Professors Karim R. Lakhani and David A. Garvin and Research Associate Eric Lonstein prepared this case. HBS cases are developed solely as
the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective
management.

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KARIM R. LAKHANI
DAVID A. GARVIN
ERIC LONSTE IN
TopCoder (A): Developing Software through
Crowdsourcing
In December 2009, Jack Hughes, CEO and founder of TopCoder Inc., entered his ????????????????????
headquarters in Glastonbury, Connecticut, eager to review a particularly complex software
development project for an ????????????????????????????dynamic power pricing system. Eight years after founding
TopCoder, Hughes still enjoyed detailed project reviews. He was particularly proud that his
company could produce high-­quality software solutions for which his own employees did not have
to write a single line of code. Instead, the firm nurtured a global community of more than 225,000
programmers who competed to design and create software modules for TopCoder clients, a process
that the popular press called crowdsourcing.1
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????-­free and operational
on its first day, a rarity in the software industry. Especially impressive to Hughes was that in four
months, 65 participants from 11 countries on six continents had competed in 57 contests to create this
critical pricing system for the client (see Exhibit 1). As of 2009, TopCoder routinely produced
software solutions for over 45 clients, including AOL, Best Buy, Eli Lilly, ESPN, GEICO, and the
Royal Bank of Scotland.
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
changes in the software industry, while also pursuing its unique competition-­based software
development approach. He had transitioned his business from a model that helped other software
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
traditional IT consulting services and competitions, mobilizing developers world-­wide to solve
clients?? problems.
The shift to a greater emphasis on competitions, encompassing all aspects of software
development, however, meant that project volume was a growing issue for TopCoder. Hughes had to
think through how a competition-­based business model, which increasingly stressed contests as an
organizing as well as money-­making approach, could handle increases in numbers of competitions,
clients, and participants. Hughes considered his own goal: attaining $200 million in revenue from a
high of just over $18 million in 2008. He fundamentally believed that contest demand would spur the
supply of TopCoder participants, who would in turn create high-­quality software solutions. But, was
1 ????????????????????????????????????????????????????????????????????????????????Wired Magazine 14.06, June 2006.
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
2
$200 million in revenue a reasonable goal? Did his assumptions make sense? If so, what would it take
to increase revenues by over an order of magnitude?
Background and Current Operations
Before he founded TopCoder in 2001, Hughes had built a custom software development2
company, Business Data Services, in 1985;; the company name changed to Tallan in 1991. Tallan
employed some 600 people before being sold to CMGI in 2000.3 As he was completing the
transaction, Hughes reflected on what he had learned from his experiences at Tallan??the experiences
that would inspire the core tenets of the TopCoder business model. Although Hughes enjoyed his
time at Tallan, the company struggled in some areas. For example, recruitment was an expensive and
frustrating process because finding qualified programmers was time-­consuming and talent was
difficult to assess???? ???????? ?????? ?????????????????????? ?????????????????? ???????????????????????????? ?????????????????????????? ???????????? ?????????? ???????????? ??????????????
obsolete after only a few years of productive service, leading to high levels of employee turnover.
?????????????????????????? ???????????????? ?????????????????? ?????????? ?????? ?????????????????????? ?????????????????? ?????????????? ?????????????? ?????????????????? ???????????? ??????????
???????????????????????????? ?????? ?????????? ???????????????? ?????????? ???????? ???????????? ???????? ???????? ?????????????????? ???????????????? ?????????????????? ???????????????????? ????????????
components instead of building each application from scratch.
Drawing upon these and other insights, Hughes set about creating a new kind of organization that
would build a ??community?? of programmers to help address the issues he had identified. These
programmers would compete??as well as affiliate??by building and using components that had
already been tested and found workable. The idea of reusing software components for new projects
would become the core of the solutions the new company, called TopCoder, provided. Hughes
?????????????????????? ???????? ???????????????? ?????? ???? ??????o-­???????????? ???????????????????? ???????? ?????????????????? ???????????????????????? One side of the
platform would be clients, firms that needed software developed, who would work with his staff to
specify programming challenges. The other side would be community members who would compete
in contests to create solutions to the challenges for money and skill ratings. TopCoder would be in the
middle as the platform host, designing and enforcing the rules of engagement between clients and
???????? ???????????????????? ?????????????????? ?????????? ?????????????????? ?????????????????????? ?????????? ????????????????d that the company needed to
excel at five core tasks: breaking down large client software projects into components, taking in and
processing client project specifications, determining appropriate contest prizes, having a consistent
and unbiased way of selecting contest winners, and fixing bugs at the back end of development.
Setting out to amass an initial collection of highly skilled programmers, from 2001 to 2003
TopCoder asked established software development companies to sponsor world-­wide web-­based
p????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
competition platform and provided the company with access to talented programmers from around
the world. In return, the sponsors, including Sun Microsystems and Google, used the contests to
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????vice president of finance, explained that
during the sponsorship phase, TopCoder offered unusually large prizes??as much as $5,000 to
$10,000 per match for tournament winners??to attract competitors and expand the community. In
addition, every contestant that participated received an objective numerical rating for their
2 Custom software development by specialist firms in the global IT consulting and services sector (for example, Accenture and
IBM) was an over $500 billion segment in 2008. (Source: ???????????????? ?????? ?????????????????????? ???? ???????????? ???????????????????? ?????????????????? ???????????????????? Data
Monitor, March 2009.)
3 ???????????? ?????????????????? ???????????? ?????????????????? ?????????????? ???????? ??????????M???????????????? InternetNews.com, February 14, 2000, http://www.internetnews.
com/ec-­news/article.php/303771/CMGI-­Acquires-­Tallan-­for-­920-­Million.htm.
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
3
performance against the global talent pool, providing a clear signal to TopCoder and others about the
talent in the community.
By the end of 2004, the TopCoder community was 50,000 members strong. In its early efforts to
use the community to generate revenue, TopCoder acted as a placement firm, matching top-­rated
community members with firms seeking new talent. Hughes, however, was ????????????????????????????????????????????????????????
the idea of TopCoder becoming a placement firm. That was not my end ????????????????????????????????????????????????
In 2005, TopCoder began to use its community to develop software components and applications.
Hughes first tested this model by having highly rated community members compete to redesign and
???????????????? ???????? ?????????????? ???????? ?????????????????? ???????????????????? ???????? ???????????????????? ?????????? ???????? ?????????????? ???????????????? ???????? ?????????? ??????????
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????itive proof that
complex software systems could be built through competitions.
Initially, TopCoder adopted a model to create solutions for clients by contracting with community
members, running competitions, and providing consulting services. The company broke down the
software development process into seven distinct but interrelated tasks: 1) conceptualization, 2)
specification, 3) architecture, 4) component production, 5) application assembly, 6) certification, and
7) deployment. Most revenue came from consulting services: TopCoder billed clients for the time the
???????????????????? ?????????????????? ?????????????????? ???????????? ???????????????????????????????? ???????? ?????????????????????? ?????????????? ???????????????????? ???????????????? ??????
component design and development competitions, assembling components, and delivering finished
solutions.
Shortly after TopCoder started developing software for clients, the company identified reusable
components from the software it was creating and collected the components in a catalog. These
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????ue proposition to its clients. Many
of the custom applications could be produced by combining existing catalog components with new
components built through competition. TopCoder had also received eight U.S. patents for various
aspects of running online programming contests in a distributed community setting and had other
patents pending domestically and internationally.
?????????????????????? ?????????????? ?????????????????????? ???????????? ???????? ?????? ???????????? ???????????????????? ?????? ???????????????????? ?????????????????? ?????????????? ????????
??????????????????????????????????????????????????????????????????????????????-­??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
2007 and 2008, TopCoder produced nearly $20 million in revenue, but platform manager costs
remained high (see Exhibit 2 for information on revenue and platform manager costs). Attempting to
alleviate costs, in 2007 TopCoder introduced competition tracks for component architecture and
assembly. With these new competition tracks in place, the work traditionally done by platform
managers would now be done by the community. In 2008, the company also added competitions in
software development tasks, such as conceptualization and specification, as well as deployment and
bug fixing.
By early 2009, TopCoder had moved increasingly away from the hybrid consulting model. It now
focused on completing all tasks in software development through competitions. Instead of paying for
time and materials for TopCoder platform managers, clients paid a monthly platform fee based on
the complexity of their software requirements and the estimated number of competitions they would
run through the TopCoder platform each month. The platform fee also provided clients with
unlimited access to the ?????????????????????????????????????????????????????????????????????????????????????? Roughly 60% of most clients??
projects could be accomplished through reusing components from the catalog. The company coupled
the move from the hybrid consultancy model to a competition model with the reduction of many
platform manager positions, leaving the company with 16 project managers servicing 35 clients by
the end of 2009.
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
4
As of late 2009, TopCoder ran two different types of competitions on its platform: algorithm and
client software development. Algorithm competitions served as the primary means for attracting new
members and retaining existing members. These competitions required members to develop creative
software solutions to relatively difficult programming challenges. All members were assessed against
each other through an automated computer scoring system;; they then received a TopCoder rating for
their performance. Some algorithm competitions also had cash prizes for winners.
The second type of competition targeted developing software applications for specific client
needs. A TopCoder platform manager initially worked with the client staff to develop a ??game plan????
(see Exhibit 3 for a representative game plan) or a project road map for building the software. The
first step typically involved a contest where the general client problem was presented to the
TopCoder community in a conceptualization contest. Here contestants publicly cross-­examined the
client staff as to their actual needs and then submitted a business requirements document and high-­
level use cases. The client chose the submission or submissions that best represented ???????? ??????????????????
needs as the basis for further development. Then a series of specification contests was held to create
the application??s requirements documents, application wireframes (i.e. the logical flow of the
application), and storyboards (detailed cases of the user experience). Next, the output of the
specification contests was fed into several architecture contests to create the overall system and
component level designs. At this point, the TopCoder platform manager would work with the client
to either select components from the catalog or commission the creation of new components through
design and development competitions. After the component production phase, all the relevant
components were put together through an assembly competition with the objective of creating a
working system. Assembly was then followed by certification and testing contests and then,
eventually, deployment. Throughout the execution of the game plan, TopCoder retained flexibility in
???????????????????????? ?????? ???????????????? ??bug r???????????? ?????? ???????????????????????? ?????????????????? ?????????????? ??????????????????????????s or unforeseen
errors.
To determine winners and assess quality in client software development, TopCoder used a
community-­based peer-­review system. In particular, expert and experienced TopCoder community
members were paid to grade and comment on all contest submissions using detailed scorecards,
ultimately picking the contest winners. The winning competitors for each contest then received
monetary prizes, and all participants received updated ratings for their performance. TopCoder also
ran studio contests if an application required logos or graphics;; in those cases, clients chose the
winners.
Evolution of the TopCoder Community
Growth and Composition
From 2001 to 2009, TopCoder added an average of 25,000 new computer programmers to its
community each year. After filling out a short online registration form, anybody in the world could
participate in a software development competition;; by spring 2009, the TopCoder community had
over 200,000 members (see Exhibit 4 for community growth). Although the size of the overall
community was large, the number of people within that community who actively participated in
contests and posted in forums was much smaller. The majority of community members at TopCoder
registered as members of the community but never competed in any contests. In fact, by 2009, only
35,000 unique individuals had competed in contests. To Mik???? ?????????????? ?????????????????????? chief technology
o???????????????? ???????? ???????????????????? ???????????? ?????? ???????? ???????????????????? ???????? ???????? ???????????????? ?????????????? ?????????????? ???????? ?????????? ??????????????????????
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
5
enough in the TopCoder platform to register and had the potential to provide TopCoder with
increased development under the right conditions.
