Crowdsourcing sounds good in theory—pull together a bunch of smart, motivated individuals from across the Web to create a new product or business—but in practice it is not so easy to pull off. One of the first major casualties of the crowdsourcing movement looks like it will be Cambrian House, the Calgary startup that tries to organize the crowd around creating new ideas for Websites and software products. After unsuccessfully trying to raise a new round of capital, it is our understanding that the startup has negotiated a fire sale of its intellectual property, assets, Website (and whatever community remains after the sale) to Spencer Trask Ventures, a New York venture firm inspired by the financier who originally backed Thomas Edison.
The deal is structured as an asset purchase, after devolving through various stages from initial talk of a new investment to a joint venture to a buyout. The more Spencer Trask looked, the less it offered. Spencer Trask is basically buying the Cambrian House platform and its community for a fraction of the $7.75 million that investors have already put into the company. We cannot yet confirm an exact figure, but one source speculates that it could be less than $1 million. Spencer Trask plans on taking the assets and rolling it into VenCorps, a Cambrian House project in development that wants to apply the crowdsourcing concept to venture capital. Sean Wise, a Canadian “venture consultant,” is heading up VenCorps and (presumably) whatever is left of Cambrian House. A Cambrian House spokesperson (VP of Communications Jasmine Antonick) contacted confirms that the sale has gone through and that the site will “dissolve” in three months. We are placing Cambrian House in the deadpool.
So far, 6935 ideas have been created on the Cambrian House site. Some of them must be worth pursuing, no? Perhaps. In addition to VenCorps, Cambrian House itself will be keeping some of its more successful projects alive, including desktop fighter game Gwabs, independent-film funding service FilmRiot, Digg-like charity Greedy or Needy, mobile app testing site Mob4Hire, and virtual gift-wrapping app Prezzle. It will also retain rights to its source code and try to license it to others through an application called Knottle and a platform called Chaordix, both yet to be released. Many of these ideas didn’t gain traction until they were invested in and championed by Cambrian House itself, which again makes you wonder whether any good ideas can actually grow into full-fledged products from an unaffiliated crowd.
To be charitable, maybe Cambrian House just suffered from poor execution and Spencer Trask thinks it can do better. But crowdsourced venture capital? If the crowd cannot even make a decent Web app, the chances of its being able to allocate millions of dollars more efficiently than seasoned pros does not seem terribly great.
The imminent demise of Cambrian House is a cautionary tale for other startups, such as Kluster, CrowdSpirit, CrowdSpring, and FellowForce, trying to cut their teeth in the nascent crowdsourcing industry. They all have their own approach, and experimentation is necessary to find the right one.
The fall of Cambrian House won’t deter them from trying. For instance, Kluster takes a more structured approach by breaking down projects into manageable stages and has thought through the incentives a little differently. And CrowdSPRING, which focuses on designs for Website and marketing materials, is formally launching tomorrow after picking a winner for the $5,000 contest to design its own Website.
Some of these will survive, and some won’t. The key is attracting the right community of active contributors and structuring the rewards in such a way that makes it easy to participate. Or is crowdsourcing simply a bad idea that should be put to rest?
Update: In a comment below, Cambrian House CEO Michael Sikorsky reflects (excerpt):
Indeed, our model failed. In short: we became a destination people loved to bookmark more than they loved to actively visit (our traffic pattern was scarily VC-ish). The limiting reagent in the startup equation is not ideas, but amazing founding teams.
A key assumption for us, which proved out NOT true: given a great idea with great community support and great market test data, we would be able to find (crowdsource) a team willing to execute it OR we could execute it ourselves. We needed amazing founding teams for each of the ideas – this is where our model fell short.
What we learned: it would have been better to back great teams with horrible ideas because most of the heavy lifting kept falling back on us, or a few select community members. A vicious cycle was created leading all of us to get more and more diffuse.
