Topcoder Case
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Transcript of Topcoder Case
TopCoderDeveloping software through crowdsourcing
How TopCoder came about?
Jack Hughes
Tallan Inc. (Business Data Services)
Sold for $920M
Lessons learnt from Tallan?
Not happy with the operations of TallanExpensive and time consuming recruitment process
Evolving technologies results in high employee turnover rate
More can be done to save clients time and money
Crowdsourcing was the solution!
TopCoder v1.0Consulting Business Model
Host competitions with monetary rewards from sponsors
Build community strength
Gain popularity
Winner gets a job with the sponsorHR firm
• Looking to hire
Client
• Held Competitions
TopCoder • Winner got
hired
Crowd
TopCoder v2.0Competition Based Model
Crowd sourcing Software Development
Tasks of Software Development Process
Task Conceptualization
Specification
Architecture
Component Production
Application Assembly
Certification
Deployment
v.2.0 PM PM PM COM PM PM PM
• Looking for software application
Client
• Held Competitions
TopCoder • Winner got
rewarded
Crowd
TopCoder v2.1Competition Based Model
Dissatisfied with $20 mil in revenue
Platform Managers costs too high
Tasks of Software Development Process
• Looking for software application
Client
• Held Competitions
TopCoder • Winner got
rewarded
Crowd
Task Conceptualization
Specification
Architecture
Component Production
Application Assembly
Certification
Deployment
v.2.0 PM PM PM COM PM PM PM
v2.1 PM & COM PM & COM COM COM COM PM PM & COM
No. of Clients vs. No. of PMs
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
0
10
20
30
40
50
60
No. ClientsNo. PM
Total Revenue vs. PM Cost
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
0
1
2
3
4
5
6
7
Total Revenue PM Cost
Why was there a decrease in revenue?Switched from hourly based consultation to monthly fee
Distributed revenue over months instead of concentrated billing
Increase of prize moneyBecause of more contests
Revenue/PM vs. Revenue/client
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
0
0.05
0.1
0.15
0.2
0.25
0.3
Revenue/PMRevenue/client
Types of Competition
Algorithm CompetitionAttract new members
Retain existing members
Software Development CompetitionProvide clients with specific solutions
Expand TopCoder’s catalog
Algorithm Competitions
Timed competitions
Available in Java, C#, C++ & VB.Net
Single Round Match consists:Coding Phase
Challenging Phase
System Testing Phase
Example of an Algorithm Competition
Example of Algorithm Competition
Input - 123210122
Output - 011100011
Encrypt by adding to each digit to the sum of the adjacent digits
[0+1], [0+1+1], [1+1+1] etc.
How does it attract & retain the TopCoder Community
Think about your lab practices/testsChallenging
Prove your worth
Self improvement
Motivating members
Money is the most attractive thing
TopCoder ratings
Peer reviews
Community
TopCoder Community Activeness & Earning Distribution
Latent Pool
Other Earners
Active Pool
82.5% 17.5
%
95%
5%
How to motivate the latent pool?
Monetary Award$50 for successful compilation of code by latent pool (for 5 rounds)
1.5 times prize money if they are the winner
Prospective Jobs
Advantages
TopCoderIncrease Profit
Higher Product Quality
Happier Customers
Increased Catalogue Size
Community(Crowd)Better Feedback for their work
Enrichment
Flexible time
Flexible Income
Advantages cont’d
ClientsReduced cost
Increase efficiency
More ideas
Better quality
EconomyCost savings of the client will be passed on to the consumers
Disadvantages
TopCoderHigher cost incurred for evaluation
Possibility of lost of community
Higher cost incurred to manage projects
Community(Crowd)Reduced prize money
Possible little or no credit
Disadvantages cont’d
ClientsPossible lost of IP
Possible lost of security
Possible lost of control of project
EconomiesWhat happens to companies using the conventional model of sourcing?
Examples
Future Of Crowdsourcing
The increasing complexity of problems has caused a rise in mass collaboration
Big problem broken into small problems for a huge group of participants to solve
Supplying a way for companies to engage with and harness the crowd for help
More ideas
More efficient
More creative
De facto standard for prospective employee evaluation
Musician Pete Seeger: Participation is the only thing that is going to save us from global warming