A second group within the TopCoder community comprised those members who at one time
participated in TopCoder contests but then stopped participating. Lydon noted that, after TopCoder
decreased prize values in 2008, many competitors from the United States and Canada left the
TopCoder community. Yet another group included people who participated in TopCoder contests
but did not win. TopCoder saw those competitors as the ???????????? ????????????people who primarily
competed for the sake of learning????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
less-­skilled competitors could improve over time and increase their levels of contribution. Lastly,
?????????????????????? ?????????? ?????????????????? ???????????? ?????? ???????????????????????? ?????????????????? ???????? ?????????????????? ?????????????????? ???????? ?????????????? ??????
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
for 0.5% of the total TopCoder population.
The ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? in their 20s.
According to Michael Paweska, a six-­??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
?????????????? ?????? ???????? ???????? ?????????? ?????????? ???????? ???????????????????????? ?????? ?????????? ?????????? ?????????????? ?????????????????? ?????? ???? ?????????????????????? ?????????????? ????????
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????TopCoder attracted
competitors from developed nations such as the United States, Canada, South Korea, and Japan, as
well as from emerging economies such as China, Russia, Poland, India, and Ukraine. Wu Yanbo, a
Chinese TopCoder community member studying abroad in Australia, explained that most
competitors in the lower-­paid contests were from developing countries. According to Wu, the prizes
were not large enough for many individuals from developed countries to compete, since they could
spend their time better elsewhere.
Justin Gasper, a member since 2001, began experimenting with the TopCoder platform while
working for a traditional software engineering company. After winning significant money with
TopCoder, Gasper decided to quit his job in 2005 and devote 40 to 50 hours a week to TopCoder.
Gasper explained: ???????????????????? ?????? ?????? ????????-­?????????? ?????????? ???? ???????????? ?????????? ???? ???????? ?????????? Gasper was one of
?????????????????????? ???????????????? ?????????????????? ???? ?????????????? ?????? ???????? ???????????????? ?????????????? ?????? ?????????????????????????? ?????? ??????????????????????????
competitions, Gasper won at least second place 95% of the time and had a win percentage of 69.23%.
Competitors at TopCoder could choose which contests and what type of contests to join (see
Exhibit 5 for participation and prize data by contest type).
Profiles and Ratings
Each programmer in the TopCoder community maintained a public profile that displayed his or
her user name, contest history, and basic personal information. Another part of the member profile
??????????????????????????????????????????????????numeric rating for each type of contest. The rating system was modeled on
the one used to rank grandmaster chess players engaged in worldwide competition. A ?????????? ????????????
???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? within the community and a high skill level.
Yellow, blue, and green color ratings represented descending skill levels. ????????????????????????????????????country
rank, total community rank, success rates for contests, and reliability??or percentage of times the
contestant joined a competition and submitted a passing solution??were featured in their profiles.
TopCoder members could also choose whether or not to display their total earnings on their profiles
(see Exhibit 6 for an example member profile).
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
6
Motivating Members
Between 2001 and 2009, TopCoder paid out over $20 million in prizes and peer review money to
its community of developers. However, prize money was not evenly distributed throughout the
TopCoder community. The top 5% of prize earners received approximately 80% of the total prize
pool, while the majority of TopCoder community members earned little or no money from
competitions. Some competitors were extremely successful. For example, from 2006 to 2008, Paweska
earned $200,000 to $300,000 per year, while Gasper averaged over $100,000 annually. Wu
commented: ??????????????????????????????????????????is the most attractive thing. The prize is very good compared to the
income of my friends who are working in some local companies in China. Even though the economy
is not very good and TopCoder reduced its prizes, I can still earn around $1000 per month in my
??????????????????????????TopCoder typically awarded prizes to the top two submissions in each contest, with the
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
Besides prizes awarded on a contest-­by-­contest basis, another main source of income for members
was the Digital Run. In the Digital Run system, the top five ranked competitors for each contest were
awarded points based on contest rank and performance. At the end of each month, TopCoder tallied
?????????????????????????? ???????????? ?????????????? ???????? ???????????????? ???????? ???????? ???????????? ??arners thousands of dollars in bonus prizes.
Paweska explained that success in the Digital Run was not all about who was the best programmer
but more about who could handle the most all-­nighters. Other competitors, such as Gasper, also
made money through contracted projects that TopCoder assigned.
In addition to their cash earnings, many community members reported that their TopCoder rating
was very important because it provided an objective assessment of ability. Wu commented that it was
not easy to maintain a very high rating as it required familiarity with many kinds of technologies,
quick thinking, the ability to learn independently, a strong work ethic, and attention to detail.
According to W?????? ???? ?????????????????? ?????????????? ???????????? ?????? ???????????????????? ???????? ???? ?????????????????????????? ?????????????? ???????????????? ????????
???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Gasper noted that
TopCoder ratings were also symbols of status and prestige for many programmers: ??If you have red
???????????????????????????????????????????????????????????????? Indeed, many prestigious software firms asked potential recruits to
get a TopCoder rating before applying for a job. To others, however, the rating system was less
important. Gasper, for example, explained that winning and making money meant more to him than
ratings.
Although there were differences of opinion regarding the importance of ratings, almost all
community members agreed that competing at TopCoder provided numerous opportunities to learn
and improve. In fact, for many programmers, a TopCoder career often began with failure, but post-­
contest evaluation and peer review of each submission helped them grow and improve. Gasper
noted: ?????????????????????????????????? in my first competition. But the reviewers were really good at pointing me in
the right direction???????????????????????????????????????????????????????????????????????????? ?? ??????????????????????????????????????????????????????????????????????????????????
peer reviewed by people who are better at programming ????????????????????????????????????????????????????????????????????????????????????
they hurt your feelings;; they are ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
that getting feedback from reviewers was crucial and added that community members could also
learn from acting as a reviewer for contests. For scientists and developers, Wu believed that
algorithm contests were particularly helpful at sharpening research skills and improving critical
thinking abilities. In all cases, continual learning opportunities from peers were an important reason
for participation.
Gasper described the appeal of working at home on a web-­based platform instead of in a
?????????????????????????????????????????????????????????????????????? ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
7
a half an hour to work each day and can do the same work at home. If I want to take off a day to play
golf, I just do i?????? ???? ?????????? ???????????? ?????????? ?????? ???????? from 2:00 to 6:00 p.m.???? ?????? ?????????? ?????????????????????????? ??????????????
Sharing similar sentiments, Paweska liked that while working at TopCoder he did not have a
supervisor looking over his shoulder.
???????????????????????????????????????? ?????? convenient but also challenging, as competitors had to actively manage
their individual levels of participation. Gasper constantly balanced effort and reward to maximize
?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? too much work for
???????????????????????????????????????????????????? . . . ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
worthwhile to solve???????????????? skill that ??????????????????????????????????????????????????????????????????????????????????????????
??????????????????????????????????????????????????????????
Wu noted that, although the firm was competitive in sprit, competition at TopCoder was never
disrespectful or nasty and that people liked to help each other, even when they competed in the same
arena. TopCoder forums were the main source for collaboration. In the forums, less-­experienced
community members asked for assistance on certain problems and received instant feedback from
more-­experienced competitors.
At TopCoder, conversations and relationships extended beyond the scope of software
development. Hughes reflected on a particularly remarkable exhibit of communal strength and
?????????????? ???????? ?????????????? ???????????????????? ???????????????? ???????????????? ?????? ?????????????????? ?????????????????????????? ???????????? ???????? ?????? ????????
???????????????????? ???????????????? ?????????????? ?????? ???????????? ?????????? ?????????????????????? ?????? ???????????????? ???????? ?????????? ?????????? ???? ?????????????? ?????? ????????
community members took ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
????????????????????????????????????????????????????????????????????????????????????????????
Once a year, TopCoder paid for all of the best talent from the community to travel to Las Vegas,
Nevada, to compete in the TopCoder Open (TCO). In addition to serving as a proving ground for the
best programmers in the world, the TCO provided community members with the opportunity to
network professionally and socially.
The TopCoder community had a distinctive culture, with identifiable personalities. Wu explained:
?????? ???????????????? ?????????? ?????????????????????? ?????????? ???????? ???????????????? ???????? ???????? ???????? ?????????????????? Clearly, the members built it up
continuously. When I joined the community, there were already some leading members who were
active in competitions and forums, brought out good suggestions, and started up interesting and
???????????????????? ???????????????????????????? ?????? ?????????? ?????????????? ???????? ?????????? ?????? ???????????????????? ???????????????? ?????????????????? well beyond
TopCoder. For example, Tomasz Czajka??????????????????????????????????????????????????rock star???????????????????????????????????????? picture
plastered on billboards throughout Warsaw after he won the TopCoder Open in 2006.
????????????????????????????????????????????????
Clients came to TopCoder to have high-­quality software developed in a cost-­effective and time-­
efficient manner. TopCoder positioned itself to serve both large firms and medium-­ to small-­sized
business that wanted to see systems developed. Keith Moore, a TopCoder client and former senior
vice president at LendingTree.com, believed that, regardless of size, any company could take
advantage of TopCoder, whether it was a five-­person operation or large outsourcing vendor. For
many CIOs, the process of software development and talent recruitment was a major headache, and
missed deadlines and large cost overruns were common worries. According to Stephen Laster, the
???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? over 48% of its
employees every three years. This process is very costly. The same problem exists with our
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
8
outsourcing consultants. When selecting consultant teams, we tried out 60 programmers before
finding our team of 20. With TopCoder, I pay for performance and the CIO sees Nirvan????????
As of 2009, TopCoder had developed a strong relationship with existing clients for delivering
high-­quality software solutions and superior customer service. After completing their first project
with TopCoder, 82% of clients signed up for a second round of contests. These clients cited several
advantages.
Benefits
Better Ideas Before sinking thousands of dollars into a project, a client could run a
conceptualization contest through which TopCoder members helped identify bad ideas and generate
better approaches early in the development cycle. When the client introduced a business problem to
the community, members asked hundreds of questions. Nic Perez, a former technical director at
AOL, ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
?????????? ???? ?????????? ???????? ?????????????? ?????? ???????????? ?????? ???????????? ???????? ?????? ???????????? ???????????????????? ???????????????????? ???????????? ?????????????? ????????????????
clients answered questions for all competitors only once, avoiding repeated efforts. In some cases,
clients scrapped product ideas entirely after the community raised concern???? ???????????? ???????? ????????????????????
likely success or usability in the marketplace.
?????????????????????? ??????????????-­based development system consistently produced highly creative ideas and
solutions. According to Darren Smith, a solution architect for the e-­commerce division at Ferguson
Enterprises, ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????, ??????????????????????????????
comes back with many options. It really has surprised us. You never know what you are you going to
get. The creative side allows us to go to the marketing management team and say, ????e could do X, Y,
and Z that we may not have previously considered.?? ?????????????? adding value to our business because
they bring us solutions that quite frankly we may not have considered or were not resourced to
deliver??????
Superior Quality, Cost, Speed, and Flexibility ???????????????? ???????????????? ?????????????????????? ??????????????????
evaluation and documentation process for being well above industry standards. Reflecting on his
experience working on the Google Talk interface to AOL Instant Messenger, Perez stated that
TopCoder and its community had a strong desire to deliver bug-­free code and that even the most
complex systems always had fewer than 100 identified bugs. According to Perez, the same sized
projects, developed internally, at AOL would have had five to eight times that number of bugs.
Another TopCoder client, a Web-­based startup business, noted that it would have had to pay
$350,000 to a large IT consulting firm, $200,000 to a small IT consulting firm, or $80,000 to individual
contractors ????????????????????????????????????????????????????????????. Using TopCoder, the client only spent $35,000. This same
client proclaimed: ???????? ?????????????????? ?????????? ?????????????????????? ???????????? ?????? ?????? ???????????? ?????????? ???????? ???????????????? A different client
noted that based on its experience working with almost every type of software development
company, TopCoder charged approximately half of the fee of a large, tier-­one IT consulting firm.
