Crowdsourcing By Jeff Howe - Excerpt

CROWDSOURCING WHY THE POWER OF THE CROWD IS DRIVING THE FUTURE OF BUSINESS

J E F F H OW E

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Copyright © 2008, 2009 by Jeff Howe All rights reserved. Published in the United States by Three Rivers Press, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York. www.crownpublishing.com Three Riuvers Press and the Tugboat design are registered trademarks of Random House, Inc. Originally published in hardcover in slightly different form in the United States by Crown Business, an imprint of the Crown Publishing Group, a division of Random House, Inc., New York, in 2008. Library of Congress Cataloging-in-Publication Data is available upon request. ISBN 978-0-307-39621-1 Printed in the United States of America Design by Nancy Beth Field 10 9 8 7 6 5 4 3 2 1 First Paperback Edition

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CONTE NTS

Crowdsourcing: A Status Update

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I NTRODUCTION The Dawn of the Human Network

1

SECTION I

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HOW WE GOT HERE

1 • TH E R I S E OF TH E AMATE U R Fueling the Crowdsourcing Engine

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2 • FROM SO S I M PLE A B EGI N N I NG Drawing the Blueprint for Crowdsourcing

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3 • FASTE R, CH EAPE R, S MARTE R, EAS I E R Democratizing the Means of Production

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4 • TH E R I S E AN D FALL OF TH E FI R M Turning Community into Commerce

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SECTION II

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WHERE WE ARE

5 • TH E MOST U N IVE R SAL QUALITY Why Diversity Trumps Ability

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Contents • vii 6 • WHAT TH E CROWD KNOWS Collective Intelligence in Action

146

7 • WHAT TH E CROWD CR EATE S How the 1 Percent Is Changing the Way Work Gets Done

177

8 • WHAT TH E CROWD TH I N KS How the 10 Percent Filters the Wheat from the Chaff

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9 • WHAT TH E CROWD FU N DS Reinventing Finance, Ten Bucks at a Time

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SECTION III

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WHERE WE’RE GOING

10 • TOMOR ROW’S CROWD The Age of the Digital Native

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11 • CONCLUS ION The Rules of Crowdsourcing

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Notes

289

Acknowledgments

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Index

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CROWDSOU RCI NG: A STATUS U PDATE

In July 2008, having recently finished the manuscript for this book, I took a much-needed vacation with my family. About halfway through I received an urgent phone call from the food writer at the Washington Post. What, she wanted to know, did I think about crowdsourcing for restaurants. Jerked abruptly from my poolside reverie, an uncomfortable silence filled the line while I tried to gather my thoughts. “Restaurants?” I asked, thinking I might have misheard her. Uh huh, she said, restaurants. “Well, not much,” I admitted. “Can you crowdsource a restaurant?” Indeed, it seems, one could. She explained how a community of four hundred foodies had gathered on a community site to develop everything from the cuisine to the décor to the logo of a restaurant they hoped to open the following year. I had often said that crowdsourcing could be applied to anything reducible to bits and bytes, but not products measured in pounds and ounces. But after that phone call I changed my maxim. Crowdsourcing’s limits are determined by people’s passion and imagination, which is to say, there aren’t any limits at all.

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As if to prove the point, a seemingly endless array of start-up companies have emerged since this book was first published in the fall of 2008, each determined to turn the crowd’s manifold energies to their own gain. In this same interim a less predictable development unfolded, as established institutions like government agencies and Fortune 500 companies also embraced various forms of online collaboration. The rise of participatory networks has become a defining hallmark of our frightening and exhilarating age. If the tone of this book exhibits more excitement than fear, that too is a mark of the age in which it was written. By its very name, crowdsourcing encourages a comparison to outsourcing, and all the negative associations people have with that term. But when this book went to press—well before widespread bank failure set our economy reeling—it was far from clear whether the phenomenon would realize its disruptive potential. Just one year later, it seems increasingly obvious that it will. Aided by a new generation of savvy entrepreneurs, ever cheaper creative tools, and—most of all—a recession that is forcing cost-saving measures on businesses, crowdsourcing is rapidly migrating from the fringe to the mainstream. As it proliferates, the creative destruction hinted at in this book has accelerated faster than I anticipated. And as the case has been in previous periods of swift technological change, new industries are emerging even as older industries struggle to adapt. Crowdsourcing has contributed to this disruption, but it will almost surely become part of the foundation on which a new order is built, especially in fields like media and entertainment. Some professionals rightly regard crowdsourcing as a threat; others, likewise, view it as a solution. In fact it is

