Idea Crossing Helps Clients Tap Into the Wisdom of Crowds
The Pitch: "We host online competitions that allow companies to tap customers, employees, or external partners for ideas. For example, 2,000 M.B.A. students recently suggested ways in which Hilton Hotels (NYSE:HLT) could foster a sense of community among its guests. Our contests give people a forum to share their opinions and reap rewards for them. In addition to generating ideas for our clients, the contests help them spur dialogue with customers and create word-of-mouth buzz. They also serve as market research tools, not to mention a great way to recruit new talent."
Company: Idea Crossing
Owners: Anil Rathi, founder and CEO; Hoang Tran, chief technology officer; Kenton Williams, director of operations and service delivery
Location: Los Angeles
2005 Revenue: $220,000
2006 Revenue: $500,000
2007 Projected Revenue: $1 million
Clients: American Express (NYSE:AXP), Sprint (NYSE:S), Daimler Chrysler (NYSE:DCX)
Needed: $750,000 to hire project managers and software developers
Recent Buzz: Mentions in Business 2.0 and Continental inflight magazine
Too many ideas
The concept of using online communities to solve problems for big companies is intriguing--the wisdom of crowds has been tapped at a low cost in a variety of industries and has proved surprisingly accurate. Idea Crossing should focus on that concept and forget about buzz marketing, which has been out there for some time and strikes me as an afterthought. On the financial side, the company's revenue projection is pretty dismal. A large client base and a relatively small revenue number is often a red flag. Before seeking venture funding, the company should raise about $1 million and bring in some helpful angels.
General Partner, Spark Capital
Stick with people you know
Idea Crossing's revenue is so tiny it probably has negative cash flow. Rathi and his team should really ask friends and family to invest the $750,000. Another option would be to find strategic investors: companies that think crowdcasting is a good idea and might want to do it themselves. For starters, Rathi could ask some of his current customers to invest. Despite the paltry revenue figures, these guys have a very interesting idea and good solid clients. Potential investors should call those clients and ask them what they like about Idea Crossing, and how far the relationship could grow in terms of dollars.
CEO, Presidio Financial Partners
I need more proof
The concept of reaching out to passionate customers for new ideas is great. But Idea Crossing's business plan presents two challenges. First, it's going to be hard to identify passionate customers. What's more, customers who spend a lot of time coming up with innovations are going to be mad if you reward their idea but don't implement it. For Idea Crossing to raise the next round of funding, it's going to need proof that it can overcome these problems. Maybe if it got a company like American Express to prepay for a software license, I'd be interested.