Community Enterprise

Summary

Wouldn't it be great to get a crowd of experts to invest a bit of time in your enterprise in an effective and meaningful way, especially when traditional investment is not available?

Community Enterprise (CE) is a platform that allows enterprises to be built and developed by a community. More concretely, it is a work crowdsourcing platform that compensates work by equity, thereby providing new means of enterprise financing.

The idea of enterprise crowdsourcing is in the air. While this goal is not easy to achieve, all the components are already there to make it a reality.

Problem

Enterprises are frequently in need of external resources to support their development. Traditionally, such resources have been supplied by various types of investors, investment funds, banks, and government grants. However, this traditional form of financing is in very limited supply, and therefore, hard to obtain. The various limitations of the traditional investment paradigm are an important bottleneck of progress in the private sector. The situation is especially difficult for startup companies, most of which fail because the necessary resources and expertise are not available.

On the other hand, there are lots of people who have some free time, money, and interest to invest into a company that they believe in. It could be just a few hours a month and a few hundred bucks, but such resources can be more than sufficient if enough people invest. For this to happen, a new conceptual, legal, and technological platform needs to be created.

Solution

"In the long history of humankind...those who learned to collaborate and improvise most effectively have prevailed - Charles Darwin"

Enterprise equity is routinely used as a means of work compensation. However, in most cases it is used as a compliment to monetary compensation. Most people cannot afford to work just for equity, unless they can do that while earning money at another job. That is where crowdsourcing comes in. Crowdsourcing is becoming an increasingly popular way of outsourcing work to a community on a task-by-task basis. This methodology would allow individuals or organizations to invest whatever resources they can spare (e.g., a few hours per month) into an enterprise in exchange for equity. Enterprise can crowdsource any type of work, be it management, development, marketing, sales, or support.

Lots of people would like to be involved in cool innovative projects. Most have to earn their living, but have a few hours a month to spare on a side project. CE allows enterprises to tap into this enormous resource that is currently inaccessible.

For this idea to succeed, a new conceptual, legal, and technological platform needs to be created.

Creation of such a platform is not a simple matter, but things are made easier by several related projects and experiences. These include:

1. Open collaborative platforms / projects such as open source projects (e.g., Open Office), content communities (e.g., Wikipedia), or social games (e.g., eRepublik).
2. Legal frameworks for sharing intellectual property such as open-source licenses and Creative Commons.
3. Investment platforms for monetary exchange between individuals and groups, such as Kickstarter and FriendsClear.
4. Task crowdsourcing platforms such as Amazon's Mechanical Turk.

The challenge is to put all these parts into a complete easy-to-use solution. As usual, the devil is in the details. The platform requires a fine balance of flexibility and simplicity as well as control and freedom in order to work. It needs to get this just right, but it is possible to achieve.

Once the CE platform is available, it would provide a rich alternative source of investment to all kinds of startup projects, for profit or not for profit. It would also be used by existing companies to raise investment from individuals or to distribute internal resources more effectively. CE would do for time investment what microfinancing did for monetary investment.

In addition to the resource aspect, crowdsourcing can add the extra dimension of "the wisdom of crowds". Finally, a CE would naturally tend to be more democratic and agile than the traditional enterprise structures.

Business model

The business model behind CE could be based on a mix of: 1) targeted advertisement, 2) license or subscription fees, and 3) transaction fees.

1. Effectively, CE is a novel enterprise collaboration platform. Hence, its users are the perfect customers for complimentary collaboration products. Moreover, CE fosters highly distributed collaborative organizations, thereby actually creating additional market for this type of technology. CE can make money by advertising and becoming a distribution channel for these technologies.
2. The CE platform could be licensed or offered as a service for internal collaboration within existing organizations. In this context, CE could serve to gather support for internal projects from the pool of the organization's employees, thereby improving internal resource management and cross-team collaboration. Alternatively, CE could be sold at a reduced rate to non-profit organizations as a platform for recruiting and managing volunteers. This would be a great way to increase public involvement in social causes.
3. CE could charge its user companies a percentage of the investment that they receive through the platform. The fees could be a combination of equity and cash, depending on the situation.

Given the high interest of governments to foster entrepreneurship, the first and third source of revenue could be co-financed by governments.

It would be natural to build CE from the beginning in the spirit of what it is trying to achieve, i.e., by inviting as many members as efficient to contribute to the project. Since the right platform is not available at this time, the openness of the project from the beginning will have to be limited but can increase in phases as the platform is developed. At the beginning, a core team would have to put together the most critical aspects of the platform into a prototype that would allow the project to launch. Such a prototype could be assembled by a quick & dirty integration of already existing pieces of the puzzle.

Go-to-market strategy

Due to the novelty and importance of the concept, CE should get easy publicity from mainstream press. Moreover, CE is subject to a significant viral effect as enterprises themselves will be promoting the platform in their effort to find new investment. In addition, governments can serve as a great free marketing channel since they maintain constant communication with local enterprise communities and it is in their interest to promote CE. The above can be supplemented by the common on-line and off-line marketing channels. Such a strategy should ensure rapid user growth that will in turn lead to rapid monetization of the platform.