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both. These, then, are the most prevalent dynamics to emerge since this book was first published: proliferation, on the one hand, and disruption on the other. Both factors give rise to larger ethical and regulatory issues. In most instances, of course, individuals are willing—indeed, enthusiastic—partners in a crowdsourcing effort. But as more and more fields undergo such transformation, traditional firewalls against labor exploitation must be reinvented. What happens when the only possible route to gainful employment in one’s craft takes place in a crowdsourcing environment—will individuals be able to obtain the same protections that exist in an offline world, like minimum wage and overtime pay? We could well be seeing the emergence of the home sweatshop, with people’s productivity and work habits closely monitored via their computers. Two years ago such a vision seemed ridiculous on its face. Now it strikes me as inescapable.

Proliferation In the beginning, the savings promised by turning labor over to the crowd were more theoretical than real. Wikipedia had been generated on virtually no budget, spontaneously created by legions of volunteers. But applying the Wikipedia model to, say, automotive design, seemed challenging at best and ill conceived at worst. Compounding the problem, when companies did attempt to engage online communities, they often acted in a clumsy, tone-deaf fashion, alienating the very people (usually their customers) they stood to gain from the most. In just the last year, companies have grown far more

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adept at the peculiar craft of community management. Philips boosted sales of electric toothbrushes by 40,000 units using a crowdsourced marketing campaign. Procter & Gamble built a “discreetly branded” website for Tampax tampons and later said it had been “four times as effective as a comparably priced TV campaign.” The Japanese consumer goods company Muji crowdsources the design of some of its products. The crowdsourced lines—a “beanbag sofa,” for instance—outperform those designed in-house, which is to say, the products requiring the least investment returned the most revenue.* Such success stories have inspired a host of multinational corporations to integrate crowdsourcing strategies into their business. Kraft runs the “Innovate with Kraft” program, which asks consumers (and inventors) to come to them with their “favorite recipes” or “new packaging idea.” Nokia maintains a site for customers who test-drive trial versions of the company’s cell phones, then report back to the “betalab” community about their experiences. Feedback from these “lead users,” Nokia executives say, have been essential in determining the design and functionality of the company’s phones. The beverage giant PepsiCo used video games, sweepstakes, and voting to induce the crowd to collaborate on a new flavor of Mountain Dew. If some of these examples sound more like branding campaigns, that’s because they are. What marketing executives and advertising agencies have discovered is that involving consumers in the production process builds goodwill and brand loyalty. Some people, for instance, are passionate about technology. Others are passionate about * Paul Marsden, “Crowdsourcing: Your Recession-Proof Marketing Strategy?,” Contagious, Issue 18 (2009): p. 25.

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the technology produced by a particular company—Apple being just one obvious example. We’ve long understood that brands play an outsize role in creating identity, becoming in the process far more integral to our lives than the physical product. This deep, abiding interest comprises a precious asset, at least from the marketer’s perspective. After decades of neglect, that resource is now being put to use. Interest in crowdsourcing has grown even more rapidly within the crowd itself. The ranks of the online networks and communities profiled here have grown substantially in the last year. Submissions to the T-shirt design site Threadless.com have nearly doubled since I first wrote about them in 2006, and the crowdsourcing software company TopCoder now counts nearly 200,000 community members, compared to just over 100,000 when I first spoke to them in 2007. Add to this the sundry crowdsourcing initiatives that have launched in the last year. I used to cover crowdsourcing start-ups on my blog, but they began multiplying so rapidly I gave up trying. It goes without saying that most of these startups will fail. But it’s notable that a down economy has increased—not dampened—the entrepreneur’s ardor for crowdsourcing. To some extent the growth of contributors and proliferation of sites to which they can contribute are both due to increased awareness. As more crowdsourcing projects sprout up, more media attention is devoted to the concept, inciting more people to contribute to individual projects. Here too our current economic downturn plays a role. As the ranks of both the unemployed and the partially employed grow, so too does the role financial incentives play in collaborative exchanges. If crowdsourcing runs on people’s “spare cycles”—their downtime not