Using the community for parallel problem solving, TopCoder marketed itself as faster than
other software development shops. This was true for back-­end bug races and system checks, as
TopCoder took 72 hours to complete the same bug testing that a traditional development firm
finished in 10 business days. However, for other steps in the software development process, reports
on speed were mixed. Some clients said that TopCoder worked at about the same speed as a large IT
consulting firm, while others lauded TopCoder for speed of completion.
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
9
Especially appea?????????? ?????? ???????????????? ???????? ?????????????????????? ???????????????? ?????? ?????????????? ?????????????????? ?????????????????? ????????????????????????
capacity. In particular, a TopCoder client could expand or reduce its business requirements and
development capabilities without having to hire or fire programmers. According to one client, a basic
in-­house computer programmer cost $120,000 a year, after accounting for benefits, sick time, and
vacation. Working with TopCoder??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
downtime.
Concerns
Although CIOs were im???????????????? ?????? ?????????????????????? ???????????????????? ?????????????????????????? ???????? ????????-­saving potential,
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
model.
Intellectual Property (IP) and Security According to Ira Heffan, ???????????????????? chief legal
c???????????????? ?????????? ???????? ???????????????? ?????????????????????? ?????????? ?????????????????????? ?????????????? ?????? ???????? ?????????????????? ?????????????????? can be an
initial point of resistance. Until they understand the documentation and processes we have in place
with the community members, they see IP and security as potential barriers to working with a
???????????????????????? ???????? ?????????????????? ?????????? ???????????????? ?????????? ?????????????????????????? ?????????? ???? ?????????????????? ???????????????????? ??????????????
might divulge proprietary ideas, business plans, or operations to their competitors. In addition, some
clients worried that once a component became an integral part of their IT systems, the community
member who built the component might attempt to prohibit its use or ask the client to pay
considerable royalties. Lastly, some clients were concerned that a solution submitted by a community
member could be stolen, copyrighted, or taken from open-­source software projects, thus potentially
opening the door for intellectual property disputes.
TopCoder had in place a number of initiatives targeted at addressing these concerns and reducing
the risk level for clients, and also took steps to communicate its processes. To ease clients?? intellectual
property and security concerns, TopCoder produced a white paper that detailed confidentiality
???????????????????? ?????????????????????????? ?????????????????? ?????????????????????? ?????????????? ???????? ?????????????????????? ???????????????? ?????????????????? ?????? ??????????????????
development. In addition, TopCoder allowed clients to keep their company names anonymous
during competitions and helped clients generate test data sets to avoid the exposure of sensitive
?????????????????????????? ?????? ???????? ?????????????????? ?????????????????? ?????????????? ???? ???????????????????? ?????????????? ???????? ???????????????? ???????????? ?????????? ????
competition, all competitors could be required to sign a standard competition confidentiality
agreement.
The peer-­review process was another means to ensure code security and quality. Peer reviewers
were selected and vetted by TopCoder employees based on their superior performance on prior
competitions. TopCoder clients also had the option of running testing competitions at the back end of
software production, serving as an additional means of checking code security and quality.
?????????????????????? ???????????????????????????????????? ?????????????????? ???????????????????????? ???????????????? ??????o made it difficult for a single
competitor to insert harmful code into a program, since individual contests only addressed one small
piece of the overall program.
Cultural Change Many clients realized that working with TopCoder would be difficult
culturally for their company. In particular, CIOs believed that internal employees would view
TopCoder as a threat to their job security. One new client observed: ??????????????????????????????????????????????????????????????
???? ?????????????????????????? ???????????? ?????????????????????? I fully expect that if this goes well and if my programmers see
good quality work coming out of TopCoder, fear will ???????????????? ???????????????? ?????????????????????? ???????? ????????????????????
Although using TopCoder could help a company scale and reduce the programming staff costs,
companies still had to reta?????? ???????? ?????????? ???????????????????? ??????????????the employees who could guide the
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
10
TopCoder development process. The managers at TopCoder clients also had to adjust to a perceived
loss of control over the software development process. Smith ??????????????????????????????????????????????????????????????????????,
but they manage the whole process. Our project management group works with the TopCoder
manager to ensure delivery according to pre-­determined service level agreements (SLAs)??????
Additionally, some clients found a few community members to be pushy and rude during pre-­
competition question-­and-­answer sessions.
Coding Challenges ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
???????????????? ???????????? ?????????????? ?????? ?????????? ?????? ?????????????????? ???????????? ?????? ???????????????????? ???????? ???????????????????????? ?????????? ???????? ?????????????????? ??xisting
systems, review the code for security issues, and adjust and fix code as systems changed over time.
???????? ?????????????????? ???????????????? ?????????? ?????? ?????????????????? ???????????? ???? ???????????????????????? ?????????????? ?????? ?????????? ???????????????????????? ?????????????????? ????????
?????????????????????? ?????????????????????? ?????????? ?????? ?????????? ?????????? ?????????? ?????????? were no security threats or bugs. In some
contests, TopCoder clients also spent time evaluating ideas and approaches from multiple winning
solutions.
Another ongoing issue for clients was finding the right types of problems and providing the
appropriate a???????????? ?????? ???????????????? ?????????????? ???????? ???????? ?????????????????? ?????????????????????? ?????? ???????????? ???????????????????? ???????? ??????????
want neither too much nor too little detail. You do not want to quell innovation but also want a
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????icipation decreased if
they were unclear about what problems they wanted to solve or presented problems that were too
complex or vast in scope;; in those cases, the TopCoder community struggled to produce an
acceptable solution. Clients also found that community members worked best when contests lasted
less than two weeks. If projects took too long to complete, contestants would lose interest and not
make submissions.
Managing TopCoder
The Supply Side
A management job at TopCoder was unique. Along with supervising internal TopCoder
employees, managers at the firm had to oversee a community of over 200,000 members and direct the
process of competition-­based software development. According to senior vice president George
Tsipolitis, the key to success was effective process management: ???????????? ?????????????? ?????????????????? ????
?????????????????????? ???????? ???????? ?????? ?????????????? ?????????????????? ?????????????????????????? ?????????????? ?????????????????? ???? ?????????????? We ???????????? ????????????????
individuals. We can only control the process of their participation.???? ???????????????? ???????? employees alike
believed that the sustainable value of the ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
community participation and foster community growth. Lydon described the risks: ??From the
beginning, we focused on the community. We knew they could be unforgiving. If you did the wrong
thing, ????????????????????????????????????????
Attraction To run many competitions simultaneously and produce solutions for many clients
at the same time, TopCoder needed to have access to a critical mass of talent and coding capacity.
?????????????????????? ???????????????? ???????????? ?????? ?????????????????????? ???????? ???????????????? ?????????? ???????? ???????????????????? ???????? ???????? ?????????????? ????????
challenge of the algorithm contests. In addition, TopCoder occasionally advertised its online
competition platform by paying for Google keyword searches using terms such as ??????????????????????????????????????
A third mechanism for attracting talent ???????? ???????????????? ???????????????????????? ?????????????? ???????????????????? ?????? ???? ????????????
team of TopCoder employees, member development days were held at Chinese and other
international universities. At a member development day, a student representative would post signs
around the school and explain the TopCoder system. A primary goal of these member development
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
11
days was to encourage participation in the higher-­revenue-­producing development and design
contests. During one member development day in China, TopCoder registered over one thousand
new community members. Bourdon noted that TopCoder had achieved critical mass once it crossed
the 200,000 member threshold, as there were now many members with deep and narrow skills over a
range of software development challenges (See Exhibit 7 for the number of participants by contest
type).
Norms As the community grew, TopCoder paid close attention to establishing community
norms. As contest administrator, the company had to maintain the highest standards of contest
integrity, fairness, transparency, and quality. For example, TopCoder personnel strictly monitored
competitions and tolerated no form of cheating. Community members who peeked at other
?????????????????????????? ??olutions, shared ideas during competition, or used unauthorized code were
immediately eliminated from the contest. Often they were kicked out of the community entirely.
If any uncertainty or disagreement arose about which competitor won a particular contest,
TopCoder would spend extra money to re-­run the competition. Another part of contest integrity,
Tsipolitis explained, was TopCoder???? emphasis on maintaining consistency of rules and procedures:
?????????? ?????????????? that participants ???????????? ?????????????? ???????? ???????? ?????? ?????????? ???????????????? ?????????? ?????????????????????????????? ?????? ?????? ????????????
change the rules of a competition mid-­?????????????????? TopCoder also guaranteed complete contest
transparency by storing all contest and competitor statistics, peer reviews, and solutions in a data
warehouse. The data were publicly available to registered community members, accessed via the
TopCoder website.
???????????????????? ???????? ?????????????????? ?????????? ?????????????????? ?????? ?????????????????????? ???????????????????? ???????????????????????? ???????? ????????????????????
compensation philosophy. In particular, TopCoder was up-­front with the community over its
intention to make money. When TopCoder made a decision to change corporate direction or
competition procedures, Hughes posted the information in the forums and explained the business
reasons behind his decisions. Hughes also believed that, since the company benefited from the
???????????????????????????????????????????????????????????????????????????????????????????? community members was essential.
Governance Although TopCoder executives were responsible for final decisions, they
frequently incorpo?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ????????????????????????????
community as the driver for everything we do. If we have enough dissent from members, we always
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????embers will also be
????????????????Community member Gasper shared a similar perspective: ????????????????????????????????????????????????????????????????????
into the forums to get feedback. Seventy-­five percent of the time, they listen to the community. But
TopCoder also has its own business interests to consider. Sometimes the community and business
???????????????????????????????????????? ??????????
Similarly, if competitors were unhappy with a peer-­review scoring outcome, TopCoder allowed
them to appeal the decision. Over 90% of contests featured at least one appeal. If a member appealed,
peer reviewers had to provide specific reasons why the appeal was accepted or rejected. If
disagreement remained between contestant and reviewer, TopCoder employees often investigated.
Contestants could also appeal directly and privately to TopCoder personnel or post complaints
publicly on the TopCoder forums.
TopCoder managers inevitably made decisions that sometimes disturbed and upset the TopCoder
community. For example, facing a very difficult economic environment in the summer and fall of
2008, TopCoder reduced the contest prize amounts, cut payments to peer reviewers, and reduced the
number of algorithm competitions. During this period, some TopCoder competitors left the
community entirely and others dramatically reduced their participation levels. Gasper argued that
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
12
the payment cuts also led to many superficial reviews because the best reviewers were no longer
doing the work, which then required additional cycles to achieve acceptable quality.
Resource Allocation Another part of the TopCoder managerial role was allocating
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
how to distribute the number of people who want to participate across the number of contests that
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? the costs of
evaluation, stimulate effort through competition, and get at least one solution that was acceptable to
the client. To achieve the ideal number of submissions and participants, TopCoder adjusted the prize
amount, the duration and timing of the contest, the number of other contests running concurrently,
???????? ???????? ???????????????????? ?????????????????????? ???????? ?????????????? ?????????? ?????????????????? ?????? ???????? ???????????? ?????????????? ?????? ??????????????????????????
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
directly to individual community members if other methods did not lead to the desired participation
levels.
Although TopCoder managers could pull many levers to influence contest participation, they
believed it was important not to act like ???????? ?????????????????????? boss. Hughes explained his community
management philosophy???? ???????? ???????????? ???????? ?????????? ?????????????????????? ?????? ?????????? ?????????????? ?????? ?????? ?????????? ?????????? ??????????
want to be here. You are just going to get much better results when you let people do what they
??????????????????????????????????????
