Genius Crowds, Another Company That Failed to Turn Co-Creation Into a Profit

In May 2011, I covered the French platform Crowdspirit, and tried to discuss the reasons of its failure. In August of the same year, I wrote a blog post about the costs of co-creation, underlining that there are substantial costs to orchestrate crowdsourcing and/or organize co-creation, and that profitable platforms are actually rare. Well, very recently, crowdsourcing.org announced that a US-based crowdsourcing company, Genius Crowds, had to close its doors. Why? Because Genius Crowds was not able to turn their co-creative model into a profit.

“As a small startup, we frankly didn’t have enough resources to do the job of business development that we wanted to be able to do” (C.J. Kettler, CEO and co-founder)

The idea behind Genius Crowds was to run monthly competitions and to manage contests for partner companies:

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It seemed to work out quite well, as the company announced the development of a crowd-sourced pet product and a partnership with Mattel to develop crowd-sourced product ideas for brands like Hot Wheels and Barbie.

But then, on February 12th, the company announced on its blog that it wanted to “[take] a break from our monthly callouts at Genius Crowds to evaluate and rethink our business model.” Obviously, collaboration with big companies turned out to be more difficult than expected!

The time to market is long and sometimes arduous, especially for the large corporations we wanted to work with

Indeed, large corporations have long, sometimes very long product development cycles. Crowdsourcing allows them to accelerate innovation in some cases, but this does not mean that, as soon as crowd-spourced ideas pour in, products will hit the market soon after. The product manager has to select good ideas, test them with market research, involve internal and external stakeholders, market the product… bringing products and services to market is not easy as a piece of cake. And that’s ok. But then there’s the community.

The expectation of the community is that they will see their products on the shelves [soon] after

It’s tough to align expectations of an active, creative community, and the imperatives of a large corporation. That’s what Bernard Cova already told me in October 2011, where he explained the challenges of aligning parties with different interests and expectations, namely a for-profit corporation and a community of consumers. His research was based on the co-creation of an event for Alfa-Romeo, but the findings were similar: different parties expect different things, and it’s difficult to create fruitful dialog and, more importantly, to generate return on investment!

The model should be about ideas and participation, and less about creating a hard, physical product

… says CJ Kettler of Genius Crowds about the idea of crowdsourcing and co-creation. She’s not totally right, because companies like Quirky obviously bring physical products to market. But there are not many other companies like Quirky, and I don’t even know if they are profitable (Ismael Meite, founder of Nov’In, says that Quirky has a turnover of about €30 million). But she makes a good point in saying that it’s much easier to crowd-source ideas than to bring them to market. Getting ideas is easy? Turning them into action is difficult.

Image via Harvard Business Review

But beside the failure of the economic project, Kettler wants to concentrate on other learnings. “One of the things I’m most proud of was the level of commitment and also the level of solidarity as a community,” she explains, “[it’s] one of the hardest things to build.” Definitely true. Congratulations for this adventure, CJ Kettler, and I wish you the very best for the future!