From the point of view of Design Crowd's business was this a necessary step to differentiate yourselves?
Yes, look we talk about differentiation versus other crowdsourcing sites. We felt that there were some weaknesses, not just with our crowdsourcing but with everyone's crowdsourcing. We tried to fix that. We'd like to think that if someone asks us, "well what's the difference between your website and crowdsourcing website X", we would say that we have fixed some of the inherent weaknesses of crowdsourcing.
And how's the business been growing?
The business has been growing strongly; we've been averaging about 20% month-on-month growth, which is very encouraging and positive. This initiative, I think that it will have a few effects, I think one of the things it will do is create a model that appeals to a wider part of both the business community and the designer community. So to a degree I think it neutralises a lot of the issues with crowdsourcing and if you look at the public criticism of crowdsourcing websites, Design Crowd really isn't mentioned because we've always had a number of things about our site that addresses those problems.
Is this going to speed up the growth, or will there be less jobs going through the site but more satisfied customers?
Look, I expect that there will be more jobs going through the site because there are more satisfied customers. So 40% of our clients come through word-of-mouth and if we can make our current clients more satisfied then that word-of-mouth factor will increase further. I guess in a nutshell, I think this initiative is part of what we're doing to become number one or number two in online design, that's basically our objective. We're probably in the top three at the moment but we feel this is definitely one of the things that will set us apart and potentially take us to the top.
One of your rivals would be 99designs, are they at the top of the tree?
I think that's correct. They are the largest crowdsourcing website but they wouldn't be the largest in online design. Some of the traditional players on the numbers that they have made public are still larger but I think that crowdsourcing players will eventually dominate the online design market definitely.
We did a story a little while back about the hub of crowdsourcing companies in Australia. What's created that hub?
There's no definitive answer to that but I have a couple of theories. One theory is that Australia's culture in general is egalitarian and as a result Australians are more willing to give someone a go who might not have the reputation of a leader in that field. Crowdsourcing relies on that principle. Crowdsourcing basically assumes that good creativity or talent can reside anywhere so it gives everyone a shot. I'm sure a lot of countries and a lot of entrepreneurs hold that view and there are a lot more crowdsourcing sites that have come from the US than any other country, but in saying that we do have probably a higher number from Australia.
The other possible factor influencing the kind of Australian crop is that we are closer to Asia, we have closer ties to Asia and perhaps more visibility of resources and talent there and both with crowdsourcing and outsourcing relying on talent from developing countries is part of that. So perhaps Australians are better positioned to see that opportunity and build a business around it.
In building your business what have been some of big challenges over the last 12 months?
One of the challenges has been advertising the business effectively globally. So when I started I had with a small amount of capital which was my own money and then funded the business for the first year with personal debt and I went into $60,000 of personal debt. Now, using that cash to primarily promote the business and for advertising, if you're trying to grow a business globally, you spread that out across all the countries and across 12 months, that's pretty thin on the ground.
The fact that I tried to be international from the start and had limited capital, that was definitely one of the biggest challenges. The other thing that's then a big challenge is finding profitable and effective forms of marketing. There's obviously a lot of choice and different techniques and different types of marketing but it's taken awhile to identify which strategies are the most effective. And we've done that probably in only the last three or four months, we've really narrowed it down and the best ones have bubbled to the top.
And what are they?
They're mostly online. I mean I'd love to give more away but distribution is part of our competitive advantage. But we've done radio interviews, we've had heaps of print newspaper articles and sometimes you just don't see a blip in sales or traffic as a result and yet there was a large amount of effort to get that PR. An article on a popular blog in the Philippines can be significantly more valuable to an online business and to our business than an article in the Financial Review.
Late last year you acquired a US business and did a capital raising. Firstly, was it good to get investors in and secondly, how has the integration of that acquisition gone?
Answering the first part of your question, having the investors has been transformative for two reasons. One, because the capital has enabled much better marketing, allowed us to grow the team and develop the product further, but secondly the investors are angel investors and have actually provided a lot of ideas, expertise and contacts which I didn't expect and I wasn't looking for.
It's the first time that I've raised capital for a business and the main thing I think I was looking for when I begun my search was cash to help fund the next stage of growth. But as I met investors and since having them onboard late last year, it's become clear that the IP that they contribute and experience is also invaluable.
Regarding the website that we acquired, Design Crowd, the integration has gone well. The main thing we had to integrate with that were the 8,000 designers that were part of their community. That website operated in a very different fashion to our website, it's actually a learning curve in that the communication that you need to send. Actually some of them got a shock in that we drastically changed the brand and the website to what it is today. But the majority of those designers have come across. It's been a successful purchase from our perspective. One of the main things we really wanted to get was the brand and the domain name because we wanted to tie ourselves closely with crowdsourcing.
Finally, this is the latest iteration of crowdsourcing, which is still a very young sector, but do you think it will continue to evolve and get refined as we move forward?
Absolutely, I'd agree with that 100%. I think some of the things you might see introduced in the next few years would be some sort of industry code or perhaps company-level code of ethics or approach to crowdsourcing to help with the governance and operation of crowdsourcing services. I think you'll continue to see crowdsourcing applied to new industries and in new ways. You'll also see in our form of crowdsourcing, an increasing efficiency where websites and services move to utilising the unused IP and unused designs so that it doesn't go to waste and suppliers can make money from that as well.
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Cast The Net.com.au has suppliers coming to you when you’re looking for products or services. It’s also a place to find new customers – businesses that are in the market for what you sell, which can be anything from Actuaries to Website developers.
We’ve addressed some of the weaknesses in the crowd sourcing model raised here by Alec Lynch. We’ve got around the copying issue by using a closed-tender model where proposals are not visible to anyone but the business seeking the product or service.
The site facilitates a two-way communication between the parties to clarify needs and refine offerings.
Thanks Alec for your insightful views on an emerging Australian sector.