Retention At the same time, TopCoder executives worked to retain community members and
encourage future contest participation. At least one client raised concerns in this area: ??I think that
communities are fickle. Community members could start to ask, why do I need them? For example,
what happens if an imitator comes along and offers twice ???????? ???????????? ???????????????? To avoid such
problems, TopCoder tried to supply community members with consistent work streams and prize
money. TopCoder also encouraged community members to engage in the community as much as
possible by dedicating significant resources to facilitating forum discussions and inviting contestants
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
TopCoder community members differed on their level of loyalty to the TopCoder community.
?????????????????? ?????????????????????????? ?????? ???????? ???????? ???????????????????????????? ?????????????????? ???????? ???????????????????? ?????????????????????? ?????? ?????????? ??????????
loyalty. I think it would take a lot for me to leave. Only if there were no projects would I leave??????
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
??????????????????????????????????????????[For me] to defect, the payment and work would have to outweigh the payment
and flexibility I have at Top????????????????
The Demand Side
Platform Managers The other side of management at TopCoder was guiding clients through
the contest-­based software development process. ?????????? ???????? ???????? ?????????????????????????????? ?????? ???????? ??????????????????
platform managers, whose job was to induce the appropriate amount of community participation,
make suggestions for contest prize amounts, gather feedback between contests, and provide project
status updates to clients. Before starting the next step in the game plan, platform managers also
adjusted contest requirements based on the work already completed. Once the product was delivered
to the client, TopCoder platform managers were required to act in a support and service role. If there
was a technical problem with a solution, the platform manager often contacted the community
members who developed the component and worked with the community members to fix the issue.
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
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Most enterprise-­level clients believed the platform manager was pivotal to ????????????????????????????????????????????????????
large client like LendingTree, the platform manager was on site three to four days a week, conducting
daily meetings with the internal teams. ???? ???????????? ???????????????? ???????? ?????????????????? ???????????????????? ?????????? ???????? ??????????????????
client expectations and serving as a sounding board for client concerns. At the back end of projects,
?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? the platform
manager was also an expert at combining the small software pieces. The component integration role
saved the client hours of work trying to figure out how all the pieces fit together. At Ferguson, Smith
considered the TopCoder personnel working on site to be an integral part of his team.
TopCoder Direct However, each ????????????????????????????????????????????????????????????????????????????????????????????????????????????????
narrowed profit margins. As of 2009, a typical platform manager at TopCoder cost $100,000 a year
including ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
????????????????????????????????????????????????????????????????????????????????????????????????????????
To avoid a potentially large increase in expenses as TopCoder added clients and projects, Hughes
?????????? ?????? ?????????? ???????? ???????????????? ?????? ???????????????????? ?????????????????? in which the client used the ?????????????????? platform
with little to no intervention from its employees. Under this self-­service model, platform managers
would educate clients on how to use the TopCoder platform to manage the contest-­based software
development process themselves. ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
to an experienced community member or an external ??????????????????????????????????????????????????????????????????????????????????????????
someone who would serve as a ??????-­???????????? to assist the client staff. With co-­pilots taking the role of
platform managers, ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????ect would
shrink from 40 hours to two, thus saving the client and TopCoder considerable time and money.
The Future
As of December 2009, no competitors had elected to copy ????????????????????????????????????????????????????by offering
full-­service software development through a competition-­based approach. Instead, companies such
as RentACoder, Elance, and oDesk served as online liaisons between clients and freelance software
developers. Unlike TopCoder, whose clients only paid for solutions, clients at these firms used a ????????
?????????????? approach: they selected one or more programmers to solve their problem. More similar to
TopCoder, uTest used crowdsourcing to find bugs and check the functional usability of web, mobile,
desktop, and gaming applications, but did not engage in software development. According to
Hughes, this lack of direct competition reflected the technical difficulties and costs associated with
building a full-­fledged community and platform.
After a significant downturn in the global economy in 2008 and 2009, Hughes believed that
TopCoder was primed for growth. Sales staff were forecasting aggressive targets for the volume of
competitions and revenues, and several strategic partnerships were under consideration. However,
significant challenges and uncertainty remained. In particular, Hughes wondered whether the
community, as well as the company, could grow to meet increasing demand.
Stakeholders had divergent views. Mike Morris, vice president of sales, saw unlimited potential:
????f sales grow at a linear rate, membership grows at an exponential rate. The supply of community
members is not going to limit growth. If you throw enough money out there, you will get enough
?????????????????????????? Community members Paweska and Wu agreed that offering more money per contest
would increase participation among existing members. Paweska also believed, however, that holding
many more contests than usual in a given week would result in inexperienced competitors competing
actively for the prizes, possibly reducing code quality. Furthermore, Lydon noted that that during
??????????????????????????????????????????????????????-­up in 2007, review quality suffered during a transitional period of a few
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
14
months. As more contests became available, the usual reviewers wanted to compete in the contests,
rather than review them, leaving TopCoder scrambling to find replacements. In addition, a few
clients worried that as the number of avenues of competition at TopCoder grew, attracting the same
group of competitors would prove much more difficult, reducing contest consistency and continuity,
which were especially critical for addressing legacy systems.
Hughes also worried about client service. If the number of TopCoder clients expanded
significantly, TopCoder???? staff might face increasing difficulties responding to all ???????????? ??????????????????
questions and concerns. For large clients, expansion might require adding more platform managers,
??????????????????????????????????????????????????????COO, was concerned that too many platform managers might make the
firm appear to be like any other large IT consulting company, with the risk of losing its unique
business model.
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
position. In particular, Hughes wondered if community members would stick with TopCoder if a
new competition-­based software development company emerged. What would happen if a company
like Accenture started to develop software in the same way as TopCoder? Would the TopCoder
community remain intact?
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610-­032 -­15-­
Exhibit 1 TopCoder Members Involved in Creating a Power Pricing System for an Energy Company
Source: Company documents;; developed via a TopCoder Studio competition.
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610-­032 -­16-­
Exhibit 2 Number of Clients, Revenue, Number of Platform Managers, and Platform Manager Costs by Quarter
2007
Q1
Q2
Q3
Q4
2008
Q1
Q2
Q3
Q4
2009
Q1
Q2
Q3
Q4
Number of Clients
Total Revenue
($MM)
Number of
Platform
Managers
Cost of Platform
Managers ($MM)a
32
4.66
51
1.23
32
4.50
51
1.24
34
3.80
44
1.12
25
5.35
52
1.30
24
5.80
52
1.36
38
5.50
46
1.19
37
4.85
44
1.13
47
2.60
36
0.91
46
2.25
20
0.53
47
1.92
19
0.49
38
1.82
18
0.46
35
2.45
16
0.40
Source: Company statistics.
a Includes platform managers?? salaries, benefits, and other expenses.
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610-­032 -­17-­
Exhibit 3 Sample Game Plan
Source: Company documents.
Phase
# of
Contests
Estimated
Costs
MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F
Conceptualization
Logo – Tournament 0 $ –
Concept Contest – Tournament x x x x x 1 $ 4,500.00
Wireframes – Tournament x x x x x 1 $ 3,000.00
Storyboard – Tournament x x x x x x x x x 1 $ 3,500.00
Application Build
System Architecture
System Architecture x x x x x x x x x x 1 $ 4,500.00
Component Design x x x x x x x 1 $ 2,300.00
Component Development x x x x x x x x 1 $ 2,050.00
Catalog Components 0 $ –
System Assembly x x x x x x x x x x 1 $ 4,900.00
<Functional> Module
Module Specification x x x x x x x x x x 1 $ 4,000.00
Module Architecture x x x x x x x x x x 1 $ 4,000.00
Component Design x x x x x x x x 3 $ 6,900.00
Component Development x x x x x x x x x 3 $ 6,600.00
Catalog Components 0 $ –
Module Assembly x x x x x x x x x 1 $ 4,900.00
Prototype Assembly x x x x x x x x x x 1 $ 4,900.00
Testing
Test Scenarios x x x x x x x x x x 2 $ 3,900.00
Test Cases x x x x x x x x x x 2 $ 3,900.00
Bug Hunt x x x x x x x x 1 $ 2,750.00
Deployment
Deployment x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 20 $ 4,000.00
Updates
Bug Races x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 30 $ 4,200.00
Total $ 74,800.00
Timeline
4/27 5/4 5/11 5/18 5/25 6/1 6/8 6/15 6/22 6/29 7/6 7/13 7/20 7/27 8/3 8/10
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
18
Exhibit 4 Community Growth
Source: Company statistics.
Exhibit 5 Average Contest Registration, Submission, and Prize Amount for Client Contests in 2008
and 2009
Contest Type
Number of
Registrants
per Contest
2008
Submissions
per Contest
Prize
Amount per
Contesta
Number of
Registrants
per Contest
2009
Submissions
per Contest
Prize
Amount per
Contesta
Conceptualization
Specification
Architecture
Component
Design
Component
Development
Assembly
Studio
n/ab
n/ab
16.3
9.83
15.4
16.09
27.55
n/ab
n/ab
1.64
2.85
2.69
1.12
14.57
n/ab
n/ab
$1,590
$899
$733
$1,628
$795
17.57
14.20
19.34
16.26
25.59
18.38
27.57
3.60
1.94
1.75
1.94
2.56
1.18
20.04
$1,314
$1,017
$1,095
$559
$465
$913
$1,015
Source: Company statistics.
a Prize per contest ?? Prize for first and second places and reserve for Digital Run.
b n/a ?? Data not available for most of 2008.
0
50,000
100,000
150,000
200,000
250,000
Total
Community
Members
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
19
Exhibit 6 Example Community Profile
Source: http://www.topcoder.com/tc?module=MemberProfile&cr=287614, accessed December 23, 2009.
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610-­032 -­20-­
Exhibit 7 Number of Unique Participants by Contest Type per Year and Month/Total Number of Official Contests per Year
2005 2006 2007 2008 2009
Average Submitters Contests Average Submitters Contests Average Submitters Contests Average Submitters Contests Average Submitters Contests
Contest Type per Month per Year per Year per Month per Year per Year per Month per Year per Year per Month per Year per Year per Month per Year per Year
Algorithm Contests
Single Rounda 1,319 5,287 81 1,930 7,525 105 2,638 8,994 113 2,945 10,433 66 2,558 9,616 51
Marathon Matchb 500c 500c 1c 273 1,532 20 281 1,588 30 253 1,621 29 314 2,150 35
Client Software
Development Contests
Conceptualization 7c 11c 9c 6 34 70
Specification 5c 7c 16c 6 32 71
Architecture 1c 4c 4c 4 29 65 9 36 145
Component Design 33 157 362 45 225 615 61 243 698 38 144 488 20 93 300
Component Dev. 58 316 287 88 451 484 135 605 780 91 434 733 41 204 337
Assembly 7 47 86 10 59 191 20 104 416
Design Contests
Studio 65c 223c 17c 81 453 118 66 279 451 102 429 456
Totald 1,370 5,565 730 2,146 8,517 1,224 2,867 10,072 1,825 3,198 11,487 2,023 2,911 11,122 1,881
Source: Company statistics.
a 75-­minute programming contest.
b Programming contests that run from 3??30 days.
c Partial year data??contest track officially did not officially start until the middle or end of the year.
d Represents the unique number of participants during a given time period. Columns are not additive.
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Professors Karim R. Lakhani and David A. Garvin and Research Associate Eric Lonstein prepared this case. HBS cases are developed solely as
the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective
management.