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claimed by work or family obligations—that quantity is now in surplus. This can be seen in the success of distributed labor networks like Amazon’s “Mechanical Turk.” In the original edition of this book I largely ignored this particular genre of crowdsourcing—in which money is offered in return for performing simple, rote tasks like tagging images, transcribing audio materials, or culling records from online databases. Instead I focused on forms of productive activity that took place within the context of community. It’s time to correct that oversight. In early 2007, Mechanical Turk’s success was anything but assured. Companies seemed unwilling to experiment with it, and the pool of “Turkers” (the people who accept these menial assignments) looked to be a diminishing resource. Then a cottage industry of third-party firms sprung up specializing in helping companies exploit the service and filtering out the inevitable low-quality responses. Add in a recession, and the service has blossomed into a 200,000-person strong workforce. Given the paltry rewards, one would imagine that most Turkers hail from the developing world. In fact, according to several surveys, the majority live in the United States and Canada. Why do they do it? To hear them tell it, to kill time and earn a little bit of pocket change. Crowdsourcing is proving to be highly efficient at identifying and exploiting those “spare cycles” I write about. The company LiveOps has built a thriving business running a network of freelancers who work from home taking calls generated by infomercials, selling insurance, or even taking pizza orders. These virtual employees work entirely according to their own schedule. In 2008, the Harvard Law School professor Jonathan Zittrain wrote about the rise of Mechanical Turk and

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other examples of what he calls “ubiquitous human computing.”* In the near future, people won’t sit in subway cars reading the newspaper. “Instead they will stare into screens even for just a few minutes and earn as much money in that time as their respective skills and stations allow.” It’s a somewhat disheartening vision, but then technology—as well as the behavior it engenders—has always been deployed to a variety of ends. Encouragingly, crowdsourcing has also been recently put to imaginative use in fields with more philanthropic objectives. In December 2008, Ory Okolloh, a consultant and law school graduate, went back to her native Kenya to vote in that country’s presidential election that spawned widespread violence among Kenya’s ethnic and political rivals. In the midst of a news blackout Okolloh did her best to document the chaos on her blog. Soon she had teamed up with a few volunteers to create a mash-up of Google Earth and the open source software program FrontlineSMS that would allow her to aggregate eyewitness reports onto a single website. Called Ushahidi—the word means “testimony” in Swahili—it allows people to send e-mails or text messages to a central source. These reports are then vetted for authenticity before being displayed on a map. Ushahidi has already proven its value during outbreaks of bloodshed in South Africa and the Congo. In January 2009, Ushahidi won an award from USAID in a competition that was itself crowdsourced, an indication of the degree to which the collaborative zeitgeist has penetrated the field of international development. USAID is just one of several government agencies adopting various forms of crowdsourcing. In this they are * Jonathan Zittrain, “Ubiquitous Human Computing,” University of Oxford Legal Research Paper Series, June 2008, Paper #32.

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able to follow no-less-commanding a model than the office of the president. In his presidential campaign, Barack Obama was able to demonstrate the efficacy of mass organizing. As president, he has vowed to continue encouraging large-scale participation, leveraging the diverse experience, knowledge, and viewpoints of the American citizenry. His initial experiments with crowdsourcing display both the raw power of crowdsourcing—his open calls for contributions are deluged with hundreds of thousands of responses—and its pitfalls. In March 2009, the president held what was billed as an “interactive town hall.” Rather than just answering questions from the press, the president announced he would answer questions from the public as well. The public—which is to say anyone in the world with an Internet connection, U.S. citizen or not— submitted their questions via a website called Open for Questions, which was organized into categories like Education, Small Business, and Budget. Visitors to the site could then vote yea or nay on other people’s questions. The most popular questions rose to the top. In the end, some 92,000 users cast over 3.5 million votes on some 103,000 questions. The voice of the people was loud and clear: legalize marijuana. During his press conference, the president made short work of the most popular topic on his own forum. “I don’t know what this says about the online audience, but no, I do not think [legalizing marijuana] is a good strategy for growing our economy,” he said to general laughter from the studio audience. Next question, please. While a lot of ink was spilled over the aborted crowdsourcing experiment, very little analyzed the president’s use, or misuse, of social media to engage the citizenry. The common perception was that the forces of drug reform “hijacked” the White House’s crowdsourcing plat-

