Than A New Capital Source
However, there are some areas in which crowds might
outperform existing institutions. And for these contributions, crowds deserve
serious consideration for startups and their stakeholders.
Understanding the Costs of Crowd Benefits
When it comes to contributions, you should expect to find power laws at work. That is, a small group will drive a great deal of the value. For this small group, you should expect more help to refine product-market fit, more access to their unique expertise and more help with early customer acquisition. Like advisors, don't they deserve compensation? Or might you get even better contributions if you made it explicit, upfront that this type of compensation was possible?
Also, involving a larger group of stakeholders
introduces new demands on founding teams. Founders will need to plan processes
to share progress and respond to feedback like they do for shareholder meetings
and investor updates. Fortunately we can look to effective community management
techniques from firms like Threadless or Giffgaff, who have efficiently engaged
and worked with their communities.
Like investors, crowds can contribute much more than
capital. And like investors, some crowd participants will be more valuable than
others. How will you recruit your crowdfunders? Read Full Text On HuffPost