Copyright © 2010, 2011, 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-­800-­
545-­7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be
digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
KARIM R. LAKHANI
DAVID A. GARVIN
ERIC LONSTE IN
TopCoder (A): Developing Software through
Crowdsourcing
In December 2009, Jack Hughes, CEO and founder of TopCoder Inc., entered his ????????????????????
headquarters in Glastonbury, Connecticut, eager to review a particularly complex software
development project for an ????????????????????????????dynamic power pricing system. Eight years after founding
TopCoder, Hughes still enjoyed detailed project reviews. He was particularly proud that his
company could produce high-­quality software solutions for which his own employees did not have
to write a single line of code. Instead, the firm nurtured a global community of more than 225,000
programmers who competed to design and create software modules for TopCoder clients, a process
that the popular press called crowdsourcing.1
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????-­free and operational
on its first day, a rarity in the software industry. Especially impressive to Hughes was that in four
months, 65 participants from 11 countries on six continents had competed in 57 contests to create this
critical pricing system for the client (see Exhibit 1). As of 2009, TopCoder routinely produced
software solutions for over 45 clients, including AOL, Best Buy, Eli Lilly, ESPN, GEICO, and the
Royal Bank of Scotland.
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
changes in the software industry, while also pursuing its unique competition-­based software
development approach. He had transitioned his business from a model that helped other software
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
traditional IT consulting services and competitions, mobilizing developers world-­wide to solve
clients?? problems.
The shift to a greater emphasis on competitions, encompassing all aspects of software
development, however, meant that project volume was a growing issue for TopCoder. Hughes had to
think through how a competition-­based business model, which increasingly stressed contests as an
organizing as well as money-­making approach, could handle increases in numbers of competitions,
clients, and participants. Hughes considered his own goal: attaining $200 million in revenue from a
high of just over $18 million in 2008. He fundamentally believed that contest demand would spur the
supply of TopCoder participants, who would in turn create high-­quality software solutions. But, was
1 ????????????????????????????????????????????????????????????????????????????????Wired Magazine 14.06, June 2006.
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
2
$200 million in revenue a reasonable goal? Did his assumptions make sense? If so, what would it take
to increase revenues by over an order of magnitude?
Background and Current Operations
Before he founded TopCoder in 2001, Hughes had built a custom software development2
company, Business Data Services, in 1985;; the company name changed to Tallan in 1991. Tallan
employed some 600 people before being sold to CMGI in 2000.3 As he was completing the
transaction, Hughes reflected on what he had learned from his experiences at Tallan??the experiences
that would inspire the core tenets of the TopCoder business model. Although Hughes enjoyed his
time at Tallan, the company struggled in some areas. For example, recruitment was an expensive and
frustrating process because finding qualified programmers was time-­consuming and talent was
difficult to assess???? ???????? ?????? ?????????????????????? ?????????????????? ???????????????????????????? ?????????????????????????? ???????????? ?????????? ???????????? ??????????????
obsolete after only a few years of productive service, leading to high levels of employee turnover.
?????????????????????????? ???????????????? ?????????????????? ?????????? ?????? ?????????????????????? ?????????????????? ?????????????? ?????????????? ?????????????????? ???????????? ??????????
???????????????????????????? ?????? ?????????? ???????????????? ?????????? ???????? ???????????? ???????? ???????? ?????????????????? ???????????????? ?????????????????? ???????????????????? ????????????
components instead of building each application from scratch.
Drawing upon these and other insights, Hughes set about creating a new kind of organization that
would build a ??community?? of programmers to help address the issues he had identified. These
programmers would compete??as well as affiliate??by building and using components that had
already been tested and found workable. The idea of reusing software components for new projects
would become the core of the solutions the new company, called TopCoder, provided. Hughes
?????????????????????? ???????? ???????????????? ?????? ???? ??????o-­???????????? ???????????????????? ???????? ?????????????????? ???????????????????????? One side of the
platform would be clients, firms that needed software developed, who would work with his staff to
specify programming challenges. The other side would be community members who would compete
in contests to create solutions to the challenges for money and skill ratings. TopCoder would be in the
middle as the platform host, designing and enforcing the rules of engagement between clients and
???????? ???????????????????? ?????????????????? ?????????? ?????????????????? ?????????????????????? ?????????? ????????????????d that the company needed to
excel at five core tasks: breaking down large client software projects into components, taking in and
processing client project specifications, determining appropriate contest prizes, having a consistent
and unbiased way of selecting contest winners, and fixing bugs at the back end of development.
Setting out to amass an initial collection of highly skilled programmers, from 2001 to 2003
TopCoder asked established software development companies to sponsor world-­wide web-­based
p????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
competition platform and provided the company with access to talented programmers from around
the world. In return, the sponsors, including Sun Microsystems and Google, used the contests to
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????vice president of finance, explained that
during the sponsorship phase, TopCoder offered unusually large prizes??as much as $5,000 to
$10,000 per match for tournament winners??to attract competitors and expand the community. In
addition, every contestant that participated received an objective numerical rating for their
2 Custom software development by specialist firms in the global IT consulting and services sector (for example, Accenture and
IBM) was an over $500 billion segment in 2008. (Source: ???????????????? ?????? ?????????????????????? ???? ???????????? ???????????????????? ?????????????????? ???????????????????? Data
Monitor, March 2009.)
3 ???????????? ?????????????????? ???????????? ?????????????????? ?????????????? ???????? ??????????M???????????????? InternetNews.com, February 14, 2000, http://www.internetnews.
com/ec-­news/article.php/303771/CMGI-­Acquires-­Tallan-­for-­920-­Million.htm.
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
3
performance against the global talent pool, providing a clear signal to TopCoder and others about the
talent in the community.
By the end of 2004, the TopCoder community was 50,000 members strong. In its early efforts to
use the community to generate revenue, TopCoder acted as a placement firm, matching top-­rated
community members with firms seeking new talent. Hughes, however, was ????????????????????????????????????????????????????????
the idea of TopCoder becoming a placement firm. That was not my end ????????????????????????????????????????????????
In 2005, TopCoder began to use its community to develop software components and applications.
Hughes first tested this model by having highly rated community members compete to redesign and
???????????????? ???????? ?????????????? ???????? ?????????????????? ???????????????????? ???????? ???????????????????? ?????????? ???????? ?????????????? ???????????????? ???????? ?????????? ??????????
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????itive proof that
complex software systems could be built through competitions.
Initially, TopCoder adopted a model to create solutions for clients by contracting with community
members, running competitions, and providing consulting services. The company broke down the
software development process into seven distinct but interrelated tasks: 1) conceptualization, 2)
specification, 3) architecture, 4) component production, 5) application assembly, 6) certification, and
7) deployment. Most revenue came from consulting services: TopCoder billed clients for the time the
???????????????????? ?????????????????? ?????????????????? ???????????? ???????????????????????????????? ???????? ?????????????????????? ?????????????? ???????????????????? ???????????????? ??????
component design and development competitions, assembling components, and delivering finished
solutions.
Shortly after TopCoder started developing software for clients, the company identified reusable
components from the software it was creating and collected the components in a catalog. These
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????ue proposition to its clients. Many
of the custom applications could be produced by combining existing catalog components with new
components built through competition. TopCoder had also received eight U.S. patents for various
aspects of running online programming contests in a distributed community setting and had other
patents pending domestically and internationally.
?????????????????????? ?????????????? ?????????????????????? ???????????? ???????? ?????? ???????????? ???????????????????? ?????? ???????????????????? ?????????????????? ?????????????? ????????
??????????????????????????????????????????????????????????????????????????????-­??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
2007 and 2008, TopCoder produced nearly $20 million in revenue, but platform manager costs
remained high (see Exhibit 2 for information on revenue and platform manager costs). Attempting to
alleviate costs, in 2007 TopCoder introduced competition tracks for component architecture and
assembly. With these new competition tracks in place, the work traditionally done by platform
managers would now be done by the community. In 2008, the company also added competitions in
software development tasks, such as conceptualization and specification, as well as deployment and
bug fixing.
By early 2009, TopCoder had moved increasingly away from the hybrid consulting model. It now
focused on completing all tasks in software development through competitions. Instead of paying for
time and materials for TopCoder platform managers, clients paid a monthly platform fee based on
the complexity of their software requirements and the estimated number of competitions they would
run through the TopCoder platform each month. The platform fee also provided clients with
unlimited access to the ?????????????????????????????????????????????????????????????????????????????????????? Roughly 60% of most clients??
projects could be accomplished through reusing components from the catalog. The company coupled
the move from the hybrid consultancy model to a competition model with the reduction of many
platform manager positions, leaving the company with 16 project managers servicing 35 clients by
the end of 2009.
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
4
As of late 2009, TopCoder ran two different types of competitions on its platform: algorithm and
client software development. Algorithm competitions served as the primary means for attracting new
members and retaining existing members. These competitions required members to develop creative
software solutions to relatively difficult programming challenges. All members were assessed against
each other through an automated computer scoring system;; they then received a TopCoder rating for
their performance. Some algorithm competitions also had cash prizes for winners.
The second type of competition targeted developing software applications for specific client
needs. A TopCoder platform manager initially worked with the client staff to develop a ??game plan????
(see Exhibit 3 for a representative game plan) or a project road map for building the software. The
first step typically involved a contest where the general client problem was presented to the
TopCoder community in a conceptualization contest. Here contestants publicly cross-­examined the
client staff as to their actual needs and then submitted a business requirements document and high-­
level use cases. The client chose the submission or submissions that best represented ???????? ??????????????????
needs as the basis for further development. Then a series of specification contests was held to create
the application??s requirements documents, application wireframes (i.e. the logical flow of the
application), and storyboards (detailed cases of the user experience). Next, the output of the
specification contests was fed into several architecture contests to create the overall system and
component level designs. At this point, the TopCoder platform manager would work with the client
to either select components from the catalog or commission the creation of new components through
design and development competitions. After the component production phase, all the relevant
components were put together through an assembly competition with the objective of creating a
working system. Assembly was then followed by certification and testing contests and then,
eventually, deployment. Throughout the execution of the game plan, TopCoder retained flexibility in
???????????????????????? ?????? ???????????????? ??bug r???????????? ?????? ???????????????????????? ?????????????????? ?????????????? ??????????????????????????s or unforeseen
errors.
To determine winners and assess quality in client software development, TopCoder used a
community-­based peer-­review system. In particular, expert and experienced TopCoder community
members were paid to grade and comment on all contest submissions using detailed scorecards,
ultimately picking the contest winners. The winning competitors for each contest then received
monetary prizes, and all participants received updated ratings for their performance. TopCoder also
ran studio contests if an application required logos or graphics;; in those cases, clients chose the
winners.
Evolution of the TopCoder Community
Growth and Composition
From 2001 to 2009, TopCoder added an average of 25,000 new computer programmers to its
community each year. After filling out a short online registration form, anybody in the world could
participate in a software development competition;; by spring 2009, the TopCoder community had
over 200,000 members (see Exhibit 4 for community growth). Although the size of the overall
community was large, the number of people within that community who actively participated in
contests and posted in forums was much smaller. The majority of community members at TopCoder
registered as members of the community but never competed in any contests. In fact, by 2009, only
35,000 unique individuals had competed in contests. To Mik???? ?????????????? ?????????????????????? chief technology
o???????????????? ???????? ???????????????????? ???????????? ?????? ???????? ???????????????????? ???????? ???????? ???????????????? ?????????????? ?????????????? ???????? ?????????? ??????????????????????
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
5
enough in the TopCoder platform to register and had the potential to provide TopCoder with
increased development under the right conditions.
A second group within the TopCoder community comprised those members who at one time
participated in TopCoder contests but then stopped participating. Lydon noted that, after TopCoder
decreased prize values in 2008, many competitors from the United States and Canada left the
TopCoder community. Yet another group included people who participated in TopCoder contests
but did not win. TopCoder saw those competitors as the ???????????? ????????????people who primarily
competed for the sake of learning????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
less-­skilled competitors could improve over time and increase their levels of contribution. Lastly,
?????????????????????? ?????????? ?????????????????? ???????????? ?????? ???????????????????????? ?????????????????? ???????? ?????????????????? ?????????????????? ???????? ?????????????? ??????
