Put a Hacker to Work
In the world of hard-core computer geeks, street cred is everything. Indeed, the only thing true programming nerds seem to enjoy more than competing with their peers is bragging about it when they win. A cash reward doesn't hurt either.
That, in a nutshell, is the business model of TopCoder, a software developer based in Glastonbury, Conn., that has come up with an unusual way to tap into the global pool of tech talent. The company stages international code-writing tournaments--a kind of PGA Tour for hackers. In some contests, TopCoder asks hackers to solve a tricky math problem or algorithm, just for the sport of it. In others, TopCoder clients with a software problem pony up prize money, and TopCoder challenges its global network of computer nerds to come up with a solution. The winner gets the cash--which can total tens of thousands of dollars--as well as star treatment on the company's website, which includes baseball-card-like photos and stats on top performers.
TopCoder gets a cut of each contest's prize money. But that's only part of it. Because each programmer must register before competing, the company has been able to develop a database of the world's most talented techies. Some of the smartest have turned out to be students or twentysomethings in places such as Taiwan, India, and Belarus--the kinds of people who never respond to formal job postings and as a result go unnoticed by businesses looking for brainpower. TopCoder clients can mine the database for potential recruits outside of tournament play for a fee or pay TopCoder to notify members about a particular job opening. "We are a true globally distributed work force," says Rob Hughes, the company's president and chief operating officer.
The idea for TopCoder came from Hughes's brother Jack, who was looking for something to do after selling his previous company, a software application developer called Tallan, in 2000. One of the biggest ongoing problems at Tallan had been finding talented programmers, and Hughes knew there was money to be made if he could help other companies solve that problem. Suddenly it hit him. Why not host a coding tournament, and allow programmers from all over the world to compete?
Hughes recruited his brother Rob and the two began building a kind of online arena, where the competitions would take place. Jack ponied up $500,000 of his own money to fund two inaugural tournaments. In June 2001, Jason Woolever, a student at MIT, bested 256 rivals in the Collegiate Challenge, taking home $100,000. Five months later, Stanford junior Jon McAlister won the Open Invitational, winning $100,000. Both contests got considerable media attention, and by the end of the year, Sun Microsystems called, asking TopCoder to help it sponsor a contest of its own. Intel, Yahoo, Oracle, Google, and others followed suit, and TopCoder was born.
The company's database now includes some 65,000 programmers in 201 countries. Meanwhile, 81 full-timers work in offices in Connecticut and Silicon Valley. Revenue hit $10 million in 2005. Clients with software needs meet with TopCoder's developers to nail down their specifications and requirements. The developers break the project into functional components, which are posted online. TopCoder's members view them and decide whether or not to join the competition.
Both the client and a TopCoder review panel rate each submission on a host of factors, including how well it works and how thoroughly it is documented. Once the winning components are identified, TopCoder puts them together and implements the system for the client. "This approach puts us on the leading edge of open-source development," says Rob Hughes.
TopCoder client Phil Fillippelli was skeptical at first. Fillippelli heads tech efforts at Gentiva Health Services, a supplier of nurses and home health care aids based in Melville, N.Y. Faced with HIPAA and Sarbanes-Oxley regulations, the company needed new, Web-based applications for both its nurses and corporate compliance officers. Fillippelli considered hiring a team of his own. But he chafed at the cost. That's when his chief information officer recommended TopCoder. Fillippelli agreed to a test drive and farmed out part of the company's HIPAA compliance system via a tournament. Eight weeks later, after seeing TopCoder in action, he decided to push more work out to the tournaments. "We have access to engineers we could not have reached in any other way," he says. "There's no way we could recruit or retain people of this caliber."
TopCoder's current top earner is Daniel Wright, a U.S.-based programmer who has taken home $157,196 in prize money over the past four years. But David Plass, a 36-year-old New York City programmer, is determined to catch up. He's competed in about a dozen development tournaments, earning more than $4,000. But more valuable, he says, is the experience and the feedback he's received as part of each contest. "Participating in the tournaments has definitely made me a better coder," he says. Plass's next goal: to improve his algorithm rating enough to qualify for the upcoming TopCoder Open to be held in Las Vegas in May. The $20,000 purse, he says, would pay a lot of bills. As for the reward for besting hundreds of hackers on a national stage? Priceless.
Darren Dahl is a contributing editor at Inc. magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, North Carolina.