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form. Pro-drug reform organizations like NORML had sent out e-mail blasts asking people to vote up questions regarding marijuana legalization. This grassroots effort worked spectacularly well, despite the fact that decriminalization is nowhere to be found in any list of what Americans think are the most important issues facing the country. But calling the NORML lobbyists “trolls” or dismissing the incident as the abuse of the White House Open for Questions platform reveals a fundamental misunderstanding of how crowdsourcing works. It assumes that the technology used by the White House is capable of creating a representative sampling of popular opinion. The tech doesn’t do that, and we shouldn’t expect it to. We possess other, highly effective tools for that job— they’re called polls. Open for Questions fits squarely within a genre of crowdsourcing I call “idea jams,” and they constitute their own evolutionary branch of brainstorming. Users don’t just submit ideas, but also vote and (usually) comment on them as well. Idea jams are a big hit with the private sector. Companies like Starbucks, Dell, IBM, and even General Mills have all adopted them, for the excellent reason that they’re a cost-effective method for product innovation and inspire goodwill with your customers to boot. The best-publicized incarnation involves Dell’s “IdeaStorm,” which the computer maker used to tap its most loyal (or at any rate, most vocal) customers. They’ve now integrated some 280 suggestions from IdeaStorm into their product line. So if the idea jam format works for companies, why isn’t it working for our president? A few reasons: First, the White House isn’t matching the right tool to the right job. “The whole point of [idea jams] is not to find the question that the whole group wants to ask and

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that is predictable—but to enable cognitive outliers to ask the unpredictable question—to promote ways of thinking about problems (and solutions) that are uncommon,” writes Kim Patrick Kobza, CEO of Neighborhood America, which develops social software for business and government. In other words, idea jams are built to allow people to discover the fringe question (or idea, or solution), then tweak it, discuss it, and bring the community’s attention to it. When Dell launched IdeaStorm, it was hijacked by Linux die-hards who suggested (nay, insisted) that Dell release a Linux computer. These folks were trolls to the same extent the drug legalization lobbyists swamping White House servers are, and Dell struggled with how to deal with them. The company’s ultimate reaction is instructive. First, they merged all the Linux comments into one thread, giving much-needed daylight to other ideas. Next, they saw the value in what the Linux folk were saying. The outcry for an open source operating system had revealed that there was a “constituency” large enough to justify enacting this particular “policy.” Put another way, there was adequate demand to support a new product line. Three months after launch, Dell released three computers preinstalled with the Linux operating system. In this sense, the virtual town hall performed a valuable function. It highlighted an important, if nonurgent, issue and stimulated an ultimately useful public dialogue. The problem was that the president’s office wasn’t part of that conversation. Unlike Dell and other private sector groups that have made use of idea jams, the White House didn’t weigh in on the issues raised on its forums, or otherwise engage its contributors. They had failed to heed one of social media’s central tenets: participation goes both ways.

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As Bob Pearson, Dell’s former “chief of communities and conversation,” notes, “Idea management is really a three-part process. The first is listening. That’s obvious.” The second part, says Pearson, is integration: “We had engineers studying IdeaStorm posts and debating how they could be implemented.” The last part is the trickiest and most important: “It involves not just enacting the ideas, but going back into your community and telling them what you’ve done.” Starbucks, which maintains its own version of IdeaStorm, employs forty-eight full-time moderators whose only job is to engage the online community. In other words, Starbucks is investing the vast share of its resources in the second and third parts of the idea management cycle, exactly those steps in the process that the White House ignored. Of course, the White House, Dell, and Starbucks aren’t putting people out of work, and indeed, many uses of crowdsourcing do not involve the displacement of traditional workers. If anything, crowdsourcing provides added value to a company or institution without devaluing the labor being contributed by full-time employees. But this is not always the case. If proliferation has been one theme to emerge since the original edition of this book was published, the other theme to arise has been turmoil, most of it occurring within the media and entertainment industries.