Hence: the wisdom of crowds worked well in the model, but it was our participation of crowds aspect which broke down. Trying to find people willing or capable to take on the offspring (our outputs) of the CH model was hard and/or incredibly time consuming.
It is not often you get such an honest assessment of why a business failed from a CEO in the midst of its demise. Sikorsky also disputes that it was a “fire sale,” but declines to give any specifics on the price. He also notes that Cambrian House as a company will continue, even if the site will die, and still owns its intellectual property.
Update 2 (5/20/2008): The company has issued two press releases. One details the sale of assets to Spencer Trask and the other emphasizes that Cambrian House is still a going concern, albeit with a totally different strategy of selling “crowdsourcing in a box” (i.e., licensing its technology to other sites that want to make a go at crowdsourcing). And here’s a 26-minute video Sikorsky made to explain what is happening at Cambrian House titled VenCorps, TechCrunch, and a Loong Talk:
I think the weird name and the logo killed them before they even got out of the gate. Sounds like a recovery house for wayward vikings.
i don’t think the firm Spencer Trask has anything to do with the person Spencer Trask other than the name.
The thing that always baffles me with idea sharing / crowd sourcing sites is this: If you’ve got an idea that you really think is worth pursuing and putting in all the hard work, blood and tears it takes to give even the best ideas a chance to succeed, would you really share it on such a site or would you go for it yourself?
In turn, which are the ideas to post on such sites? Exactly, it’s the things that seem like a cool idea but you’re not sure if it’s worth going for it or you just can’t bring yourself to put in all the risk and work it takes. Why not, post it and see what others think…
In my mind this results in a hodgepodge of mediocre ideas that others haven’t thought through properly (error 405 - business model not found
and /or that they don’t have the chops to go for it themselves.
While this is all fun to share and explore it certainly is not the place where highly profitable business start their journey. Why? Because highly successful and profitable business are the result of good to very good ideas that are executed extraordinarily well. Even fairly lame ideas are can be highly successful if executed very well. Selling cheap computers online and over the phone - not a very cool idea but Dell executes it into a huge success. Starting a trucking company? Probably the worst business to start but Deborah knows how to execute it to success by specializing in HotShot last minute transports for Oil companies (check out her blog http://www.lifeinthefastlane.ca/ and her business http://www.fastlanetransport.ca/ to see what I mean)
So if I can win by executing a so-so idea very well, why would I want to share a ‘great’ idea on one of those sites?
Peter
do you follow me on http://twitter.com/peterurban
“Some of these will survive, and some won’t.”
Erick - at this early stage in the evolution of Web 2.0/online community/crowdsourcing, I think your statement is a tremendous understatement.
Most will fail and very few will survive longer than the initial funding round, as you probably secretly know but don’t necessarily write…
I feel sorry for them, Good idea. Don’t know what went wrong.
sean wise was on the board of cambrian house…why would spencer trask wants sean wise to run vencorp? the blind leading the blind!
http://www.seanwise.com/2007/0.....llio_.html
So what exactly does all this mean? They’re keeping the rights and the silly products, but selling the company? What does this say about the company and the people that work there? Sounds to me that it’s a sinking ship. Unfortunately not all rats leave a burning ship as it goes down. I couldn’t imagine working for a company that sells everything off for a fraction of the initial funding, and then continues to pawn off the remaining stuff.
It’s so sad, I had big hopes for a new method of working on internet related products. I’m wondering if Eric’s statement is correct “just suffered from poor execution”, or is it 2.0 community read for crowdsourcing?
Ask inventive people if they need alternatives to get ideas made into commercialized products/services, and they’ll say yes resoundingly.
Offer a site that attempts to do that and you get a clearer response: “I’ll give you my second rate ideas, but not the winners which I’ll work on myself.”