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
for 0.5% of the total TopCoder population.
The ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? in their 20s.
According to Michael Paweska, a six-­??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
?????????????? ?????? ???????? ???????? ?????????? ?????????? ???????? ???????????????????????? ?????? ?????????? ?????????? ?????????????? ?????????????????? ?????? ???? ?????????????????????? ?????????????? ????????
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????TopCoder attracted
competitors from developed nations such as the United States, Canada, South Korea, and Japan, as
well as from emerging economies such as China, Russia, Poland, India, and Ukraine. Wu Yanbo, a
Chinese TopCoder community member studying abroad in Australia, explained that most
competitors in the lower-­paid contests were from developing countries. According to Wu, the prizes
were not large enough for many individuals from developed countries to compete, since they could
spend their time better elsewhere.
Justin Gasper, a member since 2001, began experimenting with the TopCoder platform while
working for a traditional software engineering company. After winning significant money with
TopCoder, Gasper decided to quit his job in 2005 and devote 40 to 50 hours a week to TopCoder.
Gasper explained: ???????????????????? ?????? ?????? ????????-­?????????? ?????????? ???? ???????????? ?????????? ???? ???????? ?????????? Gasper was one of
?????????????????????? ???????????????? ?????????????????? ???? ?????????????? ?????? ???????? ???????????????? ?????????????? ?????? ?????????????????????????? ?????? ??????????????????????????
competitions, Gasper won at least second place 95% of the time and had a win percentage of 69.23%.
Competitors at TopCoder could choose which contests and what type of contests to join (see
Exhibit 5 for participation and prize data by contest type).
Profiles and Ratings
Each programmer in the TopCoder community maintained a public profile that displayed his or
her user name, contest history, and basic personal information. Another part of the member profile
??????????????????????????????????????????????????numeric rating for each type of contest. The rating system was modeled on
the one used to rank grandmaster chess players engaged in worldwide competition. A ?????????? ????????????
???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? within the community and a high skill level.
Yellow, blue, and green color ratings represented descending skill levels. ????????????????????????????????????country
rank, total community rank, success rates for contests, and reliability??or percentage of times the
contestant joined a competition and submitted a passing solution??were featured in their profiles.
TopCoder members could also choose whether or not to display their total earnings on their profiles
(see Exhibit 6 for an example member profile).
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
6
Motivating Members
Between 2001 and 2009, TopCoder paid out over $20 million in prizes and peer review money to
its community of developers. However, prize money was not evenly distributed throughout the
TopCoder community. The top 5% of prize earners received approximately 80% of the total prize
pool, while the majority of TopCoder community members earned little or no money from
competitions. Some competitors were extremely successful. For example, from 2006 to 2008, Paweska
earned $200,000 to $300,000 per year, while Gasper averaged over $100,000 annually. Wu
commented: ??????????????????????????????????????????is the most attractive thing. The prize is very good compared to the
income of my friends who are working in some local companies in China. Even though the economy
is not very good and TopCoder reduced its prizes, I can still earn around $1000 per month in my
??????????????????????????TopCoder typically awarded prizes to the top two submissions in each contest, with the
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
Besides prizes awarded on a contest-­by-­contest basis, another main source of income for members
was the Digital Run. In the Digital Run system, the top five ranked competitors for each contest were
awarded points based on contest rank and performance. At the end of each month, TopCoder tallied
?????????????????????????? ???????????? ?????????????? ???????? ???????????????? ???????? ???????? ???????????? ??arners thousands of dollars in bonus prizes.
Paweska explained that success in the Digital Run was not all about who was the best programmer
but more about who could handle the most all-­nighters. Other competitors, such as Gasper, also
made money through contracted projects that TopCoder assigned.
In addition to their cash earnings, many community members reported that their TopCoder rating
was very important because it provided an objective assessment of ability. Wu commented that it was
not easy to maintain a very high rating as it required familiarity with many kinds of technologies,
quick thinking, the ability to learn independently, a strong work ethic, and attention to detail.
According to W?????? ???? ?????????????????? ?????????????? ???????????? ?????? ???????????????????? ???????? ???? ?????????????????????????? ?????????????? ???????????????? ????????
???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Gasper noted that
TopCoder ratings were also symbols of status and prestige for many programmers: ??If you have red
???????????????????????????????????????????????????????????????? Indeed, many prestigious software firms asked potential recruits to
get a TopCoder rating before applying for a job. To others, however, the rating system was less
important. Gasper, for example, explained that winning and making money meant more to him than
ratings.
Although there were differences of opinion regarding the importance of ratings, almost all
community members agreed that competing at TopCoder provided numerous opportunities to learn
and improve. In fact, for many programmers, a TopCoder career often began with failure, but post-­
contest evaluation and peer review of each submission helped them grow and improve. Gasper
noted: ?????????????????????????????????? in my first competition. But the reviewers were really good at pointing me in
the right direction???????????????????????????????????????????????????????????????????????????? ?? ??????????????????????????????????????????????????????????????????????????????????
peer reviewed by people who are better at programming ????????????????????????????????????????????????????????????????????????????????????
they hurt your feelings;; they are ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
that getting feedback from reviewers was crucial and added that community members could also
learn from acting as a reviewer for contests. For scientists and developers, Wu believed that
algorithm contests were particularly helpful at sharpening research skills and improving critical
thinking abilities. In all cases, continual learning opportunities from peers were an important reason
for participation.
Gasper described the appeal of working at home on a web-­based platform instead of in a
?????????????????????????????????????????????????????????????????????? ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
7
a half an hour to work each day and can do the same work at home. If I want to take off a day to play
golf, I just do i?????? ???? ?????????? ???????????? ?????????? ?????? ???????? from 2:00 to 6:00 p.m.???? ?????? ?????????? ?????????????????????????? ??????????????
Sharing similar sentiments, Paweska liked that while working at TopCoder he did not have a
supervisor looking over his shoulder.
???????????????????????????????????????? ?????? convenient but also challenging, as competitors had to actively manage
their individual levels of participation. Gasper constantly balanced effort and reward to maximize
?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? too much work for
???????????????????????????????????????????????????? . . . ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
worthwhile to solve???????????????? skill that ??????????????????????????????????????????????????????????????????????????????????????????
??????????????????????????????????????????????????????????
Wu noted that, although the firm was competitive in sprit, competition at TopCoder was never
disrespectful or nasty and that people liked to help each other, even when they competed in the same
arena. TopCoder forums were the main source for collaboration. In the forums, less-­experienced
community members asked for assistance on certain problems and received instant feedback from
more-­experienced competitors.
At TopCoder, conversations and relationships extended beyond the scope of software
development. Hughes reflected on a particularly remarkable exhibit of communal strength and
?????????????? ???????? ?????????????? ???????????????????? ???????????????? ???????????????? ?????? ?????????????????? ?????????????????????????? ???????????? ???????? ?????? ????????
???????????????????? ???????????????? ?????????????? ?????? ???????????? ?????????? ?????????????????????? ?????? ???????????????? ???????? ?????????? ?????????? ???? ?????????????? ?????? ????????
community members took ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
????????????????????????????????????????????????????????????????????????????????????????????
Once a year, TopCoder paid for all of the best talent from the community to travel to Las Vegas,
Nevada, to compete in the TopCoder Open (TCO). In addition to serving as a proving ground for the
best programmers in the world, the TCO provided community members with the opportunity to
network professionally and socially.
The TopCoder community had a distinctive culture, with identifiable personalities. Wu explained:
?????? ???????????????? ?????????? ?????????????????????? ?????????? ???????? ???????????????? ???????? ???????? ???????? ?????????????????? Clearly, the members built it up
continuously. When I joined the community, there were already some leading members who were
active in competitions and forums, brought out good suggestions, and started up interesting and
???????????????????? ???????????????????????????? ?????? ?????????? ?????????????? ???????? ?????????? ?????? ???????????????????? ???????????????? ?????????????????? well beyond
TopCoder. For example, Tomasz Czajka??????????????????????????????????????????????????rock star???????????????????????????????????????? picture
plastered on billboards throughout Warsaw after he won the TopCoder Open in 2006.
????????????????????????????????????????????????
Clients came to TopCoder to have high-­quality software developed in a cost-­effective and time-­
efficient manner. TopCoder positioned itself to serve both large firms and medium-­ to small-­sized
business that wanted to see systems developed. Keith Moore, a TopCoder client and former senior
vice president at LendingTree.com, believed that, regardless of size, any company could take
advantage of TopCoder, whether it was a five-­person operation or large outsourcing vendor. For
many CIOs, the process of software development and talent recruitment was a major headache, and
missed deadlines and large cost overruns were common worries. According to Stephen Laster, the
???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? over 48% of its
employees every three years. This process is very costly. The same problem exists with our
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
8
outsourcing consultants. When selecting consultant teams, we tried out 60 programmers before
finding our team of 20. With TopCoder, I pay for performance and the CIO sees Nirvan????????
As of 2009, TopCoder had developed a strong relationship with existing clients for delivering
high-­quality software solutions and superior customer service. After completing their first project
with TopCoder, 82% of clients signed up for a second round of contests. These clients cited several
advantages.
Benefits
Better Ideas Before sinking thousands of dollars into a project, a client could run a
conceptualization contest through which TopCoder members helped identify bad ideas and generate
better approaches early in the development cycle. When the client introduced a business problem to
the community, members asked hundreds of questions. Nic Perez, a former technical director at
AOL, ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
?????????? ???? ?????????? ???????? ?????????????? ?????? ???????????? ?????? ???????????? ???????? ?????? ???????????? ???????????????????? ???????????????????? ???????????? ?????????????? ????????????????
clients answered questions for all competitors only once, avoiding repeated efforts. In some cases,
clients scrapped product ideas entirely after the community raised concern???? ???????????? ???????? ????????????????????
likely success or usability in the marketplace.
?????????????????????? ??????????????-­based development system consistently produced highly creative ideas and
solutions. According to Darren Smith, a solution architect for the e-­commerce division at Ferguson
Enterprises, ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????, ??????????????????????????????
comes back with many options. It really has surprised us. You never know what you are you going to
get. The creative side allows us to go to the marketing management team and say, ????e could do X, Y,
and Z that we may not have previously considered.?? ?????????????? adding value to our business because
they bring us solutions that quite frankly we may not have considered or were not resourced to
deliver??????
Superior Quality, Cost, Speed, and Flexibility ???????????????? ???????????????? ?????????????????????? ??????????????????
evaluation and documentation process for being well above industry standards. Reflecting on his
experience working on the Google Talk interface to AOL Instant Messenger, Perez stated that
TopCoder and its community had a strong desire to deliver bug-­free code and that even the most
complex systems always had fewer than 100 identified bugs. According to Perez, the same sized
projects, developed internally, at AOL would have had five to eight times that number of bugs.
Another TopCoder client, a Web-­based startup business, noted that it would have had to pay
$350,000 to a large IT consulting firm, $200,000 to a small IT consulting firm, or $80,000 to individual
contractors ????????????????????????????????????????????????????????????. Using TopCoder, the client only spent $35,000. This same
client proclaimed: ???????? ?????????????????? ?????????? ?????????????????????? ???????????? ?????? ?????? ???????????? ?????????? ???????? ???????????????? A different client
noted that based on its experience working with almost every type of software development
company, TopCoder charged approximately half of the fee of a large, tier-­one IT consulting firm.
