
Email: carl@crowdsourcing.org www.massolution.com
ssolution.com
Twitter: @Crowdsourcing_ www.crowdsourcing.org
dsourcing.org