If you didn’t live under a rock last 10 years, you probably heard about Elon Musk. Elon is a serial entrepreneur who founded zip2 and x.com (later PayPal). After the very successful exits of both companies he started fulfilling his dream to make the world more sustainable by reducing the CO2 emession by entrepreneurship. Most famous result is Tesla, the electrical car company.
Besides of Tesla, Elon created and supported a lot of initiatives under the SpaceX brand. One of it is the Hyperloop. Musk assigned a dozen engineers from Tesla Motors and SpaceX who worked for nine months, establishing the conceptual foundations and creating the designs for the transportation system.
The technology seems to be very advanced and interesting but what really inspired me was the way Hyperloop is (or will be) created. What really inspired me was the idea of crowdsourcing the company. Hyperloop calls it:
If I understand it will well participating people are investing time, or other resources (for example the land where the Hyperloop is going to be build). So it is a combination of crowdsourcing and crowdfunding. Dirk called it the new way of building a startup. I am totally agreeing with that. It looks like building a company, comparable with building software open source with the big difference that everybody who donated his time or resources will be take profit from it when it is running. The ideal way of Customer Development.
So time for some research…
At first I discovered during the research is that actually there is an organisation behind called Jump Start Fund.
At second I discovered Hyperloop’s crowdsourcing model and last and most important I discovered there is book called “Crowdstorm: The Future of Innovation, Ideas, and Problem Solving” that describes the Crowdstorm method that is used by Hyperloop.
To make it the order more logical, I start with the book, then discus the Hyperloop model and at last the Jump Start Fund.
Crowdstorm: The Future of Innovation, Ideas, and Problem Solving by Shaun Abrahamson, Peter Ryder, Bastian Unterberg is probably the base for crowdstorm for Hyperloop.
Dirk Ahlborn mentioned Lego as the example for crowdstorm and Lego is an dominant example in the book.
Also the name crowdstorming reminds directly to the example from LEGO which is Mindstorms.
Below the story about Lego directly quoted from the book (chapter 1: First, Some Context):
From the mid-1990s to 2003, LEGO’s business stopped growing. After decades of doubling its revenue every five years, changes in the market slowed LEGO’s growth to a standstill. The impact of video and other technologies were shifting its core customer base’s buying patterns. Distribution channel changes—from mom-and-pop toy stores to retail giants like Carrefour, Walmart, and Target—impacted how LEGO interacted with its end customers. And changes in supply chains, from domestic manufacturing to offshore sources, altered the cost structure of toy production and negatively impacted the bottom line.
By 2003, the company was almost broke and a new CEO was appointed, Jørgen Vig Knudstorp. Under Knudstorp, LEGO made the transition into being an innovative company that was (and still is) highly profitable. That transition had many facets, but one that has significance for this discussion concerns the impact one single new product experience had on the way LEGO now manages innovation.
The product was called LEGO Mindstorms. Mindstorms is a configurable robotics product that LEGO successfully launched in 1998. However, during the trying times at LEGO, much of the original team had moved on. But LEGO knew there was an enthusiastic group of people who were very familiar with Mindstorms—Mindstorms customers. So they reached out to this group—first on an individual basis and then through a consumer products show. They had hoped to get support from 100 of these fans; they were inundated with responses from 10,000. The new development team was flooded with new ideas for the product.
Almost a decade after they began, LEGO has not slowed in its pursuit of new and better ways to work with outside talent. In 2011, LEGO launched a process called Cuusoo (which means wish in Japanese and the name has been changed into LEGO ideas) to find and evaluate new ideas for LEGO products. Anyone can submit ideas to the Cuusoo site. Idea owners are encouraged to promote their ideas. If 10,000 people vote for an idea, LEGO will review the idea. If the idea meets certain guidelines related to considerations like design, brand, pricing, availability of a license, LEGO will put the idea into production and share royalties with the idea owner. In the case of LEGO Minecraft, the product was already a smash hit game. Cuusoo made it easy for this already engaged and excited community to begin creating brand extensions on their own for the benefit of both LEGO and MineCraft. And, while LEGO is certainly well known for deals with brands from Disney to Starwars, this time the new partnership idea and validation came from a different place—the smart, insightful, and engaged people outside LEGO.