Using the community for parallel problem solving, TopCoder marketed itself as faster than
other software development shops. This was true for back-­end bug races and system checks, as
TopCoder took 72 hours to complete the same bug testing that a traditional development firm
finished in 10 business days. However, for other steps in the software development process, reports
on speed were mixed. Some clients said that TopCoder worked at about the same speed as a large IT
consulting firm, while others lauded TopCoder for speed of completion.
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
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Especially appea?????????? ?????? ???????????????? ???????? ?????????????????????? ???????????????? ?????? ?????????????? ?????????????????? ?????????????????? ????????????????????????
capacity. In particular, a TopCoder client could expand or reduce its business requirements and
development capabilities without having to hire or fire programmers. According to one client, a basic
in-­house computer programmer cost $120,000 a year, after accounting for benefits, sick time, and
vacation. Working with TopCoder??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
downtime.
Concerns
Although CIOs were im???????????????? ?????? ?????????????????????? ???????????????????? ?????????????????????????? ???????? ????????-­saving potential,
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
model.
Intellectual Property (IP) and Security According to Ira Heffan, ???????????????????? chief legal
c???????????????? ?????????? ???????? ???????????????? ?????????????????????? ?????????? ?????????????????????? ?????????????? ?????? ???????? ?????????????????? ?????????????????? can be an
initial point of resistance. Until they understand the documentation and processes we have in place
with the community members, they see IP and security as potential barriers to working with a
???????????????????????? ???????? ?????????????????? ?????????? ???????????????? ?????????? ?????????????????????????? ?????????? ???? ?????????????????? ???????????????????? ??????????????
might divulge proprietary ideas, business plans, or operations to their competitors. In addition, some
clients worried that once a component became an integral part of their IT systems, the community
member who built the component might attempt to prohibit its use or ask the client to pay
considerable royalties. Lastly, some clients were concerned that a solution submitted by a community
member could be stolen, copyrighted, or taken from open-­source software projects, thus potentially
opening the door for intellectual property disputes.
TopCoder had in place a number of initiatives targeted at addressing these concerns and reducing
the risk level for clients, and also took steps to communicate its processes. To ease clients?? intellectual
property and security concerns, TopCoder produced a white paper that detailed confidentiality
???????????????????? ?????????????????????????? ?????????????????? ?????????????????????? ?????????????? ???????? ?????????????????????? ???????????????? ?????????????????? ?????? ??????????????????
development. In addition, TopCoder allowed clients to keep their company names anonymous
during competitions and helped clients generate test data sets to avoid the exposure of sensitive
?????????????????????????? ?????? ???????? ?????????????????? ?????????????????? ?????????????? ???? ???????????????????? ?????????????? ???????? ???????????????? ???????????? ?????????? ????
competition, all competitors could be required to sign a standard competition confidentiality
agreement.
The peer-­review process was another means to ensure code security and quality. Peer reviewers
were selected and vetted by TopCoder employees based on their superior performance on prior
competitions. TopCoder clients also had the option of running testing competitions at the back end of
software production, serving as an additional means of checking code security and quality.
?????????????????????? ???????????????????????????????????? ?????????????????? ???????????????????????? ???????????????? ??????o made it difficult for a single
competitor to insert harmful code into a program, since individual contests only addressed one small
piece of the overall program.
Cultural Change Many clients realized that working with TopCoder would be difficult
culturally for their company. In particular, CIOs believed that internal employees would view
TopCoder as a threat to their job security. One new client observed: ??????????????????????????????????????????????????????????????
???? ?????????????????????????? ???????????? ?????????????????????? I fully expect that if this goes well and if my programmers see
good quality work coming out of TopCoder, fear will ???????????????? ???????????????? ?????????????????????? ???????? ????????????????????
Although using TopCoder could help a company scale and reduce the programming staff costs,
companies still had to reta?????? ???????? ?????????? ???????????????????? ??????????????the employees who could guide the
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
10
TopCoder development process. The managers at TopCoder clients also had to adjust to a perceived
loss of control over the software development process. Smith ??????????????????????????????????????????????????????????????????????,
but they manage the whole process. Our project management group works with the TopCoder
manager to ensure delivery according to pre-­determined service level agreements (SLAs)??????
Additionally, some clients found a few community members to be pushy and rude during pre-­
competition question-­and-­answer sessions.
Coding Challenges ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
???????????????? ???????????? ?????????????? ?????? ?????????? ?????? ?????????????????? ???????????? ?????? ???????????????????? ???????? ???????????????????????? ?????????? ???????? ?????????????????? ??xisting
systems, review the code for security issues, and adjust and fix code as systems changed over time.
???????? ?????????????????? ???????????????? ?????????? ?????? ?????????????????? ???????????? ???? ???????????????????????? ?????????????? ?????? ?????????? ???????????????????????? ?????????????????? ????????
?????????????????????? ?????????????????????? ?????????? ?????? ?????????? ?????????? ?????????? ?????????? were no security threats or bugs. In some
contests, TopCoder clients also spent time evaluating ideas and approaches from multiple winning
solutions.
Another ongoing issue for clients was finding the right types of problems and providing the
appropriate a???????????? ?????? ???????????????? ?????????????? ???????? ???????? ?????????????????? ?????????????????????? ?????? ???????????? ???????????????????? ???????? ??????????
want neither too much nor too little detail. You do not want to quell innovation but also want a
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????icipation decreased if
they were unclear about what problems they wanted to solve or presented problems that were too
complex or vast in scope;; in those cases, the TopCoder community struggled to produce an
acceptable solution. Clients also found that community members worked best when contests lasted
less than two weeks. If projects took too long to complete, contestants would lose interest and not
make submissions.
Managing TopCoder
The Supply Side
A management job at TopCoder was unique. Along with supervising internal TopCoder
employees, managers at the firm had to oversee a community of over 200,000 members and direct the
process of competition-­based software development. According to senior vice president George
Tsipolitis, the key to success was effective process management: ???????????? ?????????????? ?????????????????? ????
?????????????????????? ???????? ???????? ?????? ?????????????? ?????????????????? ?????????????????????????? ?????????????? ?????????????????? ???? ?????????????? We ???????????? ????????????????
individuals. We can only control the process of their participation.???? ???????????????? ???????? employees alike
believed that the sustainable value of the ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
community participation and foster community growth. Lydon described the risks: ??From the
beginning, we focused on the community. We knew they could be unforgiving. If you did the wrong
thing, ????????????????????????????????????????
Attraction To run many competitions simultaneously and produce solutions for many clients
at the same time, TopCoder needed to have access to a critical mass of talent and coding capacity.
?????????????????????? ???????????????? ???????????? ?????? ?????????????????????? ???????? ???????????????? ?????????? ???????? ???????????????????? ???????? ???????? ?????????????? ????????
challenge of the algorithm contests. In addition, TopCoder occasionally advertised its online
competition platform by paying for Google keyword searches using terms such as ??????????????????????????????????????
A third mechanism for attracting talent ???????? ???????????????? ???????????????????????? ?????????????? ???????????????????? ?????? ???? ????????????
team of TopCoder employees, member development days were held at Chinese and other
international universities. At a member development day, a student representative would post signs
around the school and explain the TopCoder system. A primary goal of these member development
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
11
days was to encourage participation in the higher-­revenue-­producing development and design
contests. During one member development day in China, TopCoder registered over one thousand
new community members. Bourdon noted that TopCoder had achieved critical mass once it crossed
the 200,000 member threshold, as there were now many members with deep and narrow skills over a
range of software development challenges (See Exhibit 7 for the number of participants by contest
type).
Norms As the community grew, TopCoder paid close attention to establishing community
norms. As contest administrator, the company had to maintain the highest standards of contest
integrity, fairness, transparency, and quality. For example, TopCoder personnel strictly monitored
competitions and tolerated no form of cheating. Community members who peeked at other
?????????????????????????? ??olutions, shared ideas during competition, or used unauthorized code were
immediately eliminated from the contest. Often they were kicked out of the community entirely.
If any uncertainty or disagreement arose about which competitor won a particular contest,
TopCoder would spend extra money to re-­run the competition. Another part of contest integrity,
Tsipolitis explained, was TopCoder???? emphasis on maintaining consistency of rules and procedures:
?????????? ?????????????? that participants ???????????? ?????????????? ???????? ???????? ?????? ?????????? ???????????????? ?????????? ?????????????????????????????? ?????? ?????? ????????????
change the rules of a competition mid-­?????????????????? TopCoder also guaranteed complete contest
transparency by storing all contest and competitor statistics, peer reviews, and solutions in a data
warehouse. The data were publicly available to registered community members, accessed via the
TopCoder website.
???????????????????? ???????? ?????????????????? ?????????? ?????????????????? ?????? ?????????????????????? ???????????????????? ???????????????????????? ???????? ????????????????????
compensation philosophy. In particular, TopCoder was up-­front with the community over its
intention to make money. When TopCoder made a decision to change corporate direction or
competition procedures, Hughes posted the information in the forums and explained the business
reasons behind his decisions. Hughes also believed that, since the company benefited from the
???????????????????????????????????????????????????????????????????????????????????????????? community members was essential.
Governance Although TopCoder executives were responsible for final decisions, they
frequently incorpo?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ????????????????????????????
community as the driver for everything we do. If we have enough dissent from members, we always
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????embers will also be
????????????????Community member Gasper shared a similar perspective: ????????????????????????????????????????????????????????????????????
into the forums to get feedback. Seventy-­five percent of the time, they listen to the community. But
TopCoder also has its own business interests to consider. Sometimes the community and business
???????????????????????????????????????? ??????????
Similarly, if competitors were unhappy with a peer-­review scoring outcome, TopCoder allowed
them to appeal the decision. Over 90% of contests featured at least one appeal. If a member appealed,
peer reviewers had to provide specific reasons why the appeal was accepted or rejected. If
disagreement remained between contestant and reviewer, TopCoder employees often investigated.
Contestants could also appeal directly and privately to TopCoder personnel or post complaints
publicly on the TopCoder forums.
TopCoder managers inevitably made decisions that sometimes disturbed and upset the TopCoder
community. For example, facing a very difficult economic environment in the summer and fall of
2008, TopCoder reduced the contest prize amounts, cut payments to peer reviewers, and reduced the
number of algorithm competitions. During this period, some TopCoder competitors left the
community entirely and others dramatically reduced their participation levels. Gasper argued that
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
12
the payment cuts also led to many superficial reviews because the best reviewers were no longer
doing the work, which then required additional cycles to achieve acceptable quality.
Resource Allocation Another part of the TopCoder managerial role was allocating
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
how to distribute the number of people who want to participate across the number of contests that
??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? the costs of
evaluation, stimulate effort through competition, and get at least one solution that was acceptable to
the client. To achieve the ideal number of submissions and participants, TopCoder adjusted the prize
amount, the duration and timing of the contest, the number of other contests running concurrently,
???????? ???????? ???????????????????? ?????????????????????? ???????? ?????????????? ?????????? ?????????????????? ?????? ???????? ???????????? ?????????????? ?????? ??????????????????????????
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
directly to individual community members if other methods did not lead to the desired participation
levels.
Although TopCoder managers could pull many levers to influence contest participation, they
believed it was important not to act like ???????? ?????????????????????? boss. Hughes explained his community
management philosophy???? ???????? ???????????? ???????? ?????????? ?????????????????????? ?????? ?????????? ?????????????? ?????? ?????? ?????????? ?????????? ??????????
want to be here. You are just going to get much better results when you let people do what they
??????????????????????????????????????
Retention At the same time, TopCoder executives worked to retain community members and
encourage future contest participation. At least one client raised concerns in this area: ??I think that
communities are fickle. Community members could start to ask, why do I need them? For example,
what happens if an imitator comes along and offers twice ???????? ???????????? ???????????????? To avoid such
problems, TopCoder tried to supply community members with consistent work streams and prize
money. TopCoder also encouraged community members to engage in the community as much as
possible by dedicating significant resources to facilitating forum discussions and inviting contestants
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
TopCoder community members differed on their level of loyalty to the TopCoder community.
