Transcript from Panel discussion at Getting Results from Crowdsourcing

ROSS DAWSON: I think an interesting question to start off is: Australia is a global crowdsourcing hub, as I’ve said and you’ve heard today. Any particular thoughts from any of you as to why this might be the case?

MATT BARRIE: I think it might be a coincidence but also I’m aware that we’re a long way away from everything else, and I think we’re used to going overseas and thinking overseas. There are some pretty big sites in America and it’s increasingly changing.

ROSS DAWSON: There is a distinction. We have a number of great outsourcing platforms in Australia but your clientele is largely international. Is that correct?

MATT BARRIE: Our Australian clients are less than 3% of the total.

ROSS DAWSON: There is not a lot of usage by Australian businesses at this point. I don’t have any stats but it seems that it is actually not that high in Australian usage, whereas we do have several platforms here.

ALEC LYNCH: Another reason I believe it’s ideal, I can’t say it’s true but one of the principles of crowdsourcing is that good work, good creativity can come from anywhere. So, it doesn’t have to come from an exclusive agent. It doesn’t have to come from someone with an MBA. It can come from anywhere, it can come from India or Mongolia and I think there could be a link with the Australian culture there. Which is that we have quite an egalitarian culture and give someone a go and judge them on the merits of their work. That could be one of the reasons why there are some buyers or companies using these services, but we have a few entrepreneurs who see that opportunity, believe in that principle and pursue it because they believe in it. That’s one of the reasons that I started DesignCrowd is because I personally believe in that principle. I’m not a graphic designer, I never paid for a logo before but I could see that opportunity and I felt that was like a fair and good thing to pursue.

PHIL SIM: And I think that when we have conceded international growth, the first thing we go is, okay, so where do we put someone and how much of that can we do down here? If you must think that way because we’re so far removed, and think that’s a natural extension to go; “I could actually do that and I could get competitive advantage like that.” So, I think that’s part of it.

ROSS DAWSON: I’ve got a few other questions but I just want to throw it open to the floor for questions or comments.

ATTENDEE 1: I think one of the questions we had challenge us, especially large enterprises, is what to crowdsource. I mean, there are elements which you cannot do everything in your own infrastructure such as your core application, and certainly with elements like design you can possibly crowdsource. What are the kind of factors that you consider towards large enterprise application. What can be crowdsourced?

MATT BARRIE: I think we need to kind of go back to the difference between outsourcing and crowdsourcing. So, what I do is I run a massive outsourcing marketplace, You post a job, people bid on it, pick whoever you want, pick one person, pick 500 people, off you go. A crowdsourcing platform is a bit different. It’s more of a competition model. You come along and say “I want a logo” and what people will do is they’ll design that logo on spec and you have maybe 100 designs to pick from and you go and say, oh “I like that one, pick that one. Or change that one a little bit, change the colors and, I’ll pick you.” you know, maybe it’s more pretentious so, they’re kind of different. You can outsource anything. I mean, literally anything. People do talk about, you know, what about core critical application versus periphery. Sure, there’s a good argument that some sort of core IP where you don’t want it to get out there.

ATTENDEE 2: We’ve recently been outsourcing, crowdsourcing – both actually probably – like you – probably for about four or five years. It’s been good. A lot of what Tim Ferriss had to say on the four hour week about how crowdsourcing or outsourcing teaches you to be a better manager. In fact, what we’ve done is we flipped the process using project management tools now, like Basecamp or 37 Signals, to manage some of our crowdsource people even. It’s quite interesting. The question I’ve got it is that you’re starting to see – maybe this is a business opportunity – you’re starting to see this thin layer of almost like outsourced project manager?

MATT BARRIE:
You are spot on. That is the number one challenge of the entire space. You can hire five hundred people at a time. How the hell do you manage them.

ATTENDEE 2: People are struggling.

MATT BARRIE: It is absolute key and it is fully involved in this opportunity.

PHIL SIM: The thing it did for me is; when you’re a small business you can get away with doing things sloppily, you talk about processes and documentation, and when you’re a six to seven person business you just don’t worry about that. But when you have that in place, this all becomes so much easier. Because instead of having to go through this long briefing process, if you’ve got processes in place and you’ve got benchmarks that say, I know this task should take this long and it should be done this way. To outsource, it’s a piece of cake but you’ve got to get your business right before you can really take the best advantage of it.

MATT BARRIE:
We’re actually in the process of recruiting a project management team to manager projects for clients.

