The Power of US

Crowdsourcing: A Million Heads is Better than One

Written by Josh Catone / 

The “wisdom of crowds” is a popular web 2.0 buzzword, popularized by James Surowiecki’s book of the same name. At its most basic, the term means that two heads are better than one, and that still more heads will yield even better results.

The wisdom of crowds is all around us these days. Wikipedia is one of the best known examples of the concept at work. Thousands of Wikipedia users have created an encyclopedia that studies have shown is as accurate as traditional volumes like Britannica. Another well-known project is the Yahoo! Buzz Game, which is a prediction market for “high-tech products, concepts, and trends.” Their memetracker market, for example, has predicted the state of the market in line with Alexa data. Note: Read/WriteWeb covered a Yahoo! event about prediction markets here.

Perhaps the best exponent so far of Web ‘wisdom of crowds’ is Google, which organizes websites based on how they link to each other. Google sees links as votes for the relevance of a page. It is of course more complicated than that, but one can make the argument that Google works by utilizing the wisdom of crowds to determine which websites are the most relevant.

Crowdsourcing can be looked at as an application of the wisdom of crowds concept, in which the knowledge and talents of a group of people is leveraged to create content and solve problems. The official definition from the term’s originator, Jeff Howe, is “the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call.”

Crowdsourcing can be broken down in to three categories:

1. creation (like Wikipedia);
2. prediction (like Yahoo! Buzz); and
3. organization (like Google).

Let’s take a look at those…

Creation

Cambrian House

At Cambrian House, people submit ideas for software products and then vote on which ideas are the best, commenting on changes or improvements they would like to see made. Development of the most popular ideas is then sourced to members of the community, who earn “royalty points” that determines how much each contributor makes. Cambrian House can be looked at as a commercial spin on the classic site, halfbakery.

Out of over 4,400 ideas submitted, the site has so far launched three products:

1) Prezzle, which wraps online gift certificates to popular retailers in flash e-cards;
2) Robinhood Fund, at which people post their sob stories and readers vote on who needs the money the most. That person is then cut a check from an ad-supported fund;
3) Gwabs, a desktop-to-desktop online arcade game where animated characters destroy your actual Windows desktop.

It appears possible that people are actually making money from Cambrian House. Their website has a calculator that estimates that with “good” growth, a person with 100 royalty points (the amount you receive for coming up with an original idea) would make $153,600 over a three year period. Not sure exactly what constitutes “good growth” though…

Although Cambrian House crowdsources the conception and creation of its web products, ideas are subject to editorial review by a core team and actual production is subject to a set of quality guidelines. In the case of conflicting code or design contributions, the community decides which is the best.

CrowdSpirit

CrowdSpirit is a very ambitious project that aims to utilize crowdsourcing to develop and bring to market tangible, sub-$200 electronic devices (think MP3 players, digital cameras, or game controllers). Community members will decide what the product is, from concept to design to technical specification, by submitting and voting on product and design ideas. Winning ideas will then be funded by members of the community – and after prototyping and beta testing, the completed products will be delivered to market.

CrowdSpirit has a core team who, along with a select group of community members and distributors, have the final say on any community decision. The idea though is that because the ideas are coming directly from the people who will be using the products – and because the core team will be acting on polling data about those ideas – the resulting products will be very customer-centric. Further, because the research and development of the products will be funded by the community itself, the community will have a significant interest in getting things right.

One potential flaw in the model is that responsibility for support for the resulting products will fall to the community. While online forums have often given me the answer to computer problems, many consumers might balk at the lack of a reliable, trained tech support department (though that actually might be an oxymoron).

Other projects in this category: A Swarm of Angels (creating a movie), AMillionPenguins (creating a novel), We Are Smarter Than Me (creating a business book)

Prediction

PicksPal

PicksPal is a sporting event prediction site that allows users to vote on amateur and professional sporting events. The site is set up like a game, allowing you to spend points to try and beat the odds makers – you win or lose points depending on the accuracy of your picks and how ambitious you are. PicksPal awards weekly prizes, like sports tickets and flat screen televisions, to the top performing players. PicksPal says they have over 100,000 users.

Because the site mimics a professional sports book, you can bet on a lot more than just the outcome of the game. For example, you can place bets on things like who will be winning after the first quarter of a basketball game, which player will score the most points, or the final score of the game.

PicksPal sells “genius” picks, based on the picks of their top performing members, to people betting actual money. So far the site is doing pretty well. As I write this, they have a 52% win rate against the spread for their last 25 picks, and they report a 63% win rate overall.