Then back to the theory from the book:
General background (see Introduction in the book)
In general organizations in countless industries have successfully turned to very large groups for their ideas. These online crowds might work within large organizations, but more often participants are not employees. To date, these crowds have worked together to design new products, improve services, create new marketing campaigns, and bring to market low-carbon-footprint housing—to name just a few of the many areas. This is brainstorming on a much larger scale.
We call this crowdstorming.
Like brainstorming before it, crowdstorming requires that we
understand how best to organize the process for gathering and evaluating ideas. There are many parts of the process under investigation.
Figure I.1 shows how a crowdstorm project might be organized from planning and organizing through execution and review (or meta). There is one notable exception. We have moved the discussion about online spaces (which covers the role of technologies and platforms) to the end. We think it’s important to understand everything that makes crowdstorming work, before considering the right enabling technologies. Broadly, the chapters try to answer the following questions:
- How to weigh the business benefit of crowdstorming with an organization’s legal, confidentiality, and brand needs
- What kinds of questions to ask crowdstorm participants
- How to compel a community to participate and reward them when they do
- How to recruit the best people to join your crowdstorm
- How a coalition of partners can enhance crowdstorming
- How to organize participants for the best results
- How to monitor a community in support of community
- How to evaluate results
- The technology alternatives to enable crowdstorming
- Moving beyond what we have shared in this book
Table 1.1 Five Crowdstorming Outcomes explains the benefits from the crowds.
Outcomes – Descriptions
Obtaining a large number of ideas beyond the scope of what is possible with internal team or
Efficiently receiving feedback and interpretations from a wide range of stakeholders to determine where to make future investments.
Through the proposals, identifying new individuals, teams, and organizations to work with.
Generating content and often provocative ideas that in turn lead to conversations and media coverage.
Enabling stakeholders to participate in generating and selecting ideas can positively change the relationship between the organization and stakeholders.
Further research will follow after I will read the book completely.
The 2nd interesting is information that I discovered is the Official Crowdstorm Documentation (pdf).
We can read in the official Crowdstorm Documentation from Hyperloop page 3):
Hyperloop Transportation Technologies (HTT) reliance on crowdsourcing, allows anyone who gives valuable input should receive value in return. By using JumpStartfund’s (www.jumpstartfund.com) approach, 10% of HTT’s future revenue will be divided among the participants and winners of the different tasks that will be completed.
This approach borrows many aspects from open source models, and combines them with commercial enterprise. Thus, Hyperloop Transportation Technologies is a unique combination of a commercial company and open forum, in which virtually anyone with ideas and passion can participate and be part of potential future profits. If you can contribute something valuable, you can receive a part of the company’s success in return. This open-ended, crowd-oriented approach has been Hyperloop Transportation Technologies approach from the very beginning, and will continue to be.
The Community Financing model (page 63 of the document)
A very important part of the project is financing.
In general the company HTT is a research and development company that develops the know how to build Hyperloops in many cities around the world. The company is committed to using a community-based approach for crowdsourcing technical and financial inputs to the project.
And then about the Jump Start Fund.
Jump Start Fund with the clear slogan on their website:
We allow anyone to build a community around their project
– Crowdsourcing for your Ideas from Conception to Funding –
Dirk Ahlborn co-founded and became CEO of Jumpstarter in 2013, a company which provide crowdsourcing technology. He also is the CEO of Hyperloop Transportation Technologies, which is a project supported by JumpStartFund, one of JumpStarter’s subsidiaries (source: wiki).
The question that came up was if Hyperloop used the JumpStartFund or the JumpStartFund was founded to support Hyperloop. JumpStartFund was founded in 2013. Elon Musked allocated an informal group of engineers at both Tesla and SpaceX from late 2012 until August 2013.
Jump Start Fund write on it is website:
We also learned that there are a large number of smaller investors who see the potential of such companies and their entrepreneurial owners, but we had no effective and efficient channel through which to connect them because of the regulations for controlling transactions related to securities.When the Jobs Acts of 2012 was signed into law authorizing the needed changes in those regulations, we undertook the creation of the JumpStartFund platform to provide this much needed channel.
So probably it was not co-incidence that it is started in the same period and on Wikipedia it is confirmed:
JumpStartFund considered Hyperloop to be their first project and started work on it using their crowd collaboration platform.
As mentioned the Crowdstorm idea inspired me. I will do much more research as I expect it will fit to my project “The Uber for flexible work”. This post is part of the research and more will follow on this blog.