ATTENDEE 3: I’ve run about 70 different outsourced projects for various business that I have been involved in. This is just on the project management idea. I ran a project last year and had the development team, the remaining of about 3 programmers. I actually appointed a local project manager to try and manage the team. The main impediment was language and culture. I ran into both of those problems on many, many outsource projects that I’ve run. So, I have also cottoned on to the idea of a project manager really trying to make the whole thing very successful but it’s still very difficult and I was wondering, do you have an answer in terms of a platform on how you improve the whole outsourcing resolve when you start getting across language and culture.

MATT BARRIE: No one’s really solved that problem yet. I really do think it’s the absolute key to the future of this business. Language, I haven’t seen so much of an issue, simply because all our projects are run mostly in English today and we actually have certifications for the English language. So when you sign up to freelancer, for two dollars you can do a test that will test your ability in the English language for example. So, for the most part if someone can’t really speak English well then they can get ranked badly on the site. Culture is a very, very tricky thing and I think absolutely, if someone manages to nail a project manager question, it’s going to be a very big thing but you know there are certain challenges. The flip side is there are opportunities now that never existed before.

YVONNE ADELE: And the way we do that, as I said before, it’s sort of like a franchise model now. One of my brainstormers, who’s from Belgium, he’s my best brainstormer, he has clients that don’t want to submit their challenge in English and have ideas or just to submit their ideas in English, so he had bought the very first foreign language speaking version, which is like a white label version for him and he runs that in his spoken language.

PHIL SIM: One of the things that we do now. for every time we use a service-like device, we first treat it like a competition marketplace. So, we run a small project with five people and whoever does the best job of those five people then that’s who will get paid for it.

ROSS DAWSON: I think also just to bring it back to the big picture, this is why this event, why this crowdsourcingresults.com site and report is going to be issued. Because the potential is extraordinary, to be able to take the idea to execution, far, far quicker and easier and less costly than we have before. Yet, it’s not easy to do. So, it is becoming a core conquest of businesses. To be able to bridge culture, language gaps and to manage these distributive projects. You have a project manager, he’s a part of it, but also those organizations are better at that will actually have an extraordinary advantage over those that aren’t able to tap the potential of these tools as well.

MATT BARRIE: Also it’s a lot easier than we’re probably making it out to be. It really is a simple process and you’ll get the hang of it after the first one or two projects and so what the, the first project you screw up, you pay the man five dollars and that’s it. Give it a go next time. It does come down to: The better you specify what you want, the better outcome you’re going to get.

ATTENDEE 4: I wonder about how do you get people interested in something like this.

YVONNE ADELE:
Yeah. That was all about freebies. That was all about taste test and freebies and I had that original sort of 200 people who registered to be brainstormers in the beginning. I was very transparent with them about the fact that I was building as I went and that I was fixing it while it was up there and that I was changing it and integrations as I went. Then I met Jeff from Resonate who has now got a couple Dreamweaver developers working on a joint venture that we’re working to make it an actual system that now we can plug into our big internet and so it looks like. But in the beginning I went to my client, who used me as an idea facilitator for their own staff but they weren’t really doing anything with the ideas and then they would get stuck because they couldn’t do it without me. I went to them and said let us do it for you sometime as part of your mix and I’ll do you a couple of freebies. And I picked some trophy clients, like Telstra and NAB and that sort of thing so that I’d be able to wave that flag and that’s how I did it.

ALEC LYNCH: I think whether it’s big business or a small business, when you’re first introduced to the idea of crowdsourcing – particularly a competition base one model – there’s a leap of faith required. One of the things that works in the service is to publicly show previous projects. So, they can say, wow, $300. That person got 227 designs and they can look through them. That really makes it easier to build customers.

ATTENDEE 5: I guess what my question was.. do you continue using platforms and when do you build you own? So, you were talking earlier about how you use the service marketplaces to basically test a whole bunch of people and then you make that fit to your own craft. We work in the communications space and we’re potentially going to be using crowdsourcing for generating ideas, and there’s going to be a point when it becomes less economically effective to use ideas out there and from Ideas While You Sleep, prepared to creating my own crowd and actually doing it from there.

YVONNE ADELE: Never!!!

MATT BARRIE: On our sites for example, there’s a reputation and history that goes back for years and years and years. There’s people on our site who have over a thousand project under their belt and every single project there’s feedback, there’s a comment on how good they were, there’s a rating, there’s how much they were paid, there’s how long they spent on the project and that goes back six years. So, if you wanted to do this yourself you would lose out on this sort of protection.

