Aaron Strout:     

Hi, my name is Aaron Strout. Welcome to the We Show. 

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Aaron Strout:    

Thank you for joining us on the We Show today. My name is Aaron Strout, and I’m the VP of marketing for Mzinga, a leading provider of workplace and customer community solutions.  This podcast is one in a series and can be found on the WeAreSmarter.org site, Mzinga.com, and iTunes under "We Are Smarter."

Anil Rathi:      
Thank you for having me.

Aaron Strout: 
Our pleasure.  We’re going to talk a little bit about what you guys do.  You are one of the case studies in our soon-to-be-released We Are Smarter Than Me book that’s coming out in a couple weeks.  You’re in chapter two, which is called “From R&D to R and We.”

The idea is really this concept of crowdsourcing, or in your case, “crowdcasting,” which we’ll talk a little bit about as we get into the conversation.  Why don’t we start by giving me a little bit of background about you and where sort of the Idea Crossing concept came from, and what you guys do, Anil?

Anil Rathi:      
Sure.  Absolutely.  Well, we believe that the collective ideas of many will always be better than those of a few, so it’s a good fit for the book.  How we got started was when I was about 13 years old – actually when I was even younger – I used to just come up with a lot of ideas, and actually collected a book of inventions and trying to solve different problems just as a kid.  I’m partially half deaf, and so I created unique alarm clocks to help me wake up a little faster.  As I got older and started writing and drawing and developing, I created this book of inventions.  I wanted to get my ideas out there.

After talking with my parents and siblings, and exhausting that avenue, I decided to say, “Well, Sony or IBM or these companies – Apple – they might be interested in my ideas.”  I just picked up the phone, found the customer service hotline and started calling companies and pitching my ideas.  What I found was that it was very difficult to get my ideas past certain people.  At first, I’d be so excited about it and I’d tell them everything, and that, obviously, didn’t work.  Later on, I started navigating my way through the bureaucracy of some of these large companies, and finally got to the right people. So that’s how I got started.  It’s just more from my own frustrations of trying to pitch companies my ideas and getting heard.  I think there’s a lot of people out there that also have that same passion to contribute to causes, missions or brands.

Aaron Strout: 
Now one of the beauties of today is – and I think you’re a little bit younger than me but we’re not too far in age – back in those days, when you were 13, there was no Internet, and so that’s one of the things I think that’s been a great enabler.  It’s talked about in the book, The World Is Flat.  The world is totally interconnected now, so you’re not limited to just how many calls you can make, and you’re not necessarily – even if it was e-mailing people, you can now reach out to anyone and everyone through a blog, or Facebook as an example, or a variety of different channels.  So certainly, that makes life a little bit easier.

Anil Rathi:      
Absolutely.

Aaron Strout: 
Thinking a little bit about what you guys do, you guys actually work with some pretty cool companies and some fairly well-known companies.  Maybe you could talk a little bit about what you do specifically with them at Idea Crossing.  The companies that I’d love to hear a little more about is your work with Hilton Hotels, I think you said you just started a project with Red Hat or just finished a project with Red Hat, and Harley-Davidson, among others.  Can you give us a little background on that?

Anil Rathi:      
Sure.  Well, our mission is to help organizations capture the world’s imagination and use that imagination to solve crucial strategic challenges.  What we do is we fuse the groundbreaking ideas of passionate individuals – really anyone, depending on who the companies want to tap – with the curiosity of these forward-thinking companies.  If you’re a company and you’re even looking outside, I think that’s fairly new these days given all the risks in IP and other things.  So we do this through the design, production and operation of these innovation competitions.  We’ve actually created a process that we call Design - Produce - Play, and so we have a software infrastructure that will enable any organization to target a variety of targeted audiences.  I guess they can pick middle school students, high school students.  They could pick the customers – employees, suppliers, anyone that’s not limited by a specific community – which is a lot different than, I think, some of the other crowdsourcing communities out there that are focused on certain niches.

Aaron Strout: 
To simplify it, if I’m getting this correctly, you guys essentially play matchmaker between big companies that are looking for a fresh jolt of innovation, and then any target audiences you just mentioned.  I think you said you’ve got a term for this, versus just crowdsourcing, which is a term that was coined not too long ago by Wired.  You narrow it a little bit and you call it crowdcasting, so it’s really taking a particular need or project, and not just outsourcing it to the crowd, but picking a particular crowd.  You want to talk a little bit more about that, and why you found that works better than just putting it out to the public, like Amazon might with their Mechanical Turk?

Anil Rathi:      
Sure.  Absolutely.  I think that for ideas, when you’re conducting these types of competitions, you could open it up to the masses. But once you do, you could be inundated with hundreds of ideas.  The way I sort of look at it is if you go out with just a very simple question, a very broad and open-ended question, you’re going to get open-ended ideas.  There’s multiple ways of getting ideas.  You see crowdsourcing sites like Crowd Spirit that just launched and other players out there.  What they’re really doing is they’re developing raw ideas.  When you have a lot of raw ideas, you have to go through and find a way to sift through all those ideas.  What we do is, we’re not targeting necessarily the masses.  It could be open to the public, but what we help companies do is identify the targeted audience.