Disruption One year ago crowdsourcing’s disruptive potential, too, was largely theoretical. To a large extent it was contained within a single, comparatively tiny field—stock photography. In the hardcover edition of this book, I pondered

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whether photography was just the canary in the coal mine. It was an open question at the time. Now it’s not. Witness the upheaval afflicting the design industry, sparked by the rise of so-called “spec design” sites like crowdSPRING and 99designs. Customers post creative briefs directly to the community, which then competes to create a design that best fits the clients’ needs. A typical “assignment” will draw dozens of submissions. The winner receives a nominal fee (as little as $200), and the client receives a logo or website design at a fraction of what a professional agency might charge. The losers get zip, which goes a long way to explaining why working on spec (“on speculation,” or without guarantee of payment) has always been considered the toil of last resort for writers, designers, and other creative professionals. Given the low pay and the brutal competition, one might reasonably expect crowdSPRING and 99designs to wither away like so many other seemingly ill-conceived Web 2.0 start-ups. Instead, they are by all accounts flourishing. 99designs says it has paid out more than $4 million to its community of 30,000 artists, and crowdSPRING expects to be profitable by next year. Alarmed by the popularity of the spec model, a group of designers formed a protest group called NO!SPEC to persuade their colleagues (and prospective clients) to just say no to design contests. Their effort has not been in vain. The trade group AIGA, with around 22,000 designer members, has gone so far as to stake out an official position on spec work: “AIGA strongly discourages the practice of requesting that design work be produced and submitted on a speculative basis in order to be considered for acceptance on a project.” The fact is that the demand for low-end design has ballooned in recent years alongside the profusion of startups and small businesses. Conveniently enough, so has

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the supply of what we might call “low-end designers” (many of them amateurs, recent grads, and retirees). According to Forbes there are 80,000 freelance designers in the United States alone. Most of these are, proverbially speaking, waiting tables. When someone matches demand and supply, that’s kismet. The squabble over crowdSPRING and 99designs has united the design community against the barbarians at their gate, which ostensibly bodes ill for the future health of the spec sites. But then, a similar array of industry forces aligned against iStockphoto and its ilk when they first gained market share back in 2005. The fact that this debate has been largely settled—in favor of the barbarians—speaks volumes about where graphic design, and, for better or worse, most other creative fields, are heading. In the end, dirt-cheap photos produced by communities of enthusiastic amateurs totally disrupted the $2 billion stock photo industry. iStock is now the thirdlargest purveyor of stock images, and 96 percent of its “workforce” is comprised of people whose bread is primarily buttered through some other vocation. The controversy currently embroiling the design world both echoes the one that consumed photography a few years ago and prefigures the conflicts between professionals and amateurs sure to arise in other fields as the basic crowdsourcing model continues to migrate. Such conflicts may already be breaking out. Entrepreneurs within the advertising field were a few of the first to try to bring open models of idea generation to their profession. The website AdCandy.com launched in 2006 with the premise that anyone could come up with a brilliant slogan or image for an advertisement. At first such upstarts seemed destined to sputter toward unhappy oblivion, derided by professional advertising executives and ignored by their big-name clients. But recently

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attitudes have begun to shift, signaling a potential sea change for the advertising industry. “I think what you’ll see soon is a big agency will build their own crowdsourcing network,” says John Winsor, the executive director of strategy and innovation at the Miami-based ad agency Crispin Porter + Bogusky. “When they do you’re going to see massive disruption in the industry as agencies rush to mimic them.” Such experiments have been discussed for years at various industry gatherings, says Winsor, but so far no one’s made the leap. “The finance guys freak out. They’re like, ‘If we do this there’s going to be incredible downward price pressure.’ My point is that if we don’t do this there’s going to be incredible downward price pressure. At least if we [a professional agency like Winsor’s CP+B] do it we can maintain some level of control over the disruption.” That’s just the thinking behind the creation of BBH Labs, a skunkworks setup by the venerable Londonbased ad agency Bartle Bogle Hegarty. “There’s a confluence of factors coming together that anyone can see, but not everyone wants to see,” says Ben Malbon, a managing partner at BBH Labs. “Agencies need a more flexible business model than trying to house all its talent under one roof. That means external networks like crowdsourcing.” Echoing Winsor, Malbon notes that BBH Labs was initially called “Project Nemesis,” the idea being that BBH should try to create its own nemesis, the kind of forward-looking agency that could eventually cripple it. The danger, Malbon says, is that clients will simply tap the crowd on their own and bypass agencies altogether. It’s hardly an idle threat. Shortly after launching BBH Labs in January 2009, the agency made headlines by crowdsourcing its logo on crowdSPRING, eventually generating some 1,100 responses. “It’s a telling coincidence

