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Use of Crowdsourcing in Startup business

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Crowdsourcing is a process that can solve a large scale and difficult problems with the help of the crowd. This has become a recent trend which is widely used in both internet and technology markets which focuses on solving the big scale market problems with public funds (Rajesh & Ramesh, 2015). “Crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call“ (Howe, J., 2006). In this paper, we will discuss the company that was successful with the use of Crowdsourcing and also the competitive advantages using conventional methods for the product designing. Also, we will look at what is the logic behind this business model and how it is used in the real world to focus on potential traps and limitations of Crowdsourcing. Apart from these, we will list out two businesses that could achieve breakthrough gains using Crowdsourcing. 

Successful of Threadless 

Threadless is a Chicago based online design store which has been more than 10 years in the market now. The business model of this company is so different from other online or design competitors in the Retail & E-commerce industry which is a key to its success. However, there are different factors that will be considered into the Success of this company: 

  1. Not Knowing Business: From one of the Interviews, Nickell mentioned that “Actually not knowing anything was more valuable in growing Threadless than knowing something. And I kind of feel like if I did know the way things were supposed to get done, Threadless wouldn’t have happened’. (“Threadless designs success with crowd-sourced business model” n.d.) 
  2. Platform to outsell innovative designs: This Company created a platform for all the designers to have some healthy competition and getting the rest of the world to vote for the best design. This is one business model which really didn’t exist before for all the designers. 
  3. Appreciation: Designers in this company got a worldwide recognition with their designs and also gain following for all the T-shits made and gets paid. 
  4. No advertising: Threadless was started with any promotions or advertisements in the internet, Social media & TVs’. But there were quite successful in building financial profits through word of mouth by conducting competitions that made the designers to feel that they are part of an engaging sport (Hum, S., 2015). Competitive advantages using traditional strategies for product design The expansion of crowdsourcing during the last decade is remarkable. 

As could be expected in an Internet-dependent industry, crowdsourcing first appeared in the online-exclusive sectors of the economy, such as Web content creation, advertising, audio and video transcription, software development, database building, digitization, and market research. The first adopters of crowdsourcing were small firms with limited resources. Later, as crowdsourcing models developed, crowds grew, and crowdsourcing platforms became more sophisticated, medium and large firms also entered the industry (Felstiner, 2011). 

  1. Significant Cost Savings: Setting up a R&D department and hiring a consultant will be much expensive than crowdsourcing which is 
  2. Free marketing: When accessed by means of online networking sources, for example, Twitter or Facebook, Crowdsourcing can turn into a free and superb advertising option for your web based business. The Crowdsourcing task can be utilized to make mindfulness about your online business webpage just as your items and brand name. Crowdsourcing can likewise be utilized for reputation management; for instance, if there have been a various complaints with one of your items, you can ask crowd invertors to propose enhancements. 
  3. Instant hiring/outsourcing potential: The best and most brilliant individuals from your groups can be held for future Crowdsoure undertakings or even procured/contracted inside and out. By inquiring about your group individuals and finding out about their qualities, you access a pool of able experts that can help your online business with its future needs. Having such access again decreases your business expenses and overhead (Floren, C., 2012). 

Logic of Crowdsourcing and its application in real world 

Crowdsourcing is a Web-based model of development and joint effort that provides organizations with the chance to get more inflow from the organizations’ internal and external condition contrasted with customary ‘closed’ imaginative and shared practices. Crowdsourcing gives firms different favorable circumstances; eminently work constrain versatility, assorted variety of group laborers, an assortment of original thoughts, and quick arrangements. Also, Crowdsourcing can result in amazing cost investment funds for organizations utilizing this model. Firms likewise advantage from the extra exposure included. 

Also, on the grounds that Crowdsourcing furnishes firms with access to future clients, they can make increasingly precise market forecasts and alter their systems to crowd desires. Since the current writing on Crowdsourcing was inadequate as for experimental proof of the effect of Crowdsourcing on firms’ the same old thing and advancement procedures, the general target of this examination was to review the effect of executing Crowdsourcing into the business and development techniques of an organization. Crowdsourcing thrives on account of the numerous favorable circumstances it offers to firms. The most noteworthy are work force scalability and low work costs, which can result in amazing cost investment funds for organizations. On-request crowd work enables the workforce to develop and recoil after some time, depending upon the organization’s evolving needs. Crowdsourcing additionally implies almost no personal administration expenses or enlistment costs, low exchange costs, and less coordinations issues because of the secrecy of communications and the Web-based environment (Felstiner, 2011). 

Potential traps and limitations of Crowdsourcing 

Even though Crowdsource has many advantages, there are few limitations and traps with the use of crowdsourcing which include the following: 

  1. Questionable ownership: Crowdsoure websites regularly give terms of conditions that individuals must comprehend and consent to before they can take an interest in the site. In most of the cases, these terms of service incorporate an announcement about the requesting business owning the proposed thoughts, items and other guarantee. Even though, Crowdsoure individuals do challenge with and sue organizations that utilization their thoughts or items. Regardless of whether crowd individuals don’t item to the utilization of their data, a rival can without much of a stretch ‘lift’ that data and create it. When such duplication is found, one or the two parties should withdraw their Crowdsoure items that are originated from the market. 
  2. Paying more does not improve quality: Some talented crowdsource members will work hard for pennies on the dollar; meanwhile, their not-so-talented co-investors will demand a high price for average results. This is inevitable with any business but it is more prevalent with crowdsourcing because the group consists of a mixture of individuals. In contrast, outsourced and/or hired labor is more carefully screened, and paying more for its services typically results in higher quality ideas and/or products.  
  3. Bad reputation/marketing risk: Dissatisfied crowdsource individuals can begin posting bad surveys about you, your online business or your products. Question emerging between Crowdsoure individuals can prompt claims against your created thoughts as well as items. Since your showcasing plan has been forgotten in the general public eye, nearly anybody can access it and stain your picture (particularly on the off chance that you distribute an obtrusive blunder or violation of social norms). For instance, Tim Ferriss accumulated an extensive negative remark and ensuing audit of his book spread plan challenge. Notoriety the executives (or, if need be, rescuing) can be a significant test with regards to the Crowdsoure stage (Floren, C., 2012). 

Other businesses which could achieve breakthrough gains using Crowdsourcing Margaret River brand West Winds Gin has launched an equity crowdfunding campaign to raise $3.5 million to accelerate its growth, and while this form of fundraising is new to the Australian market, it’s been on the distiller’s radar for years (Koehn, E., 2018). SeedInvest works with high-development, proficient, and startup organizations. You can raise either favored value or convertible note subsidizing. For estimated rounds (favored value), you’ll have to give the pre-cash valuation. What’s more, for convertible notes, you’ll have to give the valuation top, transformation rebate, loan fee, and term length (Prater, M., 2018). 


Crowdsourcing can be a valuable technique for your web based business to begin creating thoughts and finding which of these thoughts have merit. By tackling the ‘intensity of the majority’, you discover what your clients and the general population everywhere are searching for in your business. The advantages of such a methodology are various and come easily. On the other hand, Crowdsourcing additionally has its degradations, including unclear scholarly rights, short of member efficiency, and the threat of picking up a bad status (Floren, C., 2012). 

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Use Of Crowdsourcing In Startup Business. (2021, October 25). GradesFixer. Retrieved October 1, 2022, from
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