Why the mob rules

Why the most valuable technology products do crowdsourcing

A crowdsourcing project called Tile set out to raise $20,000 to create small, flat, battery-powered stickers that you attach to your stuff, enabling you to find anything with your smartphone.

They've raised more than $1.6 million so far.

But why?

Tracker gadgets have been around for years. They're useful for finding your lost remote control, keys and other objects. But Tile does something incredible that no other tracking product can. Here's how it works.

You attach a tile to your tablet, remote control, dog's collar or you drop it into your purse, backpack or briefcase. Use the smartphone app to register each Tile device -- basically tell the Tile cloud service what object each Tile is associated with.

To find an item, you use the app to make it "ring," then follow the noise. Or you can walk around looking at a proximity display showing you when you're getting closer or farther away. It basically turns your phone into a divining rod.

But here's the awesome feature that drove crowdsourcing contributions through the roof: If you lose something -- say, your bike is stolen or you leave your phone in a taxi, you log into your online Tile account and report the item as lost.

At that point, every Tile gadget in the world keeps a lookout for your lost item. If your dog or phone or car or bike gets within 50 to 150 feet of any other Tile owned by any user, you'll get a notification showing you where on a map your Tile was detected.

How cool is that?

Crowdsourcing makes Tile different from any other tracking device. Tile leverages "network effect" like cell phones do, meaning that the value of Tile as a product gets higher as more people become users.

Come to think of it, so many of today's hottest products do something similar -- they get their value from the collective actions of users.

The most important web-based services on the Internet -- specifically social networks and search engines -- are spectacularly valuable and enjoyable sites precisely because they represent sorting algorithms applied to crowdsourced data.

Look what Silicon Valley giants are spending the truly big bucks for these days: Apps and services that do smart things with the data generated by massive numbers of users.

Facebook paid a billion dollars for Instagram, a service that's fun to join because it's full of awesome photos provided not by Instagram, but by other users.

Google paid a billion dollars for a tiny Israeli startup called Waze, which is all about crowdsourcing. Waze is a navigation service that you can use to get directions similar to Google Maps.

But Waze is also an engine of crowdsourcing. For example, the location of every opted-in user is uploaded anonymously to the servers. Waze then determines how fast each phone -- and by extension, each car -- is moving. That gives you real-time information about the speed of traffic. Waze also lets users report things like gas prices, observations about why traffic is jammed and the location of police cars.

You'll notice that both these billion-dollar startups are social networks acquired by bigger social networks. That's because social networks get all their juice from crowdsourcing.

Social network crowdsourcing is valuable to users because not only can individuals use social networks to do crowdsourcing of their own -- for example, I crowdsourced ideas for this very column -- but social action surfaces the best content on the social networks, either through Google+'s "What's Hot" list, Facebook's EdgeRank or Twitter's Discover page.

The two kinds of crowdsourcing

There are two basic kinds of crowdsourcing -- the kind where people consciously participate, and the kind where they don't.

Waze, for example, uses both kinds. The reporting of observations is conscious, the uploading of speed and location data is not.

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