Friday, May 16, 2008

Spot Us: Crowdfunded Journalism

Spot Us is a non-profit organization that encourages community-funded journalism. Spot Us was chosen as a winner this week in the Knight News Challenge, taking home a $340,000 grant/prize.

Whats the scoop? With a focus on the community level, journalists and local residents will pitch stories, while Spot Us will seek funding from the crowd for potential stories. If enough funding is raised for a particular story, a journalist will be hired to cover the issue.

More information can be found at Green Crowdsourcing

I just watched the 10 minute video at the Carrotmob website and I was truly impressed at the creativity of this crowdsourcing effort. What do they do? Well, it's a mouthful, but here goes. Carrotmob organizes a swarm of consumers on some random morning to go shopping at a store that has agreed to put a specified portion of every purchase towards becoming a more environmentally-friendly store ( 22% of revenues towards greening the store in this case). Carrotmobbers purchased about $9k worth of product, enabling the participating business to totally redo their lighting system and make some upgrades to their refrigeration units. As well, the carrotmobbers donated 366 pounds of food to the SF Food Bank.

This is an interesting concept, it would be nice to see it fly.

Knewsroom: Turning on a Dime

I noticed the other day that Kluster, a crowdsourcing-based start-up, changed its business model. The new service from Kluster, called Knewsroom, is an crowdsourced - you guessed it- news service. Members submit topics and the crowd "invests" in what topic or story they feel is most newsworthy. If a story you invest in is featured in the next day's edition, you will earn Knewsroom currency based on the size of your original investment. If you create original content and the crowd deems it worthy, you can get paid $150 on a Mastercard debit card. The problem I see, very early on, is that the crowd seems to be investing heavily in the stories with the most votes. For instance, a story on ABC had 19 votes and a story on XYZ had 2 votes yesterday late in the voting day. With such a commanding lead by ABC, why even bother voting for XYZ?

I found a video on that features Kluster founder, Ben Kaufmann. He seems pretty open about the fact that Kluster burned through $1m in 7 weeks, requiring them to change the business model.

Wednesday, May 14, 2008

Cambrianhouse: A Crowdsourcing Foreclosure

Interesting couple of days.

1. The Godfather of the crowdsourcing movement, Jeff Howe of Wired Magazine, made an appeal to the crowd on May 12th via his blog. It seems the writer responsible for coining the term crowdsourcing is having some trouble getting the crowd involved in/commenting on his blog. It seems that Jeff made an offer to get published in his book back in January. The original post yielded only four comments. His May 12th post yielded the same.

2. Yesterday, Erick Schonfeld of Techcrunch pushed Cambrian House into the deep end with his post, When Crowdsourcing Fails: Cambrian House Headed to the Deadpool. It seems that $7.5m wasn't enough to keep the CambrianHouse from going into foreclosure.

Tuesday, May 13, 2008

Crowdfunding: Accountability?

I first read about Nvohk on Springwise in December 2007. The founders were starting an eco-friendly clothing company and were trying to crowdfund their initial round of capital. The early stage target was 20,000 members @ $50 per annual membership ($1m). This would provide enough seed capital to get them off the ground. Paying members would participate in business decisions by voting on logo and product designs, marketing campaigns, sponsorships, charitable recipients, discounts, and all the other standard shenanigans that come with a crowdfunded business opportunity. Additionally, as one would expect, noone was asked to put up any dough prior to Nvohk interest "tipping" at 20,000 members.

For a month or so, Nvohk received some coverage in the blogger press (,,,,,,,,,,,, etc. Nvohk also featured a counter on their homepage advertising how many interested people had signed up for their monthly e-mailer. I remember that less than 1,000 potential members had signed up prior to 01/08. I liked the idea, so I bookmarked the site, signed up for their monthly e-mailer/updater, and checked back in periodically to see what was happening with this grassroots, eco-friendly effort.