Marketocracy

Marketocracy was launched in 2000 with the goal of finding the best investors and tapping their collective knowledge to create a superior mutual fund. Anyone can sign up for free and run a virtual fund, starting with $1 million. The site has attracted over 60,000 users to date. In November 2001 the company launched the Masters 100 Index, a real mutual fund based on the virtual investments of its 100 most successful members (as determined by a computer ranking).

The fund, which now has $44 million in assets, has outperformed the S&P 500 Index (generally considered a good gauge of the U.S. equities market) and has an average annual return of 11.4% since its inception. However it has managed just a 2-star rating from Morningstar. That equates to an above average risk and a below average return, according to the Morningstar rating system.

So does that mean Marketocracy is a success or a failure? In this case the wisdom of crowds has not turned out better than the wisdom of a single top investor. The m100 Index isn’t doing anything miraculous, like outperforming Warren Buffet, and it doesn’t stack up well against other, traditional mutual funds in the same category. But, neither have its investors lost their shirts – so it’s certainly not a failure. By utilizing the knowledge of thousands of investors, and culling the best data from the crowd, the fund has performed relatively well for 5 years.

Other projects in this category: Hollywood Stock Exchange (predicting the ups and downs of celebrity careers or entertainment properties), Foresight Exchange (predicting the likelihood of future results), Threadless (predicting which designs will sell well on a t-shirt), Yahoo! Suggestion Board (determining which issues are the most important), Dell IdeaStorm (predicting which ideas for new Dell products will sell), The Sim Exchange (predicting how well video games will sell).

Organization

digg

digg is not only a poster-child for Web 2.0 success, it is also an excellent example of using the wisdom of crowds to organize and highlight information. digg’s concept is simple: users submit links to websites, articles, news stories, photos, or videos, and other users vote on whether they are worth checking out. Depending on how many people, who, and how quickly links are “dugg” they may be promoted to the main page as a worthy link of the day.

digg has proved capable of consistently highlighting links that people find interesting, and drawing attention to news stories in a timely fashion. The large number of digg users and growing traffic (digg overtook Slashdot sometime last year according to Alexa) can attest to that. digg has, however, received criticism over its susceptibility to being “gamed”. Wired reported earlier this month that it is relatively easy to purchase votes on digg and get a story promoted to the main page (although it should be noted that Wired owns a competing product, reddit).

Another concern that people have expressed with digg, and one that is more relevant to this article, is the susceptibility to groupthink. As a story starts to become popular, users will often vote for it simply because it is popular, without really thinking whether this is something worth voting for in their own opinion. This is something that happened in the Wired article, in which at least half of the votes for the author’s sub par submission were unpaid – and likely made by users who were simply digging something that appeared popular because it appeared popular.

StumbleUpon

StumbleUpon is a browser plugin for Firefox and Internet Explorer that allows users to rate and share web pages. The plugin is very straightforward: users vote thumbs up or thumbs down on pages and are served random pages based on their previous picks, specified topic areas of interest, and the picks of other like-minded users. The idea is that the sites with the most thumbs up votes, will be the most relevant. Further, users are fed sites that were voted up by others who share a similar vote history – i.e. the more you use StumbleUpon, the more it learns about what you like and the better recommendations it gives to everyone.

With over 2 million users, Stumble Upon has amassed an exceptional amount of data on websites, photos, and videos. While the data has so far only been used to enhance their ability to deliver random sites that match users’ interests, there is no reason why it couldn’t be used for other reasons – such as enhancing or augmenting traditional search engine rankings.

Other projects in this category: del.icio.us (organizing the web based on user tags), Techmeme (organizing the day’s buzz based on what people are linking to), Netscape (organizing information by popularity).

Conclusion

I would be remiss not to mention Kathy Sierra’s widely read blog post “The Dumbness of Crowds.” In it, Sierra argues that there is more to harnessing collective intelligence than just letting a group of people run wild with an idea. It is true that crowds are susceptible to “mania” – in which a less-than-stellar idea catches on and becomes popular. This is a well-documented and very old concept. One of my favorite books, “Extraordinary Popular Delusions and the Madness of Crowds” by Charles Mackay, was first published in 1841 and documents various manias of the 17th and 18th century in which decidedly bad ideas became all the rage.

