Reputation and the Web

More on CrowdSourcing and Community Investment

Read/WriteWeb has a nice write-up on the latest players in the crowdsourcing space.  The post provides a helpful breakdown of projects across three areas: creation, prediction and organization.

I personally find those companies involved with "creation" the most compelling and have been closely watching the development of Cambrian House (among others).  I was interested to read how CrowdSpirit is embracing the Cambrian House model but in the consumer electronics space (rather than software). This is an ambitious plan as managing issues around manufacturing and distribution will be a challenge.  Their plan for providing incentives for participation is not clear - but they seem to suggest they will have a model for rewarding contributors (perhaps similar to Cambrian House).

I do wonder if these models are limiting their growth through the centralized role of decision-making.  For instance, with Cambrian House the community votes on the ideas and then only the most popular get vetted (and possibly developed).  What if instead Cambrian House provided a platform for the community to organize and develop all ideas (as long as there was passionate leadership and enough community participation to move them forward)? In other words, if three people want to contribute in the development of an idea...why not let them use the platform?

Integrating Micro-Investments and Community: We are just Getting Started

Thanks to everyone for their comments and emails regarding my prior post on the  developing field of community funding and micro-investments with the basic question: how can many small contributions (of time, money or other resource) be efficiently aggregated to support a community based organization, business, hobby or project?

While this field is becoming quite large, a few of the emerging models include:

Micro-Loans:
Prosper.com is the big player here in the US with a very interesting P2P lending model whereby individuals can obtain loans in amounts up to $25K.  The interest rate (and ability to get the loan) is primarily based on the borrower’s credit-worthiness (as determined by Experian credit agency).  However, in a twist, Prosper encourages borrowers to obtain the endorsement of “groups” or communities (e.g., veterans, Harvard University Grads, IT Professionals, etc).  Joining a group will often lower the borrower’s the interest rate by ¼ point.  On the lending side, individuals have the opportunity to lend money in increments as small $50 dollars.  Prosper creates interesting arbitrage opportunities for consumer lenders willing to take “default” risk in exchange for the opportunity to receive 20%+ on your money. Kiva.org is another interesting player in the micro-loans space.  Kiva.org is different in that the loans (in amounts as low as $25) are generally provided to entrepreneurs in developing (international) areas and there is no interest rate (just the principle is repaid).

Community Crowd-Sourcing:
One of the more interesting areas of development has been crowdsourcing, whereby ideas are generated and built by communities.  CambrianHouse is a great example of this concept and has built a business by facilitating the development of new software to market (i.e., from ideation through launch) and rewarding community contributors.  The more you participate, the more you are eligible for financial upside. Threadless and Zazzle are similar to CambrianHouse but focus more on physical goods.

Finally, there are a number of one-off instances of community ownership.   One such example is San Diego’s Market Creek Plaza (thanks to Scott Cummings for his introduction to this opportunity).  Market Creek is a new shopping development in San Diego whereby 450 local residents will own up to 20% of the center by investing $200 - $10,000 each.  As with many other models, the primary motivation for community investors is not financial but rather the opportunity to influence the future direction of the shopping center (what stores to includes, which services to provide, etc.) such that it best meets the needs of the community. 

The opportunities provided by micro-loans, crowdsourcing and community ownership (e.g., Market Creek) are exciting.  Market Creek perhaps provides the best example of an opportunity for a community to own and direct a business or venture (and benefit from it’s growth).  Yet, look at the complexity of such a deal. Five years of effort and 35 drafts of the IPO to the California regulators. Micro-loans are perhaps simpler to manage, yet are currently limited by the size of obtainable funds (and repayment obligations).  My bet is that the next twelve months will bring several new models (perhaps integrating consumer cooperative structure with crowdsourcing models) that more easily facilitate the ability for community members to contribute to new businesses / projects, participate in decision making and be rewarded for their investment.