Lance Lim asked:
You know you can start a business alone or with a few friends. However, to start a business with a crowd? Is it possible? Is it rewarding?
With the advent of the internet and web 2.0 technologies, large group of people can connect with each other and leverage on large scale collaboration to achieve collective goals. Crowdsourcing and crowdfunding are popular terms that are coined in accordance to this phenomenon. The power of the crowds has successfully shaped Wikipedia the free online encyclopedia, innoCentive which crowdsources research and development for biomedical and pharmaceutical companies, Amazon Mechanical Turk which enables employers to distribute minute tasks to thousands of registered workers, MyFootballClub which facilitate members to vote on the composition of a soccer team and various other collaborative projects springing across the internet.
Starting and managing a business is often difficult and challenging, most new ventures fail before generating enough revenues to stay afloat. Can the power of the crowds work magic in this instance? If we were to ask a large group of people to take up the difficult and challenging task of starting and managing a business over the internet, can these people turn the business into a profitable venture? Let us discuss the benefits and drawbacks of such a business model.
To start a business, having adequate funding is important. Most businesses fail because of insufficient operating funds. It is important to take into consideration that many businesses take a year or two to generate profits. A significant advantage of a crowd-funded, crowd-managed enterprise is that a huge amount of startup capital can be raise in a short amount of time. If 10,000 people can start a business together and contribute $100, the startup can successfully raise $1 million dollars. Having a huge startup capital does not guarantee success. However, it does allow these aspiring entrepreneurs to enter into high-yielding ventures that are generally monopolized by rich, high net-worth individuals and institutions.
In all large scale collaborative projects that operate over the internet, a proper structure is needed to distribute requests and manage completed tasks from the community. Do existing Web 2.0 Technologies capable of superseding traditional collaboration in managing a business?
In traditional business collaboration, relaying of information within an organization is done through face-to-face communication, group meetings, documentation of reports, emails, presentations, etc. In most large scale collaboration, information is relayed through web-based communication. A crowd-managed business, unlike traditional business, encourage large group of people to decide on business matters, thus effective communication is extremely important. The only way for a large group of people from all over the world to communicate efficiently is through web-based communication supported by Web 2.0 technologies.
Online social networking involves connecting and sharing information with other like-minded people via the Web. Current online social networking collaborative tools have proved to be capable of superseding traditional business collaboration. A business networking platform with social networking capabilities can effectively facilitate the collaboration between owners and staffs. Decision-making is another key component of business collaboration. It is a logistic nightmare to get 10,000 people to attend daily business meetings. Internet poll and forums can be use in place of business meeting to make collective business decisions. The need of physical presence to monitor business activities can be substituted with daily updates from a reliable operation team through blogs and twitters (a form of micro-blogging). With the advent of web-based collaboration, it is easier than ever to co-manage a business with a large group of people over the internet.
Common drawbacks of large scale collaboration projects are the lack of monetary motivation, lack of participants, global language barriers and the difficulty managing a large scale crowdsourced project. A crowd-funded, crowd-managed business model must be able to motivate participants through various incentives and has a proper system to manage large scale collaboration project.
Billions of individuals can stay connected through the internet and actively participate in wealth creation, innovation and social development in ways previously unimagined. When these large groups of web-enabled communities collaborate and strive towards a collective goal, the chance of success is tremendously increased.