For example, making it a little clearer, the CEO of Red Hat, Matthew Szulik – we launched a competition for Red Hat called The Red Hat Challenge earlier this year.  They were interested in finding new business models for open source.  They essentially wanted to tap specifically MBA students around the world that have technical knowledge, or maybe even they may not have technical knowledge but they could also be passionate about technology and open source. 

Then they also targeted graduate students in technology, and so we launched a competition for them.  End to end, the whole thing was about eight weeks.  They attracted 343 teams from 144 universities in 15 countries, everywhere there was a Red Hat office.  It was pretty amazing just to see the response of when you do target specific audiences, you target this untapped talent and then, if you are a brand as well respected as Red Hat, you can attract that type of talent to work on these strategic problems.

I think it’s a different approach when you have a lot of raw ideas in a masses format. Again, you’re going to have very open-ended answers.  If you do a crowdcasting model, you sort of mitigate from that risk, and so you’re carefully framing a certain type of question. You’re putting those lane markers out there, and then you’re targeting specific audiences.  You can still be open to other audiences if they hear about it and find out, but it’s a much more carefully planned sort of competition that has a lot of focus.  I think that’s sort of the difference between the two.

Aaron Strout: 
Yeah, so you get the benefit of the wisdom of a smaller crowd; you’re also not sort of putting your IP out to the wrong crowds, per se, and you do get a little bit more of a filter of the technical or whichever type of expertise you’re looking at.  That makes sense.

Anil Rathi:      
Right.  Absolutely.  There’s a lot of flexibility in that it’s sort of like you’re picking whoever your customer is, you know?  You can go out to your customer; you can go out to really anyone, but what you find is that people that are just interested in solving problems, they will come to the table and they’ll solve it. 

In the Red Hat Challenge, actually, the winning team did not have a technology background.  There was only one individual on that team that had a technology background.  The other two were in fundraising for nonprofits, and then the other guy was like an architectural history person.  Totally unexpected people, but they have this process, they have this mentality, and they like to solve problems.  They can apply that thinking to an unexpected solution and give a different perspective.  I think that’s what people at the end of the day, like Hilton and Red Hat and Harley-Davidson and Shell and Lexmark, and all the companies that we’re working with, is that they are looking for that fresh perspective.  They’re looking for that talent, and then they’re also looking to go out and they’re not afraid to ask.  I think that helps their brand, to show that they’re open to new ideas from anywhere and everywhere.

Aaron Strout: 
Well, that totally makes sense.  I guess one final question, and that is you guys have had some decent press recently.  I think one of the publications that you were in was Business 2.0.  I know one of the questions I think that comes up, that comes up with any early-stage company, is for a company like yourself that is completely community-reliant – There are a few others – Cambrian House, as you and I talked about beforehand – What has your experience been with the investor world?  Are they starting to come around to the idea that you’re onto something big?  You’re relatively small but you’re working with these giant companies, and they obviously see a real value to what you’re doing.  Can you give us a little bit of insight on that front?

Anil Rathi:      
Sure.  We’ve been out there.  We’re not specifically pounding down doors to get investment.  We’re looking for a very strategic investor, but I think in general, there is this whole – we’ve been doing this for five years now, but now, because of the crowdsourcing and all these other companies are popping up, it’s getting a lot of traction.  Is your question around why are people skeptical about this?

Aaron Strout: 
Well I guess it’s nice to have attention even if, to your point, it’s nice to be choosy versus feeling like you need capital and not having anybody willing to give it.  I think that we went through the whole Internet boom, and if you had dot-com in your name, then people instantly threw money at you. And then that went away. 

Really, over the last few years, I think VCs and angels and any type of investors have been a little hesitant to give money out unless they feel like there’s sort of a bulletproof case there.  Now it feels like the purse strings are starting to loosen up a little bit, and if you choose to take investment or not, it’s nice to know that it’s out there.

I did read in one of the other articles that I had sort of done as a pre-research, that there was a little skepticism as to whether companies that are using crowdsourcing or crowdcasting really will grow.  Obviously you’re doing fine, but in my mind I think this is a huge opportunity and it’s only going to get bigger.  I think you guys are going to be wildly successful, so it’s really around that. Do you see that same thing and are you starting to have conversations?  Even if it’s with your end clients, you’re probably having more and more of those conversations versus a year or two ago.

Anil Rathi:      
Oh yeah, absolutely.  The demand for this type of thing – I mean, I think that companies need to find the application in it, but they also need to mitigate their risks.  Obviously, when you’re going outside, you have a whole host of IP and confidentiality issues.  I think that initially those are big risks.  If you are going to go outside, then you definitely need to mitigate against those in some ways.  I think for us, we have heard that from our customers, and we’ve seen recently that I think companies are a little more open with information.  When we started back in 2002 and 2003 and we said, “Hey, Hilton,” – or U-Haul, and we’ve worked with some other companies – “give us some of your presentations and market research and what you’re working on, and give it out to these students.” And they were like, “No way. There’s no way I’m going to do that,” or they’ll just, “Here, just take this question and just throw it out there, and let’s see what we get.”  You know, it didn’t produce those types of ideas.