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that a few weeks later one of our largest clients [cell phone maker] LG used crowdSPRING for a huge project.” (LG held a contest on crowdSPRING to design a new cell phone.) Needless to say, it’s just the sort of business BBH would have received in the not-at-all-distant past. If companies can forge direct links to creatives, will the agency go the way of the typing pool? CP+B’s John Winsor doesn’t think so, and I don’t either. What’s become clear over the last several years is that, as in so many aspects of life, the optimal solution involves a sophisticated hybrid of the new and the old. “It’s hard to distinguish wheat from chaff,” Winsor says. He should know—he’s writing his current book, Flipped, via a wiki with loads of reader contributions. “You’ll see a handful of professionals using a crowdsourcing network to generate a lot of raw ideas, but then picking and refining those ideas and creating value around them for the client.” It’s no accident, in my opinion, that news organizations have pursued hybrid approaches as well. In chapter 7, I recount the failings of my own experiment in crowdsourced journalism, Assignment Zero. In the broadest of strokes, we overestimated the crowd’s ability to create a journalistic product from whole cloth. However, we underestimated its interest in participating in the process by suggesting ideas, conducting interviews, and playing other roles crucial to any journalistic outfit. Such lessons seem not to have been lost on the news industry at large as it struggles to adapt to a rapidly deteriorating financial environment. Of all the fields surveyed in this book, none is suffering so egregiously as the news media. In the month I spent working on this foreword, the Rocky Mountain News folded, the Seattle PostIntelligencer canceled its print edition, and bankruptcy looms for such august publications as the San Francisco

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Chronicle and, further down the road, possibly even the New York Times. This has not curbed the speed with which newspapers (and their sister outfits in broadcasting and on the Internet) are experimenting with crowdsourcing. In fact, on the day I am writing this the New York Times posted a 658-page document detailing the daily schedule of Timothy F. Geithner from January 2007 to January 2009, when he was the president of the Federal Reserve Bank of New York. Readers are encouraged to peruse the diary and “share [their] observations” with the Times. It’s precisely the model—using the crowd as an investigative ancillary force—that has worked so well for Josh Micah Marshall at the political blog TalkingPointsMemo.com, which I also write about in chapter 7. “Crowdsourcing may be destroying other industries, but it isn’t destroying the news industry,” says Bob Garfield, the host of the public radio program On the Media. “If anything, crowdsourcing is enabling existing news organizations to conduct a journalism of the sort it could never conduct before.” He pauses before continuing. “So in the five minutes before those news organizations utterly collapse, they can enjoy the benefits of a crowdsourced world.” He chuckles, darkly. Crowdsourcing doesn’t mean the end of design, advertising, journalism, or any of the other fields—product design and innovation come quickly to mind—in which it has started to compete with traditional methods. As Garfield notes, “Afterwards some of this will coalesce into a reasonable facsimile of the vast journalistic infrastructures that are now in the process of collapsing.” It’s a sobering but oddly reassuring thought. Writers will still write, designers will still design, photographers will still take photographs. The structures in which it all takes place, however, are about to change forever.

