FAQ - Version 2

Idea Management

• IP: CrowdSpirit wants to work closely with everyone at all stages of the supply chain, from the inventor right through to distributors. It is only when we have every stage of the supply chain working that everyone in that supply chain can benefit from the contribution they have made. We also depend on the supply chain community for this project to happen and support from the community to make the project a success for everyone involved. The issue of Intellectual Property (IP) is a complex one, however we feel that because the delivery of the supply chain is through collaboration, then there would be difficulties associated with just having the original inventor retain the IP. What would happen if they changed their mind and the product was in production? What happens to any associated IP added when the idea was being refined? What if different inventors want different terms and conditions? What about the other people in the supply chain besides the inventor? What about the complexity with inventors being in different countries around the world?

  The simplest way for CrowdSpirit to manage this is to hold the IP and to have standard terms and conditions based on a person’s contribution - e.g. a certain value associated with the original idea, another value for the refinements, another for the distribution etc. The exact split will vary from product to product, however with CrowdSpirit holding the IP it places CrowdSpirit in a stronger negotiating position not only with suppliers but also in the event that a manufacturer approaches us having spotted an idea in development and wishes to ’sponsor’ or invest in it. In all these cases, the original inventor will receive a share of revenue.

  However, IP only transfers to CrowdSpirit if we accept the idea as suitable for the community and if we do, then we have 12 months to use if and if CrowdSpirit doesn’t use the idea then the IP reverts back to the inventor.

• Collaborative platform launch: we’re currently scheduling a launch of the platform for the second quarter of 2007. In the meantime, we will involve some beta users on the beta releases.
• Product development Life Cycle: our process will be based on 4 major steps. This timings detailed here are suggested values and may be subject to change depending on the project.
  1. Continous idea sourcing.
  2. Product definition (3 months).
  3. Detailed production specification (3 months).
  4. Production and test of first prototype (4 months).

     Only at this stage, we will be able to decide or not (Go/NoGo) for commencing production of the product. This means that we’re scheduling a 10 month cycle for producing a product although this will vary depending on the complexity of the innovation. C.f. business model for the big picture.

• Innovation Management: The CrowdSpirit strategy is to avoid as much as possible that the proposed products will be “geek” products designed only for “geeks” with a very limited market. Our strategy is to address mass-market in order to increase our chance of generating sufficient revenue to reward the community. Our innovative CrowdSpirit collaborative platform will handle the different alternatives - from totally new product to simple product improvement. Only the best idea following predefined criteria will be produced. We cannot share everything so wait for the platform launch
• ! NEW ! Who makes the final decisions regarding the product launch- can a community always come to a democratic decision?
  • The final decision for launching a product will be jointly made by a steering committee made of a product team, who are community members, the distributors, who own the market knowledge and the CrowdSpirit management in a democratic way. Keep in mind that before this go no-go step, all the product design will be designed in a democratic way.

Supply Chain Management

• Competitive Supply Chain: our main advantage will be based on our supply chain flexibility and agility to quickly design and market new innovative products. Thanks to our sales model that means CrowdSpirit will never own the products, and totally outsourced supply chain model, we will be able to quickly setup new networks between manufacturers and customers through retailers and distributors.
• Operational Partnership: From an operation standpoint, CrowdSpirit will interface with 2 major partners:
  • The IT Distributors who will distribute and market our products with a potential of 150,000 retailers within 100 countries.
  • The manufacturers (called ODM for Original Design Manufacturer) who will produce our products.
• ! NEW ! Involvement of external companies: Could a retailer or a well know Brand use the community as an R&D department to develop a new product just for them ?
  • This is currently not our first strategy but we can easily consider implementing such strategy without any problems
• ! NEW ! What effect do you think crowdsourcing will have on traditional retail businesses and supply chain?
  • The Crowdsourcing will have an incredible impact of both supply chain and retailers. Let us try to summarize some keys aspects:
    • First of all on the supply chain side, the product will be for the first time customer centric, meaning that they will be based on customer wishes and expectations. So this will substantially decrease the risk to develop and invest on useless product (Please note that “geek” product for “geek” will avoided). The R&D will be much faster regarding the innovation led by customers thanks to the deep involvement of manufacturers (pure manufacturer R&D will be always required for innovation driven by technology). The overall time-to-market from idea to production will be extremely reduced thanks to a “No-touch” supply where everything is outsourced (CrowdSpirit will never own the goods).
    • Secondly by involving the retailers on the overall supply chain (especially for forecasting the sales), we will reduce the overall logistic cost by reducing obsolescence and excess costs. The retailers will have less risk when purchasing these products thanks to the market study already performed. The retailers will have the opportunity, like end-customers; to influence the product design based on customer feedback and to be rewarded for their contribution. The customer facing function will bring all its value versus a direct impersonal sale. Last but not least, Retailer will have the opportunity to sell those attractive products c.f. this interview for further details

! NEW ! Sales Management

• Our first sale strategy is to address multiple retailer channels with our own brand, as we will bring a clear difference over existing products. Where there are major difficulties in producing the product, we will assume that the brand name will be not CrowdSpirit, as we will negotiate directly with a brand or a retailer for selling the idea to generate revenues for the community. However, the latter strategy is not our preferred option.
• Direct retailling ?: No, our strategy is to outsource the entire consumer selling to a channel of retailers. They will be in touch with our distributors to purchase the products. We will empower the experts in that area do their work and we clearly rely on the customer facing skills of retailers for convincing end-customers that our product will propose an added value over traditional products.
• Regarding the retailers strategy, our distributors retailer base will be very important (150,000 around 100 countries) thanks to the distributors network, but we will miss the most important piece that’s why we will deeply rely on the community to make the connection between our distributor and the retailers. Basically, they will recommend the product to the retailers: this is the ambassador role. Once the retailer becomes interested in our products, they will simply get in touch with our distributors to purchase the products as they already do with traditional development

CrowdSpirit Structure

• Brand: CrowdSpirit will market as much as possible the products with its own brand name. Thanks to a huge community of retailers and distributors, our products will be distributed everywhere that demand is present.
• “Royalties” Management: CrowdSpirit will put in place an innovative and adaptive platform to ensure that contributors get maximum recognition for their work. This will be handled by our collaborative platform.
• Price management: The price will be jointly defined between the product team, the distributors and the CrowdSpirit Team based on knowledge of the local market. Please note that this is clearly a core competency of the distributors.
• Investor: the CrowdSpirit project is currently financed privately. Please note that required investments on the supply chain side are limited thanks to the “no-touch supply chain”. As the project develops, we will investigate bringing in external investors.