My bet is that the formula needs to be:
- built off of a trusted source website as an added feature that has thousands of inventive, smart folks already tuned in
- made as a non-profit where funds pay for hosting and charity
- has a positioning of tackling projects where the work is largely labor intensive, variable cost and can be done in assignable independent tasks, e.g. software
Did I just describe open source? Maybe that’s where the model works the best while for-profit cousins may not be in the cards.
Should there be a solution between starting a company because of a single idea v. doing nothing with that idea? Yep. A company with resources and patience will get rewarded for creating ways to reward open, transferable collaborative innovation. My bet is that the company doesn’t even need to be a pure play of ideas (i.e. it becomes an extension of what they already do, re: P&G).
Spencer Trask is a bunch of bottom feeders looking to get something for nothing.
I believe Spencer Trask backs Innocentive, which has seen much success in Open Innovation on the ‘high end’ … tapping engineers, scientists, etc for big-reward crowd-source challenges.
I”m sorry to hear Cambrian House is heading to the deadpool. I wish their employees the best. I don’t feel this will dampen the ongoing search for best models to unleash the potential of ideas. I think the most consistent success will be around established businesses integrating ‘idea portals/communities’ to tap consumer/employee/client ideas and suggestions, rather than using the crowd to create something from scratch, or hosting crowd-sourced contests. Salesforce is all over this (DellIdeaStorm, MyStarbucksIdea.com), Mzinga another great example, and Fellowforce’s new Webforce Co-creation platform is an exciting, more affordable alternative as well.
I’m especially jazzed by the appearance of SuggestionBox.com, recently profiled on Techcrunch. I think it has a great shot at gaining fast traction (the brand/URL alone is pure gold) as a simple, affordable way for any business to ‘ask the crowd’ for feedback and ideas.
My sources at CH are saying that most of this isn’t true. That there isn’t a fire sale. Erick, are you willing to let us know your sources for this?
I think there is still some fight left in Cambrian House.
Brenden
CrowdsoureThis.com
@Tim, lol, you’re on a roll this afternoon.
Crowdsourced anything sounds difficult to navigate if there is hope of revenue at some point. Good luck to all who bother to endeavor, it could be a very lucrative one-off of the incubator model.
I’m a CH member.. they’ve been working on something for a long time.. pretty sure it involves investing in the commuunity’s ideas.. so they’re not dying - it’s a rebirth!
If you don’t believe me then check out this new york times article… http://www.nytimes.com/2008/03.....ref=slogin
Sounds like Google didn’t need all that pizza after all. This is a glorious Web 1.0 style failure.
The employees should be worried. This ship is going down along with all the blowhards that run it.
Cambrian House confirmed most of this post. It wouldn’t comment on the price of the asset sale.
I know for a fact that they were trying to raise more funding, couldn’t, tried to sell the whole company, couldn’t, and finally settled for what they could with the asset sale. I also know the price Spencer Trask was willing to pay kept going down.
I can’t get into my sourcing. Suffice it to say, when I called Cambrian House, the details panned out.
http://www.crowdsourcethis.com.....cing-dead/
A summary of some of the different crowdsourced offerings:
http://www.readwriteweb.com/ar....._guide.php
Seems to be at least some early success stories there!
Wait, confirmed *most* of it? Which parts did they confirm and which didn’t they?
Who confirmed it at Cambrian House?
Also, you mix specific facts from unsourced people with sweeping generalizations of an entirely new industry.
Not impressed.
Cambrian House has some serious branding problems. The name does not even remotely communicate the product/service and the logo makes it look like a professional sporting league.
1) Most startups failed. But CM is more likely to fail because it’s really not a product. It is more like a culture movement. If the general concept is valid, it will take a very long time to take shape. They ran it with a product startup method/structure/burnrate is a bad idea.
2) No valuable intellectual properties would be put into such a CM crowd for its ownership structure. The quality of those ideas there are really questionable.
3) CM really knows how to sell itself though.
