CrowdSourcing Repetitive Tasks: CrowdFlower Founder Lukas Biewald (Part 5)

Sramana: After you gained your first few small startup customers, how did you go about building the company? What were the big milestones?

Lukas Biewald: There really was not a single moment where I suddenly realized that we would make it. There were a couple of things that added up for us. We had a customer, Gary Kremin, who ran Match.com. He liked our service so much that he invested in us right before the bubble burst. We just received the check before the market tanked, and I don’t think that our business would have survived without that investment.

Sramana: How did he find you?

Lukas Biewald: He had a project where he wanted to classify a bunch of websites. He used us to accomplish that task, and while we were naïve we were very good at customer service, which resulted in us having a lot of conversations. He decided to invest in us when we got a job done in days that he thought would take several days.  second big bonus for us occurred when I met Travis Kalanich, who now runs Uber. At that time my cell phone number was the customer service number on the website. He just called in to that customer service number and asked if he could meet us because he was potentially interested in investing in our company.

We raised $100,000 from Gary. Travis helped me put together a million-dollar round. It took me a long time to raise that money. This was late 2008 and I was a first-time entrepreneur. We kept having deals that would have made us profitable keep falling through on us. The funny thing is I set out trying to raise $500,000 and it just felt impossible. Once you get commitments from people, then everybody starts getting interested in joining the round. That finished in very early 2009.

The next phase of the business was the idea of paying people with virtual goods and games. Half of our workforce today does that. We like it because our workforce can scale up or down instantly. People will be playing a Zynga game and need currency to buy a tractor. They need virtual currency for that, and they can earn it by doing tasks. We just integrated with a few of the companies that have Offer Walls. Our offers are really clean; we just wanted brainpower rather than credit cards. Game companies loved having us on their Offer Walls.

Sramana: How does the money flow?

Lukas Biewald: The game companies have users who want virtual currency. The game company says they can buy virtual currency, but users are often very reluctant to buy it because they feel like they are trading real money for fake money. When we enter the picture game companies can then offer virtual money to users who complete a task for CrowdFlower. We pay the game company for every task that gets done and the game company provides virtual currency to their users. It is a little complicated to get set up, but once it was established we found ourselves with a great workforce of middle-aged women since they are the most likely to be playing those types of games. That is great for us because they are an extremely reliable workforce.

Sramana: Early on it sounds like your primary customers were startups and smaller companies. It sounds like today most of your customers are enterprise customers. Would you talk some about that?

Lukas Biewald: Initially I thought we were going to be a S&B solution. We just started getting more and more successful selling to enterprise customers because addressing vendors could not match our speed or our on-demand capability. Enterprises liked the fact that they did not have to commit to any specific size of contract. That let us get in and grow from there. eBay was our first enterprise customer, but we have since expanded to a lot of them. Even though the dollar value was not huge in 2009, it was enough for VCs to notice.

This segment is part 5 in the series : CrowdSourcing Repetitive Tasks: CrowdFlower Founder Lukas Biewald
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