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I NTRODUCTION The Dawn of the Human Network

The Jakes didn’t set out to democratize the world of graphic design; they just wanted to make cool T-shirts. In 2000, Jake Nickell and Jacob DeHart, as they’re more formally known, were college dropouts living in Chicago, though neither had found much work putting his abbreviated educations to use. Both were avid members of a burgeoning subculture that treated the lowly T-shirt as a canvas for visual flights of fancy. So when they met after entering an online T-shirt design competition, they already had a lot in common. For starters, both thought it would be a good idea to start their own design competition. But instead of using a jury, they would let the designers themselves pick the winner. That November a company was born—the product of equal parts youthful idealism and liberal doses of beer. The pair launched Threadless.com a few months later with a business plan that was still in the cocktail-napkin stage: People would submit designs for a cool T-shirt. Users would vote on which one was best. The winner would get free T-shirts bearing his or her winning design,

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and everyone else would get to buy the shirt. At first the Two Jakes, as people called them, ran Threadless from Nickell’s bedroom. But the company grew. And grew. And grew yet more. People liked voting on T-shirts, and the designs were less staid and less formulaically hip than those sold by Urban Outfitters or Old Navy. The winning designs started appearing on hit TV shows and on the backs of hip-hop artists. The company has nearly doubled its revenue every year since. Threadless currently receives some one thousand designs each week, which are voted on by the Threadless community, now six hundred thousand strong. The company then selects nine shirts from the top hundred to print. Each design sells out— hardly surprising given the fact Threadless has a finetuned sense of consumer demand before they ever send the design to the printer.

Design by democracy, as it happens, isn’t bad for the bottom line. Threadless generated $17 million in revenues in 2006 (the last year for which it has released sales figures) and by all accounts has continued its rapid rate of growth. Threadless currently sells an average of ninety thousand T-shirts a month, and the company boasts “incredible profit margins,” according to Jeffrey Kalmikoff, its chief creative officer. Threadless spends $5 to produce a shirt that sells for between $12 and $25. They don’t need advertising or marketing budgets, as the community performs those functions admirably: designers spread the word as they try to persuade friends to vote for their designs, and Threadless rewards the community with store credit every time someone submits a photo of themselves wearing a Threadless shirt (worth $1.50) or refers a friend who buys a shirt (worth $3). Meanwhile, the cost of the designs themselves isn’t

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Introduction • 3

much more than a line item. DeHart and Nickell have increased the bounty paid to winning designers to $2,000 in cash and a $500 gift certificate, but this still amounts to only $1 million per year, a fraction of the company’s gross income, and Threadless keeps all the intellectual property. But as any number of winners will happily volunteer, it’s not about the money. It’s about cred, or, to give that a more theoretical cast, it’s about the emerging reputation economy, where people work late into the night on one creative endeavor or another in the hope that their community—be it fellow designers, scientists, or computer hackers—acknowledge their contribution in the form of kudos and, just maybe, some measure of fame. Threadless’s best sellers (such as “Communist Party,” a red shirt featuring Karl Marx wearing a lampshade on his head) are on regular view at coffee shops and nightclubs from London to Los Angeles.

The Jakes now enjoy a certain degree of notoriety themselves. Nickell and DeHart have become heroes among the do-it-yourself designer set, and even have given lectures to MBA students at MIT’s Sloan School of Management. Aspiring executives spent much of the time explaining all the basic business tenets the Jakes had broken in building Threadless. Good thing they weren’t there when Nickell and DeHart were first launching their company. Nickell and DeHart are smart enough to know a good idea when they stumble on it. They created a parent company, skinnyCorp, which includes not just Threadless but a spin-off division that takes a similarly democratic approach to the creation of everything from sweaters to tote bags to bed linens. “Next we’re thinking of doing housewares,” says Nickell.

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An Accidental Economy In late 2005, the Pew Internet & American Life Project released a paper called “Teen Content Creators and Consumers.” The study, which consisted of interviews with more than eleven hundred Americans between the ages of twelve and seventeen, drew little attention when it was published, but the findings were extraordinary: there were more teens creating content for the Internet than there were teens merely consuming it. At the time it was commonly assumed that television had created a generation of consumers characterized by unprecedented passivity. Yet now it seemed the very opposite was the case. In his book The Third Wave the futurist Alvin Toffler predicted that consumers would come to exercise much more control over the creation of the products they consumed, becoming, in a word, “prosumers.” In 1980, the year Toffler published his book, this seemed like mere fodder for bad science-fiction novels. From the perspective of 2005, it seemed stunningly prescient. Pew’s conclusions confirmed my own recent experience. A few months before the study was released I had been hopscotching across the country attending concerts on the Warped Tour, a carniesque collection of punk bands and the hangers-on that followed them from town to town. I was writing about the social networking site MySpace, which was known—to the degree it was known at all—as a grassroots-marketing venue for Emo bands, off-color comedians, and Gen Y models. In the hours I spent with the performers and their fans, I noticed that very few defined themselves as musicians, artists, or any other such label. The singers were publishing books of poetry; drummers were budding video directors; and the