Very interesting site from a product-marketer’s perspective but $7.7M is obviously too much. Where did the money go ?
erik, your diligence on spencer trask is poor. they bought one of edisons old shell companies.
@NickeyD
http://www.youtube.com/watch?v=q3BdkToI5Bc
That’s where the money went. What a waste.
The thing that always baffles me with idea sharing / crowd sourcing sites is this: If you’ve got an idea that you really think is worth pursuing and putting in all the hard work, blood and tears it takes to give even the best ideas a chance to succeed, would you really share it on such a site or would you go for it yourself?
In turn, which are the ideas to post on such sites? Exactly, it’s the things that seem like a cool idea but you’re not sure if it’s worth going for it or you just can’t bring yourself to put in all the risk and work it takes. Why not, post it and see what others think…
In my mind this results in a hodgepodge of mediocre ideas that others haven’t thought through properly (error 405 - business model not found
and /or that they don’t have the chops to go for it themselves.
While this is all fun to share and explore it certainly is not the place where highly profitable business start their journey. Why? Because highly successful and profitable business are the result of good to very good ideas that are executed extraordinarily well. Even fairly lame ideas are can be highly successful if executed very well. Selling cheap computers online and over the phone - not a very cool idea but Dell executes it into a huge success. Starting a trucking company? Probably the worst business to start but Deborah knows how to execute it to success by specializing in HotShot last minute transports for Oil companies, check out her blog ‘lifeinthefastlane.ca to see what I mean.
So if I can win by executing a so-so idea very well, why would I want to share a ‘great’ idea on one of those sites?
Peter
do you follow me on http://twitter.com/peterurban
@23 Wow. Was not aware they tried that stunt. Like bringing thousands of free t-shirts to CafePress.
I’ve worked with Sean Wise and he’s first class all the way.
@Voice 2.0: Who cares?
Cambrian House, to date, hasn’t presented a stable business plan to this space.
They’ve tried giving away part of their company (through a Co-op), owning a portion of each idea submitted, viral marketing campaigns…and you know what? Nobody really cares. The fact they wanted the world to believe they’re the ‘Home of Crowdsourcing’ before proving they could facilitate Sourcing of any kind is actually pretty funny.
$7million in Calgary is couch change which along with CH, will hardly be missed.
I’m not an insider on this, but I’ll tell you this:
1. Broad details (funding, sale, sale) are accurate.
2. Actual details (y’know, the stuff that makes the story factual, like “deadpool” vs “purchase” are wrong. Including vencorps isn’t a ch project. St didn’t tap wiswe (other way around), etc.
The story, and angle, on this are off base erick, plain and simple.
Spencer Trask should fund the idea that I shared with the Cambrian House community.
http://www.cambrianhouse.com/i.....d/T49gkhW/
My full response to this:
http://tiny.cc/CrowdsourcingNeedsNewHome
Summary: Crowdsourcing HAS a very successful model (Innocentive). If this one failed (Cambrian), it does not invalidate the entire idea of crowdsourcing. And hats off to the Cambrian community for at least trying.
Erick:
Indeed, our model failed. We’ve spent many hours reflecting on it, and, I’d be happy to share our learning’s in detail with anyone keen on the crowdsourcing space.
But, in short: we became a destination people loved to bookmark more than they loved to actively visit (our traffic pattern was scarily VC-ish). The limiting reagent in the startup equation is not ideas, but amazing founding teams.
A key assumption for us, which proved out NOT true: given a great idea with great community support and great market test data, we would be able to find (crowdsource) a team willing to execute it OR we could execute it ourselves. We needed amazing founding teams for each of the ideas – this is where our model fell short.
What we learned: it would have been better to back great teams with horrible ideas because most of the heavy lifting kept falling back on us, or a few select community members. A vicious cycle was created leading all of us to get more and more diffuse.
Hence: the wisdom of crowds worked well in the model, but it was our participation of crowds aspect which broke down. Trying to find people willing or capable to take on the offspring (our outputs) of the CH model was hard and/or incredibly time consuming.