But can crowdsourcing be successful at creating products, predicting markets, or organizing data? In a post about crowdsourcing on my personal blog (which inspired this post), I came up with the following rules to help assure success in tapping the wisdom of crowds:

1. Crowds should operate within constraints. To harness the collective intelligence of crowds, there need to be rules in place to maintain order.
2. Not everything can be democratic. Sometimes a decision needs to be made, and having a core team (or single person) make the ultimate decision can provide the guidance necessary to get things done and prevent crazy ideas and groupthink from wreaking havoc on your product.
3. Crowds must retain their individuality. Encourage your group to disagree, and try not to let any members of the group disproportionately influence the rest.
4. Crowds are better at vetting content than creating it. It is important to note that in most of the above projects, the group merely votes on the final product; they do not actually create it (even at Cambrian House, where the group collaborates to create the product, individuals are still creating each piece on their own and the group votes on whose implementation of an idea is best).

web3.0+ amazing video on know it all

Welcome Web 3.0!

November 11, 2006

Web 2.0 is so over. First came the tepid reviews of the third annual 2.0 boondoggle. “If you were looking to learn something new,” sniffed GigaOm’s Liz Gannes, “this week’s Web 2.0 Summit was not the place to be.” Wrote a jaded Scott Karp, “there were few revelations, few moments where you had the exhilarating experience of seeing something that was about to change the world. Every conversation I had began with discussing the underwhelming nature of Web 2.0.” “I didn’t come away from the conference having learned much,” confessed Richard MacManus, who felt the highlight of the event “was seeing Lou Reed play live.” It was the Lou himself, though, who put it most bluntly, telling the Web 2.0ers, “You got 20 minutes.”

But the nail in the coffin comes in tomorrow’s New York Times, which features a big article by John Markoff on – yes! – Web 3.0. Formerly known as the semantic web, but now rebranded for mass consumption, Web 3.0 promises yet another Internet revolution. It would, Markoff writes, “provide the foundation for systems that can reason in a human fashion … In its current state, the Web is often described as being in the Lego phase, with all of its different parts capable of connecting to one another. Those who envision the next phase, Web 3.0, see it as an era when machines will start to do seemingly intelligent things.”

Personally, I’m overjoyed that Web 3.0 is coming. When dogcrap 2.0 sites like PayPerPost and ReviewMe start getting a lot of attention, you know you’re seeing the butt end of a movement. (There’s a horrible metaphor trying to get out of that last sentence, but please ignore it.) Besides, the arrival of 3.0 kind of justifies the whole 2.0 ethos. After all, 2.0 was about escaping the old, slow upgrade cycle and moving into an age of quick, seamless rollouts of new feature sets. If we can speed up software generations, why not speed up entire web generations? It doesn’t matter if 3.0 is still in beta – that makes it all the better, in fact.

But, seriously, Markoff’s piece is a thought-provoking one. As he describes it, Web 3.0 will be about mining “meaning,” rather than just data, from the web by using software to discover associations among far-flung bits of information:

the Holy Grail for developers of the semantic Web is to build a system that can give a reasonable and complete response to a simple question like: “I’m looking for a warm place to vacation and I have a budget of $3,000. Oh, and I have an 11-year-old child.” Under today’s system, such a query can lead to hours of sifting — through lists of flights, hotel, car rentals — and the options are often at odds with one another. Under Web 3.0, the same search would ideally call up a complete vacation package that was planned as meticulously as if it had been assembled by a human travel agent.

Web 3.0 thus promises to be much more useful than 2.0 (not to mention 1.0) and to render today’s search engines more or less obsolete. But there’s also a creepy side to 3.0, which Markoff only hints at. While it will be easy for you to mine meaning about vacations and other stuff, it will also be easy for others to mine meaning about you. In fact, Web 3.0 promises to give marketers, among others, an uncanny ability to identify, understand and manipulate us – without our knowledge or awareness. If you’d like a preview, watch Dan Frankowski’s presentation You Are What You Say and Oren Etzioni’s presentation All I Really Need to Know I Learned from Google, and then connect the dots. (Thanks to Greg Linden for those links.)

Markoff quotes artificial-intelligence-promoter Danny Hillis, who calls Web 3.0 technologies “spooky.” If Danny Hillis thinks they’re spooky, they’re spooky. But I’m looking on the bright side: At least I’ll have more material for the old blog.