I think over the years, companies wanted to get that type of information out.  Of course, they’re not going to give super confidential information, but they are going to give the information that they have, such that the people feel empowered to take that information and make sense out of it.  I think there’s been an increasing amount of transparency. 

I think the benefits definitely outweigh the risks, but it’s just about making sure that you’re protecting yourself and individuals are protected, and it’s a fair model.  Because, obviously, the individual needs to be compensated in some way. Is that prize money? Is it a percentage of royalties?  Is it some fixed amount?  There are many different IP strategies and ways that you can do that, and I think competitions are a great way to accomplish that because it gives you so much flexibility. 

I think skepticism will change as more and more companies see that this is a great way of doing it but there’s also a right way of doing it, and so I think that we just need to prove ourselves instead of just talking about it and saying, “Hey, we’re this company and we’re going to do it.”  We’re more on the side of just trying to launch these competitions and helping our clients leverage this model and figuring out what is the best way for it. And how do we protect ourselves, and how do we make this a useful tool for innovation?  For us, we’re out there.

We just launched a competition on Tuesday, September 18 for a company that was started by the founder of eBay’s wife, Pamela Omidyar, called HopeLab.  It’s a foundation. 

The competition is called Ruckus Nation, and this competition is going out to find new ideas to get kids physically active. How do you get kids off the couch and moving?  There’s applications for foundations going out and enlisting people to help them with their mission.  There are companies that are looking for the next big thing.  There are government organizations that want to spur innovation, train the youth of tomorrow.  There’s lots of different applications for it, and I think it’s just helping companies go out there and do it in such a way that it’s going to be productive and strategically rewarding to their goals.

Aaron Strout: 
Yeah, well money talks, right?  Our foreword author, Don Tapscott, who wrote Wikinomics, has, I think, a fairly well-known documented case now with the Canadian gold-mining corp. [Goldcorp, Inc.], and I think they did something similar to what you guys did, and basically opened up all of their maps and survey geological data to the world and said, “Guys, have at it.  There’s half-million-dollar prize.”  I think they bought the company for $10 million and turned it into $10 billion or some order of that factor.  My guess is that as you help these companies and you show them how using these narrow crowds can really help their business, that it’s a no-brainer to spend the money.  I think it’s relatively small money.  If I read the numbers correctly, somewhere in the $50,000.00 range for some of these challenges that you do.  I’m sure there’s flexibility.

Anil Rathi:      
Yeah.  We have a few different models.  We have what we call “produced by.”  That’s our Innovation Challenge® property.  That’s with MBA students all around the world.  In its fifth year – last year – there were 440 teams from 88 universities and 15 countries.  This year, it’s closing in two weeks, and that’s sponsored by Hilton, American Express and Harley-Davidson, Shell, and Lexmark.  We already have about 200 teams registered.  We’re expecting about 500 for that.  That’s a produced-by model, where we take care of the whole thing full-service, and integrate all the knowledge that we’ve created, and best practices over the years of doing these things, into that model.

Then we do a “powered-by” model, and that’s where we help companies, like Red Hat and Ruckus Nation, to power their back ends and make sure that we’re targeting the right communities.  It’s not just technology; it’s just trying to figure the best competition. 

How can you make a great experience?  If you’re going to do something like this and you’re going to put yourself out there, I would want to make it fun.  It should be rewarding for everyone.  It should generate a lot of excitement. 

I think there’s a proper way to do that.  I think a lot of organizations think, “Hey, it’s just a contest.  It’s just like a sweepstakes.  We can launch that.”  But I think these are a little different.  People are sharing their ideas and they want to be heard, and they want something in return.  There’s a way to provide that in multiple ways.  Again, I think that it’s a fine balance between managing the sponsors, the companies that are doing this, and also from our end we want to have fun administering these competitions, and then the judges that get involved, as well as the contestants.  It’s sort of an integrated strategy to create the best types of competitions that will make people coming back so that it’s sustainable over time.

Aaron Strout:  Well, it sounds great. Very cool stuff, Anil.  I appreciate you taking the time to give us a little bit of background and talking about what you guys are focused on.  I actually look forward to keeping an eye on you and seeing how you’re going to do in the future.  Ideally, we can work together, maybe doing a roundtable sometime in the future.  Thank you for joining us.

Anil Rathi:       Absolutely.  [Inaudible].  Thanks for having me.  I appreciate it.

Aaron Strout:     

We appreciate you listening in to this series of the We Show podcasts. To find other podcasts like this, you can check out WeAreSmarter.org, Mzinga.com, and also iTunes under "We Are Smarter."

Thanks so much for joining us. We look forward to seeing you next week.

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