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Startup Aims to Leverage Crowdsourcing in Product Development

November 17, 2011
URL: http://www.entrepreneur.com/article/220565

C.J. Kettler knows what it's like to run a successful startup. In 2005, she founded Lime, a popular healthy-living media company funded by Revolution, AOL co-founder Steve Case's investment company. Last year, Kettler set out with a new venture: Genius Crowds, which fishes brilliant product ideas out of people's heads and gets them into stores.

Genius Crowds harnesses the power of online crowdsourcing. "There's a new movement happening, thanks to social media and the democratization of the web," Kettler says. "Consumers have a voice, a powerful voice. We give that voice a platform in product development and innovation."

Ideas are submitted to the site for free; the community critiques them and chooses "crowd favorites." A panel of retailers, manufacturers and Genius Crowd staffers then researches the idea for marketability and selects those that hold promise.

Genius Crowds is working with retailers and wholesalers to develop the vetted products, as well as directly with retailers who may want to "white label" them. "This is a turnkey operation," Kettler says. "We oversee the design, packaging, prototyping, testing, manufacturing, distribution and everything related to creating a successful product."

Genius Crowds products are still in the prototype phase, but the company plans to announce its first crowdsourced products by mid-2012. The business model calls for Genius Crowds to receive royalties from retailers and to share 25 percent with the inventor.

Product ideas on the site include a pocket pet-grooming kit, adjustable rearview bicycle mirrors and a serving tray with a retractable cover for protecting food from bugs and dogs. We talked with Kettler about nurturing an online idea machine. 

What's it like growing a business from the ground up?
The challenges are in building the community and keeping the members active and motivated while so much happens behind the scenes. We try to be as transparent as possible with our members, but because crowdsourcing is at so early a stage, lots of our large-scale, multinational manufacturing and retail partners want to test the water by keeping their names confidential until they're ready to announce products on shelves. It's a delicate balance.

Have you been able to grow despite this?
Community membership has typically grown between 5 and 7 percent week after week since the site's launch, and it's all happening organically. It proves to me that there's a large community of consumers out there who have good ideas but don't know how to bring them to market. We already receive more than 200 legitimate ideas each month.

You bought out your partner in July. Did that change things?
We had originally planned to partner with a multinational, Hong Kong-based outsourcing company to manufacture all of our products. Now we're positioned as an ingredient brand in partnership with retailers and multiple manufacturers and marketers. Genius Crowds was meant to be a company that the consumer associates with as a co-creation and collaboration brand, and that's what we've become.

What's in it for the retail partners?
Crowdsourcing will soon become as commonplace as outsourcing. Retail marketers need more crowdsourcing to open up their talent pool for research and development. Besides, it greatly reduces costs to the retailers because they're only paying for the idea, not the process. Genius Crowds provides a way to build sustainable relationships with consumers and thereby develop a deeper connection and better brand loyalty.