TopCoder—Crowdsourcing Software Long Before Crowdsourcing Got Cool

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a few small software companies that make a living using the TopCoder platform, Hughes says. About half of the people who join Top Coder are from North America, while Indian, Chinese, and Eastern European programmers make up the other half. Lately, the community has been growing at about 100 members per day.

Hughes says community interest in TopCoder always picks up in the spring, as the company’s annual TopCoder Open tournament builds to a head—the finals are coming up on June 4 in Las Vegas. Last year’s first-prize winner took home $60,000; the third-prize winner, Polish programmer Tomek Czajka, has earned more than $130,000 from TopCoder over the last five years, and parlayed his record into a job at Google. Indeed, the TopCoder Open attracts so many smart programmers from around the world that this year’s tournament is being sponsored by the National Security Agency.

Lakhani says that from an economist’s perspective, contests like TopCoder’s contests and the X Prize competitions shouldn’t really work—they’re just not efficient, from the competitors’ point of view. “In most competitions, people over-invest, and spend way more money than they can make back,” he says.

But what makes TopCoder and the other prize-driven communities function, he says, is something larger. “Human beings are not just pecuniary animals,” he says. “They care about a lot of other things,” such as status, the opportunity to test themselves against others and learn from their competitors, and just plain fun.

And from a client’s perspective, says Lakhani, the TopCoder model is extremely efficient. “Oftentimes we don’t know who the best solvers are. We can’t a priori decide who has the best answer. So the competition approach is often better, because you can just broadcast your problem to everybody, and see who thinks they can solve it for you. And you, as the problem holder, don’t have to make a bet—you pay only on completion, which takes all the risk out.”

There may be certain areas of engineering where it would be inadvisable to employ the modular, competition-based approach; I’m not sure I’d want to drive a car or fly on a jumbo jet that was designed through a TopCoder-like competition, for example. But many of us are already browsing websites and using enterprise and e-commerce software that were built this way—and not noticing the difference. Of course, it helps that TopCoder has elaborate source-code control procedures and online review systems to make sure its software performs as designed.

Recently the company introduced a beta version of a service called TopCoder Direct that allows anyone to tap directly into the company’s Web-based platform for mounting software competitions (which was itself designed and built through—you guessed it—-competitions). In other words, businesses can now launch competitions and interact with TopCoder community members directly, without become formal clients of TopCoder.

So could TopCoder eventually find itself outcompeted by its own community? “To a certain extent, we may be putting ourselves out of a job,” Hughes acknowledges. “But that probably won’t be a bad thing.”

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Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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