One last thing: I’m claiming the trademarks on Web 3.0 Conference, Web 3.0 Summit, Web 3.0 Camp, Web 3.0 Uncamp, and Web 3.0 Olde Tyme Hoedown.

storytelling

The Ten Truths of Branded Storytelling

By: Alain Thys

In our million channel world, its is the brands whose customers tell the best stories, that win.  Yet how often do we give them”real stories” to tell?  How many of the things we communicate make their conversations more interesting?   As I just got invited to the Ogilvy Brussels’ Summer Camp on Storytelling (aka. the best BBQ in town),  I thought this would be a good excuse to give it a shot.

So, … Once upon a time there where Ten Truths of Branded Storytelling …

Truth # 1: Seek the Story to Rule them All
Great brand stories stem from the reason a brand exists.  Apple wanted to free creative spirits while slaying the Microsoft dragon.  Coco Chanel set out to re-invent fashion and liberate women from tradition.   Pepsi wants to be a catalyst for change for every generation.   Dig into the history, people and promises of your brand to uncover its Unique Story Proposition (USP).  Make this the anchor for everything other story you tell.

Truth # 2: Great Stories Come To You, If You Listen
Once you have defined your USP, use every opportunity to listen for supporting stories from your staff, suppliers and customers.  Encourage people to bring these stories through competitions, blogging and more importantly actually listening to them.  In fact, merely guiding people’s attention towards your USP sets the storytelling wheels in motion.  All you have to do is watch the magic happen.

Truth # 3: Amplify Those Stories That Others Can Tell
The brands that win tomorrow are those whose customers tell the best stories.  As you discover stories that match your USP, select those that are simple enough to remember and fun to recite.   Minimise plot-twists and complex layers and highlight those aspects that re-enforce your overall brand message.  Test what sticks best, and when you’ve got it, put the weight of your media behind them so they can start living a life of their own.

Truth #4: Connect your Branding Efforts to Your USP
Each commercial, branded entertainment programme or promo is a “mini-story” within the overall framework of your brand.  It should always connect to your Unique Story Proposition.  Work with your agency to establish creative parameters and rigorously apply them to each idea.  And in case of protest from the imaginative classes, remind people that Shakespeare, Mozart and Da Vinci also had a heavy rulebook to consider.

Truth #5: Connect your Story Efforts to Your Bottom Line
A great story is nice, yet to make money, it has to press the “buy” button in the customer’s brain.  For this you need to ensure that your story “ticks” the age-old behavioural triggers like emotion, contrast, egocentricity, the power of beginnings, etc.  Use them, and people will respond.  Avoid them at your peril.   This book  is actually a good guide.

Truth #6: Know Your Classics (yet don’t get hung up on them)
Writers from Aristotle to Vogler have successfully captured the essence of storytelling into rules and recipes.  However, when taking their guidance, it’s easy to get intimidated by the need for story arches, archetypes, enemies, heroes, challenges.   Study and apply their teachings, yet don’t let them get in the way of actually telling the story (even if it’s not perfect).  What you say is infinitely more important than how you say it.

Truth #7: Storytelling is Not Just About Words
Reflect your USP in everything you do.  The way you design your product, the way you build your stores, the way your staff dresses and behaves, the way you deal with your customers.  Your brand’s actual behaviour is the loudest storyteller of them all and any dissonance will be noticed.  Look at every touchpoint and benchmark it against the story you aim to tell.  If there is a disconnect, fix it.  At some point it will blow up in your face.

Truth #8: You Don’t Need to Tell it All
If you want to promote word-of-mouth, leave the mystery.  People don’t want to know how the sausage it made.  People love to guess the end of the novel.  Telling all of your brand’s story at once is not only a waste of opportunity, it actually turns consumers off.  Use your story as a prelude or epilogue to the actual experience of using your product or service.  If you truly live your USP, people can fill in the blanks themselves.

Truth #9: Let Go of the Illusion of Control
In the old world, there was the comforting illusion that if you shot enough GRP’s at de-sensitized consumers, all would be well.   In story-world, this illusion is gone.  Good stories amplify themselves.  Bad stories die.  But astories also evolve as they travel from ear to mouth.  Resist the urge to intervene, and definitely never call in the lawyers if you run into internet versions which don’t fit the original creative brief.  After all, the fact that a customer talks about you, means she cares.

Truth #10: You Cannot Fake Authenticity
Last, but definitely not least, ensure your stories reflect the real behaviour of your brand.  In the age of consumer generated media any sign of insincerity will backfire.  Every claim you make will be investigated by someone, somewhere.  And in contrast to the old days where you could just “hush up” things with a bit of crisis PR, the footsteps you leave in Google-sand cannot be erased.