Tech Investors Crowd Into 'Crowd Commerce'
On the heels of LinkedIn’s successful initial public offering, many of Silicon Valley’s biggest investors are throwing millions in seed capital at a handful of startups looking to cash in on something called “crowd commerce,” where everything and everyone has a price.
The concept of crowd commerce is a simple one: Use the GPS capability of smartphones to connect people who need something done with people willing to do it.
Within three days of his pitch, Fishback said he raised a million dollars from some of the industry’s most well-known investors, including Groupon founders from the venture capital firm Lightbank, legendary angel investor Ron Conway, and others. Celebrities Ashton Kutcher, Demi Moore, and LeVar Burton are also investors.
“I didn’t even have a name for it,” Fishback jokes when talking about the 1-minute presentation he gave at the conference. “So I called it Geo-Bay [a combination of the word ‘geography’ and the popular online auction site 'eBay' ] … basically you can discover what people are willing to pay for what you [the user] already have or can do.”
Since its formal launch on May 18, Fishback has gained about 30,000 users by opening markets for goods, services, and what he describes as “access to experiences”—like back-stage upgrades at a concerts or riding in a car that can accelerate from 0-60 mph in under four seconds.
Gigwalk, another California crowd commerce startup, has seen the volume of completed tasks (or “gigs” as the company calls them) explode since their launch on May 2.
The company now has 10,000 active users completing as many as 3,000 gigs daily—and has clients that include the navigation company TomTom and the online restaurant site MenuPages. Both use its mobile workforce for data collection.
Gigwalk also has landed one of the nation’s most famous startup investors in Reid Hoffman—a partner at the venture capital firm Greylock Partners, whose investment in LinkedIn’s IPO made him an overnight billionaire.
“It was super simple,” said Gigwalk CEO Ariel Seidman, who pitched the idea to Hoffman over a lunch of guacamole and empanadas in downtown Palo Alto. “There was no presentation, no demo—he totally got the idea…He put us in touch with his finance operations guys and cut us the check.”
The company has raised $1.7 million in its initial round of fundraising, according to a press release.
TaskRabbit, a startup based in San Francisco is the top fundraiser, having brought in nearly $7 million from cornerstone investors, including two venture capital firms—Floodgate and Baseline Ventures—that were also early stage investors in Twitter.
Started in early 2009 by Leah Busque, a former IBM software engineer, TaskRabbit has seen the number of tasks completed through its app and website expand 10-fold over the past year, and has grown its base of runners (what it calls “rabbits”) to 1500.
In the world of crowd commerce, goods and services can range from the complex to the bizarre—and everywhere in between.
While the market to verify a road closure is only a few dollars, waiting in line for someone at the DMV will pay a bit more: about $10. Putting together Ikea furniture can pay even more. And building a tree house or designing a blog will pay, in some cases, thousands of dollars.
Since it’s largely a peer-to-peer network of employees and workers, the industry has had its share of unique tasks – including a request for a box of Lucky Charms with only the cereal’s marshmallows, an impromptu concert at a Des Moines office, and, perhaps the strangest, a request to pretend to rob a house (the user apparently wanted to see how his dog would react to an intruder, according to a company official familiar with that task).
But what has excited some investors is the sheer scalability and versatility of a mobile workforce that will seemingly do anything for the right price. Gigwalk says they’ve seen their platform used by states to test road conditions, by wireless providers to check broadband coverage areas, and by travel companies to acquire hotel layouts.
And for some, these mobile work platforms have provided a notable secondary source of income.
Jenzie Hallifax, a 27-year old event production freelancer in Orange County, California was making an extra $140 a month using Gigwalk.
“Mostly, [it’s] extra income that went towards my bills. I have a lot of student loans to pay,” she says.
Gigwalk’s top earner, according to the company, is Andrew Scoot, a full-time medical devices consultant in New York City. Andrew says he was making up to $140 daily, and has collected over $2500 in payouts since his first gig in March.
His first gig was in New York City’s upper west side—and he was hooked.
“You take a few pictures of the restaurant, take a couple pictures of the menu, answer a few questions…I submitted them and a few days later there was money in my PayPal account,” he said. “It was very addictive.”