?????????????????? ?????????????????????????? ?????? ???????? ???????? ???????????????????????????? ?????????????????? ???????? ???????????????????? ?????????????????????? ?????? ?????????? ??????????
loyalty. I think it would take a lot for me to leave. Only if there were no projects would I leave??????
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
??????????????????????????????????????????[For me] to defect, the payment and work would have to outweigh the payment
and flexibility I have at Top????????????????
The Demand Side
Platform Managers The other side of management at TopCoder was guiding clients through
the contest-­based software development process. ?????????? ???????? ???????? ?????????????????????????????? ?????? ???????? ??????????????????
platform managers, whose job was to induce the appropriate amount of community participation,
make suggestions for contest prize amounts, gather feedback between contests, and provide project
status updates to clients. Before starting the next step in the game plan, platform managers also
adjusted contest requirements based on the work already completed. Once the product was delivered
to the client, TopCoder platform managers were required to act in a support and service role. If there
was a technical problem with a solution, the platform manager often contacted the community
members who developed the component and worked with the community members to fix the issue.
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TopCoder (A): Developing Software through Crowdsourcing 610-­032
13
Most enterprise-­level clients believed the platform manager was pivotal to ????????????????????????????????????????????????????
large client like LendingTree, the platform manager was on site three to four days a week, conducting
daily meetings with the internal teams. ???? ???????????? ???????????????? ???????? ?????????????????? ???????????????????? ?????????? ???????? ??????????????????
client expectations and serving as a sounding board for client concerns. At the back end of projects,
?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? the platform
manager was also an expert at combining the small software pieces. The component integration role
saved the client hours of work trying to figure out how all the pieces fit together. At Ferguson, Smith
considered the TopCoder personnel working on site to be an integral part of his team.
TopCoder Direct However, each ????????????????????????????????????????????????????????????????????????????????????????????????????????????????
narrowed profit margins. As of 2009, a typical platform manager at TopCoder cost $100,000 a year
including ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
????????????????????????????????????????????????????????????????????????????????????????????????????????
To avoid a potentially large increase in expenses as TopCoder added clients and projects, Hughes
?????????? ?????? ?????????? ???????? ???????????????? ?????? ???????????????????? ?????????????????? in which the client used the ?????????????????? platform
with little to no intervention from its employees. Under this self-­service model, platform managers
would educate clients on how to use the TopCoder platform to manage the contest-­based software
development process themselves. ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
to an experienced community member or an external ??????????????????????????????????????????????????????????????????????????????????????????
someone who would serve as a ??????-­???????????? to assist the client staff. With co-­pilots taking the role of
platform managers, ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????ect would
shrink from 40 hours to two, thus saving the client and TopCoder considerable time and money.
The Future
As of December 2009, no competitors had elected to copy ????????????????????????????????????????????????????by offering
full-­service software development through a competition-­based approach. Instead, companies such
as RentACoder, Elance, and oDesk served as online liaisons between clients and freelance software
developers. Unlike TopCoder, whose clients only paid for solutions, clients at these firms used a ????????
?????????????? approach: they selected one or more programmers to solve their problem. More similar to
TopCoder, uTest used crowdsourcing to find bugs and check the functional usability of web, mobile,
desktop, and gaming applications, but did not engage in software development. According to
Hughes, this lack of direct competition reflected the technical difficulties and costs associated with
building a full-­fledged community and platform.
After a significant downturn in the global economy in 2008 and 2009, Hughes believed that
TopCoder was primed for growth. Sales staff were forecasting aggressive targets for the volume of
competitions and revenues, and several strategic partnerships were under consideration. However,
significant challenges and uncertainty remained. In particular, Hughes wondered whether the
community, as well as the company, could grow to meet increasing demand.
Stakeholders had divergent views. Mike Morris, vice president of sales, saw unlimited potential:
????f sales grow at a linear rate, membership grows at an exponential rate. The supply of community
members is not going to limit growth. If you throw enough money out there, you will get enough
?????????????????????????? Community members Paweska and Wu agreed that offering more money per contest
would increase participation among existing members. Paweska also believed, however, that holding
many more contests than usual in a given week would result in inexperienced competitors competing
actively for the prizes, possibly reducing code quality. Furthermore, Lydon noted that that during
??????????????????????????????????????????????????????-­up in 2007, review quality suffered during a transitional period of a few
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610-­032 TopCoder (A): Developing Software through Crowdsourcing
14
months. As more contests became available, the usual reviewers wanted to compete in the contests,
rather than review them, leaving TopCoder scrambling to find replacements. In addition, a few
clients worried that as the number of avenues of competition at TopCoder grew, attracting the same
group of competitors would prove much more difficult, reducing contest consistency and continuity,
which were especially critical for addressing legacy systems.
Hughes also worried about client service. If the number of TopCoder clients expanded
significantly, TopCoder???? staff might face increasing difficulties responding to all ???????????? ??????????????????
questions and concerns. For large clients, expansion might require adding more platform managers,
??????????????????????????????????????????????????????COO, was concerned that too many platform managers might make the
firm appear to be like any other large IT consulting company, with the risk of losing its unique
business model.
????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
position. In particular, Hughes wondered if community members would stick with TopCoder if a
new competition-­based software development company emerged. What would happen if a company
like Accenture started to develop software in the same way as TopCoder? Would the TopCoder
community remain intact?
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610-­032 -­15-­
Exhibit 1 TopCoder Members Involved in Creating a Power Pricing System for an Energy Company
Source: Company documents;; developed via a TopCoder Studio competition.
For the exclusive use of S. Weisband, .
This document is authorized for use only by Suzanne Weisband in .
610-­032 -­16-­
Exhibit 2 Number of Clients, Revenue, Number of Platform Managers, and Platform Manager Costs by Quarter
2007
Q1
Q2
Q3
Q4
2008
Q1
Q2
Q3
Q4
2009
Q1
Q2
Q3
Q4
Number of Clients
Total Revenue
($MM)
Number of
Platform
Managers
Cost of Platform
Managers ($MM)a
32
4.66
51
1.23
32
4.50
51
1.24
34
3.80
44
1.12
25
5.35
52
1.30
24
5.80
52
1.36
38
5.50
46
1.19
37
4.85
44
1.13
47
2.60
36
0.91
46
2.25
20
0.53
47
1.92
19
0.49
38
1.82
18
0.46
35
2.45
16
0.40
Source: Company statistics.
a Includes platform managers?? salaries, benefits, and other expenses.
For the exclusive use of S. Weisband, .
This document is authorized for use only by Suzanne Weisband in .
610-­032 -­17-­
Exhibit 3 Sample Game Plan
Source: Company documents.
Phase
# of
Contests
Estimated
Costs
MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F MT WT F
Conceptualization
Logo – Tournament 0 $ –
Concept Contest – Tournament x x x x x 1 $ 4,500.00
Wireframes – Tournament x x x x x 1 $ 3,000.00
Storyboard – Tournament x x x x x x x x x 1 $ 3,500.00
Application Build
System Architecture
System Architecture x x x x x x x x x x 1 $ 4,500.00
Component Design x x x x x x x 1 $ 2,300.00
Component Development x x x x x x x x 1 $ 2,050.00
Catalog Components 0 $ –
System Assembly x x x x x x x x x x 1 $ 4,900.00
<Functional> Module
Module Specification x x x x x x x x x x 1 $ 4,000.00
Module Architecture x x x x x x x x x x 1 $ 4,000.00
Component Design x x x x x x x x 3 $ 6,900.00
Component Development x x x x x x x x x 3 $ 6,600.00
Catalog Components 0 $ –
Module Assembly x x x x x x x x x 1 $ 4,900.00
Prototype Assembly x x x x x x x x x x 1 $ 4,900.00
Testing
Test Scenarios x x x x x x x x x x 2 $ 3,900.00
Test Cases x x x x x x x x x x 2 $ 3,900.00
Bug Hunt x x x x x x x x 1 $ 2,750.00
Deployment
Deployment x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 20 $ 4,000.00
Updates
Bug Races x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x 30 $ 4,200.00
Total $ 74,800.00
Timeline
4/27 5/4 5/11 5/18 5/25 6/1 6/8 6/15 6/22 6/29 7/6 7/13 7/20 7/27 8/3 8/10
For the exclusive use of S. Weisband, .
This document is authorized for use only by Suzanne Weisband in .
610-­032 TopCoder (A): Developing Software through Crowdsourcing
18
Exhibit 4 Community Growth
Source: Company statistics.
Exhibit 5 Average Contest Registration, Submission, and Prize Amount for Client Contests in 2008
and 2009
Contest Type
Number of
Registrants
per Contest
2008
Submissions
per Contest
Prize
Amount per
Contesta
Number of
Registrants
per Contest
2009
Submissions
per Contest
Prize
Amount per
Contesta
Conceptualization
Specification
Architecture
Component
Design
Component
Development
Assembly
Studio
n/ab
n/ab
16.3
9.83
15.4
16.09
27.55
n/ab
n/ab
1.64
2.85
2.69
1.12
14.57
n/ab
n/ab
$1,590
$899
$733
$1,628
$795
17.57
14.20
19.34
16.26
25.59
18.38
27.57
3.60
1.94
1.75
1.94
2.56
1.18
20.04
$1,314
$1,017
$1,095
$559
$465
$913
$1,015
Source: Company statistics.
a Prize per contest ?? Prize for first and second places and reserve for Digital Run.
b n/a ?? Data not available for most of 2008.
0
50,000
100,000
150,000
200,000
250,000
Total
Community
Members
For the exclusive use of S. Weisband, .
This document is authorized for use only by Suzanne Weisband in .
TopCoder (A): Developing Software through Crowdsourcing 610-­032
19
Exhibit 6 Example Community Profile
Source: http://www.topcoder.com/tc?module=MemberProfile&cr=287614, accessed December 23, 2009.
For the exclusive use of S. Weisband, .
This document is authorized for use only by Suzanne Weisband in .
610-­032 -­20-­
Exhibit 7 Number of Unique Participants by Contest Type per Year and Month/Total Number of Official Contests per Year
2005 2006 2007 2008 2009
Average Submitters Contests Average Submitters Contests Average Submitters Contests Average Submitters Contests Average Submitters Contests
Contest Type per Month per Year per Year per Month per Year per Year per Month per Year per Year per Month per Year per Year per Month per Year per Year
Algorithm Contests
Single Rounda 1,319 5,287 81 1,930 7,525 105 2,638 8,994 113 2,945 10,433 66 2,558 9,616 51
Marathon Matchb 500c 500c 1c 273 1,532 20 281 1,588 30 253 1,621 29 314 2,150 35
Client Software
Development Contests
Conceptualization 7c 11c 9c 6 34 70
Specification 5c 7c 16c 6 32 71
Architecture 1c 4c 4c 4 29 65 9 36 145
Component Design 33 157 362 45 225 615 61 243 698 38 144 488 20 93 300
Component Dev. 58 316 287 88 451 484 135 605 780 91 434 733 41 204 337
Assembly 7 47 86 10 59 191 20 104 416
Design Contests
Studio 65c 223c 17c 81 453 118 66 279 451 102 429 456
Totald 1,370 5,565 730 2,146 8,517 1,224 2,867 10,072 1,825 3,198 11,487 2,023 2,911 11,122 1,881
Source: Company statistics.
a 75-­minute programming contest.
b Programming contests that run from 3??30 days.
c Partial year data??contest track officially did not officially start until the middle or end of the year.
d Represents the unique number of participants during a given time period. Columns are not additive.
For the exclusive use of S. Weisband, .
This document is authorized for use only by Suzanne Weisband in .