For clarity of your story, and perhaps, just pride for my team and my investors:
- You missed http://mob4hire.com in your original post. Paul and his team launched this completely using the CH platform.
- The team and community at CH are top-notch. I’d be proud to follow them anywhere.
- We were and are still able to attract investment (this you just have wrong). However, we believed the model was off (once you have this feeling in your stomach you don’t take on additional capital until you’ve figured it out).
- Fire-sale of our IP - two points: #1) We haven’t sold our IP – we still own it – and the IP of the portfolio companies. #2) Erick – you know as well as I we won’t comment on the deal specifics. However, I believe deeply this was the right move for the community.
- The ‘rebirth’ with VenCorps goes to fix the failures I identified above. With VenCorps, the ideas don’t matter anywhere as much as the teams do.
- I’m bullish crowdsourcing but how/what you can apply it to is still under-test.
- Deadpool – yes, our original model can clearly be put to rest. However, the same can’t be said for the company.
Michael Sikorsky, CEO of Cambrian House
I was presenting at an Angel Forum and these guys were the talk of the town. Mostly because the CEO was very charismatic (he showed up in jeans+tee shirt and pulled it off).
The problem IMHO is not with crowdsourcing in general, it’s _what_ you’re crowdsourcing that matters. In fact one of the guys involved with CH was a former exec with iStockphoto. I’ll bet you 50 million dollars the guys at iStock don’t think crowdsourcing is a failure.
Crowdsourcing articles (Wikipedia) and photos (iStock) was a stroke of genius. Crowdsourcing ideas? Not so much.
Ideas aren’t worth anything. Kind of like opinions in blog comments.
Like this one
@Michael #31
What a refreshingly honest and reflective response.
So in summary: Long Live the Potential of Ideas … but the Executioner’s Song is that Execution is Key … or Ideas are Powerless.
@ Michael
Nicely put!
Cambrian House is like every other start up that starts out with one vision in mind and follows another path. The main thing learned here that great ideas are useless unless there are enough great minds/hearts to follow them through to actualization-something very rare in this world. Most people have a great idea and sit on it until someday some else does it and they say, “hey, I thought of that years ago!” Really - whomever your Cambrian House spokesperson (a lofty title at that) is,obviously has some bone to pick b/c a lot of your details are one sided and fabricated to hurt and embarrass CH.
CH took on an idea that was maybe too big for it’s britches and is better off in a VC types’ hands.
Michael,
Sorry to see this outcome, and I don’t want to appear to be putting salt in the wound but the team/relationship aspect was the key weakness I identified when I wrote about you a year ago. Best of luck going forward.
http://jeffnolan.com/wp/2007/0.....gets-real/
Why do I get the feeling #33 and #34 are fanboys?
I agree with #19, the branding was a disaster.
so bad…
as a non-english speaker It is hard for me to remember the name,
I discovered their site a year ago and NEVER NEVER NEVER I’ve been able to type it correctly! I always have to google for crowdsorcing…
But I still have faith with crowdsorcing,
I specially believe in the http://www.pixish.com/ project from that ex-JPGMag guy.
@37 Nope, I’m just a big fan of Open Innovation and the potential of ideas, especially CGI (and employee generated as well). What and who are you? Hard to tell when hiding behind a non-link.
Kluster. haha ok, Let’ play Word Association:
Q: Coca…
A: Cola.
Q: Microsoft…
A: Windows.
Q: Kluster…
A: F#$k.
For comment
دردشة
شات
@ Michael, #31, Good for you to put the horse down in your own words.
For those of you interested in learning from the Deadpool, I thought I’d add some more history as CH wasn’t the first and won’t be the last. Here are some notables for the record as added history on the crowd sourcing space:
2000/2001 - InnoCentve and NineSigma kick off, though, these are really not crowd sourcing as much as they are crowd competition in parallel. Great models, very well executed by both companies for the arenas they serve.
