Consumer Zeitgeist: Lionel David Explains CrowdSpirit as a Company and Community

The sweet spot of community is production

Andrea LaPorte interviews David Lionel, founder of Crowdspirit, via telephone, May 2007

In my interview with Lionel David, founder of CrowdSpirit, we discussed his goals of revolutionizing the creation, development, and production of electronic products through a process of crowdsourcing innovative ideas into electronic product development.

Andrea LaPorte: What is your academic background?

Lionel David: I hold a master’s degree in international transport & logistics (supply chain) from Lyon 2 University, France. I also previously completed a degree program in electronics and mechanical engineering.

Q: Did either of these degrees lead you to the idea of crowdsourced product development?

A: My seven years working in the electronic supply chain had more influence on this idea than my academic background.

Q: What inspired you to organize CrowdSpirit as a company and community?

A: The idea originally came up in August 2006, and is the result of a long process of observation of industry trends--especially in the electronics world. The trigger was the emergence of the "crowdsourcing" concept and especially with the " Cambrian House " model in the software development community. I immediately understood that the time was perfect for replicating this concept in the consumer electronics world.

Q: Why do you think a need exists for crowdsourcing the design and development of electronic products?

A: I see three needs that explain why crowdsourcing is required on the design and development of electronic products :

1. There are overall market structural needs.

The consumer requires transparency and active involvement in the product life cycle. We have seen this trend emerging for several years on the assembly side with products like those of IKEA, and in the marketing sphere with viral communication. Lead-user and focus groups were the preliminary signals of this trend, and web users are also attracted to electronic products; they know the products well and are often experts.

2. There are company structural needs.

Crowdsourcing is a natural step. When a product is co-designed and co-developed the end-user is utilized as a participant throughout a product’s life cycle. Consumers are no longer external to the product equation, but take part directly and in real time.

3. There is a need within the electronics industry.

Previously, everything was "insourced" by the physical boundaries of companies. Then some companies, due to economical scale cost reduction, decided to outsource carrier and warehouse management. Then, electronics companies outsourced manufacturing, distribution, and even R&D.

Look at especially the ODM ODMa trend which is only at the beginning. The entire electronic supply chain is now outsourced to external parties, most consumer electronic companies are responsible only for managing their brand image.

The competitive advantage of electronic companies is based on their ability to generate innovative ideas and produce products. CrowdSpirit has access to a wide range of industrial partners for producing product. Its competitive advantage is based on its crowdsourcing community, which generates the innovative ideas.

Q: Do you think the traditional consumer electronics development/production process is flawed--does it fail the consumer?

A: I would not speak about flaws in the current model, but rather address the limits. The current model worked well in the past, but we are now clearly reaching limits for some products--especially in the consumer electronics community. The competitive advantage of companies is based more on the capacity for quickly generating new, innovative product ideas than in producing them. R&D and marketing departments are reaching their limits. Looking at the end-user is the natural trend and crowdsourcing is clearly the next step.

Q: Could crowdsourcing as a development methodology be more efficient than that of traditional research and development used currently in the design of hardware products? Plainly stated, do you have concerns about having "too many cooks in the kitchen . . . ?"

A: Crowds alone cannot generate sufficient value especially in hardware design if you do not provide them with rules. CrowdSpirit is not trying to crowdsource technical hardware design tasks at this point.

Q: On your website you state that CrowdSpirit "aims to start a revolution in manufacturing by creating the first electronic products driven and inspired by customer's wishes and expectations." What are the revolutionary aspects of this developer methodology?

A: Today, initiatives like lead-user and focus groups are interesting, but work at too small of a scale. CrowdSpirit will create a revolution by extending the scope of the lead-user and focus-groups and range of aspects alongside a product’s life cycle, not only in design, but also in what we call co-development. Another revolutionary aspect is the fact that CrowdSpirit will be one of the most customer-centric companies in the world, because the CrowdSpirit contributors will also be the customers.

The aim of our project is to propose a new way for creating products by creating a virtual company based on the end-user. In 1999, Serge Tchuruk announced his intention to create a new Alcatel without a factory. We're announcing our intention to create a company without permanent employees (actually, with a limited permanent central staff). The cost for industrializing a product will be less important thanks to the crowdsourcing business.

Q: How will CrowdSpirit's product development process work? What type of people are you hoping to attract in each stage of development (investors, inventors, marketers, etc.)?

A: In its beginning CrowdSpirit will be based on the same organizational structure as a classic company (R&D, marketing, manufacturing, quality, support, sales). The major difference is that the employees will also be community members. It means that we're looking for all types of people and competencies, not only inventors. As we will work on several projects at once, all kinds of resources will be required.

Our partnership with several research labs regarding innovation generation and collaborative work area will helps us improving our working methodology and organizational structure to progressively move to a "virtual company" model.