At the end of February, I received the monthly e-mailer that let me know that 1550 people had signed up and that, based on the overall excitement from potential members, Nvohk management had decided to accelerate their activation efforts (i.e. lower the required number of members) by setting the tipping point at 5,000 members. While this would cut down the amount of seed capital by 75% to $250,000, I would think that you could make some t-shirts for that (heck, you can make a t-shirt in 3 minutes on It also demonstrates that, unless you have a serious platform already in place like the guy who started MyFootballClub, you might have to do a little marketing in addition to putting up a three-page website if you are ever going to reach a goal.

My March Nvohk e-mailer let me know that we were halfway to the goal of 5000 members. It also asked me to sign up for the Nvohk groups on Facebook and MySpace. Facebook had three separate Nvohk groups with one of them letting you know that, "If 20,000 people join this group, you will all become rich!" That group didnt mention anything about the 50 bucks. But, then again, anyone can start a Facebook group about anything they want, and it notes in the group description that the group isn't endorsed by Nvohk.

The May e-mailer was a little different. It seems that Nvohk has decided to forgo the a 5,000 member activation goal and just launch with what they have in June. This means potential members will be asked to pony up the $50 in June regardless of the number of people who have expressed interest. Currently, Nvohk claims 2650 interested members - this still means they will get a seed round of $132,500. First action item? Nvohk is going to hold a crowdsourcing contest (advertising, round 2) where members will vote on a user-submitted logo. The prize will be $500-1,000 US dollars. So, hey, let's burn 1% (ish) of our initial round of capital on a logo.

My big question: After 5 months of virtual silence (well, 4 monthly e-mails) from the Nvohk management team, what's the take rate going to be on the 2,650 people that have signed up? How many people are going to even want to put $50 into this company after management achieved 15% of their original goal and haven't really done much to foster excitement and trust with their potential members. Is this just a big scam?

Who cares if Nvohk is legit or not, do you really want to throw $50 at a company that can't even communicate with "potential" members over a 5 month launch period? But, Nvohk launched a blog on May 04, 2008. 5 months to launch a blog? Shouldn't Nvohk management have introduced the blog months ago for this crowdfunded, crowdmanaged project? Wouldn't you want to keep the crowd informed of what was happening?

Not sure where this one will fly, but it might be worth my $50 to keep an eye on it.

Thursday, May 8, 2008

Crowdfunding - A Movement?

Crowdfunding (n.) - describes the collective donation of funds, usually via the Internet, by a group of people united by a common cause.

Is Crowdfunding really a "movement" or is it just a creative way to introduce, market, and fund a new business via the Internet? Better yet, does crowdfunding present a viable funding method for someone with a business idea and limited capital to go out and virally market a low-cost, web-based prospectus (i.e. a 3 page website that asks for money). Is it just easier to put together a quick website, come up with a YouTube video, and ask the crowd for $50 for an annual membership? Have we become that lazy in the wake of the 2nd dotcom bust?

Is crowdfunding a viable alternative to traditional VC funding? Is it merely an opportunity for all the dreamers and schemers to toss some ideas on a digital cocktail napkin and test out their ideas? Will it become a viable playing field for Scam 2.0? I mean, come on, we have people trying to crowdfund bums onto the Forbes 500 who are raising more money than some of the "legit" crowdfunding outfits out there.

Is crowdfunding just a re-packaged tipping point methodology that focuses on dipping into members wallets as opposed to a collective effort to create, market and manage new and exciting technologies and products? Do we really need to call this a movement?

I do know this - I am not that interested in the academic aspects of crowdfunding, crowdsourcing, crowdmanaging, wisdom of crowds, etc. - all of that can be left to Jeff Howe and the social media marketers of the world. I like to track how these "projects" work. I like bookmarking them after I have read about them on Springwise or in Wired. I like to see what media outlets pick up the stories. I like to see some journalist in Scotland use his platform to goad the crowd into buying a football club. I like to go to the Cambrian House website and see what kind of punctuation has been used in the latest round of "idears" on the site.

I am a crowd troll.