YVONNE ADELE: Especially for ideas. You want a different batch of people every time. So, you’ve created your own crowd, you’re going to have the same batch of ideas.

ATTENDEE 5: I guess my concern is the ideas and confidentiality. I have clients asking me to be confidential about their marketing campaigns. If I’ve built my own crowd I know who they are, I can track down who is pissing me off and if I’m using your crowd I’m two steps removed from that.

YVONNE ADELE: The contract we have directly speaks to that, like our marketing consultant in Istanbul, for example, he uses us once a week. He’s got about five clients, massive big clients, and he uses us as a secret weapon. He’ll submit a challenge to us and we never ever get to even find out the client name. It’s like a large real estate developer in Istanbul who wants to sell 200 luxury apartments using newspaper advertising alone. You know, that sort of thing.

ATTENDEE 5: Well in communications ideas often the name and the brands are critical to show to the supplier.

YVONNE ADELE: Not using my special methods, they’re not.

[Laughter]

YVONNE ADELE: Really. I’ve got some great ways to get the talent out there without having to mention a brand name. That’s why you wouldn’t bother doing all that. I’ve spent all this time building it.

PHIL SIM: That’s the thing I find fantastic about your service, is where I’ve seen it work and work best is where you’ve got your intellectual property which is your processes and you apply that to the crowd and so that’s kind of a definite outcome.

MATT BARRIE: I might sound a little bit like Mark Zuckerberg here. This whole confidentiality agreement, we’ve never had an issue once with any of our users. People tend to have this preconception when they come in. They’re really worried that their idea’s going to get out there. Trust me, after one or two projects, customers are saying this, everything works out. They get over it pretty quickly. I mean, it’s a false preconception of outcome.

ATTENDEE 6:
Essentially my question is basically what is the future for IP in the private sector. This is a bit of an issue with outsourcing and outsourcing in general. He said, how exactly do we manage IP because you can choose projects that are not specifically going to put you at risk under IP but this is something that we have to deal with. One of the things that I would like you guys to comment on is to localize crowdsourcing and outsourcing. Essentially, I work for a company, well, incidentally, we do project management. We help people with outsourcing and crowdsourcing specifically in project management fields. So, if there’s anybody who’s interested in that sort of thing, they can speak to me afterwards. That’s my plug. [Laughter] Essentially, do you guys agree that maybe that’s the answer to the IP program is basically – you have a localized version of outsourcing and outsourcing. So, can you cover that issue?

YVONNE ADELE: We have, in our contract with a client. It states that when the ideas come back to you, the IP is passed to you. You own the idea but not exclusively and that’s the only way that we can protect ourselves and the client. So, we pass them to the client but we cannot guarantee that, you know, otherwise, the client who’s seeing someone on the other side of the world do the same idea as them, well we’ll say that was one of your brainstormers. I can’t tell you if it was or wasn’t one of my brainstormers. But that has worked for every client that has been worried about that. That you own the ideas but not exclusively.

MATT BARRIE: I honestly don’t see any problem at all with IP. You get the personal relationship with the freelancer when you picked them then it’s up to you if you want to form a contract with them and you form a contract with them. If you’re really worried about IP you might look at certain countries and go oh, I don’t want to outsource to these countries. I want to do it in Australia, I want to do it in the US. I mean, there’s freelancers all around the world—the Western world, as well. It doesn’t mean that it’s going to be high fetch.

ATTENDEE 6: How do you obtain the IP legally? Do you buy it?

MATT BARRIE: Just like the real world today, I mean the fact that you’re using an intermediary in the exchange doesn’t mean anything. You basically just pick which countries you’re happy to outsource to, pick the size of the organization and reputation of the organization and you do it all up front. It’s no different from how we do it in the world today.

ALEC LYNCH: I’ve got two comments to make on this issue because with logo design and graphic design, I think these are important issues. One issue is when someone submits a design and it isn’t used, you have unused IP. One that you’re seeing emerge is stock databases of unused IP. So, iStockphoto is a great example in the photography industry, and that stemmed originally from a competition platform where people would say I need a photo of a girl jumping on a beach. Then 30 photographers would go take that photo and then you have 29 unused photos and they all migrated into a stock database. And that’s going to happen in a lot of applications where it makes sense. The other point I had was logo design as an example. There’s an issue there even with offline logo design. Sure, you have like recourse but if someone’s infringed copyright and you pulled a logo from them you don’t want to pursue them. If it’s going to be expensive, it’s going to get messy. The key is prevention there and if you buy a design from the designer next door, you’re still wondering is it original. What. if he unintentionally infringed copyright? What is required and what’s starting to emerge are technological solutions to catch that. So, there’s a website now I don’t know the exact name….