Q: Are you concerned that inventors might be too highly protective of their ideas and reluctant to contribute them in the crowdsourced model?

A: Intellectual property is a major obstacle. CrowdSpririt has a huge job to do in reaching an agreement about the value of ideas with the community. A simple product idea cannot be patented and by consequence has no value on the classic business world. That's why an initiative like Ideaconnection>/a> or Ideawicket>/a> will have major difficulties in selling their ideas, because they lack industrial market value.

The CrowdSpirit model gives value to the ideas, because they are included in the product's entire life cycle. Venture capitalists tend to say that ideas have no real value until they have concrete proof that they work--likewise it's up to the CrowdSpirit community to define what proof-of-concept they want in order to finance a product.

Q: What incentives might you offer to engage participants?

A: We intend to offer a complete "reward plan" based on each individual's needs. We are all different and our needs are also different: If they want money or honorific reward, they will get it.

Q: What obstacles do you expect to encounter in the phases of product development--the idea, design, marketing, funding, and profit-sharing?

A: We need to get a positive response from both the community and the media to generate market value. Then, ensure accurate and fair intellectual properties management. Raising funds from the community for financing product development, achieving CrowdSpirit's financial independence. Finally, having the capacity to handle the growth.

Q: What kind of feedback have you gotten from traditional electronics product companies?

A: Most are observing the crowdsourcing phenomenon, and the various CrowdSpirit visitors from several consumer electronic R&D centers will not tell you otherwise. I think that they have understood that they must enter the arena. The more traditional electronics companies participate in crowdsourcing, the more benefits there will be for CrowdSpirit, because we will better value to the community. Our small size compared to that of traditional electronics companies is the best proof of our loyalty to the community.

Q: Have you consulted industry experts about your ideas?

A: Yes, both people from the internet and manufacturing worlds to check the hypothesis of our business model; so far the feedback is positive.

Q: Speaking more generally about crowdsourcing, do you see this phenomenon gaining momentum/popularity? Or, is it a passing fad like the cooperative living movement of the 1960s and 70s?

A: I think crowdsourcing or co-development in our case is definitively not a "transitory" phenomenon. The basis of this trend was identified many decades ago by researchers like Eric Von Hippel. The word crowdsourcing could be "transitory," but the trend itself is on its way. [Wired Contributing Editor] Jeff Howe was clearly visionary by inventing this word and by raising it to the public awareness. Thanks to the internet, we finally have the means to communicate to the masses, in order to really engage that new industrial revolution which was predicted a long time ago. It's now a question of time before we see the impact of this on our society. We can look at the macro-economical aspect of this revolution, because in the last century several nations tried various economic systems like capitalism and communism. In this century, crowdsourcing could be seen as a new way of thinking for our future society.

Q: Are companies like CrowdSpirit evidence of a new consumer Zeitgeist?

A: Companies like CrowdSpirit are clearly an evidence of that trend, otherwise we would have not so much interest from the media, as I don't think that their interest is in the electronic product itself. People are intrigued by business models like CrowdSpirit before they see the concrete outcomes of them. Interest in the products themselves will come further in the process.

Q:You mention on your website that Sigur Ros is "somehow at the origin" of the CrowdSpirit community. What do you mean by that statement?

A: It's a pure coincidence. During that concert, I really understood the power of a concrete crowd. We're were all together to share emotion and passion, and this created an incredible moment. Have you ever noticed that a crowd cannot sing badly? On the day following the concert, I started thinking about how to leverage the crowd, and this is how I came to the idea of our current business model.

Q: How do you see music as inspiring your ideas with regards to crowdsourcing?

A: Phenomena like Sellaband (music crowdsourcing) are fascinating. This is a concrete example that there is no limit to crowd creativity. I don't think that music will directly inspire product ideas, but we never know, and we may have a nice surprise. I hope that we will have a chance to make some trial to merge the music crowdsourcing trend and CrowdSpirit.

Q: How do you see the involvement of youth with CrowdSpirit?

A: I think that those people are really the early adapters of most of electronic trends. I think that young people will be critical to our business model

Q: Do you think that this youth group could make up the majority of your potential inventors/designers?

A: It depends how you define "youth." My feeling is that the majority of the community members seem to be between 20 and 40.

Q: Finally, what are your personal expectations of the CrowdSpirit project?

A: I hope that CrowdSpirit will become a cross between a company like Apple or Sony and an internet company like Google. On paper, the project clearly has potential. Now, it's up to both the CrowdSpirit central staff and the community to make it happen. I am reminded of a quote that I saw on the Berlin Wall this weekend: "They can fight against whatever they want, they will never take away our dream" The crowdsourcing revolution is underway . . .

(Edited by Christine Brodigan)