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Introduction • 5

roadies doubled as record producers. Everything—even one musician’s pencil portraits—was posted to the Internet with minimal attention to production quality. These were what Marc Prensky, a game designer and educator, calls the “digital natives.” The rapidly falling cost of the tools needed to produce entertainment—from editing software to digital video cameras—combined with free distribution networks over the Web, had produced a subculture unlike anything previously encountered: a country within a country quite capable of entertaining itself. Next I heard about the Converse Gallery ad campaign, in which the shoemaker’s ad agency solicited twenty-four-second spots from anyone capable of wielding a camcorder. The shorts had to somehow convey a passion for Chuck Taylors, but that was it. You didn’t even have to show the shoe. The best of the spots were very, very good—electric with inventive energy, yet grainy enough to look authentic, as indeed they were. Within three weeks the company had received seven hundred fifty submissions, a number that climbed into the thousands before Converse discontinued the campaign in early 2007. It was viewed as a smashing success by both the company and the advertising industry, as well as a seminal example of what is now called usergenerated content. This was the new new media: content created by amateurs. A little research revealed that amateurs were making unprecedented contributions to the sciences as well, and it became clear that to regard a kid making his own Converse ad as qualitatively different from a weekend chemist trying to invent a new form of organic fertilizer would be to misapprehend the forces at work. The same dynamics—cheap production costs, a surplus of underemployed talent and creativity, and the rise of online

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communities composed of like-minded enthusiasts—were at work. Clearly a nascent revolution was afoot, one that would have a deep impact on chemistry, advertising, and a great many other fields to boot. In June 2006, I published a story in Wired magazine giving that revolution a name: crowdsourcing. If anything, I underestimated the speed with which crowdsourcing could come to shape our culture and economy, and the breadth of those effects. As it happens, not just digital natives, but also digital immigrants (whom we might define as anyone who still gets their news from a newspaper) would soon be writing book reviews, selling their own photographs, creating new uses for Google maps, and, yes, even designing T-shirts. As I’ve continued to follow the trend, I’ve learned a great deal about what makes it tick. If it’s not already clear, Threadless isn’t really in the T-shirt business. It sells community. “When I read that there was a site where you could send in designs and get feedback, I instantly thought, this is really cool,” says Ross Zeitz, a twenty-seven-year-old Threadless designer who was hired to help run the community after his designs won a record-breaking eight times. “Now I talk to other designers, and they’re motivated by the same things I was. It’s addictive, especially if you’re at a design school or some corporate gig, where you’re operating under strict guidelines,” says Zeitz. The only restriction at Threadless, by contrast, is that the design has to fit onto a T-shirt. Threadless, its founders have noted, is a business only by accident. None of the Threadless founders set out to “maximize profits” or “exploit the efficiencies created by the Internet.” They just wanted to make a cool website where people who liked the stuff they liked would feel at home. In succeeding at this modest goal, they wound up creating a whole new way of doing business.

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To purchase a copy of 

Crowdsourcing    visit one of these online retailers:    Amazon    Barnes & Noble    Borders    IndieBound    Powell’s Books    Random House 

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AB OUT TH E AUTHOR

JEFF HOWE is a contributing editor at Wired magazine, where he covers the entertainment industry among other subjects. Before coming to Wired, he was a senior editor at Inside.com and a writer at the Village Voice. In his fifteen years as a journalist he has traveled around the world, working on stories ranging from the impending water crisis in Central Asia to the implications of gene patenting. He also has written for U.S. News & World Report, Time magazine, the Washington Post, Mother Jones, and numerous other publications. He lives in Brooklyn, New York, with his wife and children.

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