[See: Wikipedia for InnoCentive, NineSigma home page]
2002 - Howard Rheingold writes Smart Mobs along with a great blog on the topic.
2003 - Henry Chesbrough writes Open Innovation: The New Imperative for Creating and Profiting from Technology
2004 - Anand Chhatpar started Brainreactions as a real life brain storming business serving a ton of Fortune 500’s. A different spin on InnoCentive and NineSigma in that they create a few hundred ideas around a need area in 3 hours (what I’d call the fuzzy front end) and give an analyzed, filtered as well as unfiltered list to the client. Great service that continues to do well.
2005 - Erik von Hippel publishes Democratizing Innovation which is free from his MIT site in PDF form.
2005 - Ken Thomson writes The Bioteaming Manifesto which can be found on ChangeThis. Ken has adopted his thoughts into his start up, Swarmteams.
2005/2006 - My company, Invequity, launches I4E as an ‘online collaborative invention network’ to foster networking to the ends of creating licensable ideas using social networking and profit sharing. While some larger clients, dedicated inventors and ideas came about, we needed to do much more to get ourselves ‘out there’ to target our core audience and in the end, we moved on to bigger problems that were easier to solve. The majority of our efforts are now rolled up into the bigger vision of Patents.com LLC. (@Michael/CH, we also got the shock value by being put in the deadpool even though we did a similar-style sale).
2005/2006 - Rob May headed up a concept called The Business Experiment (TBE) that started to get traction in early 2006 and ended when the final voted idea needed to get to execution. Rob addresses his learnings if you Google “The Business Experiment, BusinessPundit”
2007 - Dell Ideastorm deserves credit as being an early adopter of raw ideas being populated and discussed in a community setting.
2007 - Incuby launches as a showcase for inventors. No idea where this is at v. goals.
I’m sure I’ve missed some other important ones that Brendan has covered.
When we were formulating ideas around this arena back in 2004, only Yet2 was noted as a key player in idea transfer which didn’t have direct experience. Any current player [with funding] would be well served to connect with people that have spent time and capital into what worked and what didn’t.
@eve…
exactly where we wanted you.
Love,
Ben
We hear that Silicon Valley Hot Shots Decision Counsel were brought in to keep the VenCorps project on track. http://www.vencoprs.com
I’ve updated the post with Cambrian House CEO Michael Sikorsky’s comment. Thanks for the honest reflection. (I tried reaching out to Michael before I posted, but I learned later he was on a plane, so I’m glad he decided to add his perspective).
I also updated the post to include Mob4Hire as a surviving project, and identified the CH spokesperson I talked to, VP of Communications Jasmine Antonick:
http://www.linkedin.com/in/jasmineantonick
@jeremy, #28, I guess I’ll take Sikorsky’s word over yours. And if you go to the Vencorps link in the article, you will see that it is indeed hosted by Cambrian House.
-Good CEO
-Bad Company Name
-Bad Logo (what’s a viking got to do with anything?)
Ben Kaufman,
you and every other guy wanted me there.
show me the goods, big boy.
Crowdsourcing is an interesting concept… but saying CH is therefor a good company is a stretch.
the tech industry is littered with smoke and mirrors - companies being folded into each other for tax losses and then the owners/investors talking about it as if it were some sort ‘exit’ is just a fraud.
7.7M dollars could do a lot, but in this case did very little.
Pizza’s for google, sponsoring trade shows, give aways, stunts… PR galore but nothing substantive. I think if you have a private conversation with the investors you will find few who are happy with the management team and fewer happy with the results.
Crowdsourcing will go on, and CH will rightly be remembered as a company which pretended to know something about it, the webvan or etoys.com of web2.0.
@Perry: What makes a good CEO? Blowing through that much investment capital with nothing to show for it? Sounds more like a self promoting CEO to me.