MATT BARRIE: Copyscape

ALEC LYNCH: Okay. Yep, there’s one that’s useful for images, TinEye.com. You plug in a URL for a logo and it searches the whole web for similar images and it’s incredible and it’s so useful and, I mean, that’s just going to become more prevalent soon. Google will probably launch something soon and then your question goes away.

MATT BARRIE: Copyscape is a similar one. You can put that any content through copyscape and for five cents it will detect any duplicates.

ATTENDEE 6:
We’ve done about 30 outsourcing projects so I just want to make a couple of comments. Firstly I agree strongly. You always, always do a preliminary small project first to pick your clients. Secondly, we never had a problem with this and that stunned me. Almost every one of our clients that’s gone to outsourcing, they all start off with this confidentiality issue and it’s gone on, as Matt says, by the second project. It just vanishes but we never ever choose to do two things; we never choose the lowest bid – it’s always the middle or higher bid and secondly, we only choose those that have been on the platform and been working for a minimum of 6 months. All the other newbies and wannabes can wait their turn. Great reputation and they’ve been there six months. That’s our minimum requirement.

MATT BARRIE: You’re absolutely spot on. Picking the lowest bidder is always the wrong thing to do. Let me tell you. The average wage in these countries is upwards in the Philippines, we pay them 12000 pesos a month, which is $250 a month. That’s a really good wage. Of course, that’s a really good wage for any taxi driver. I went there about two weeks ago. We had to write our minimum project size from $10 to $30 because otherwise, on small projects the core is the $10 and it just kept dropping. There’s a funny story. A friend of mine wanted to get some photos cut out – like the people cut out the photo – and so he lists the project and he expects to pay, you know, $100 and he had about 50 images and it went from $100 to $50 to $30 and all these people mentioning saying I’ll do it for $20, $10, I’ll do if for $2 and I’ll do it for free just so my reputation will go up. So don’t go for the lowest bid. It’s going to be so much cheaper when you’re here locally anyway. You waste more time in educating the wrong person. Make sure you’ve got quality number one and then go for the price.

ATTENDEE 7: Do you find sometimes with the highest bid, they are usually project managers or companies bidding?

MATT BARRIE: There certainly are. We have everyone from individual on the site right through to big companies doing freelancing for you. And it really, even if you grasp sometimes what’s right for you. There are people on the site that make a million dollars a year. There’s one guy, Sanjay, who makes a million dollars a year, there’s 100 people working for him now and he does websites between $50 and $100. He’ll bid on the job and make contact with 100 engineers according to what you want. So, you really have to figure out if you want to deal with something like that or you want to deal with an individual, sometimes the big ones are good for you because you’re still doing quality control and project management and then you see so much volume and I’m like everyone be happy and have an impeccable reputation, unlimited revisions and anything you wanted and, you know, very, very easy going. So, sometimes you want to go with an individual instead.

ATTENDEE 8: Just a parting question. As you say Matt, this is a revolution that’s going to change business but revolutions always end up with victims. Which businesses do the panelist see as being the victims?

MATT BARRIE: There are several. I usually don’t speak my mind on this and upset other companies, but there are certain industries that will be completely destroyed by this economy. But it’s just like selling ice in the age of refrigerators. Things change. As a small business now, you’ve got unparalleled opportunities. You can literally go and build multi-national empire overnight in your underwear for a shoestring budget. Things like graphic design change very, very dramatically. Simply because you can’t charge $1000 anymore to do a logo or, you know, to do some business cards. You can do this for only $100.

ALEC LYNCH: I think rather than picking specific industries, other than like graphic design or photography, a rule of thumb would be an industry that is a service-based industry that is overcharging and has been getting away with it for a few years, that’s probably one that’s going to suffer. And those people have, you know, they’ve gone and studied- a degree- and then set up a business with a certain price point in mind and a certain level of profit and those dynamics will just completely change.

ROSS DAWSON: I’d like to thank Yvonne, Matt, Phil and Alec.
[Applause]

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