Friday, February 27, 2009

My Future Resort (p5) - Economics of Crowdsourcing

Crowdsourcing is the act of taking a task traditionally performed by an employee, and outsourcing it to a crowd of people in the form of an open call. As an easy example, the Wikipedia's Crowdsourcing entry I just linked to is crowdsourced. Someone in a crowd made the move to write an entry on crowdsourcing, and various other people in the crowd over the years have added content to it. There was no employee to write the content, yet somehow the content is there and is just as good as what an employee could do. Crowdsourcing works, when implemented properly!

The term was coined in 2006 by Wired magazine, and in it's short amount of time it's had some amazing results. There's a list of examples here and here, but probably the most amazing to me is Wikipedia's success at being the biggest and most up-to-date encyclopedia, well beyond it's textbook counterparts.

Bringing this idea to the nudist venue has already happened at Sandy Terraces and a few other places, but leaves a lot to be desired. The economics side of it is working -- instead of members giving Sandy Terraces extra money for them to hire a maintenance crew, members can keep the money but are tasked with doing the maintenance themselves. The problem is that being forced to work is what nobody wants. This was one older group's main complaint against VVRC, which is why they aren't members.

Remember that a majority of the laws that impede our freedoms are the type where a choice is made for us. We have the choice to wear our pants baggy, but when the choice was made for us by lawmakers, it was struck down as unconstitutional. Pro-Life or Pro-Choice? I prefer a choice, which gives each person to option go either way depending on their circumstances. Going Pro-Life under some conditions can kill both the baby and the mother. Would you prefer a clothing-optional beach, or having the lawmakers make the choice for us? In my opinion, it's better for lawmakers to regulate the choices instead of making the choice for everybody. What authority do they have to decide what's best for me, when they don't even know me? I should have the option to smoke if I want to. I don't, and I don't like smelling smoke, but smoking shouldn't be banned because of my opinion. The government is doing the right thing by increasing the tax (a lot) on cigarettes to cover the cost of increased healthcare related to the them, and letting people make the choice. Why hasn't that idea of choice been carried over to nudist venues?

Here's how I would do it.

Let's assume that Alice and Bob are poor college students who want to tent camp at VVRC for the weekend. (I'm using names from here.) Based on their rates, it would be $26 per day grounds fees and $11 per night to camp. Three nights and two days would be a total of $74, which they both think is a bit expensive for their budget, especially since they need to put on clothes and go to town for decent food. (Remember they have no fridge or kitchen in a tent, so food is limited.) So far, it's a bit discouraging for them. And people wonder why the college generation doesn't go to campgrounds like these...

At my resort, they would have more choices thanks to a crowdsourced approach. They would be charged the same, but would have the option of very specific discounts. I'd have a markerboard in the lobby with all the tasks that need to be done, with due dates if needed, dollar amounts, volunteer spaces, and verification spaces.

Every week, there is a task of "mowing the lawn" worth $10. Also, there are a bunch of rocks that made it to the bottom of the pool so Carol (another guest) added the task to clean them out. The owner deemed this to be worth $4. Alice decides that she can clean the pool, and Bob decides that he can mow the lawn, so they both write their name in. They spend an hour or two working, and this reduces their bill to $60. (Victor "verifies" their work to ensure it was done satisfactorily, and closes the task on the marker board.) Both agree that it was well worth it, and they saved the resort from hiring someone to do the task. Alice and Bob are willing to go to the resort for the weekend, because they know they can do some work and bring the cost down to their budget while enjoying a clothes-free mini vacation.

Many resorts instead offer a discount to the younger generation. Has it been working? I don't have the numbers, but I'm guessing that it hasn't. My approach is better in two ways. First is that it gets people more involved through radical transparency. At the resorts I've visited, I've always felt like an outsider and am unable to help out. Full-time members have a connection that keeps them loyal and involved, and that same connection could be made with newbies over a weekend. Second is a part of prospect theory, where people make more aggressive decisions when faced with a loss. This human attribute is obvious when nude beaches are at risk of being closed. We fight hard to keep them open, but nudge softly when trying to get a new one. Stores make use of this attribute when offering coupons. Resorts can make use of this by charging the full price initially, and giving credit when tasks are completed.

Let's expand the idea further. Some resorts also keep motels, which Alice and Bob might want to rent instead. Each room could contain a markerboard just like the one in the lobby. A task might exist for "prepare the room for the next guests" worth $20. Alice and Bob can choose if they want to clean up after themselves and get a $20 credit, or have the resort hire a housekeeper (or volunteer) to do the task for the same price. If Alice notices that the motel room needs an improvement, such as fixing the door seal or replacing the shower head, she can add the task to the marker board and have management assign a dollar amount to it. If she's quick, she could get the door seal fixed and earn the credit on her own bill. (A rule may need to be made about this though, so the same person cannot identify and fix an issue, because they may try to create the issue for a discount.)

We should evaluate what's going on here from the resort's perspective. Older people come in and pay the normal price to enjoy not having to do any work. Younger and middle-aged people, who are able to do the work and generally have smaller budgets, come in and volunteer for some work to enjoy a cheaper stay. As the resort owner, everything costs the same no matter who does the task (volunteer or hired hand). Overall, the crowd will promptly identify tasks and the tasks will get completed in a timely matter by those with the greatest desire for a discount. As resort owner, all you need to do is associate costs with the tasks and keep the process running smoothly. There is no need to collect everyones money, and track all the things that need fixing (or forget about them), then hire people to do tasks or do them yourself (if you remember, eventually). Remember, you (the owner) can always volunteer for tasks just like everyone else.

Does this type of thing work? In a broad sense, the backpacker community is already doing it. Young people (mostly non-US people) like to get out of school and travel the world for a year before settling down. They have the option to stay at a hostel, which is a minimalistic motel with no room service or housekeepers. Basically, they're paying for a bed in a room with other guests. If they can't afford a typical hostel, they'll find one that offers a free room. Fruit plantations in Australia are an example -- backpackers can stay for free and get free meals, and some profit, as long as they work in the fields picking fruit. Many resorts, some even nudist ones, offer a free stay to backpackers who are willing to work. [UPDATE, 2010: The linked nudist resort has slowly become more of a sex venue, but they still seek workers.] If you take a week-long vacation to another country as a tourist, you'll likely be dealing with backpackers in some form who are working to pay for their much longer (often up to a year) vacation.

The idea is spreading... More recently, a local jail started using the crowdsourcing concept. Inmates can get out earlier by doing cleanup work, which saves the jail from bringing in a worker for $30/hr.

Fancy resorts, like the Terra Cotta Inn, may not have success with task-based crowdsourcing. I doubt that a businessman would be happy to walk into a room and see "remove huge spider web from behind TV. $1" on the markerboard. Fancy resorts are expected to have housekeeping, and hide the internal activities of maintenance. Is it possible to find crowdsourcing success in places such as this? Perhaps, but only if I keep expanding the idea.

In a typical resort, the owner charges people enough to make profit and cover costs of maintenance and improvements. We've already short-circuited the cost of maintenance by crowdsourcing it, so people don't have to pay for maintenance costs if they do it themselves. Can we do something similar for improvements?

Alice thinks the resort needs an indoor hot tub for the winter months. Bob thinks it needs another volleyball court for the tournaments. Both have found one to purchase and have figured out how much it would cost. I write both ideas on a markerboard and place a bucket below each one. In order to buy them, the bucket (or related account) needs to meet the purchase price. The amount in each bucket is public. The buckets need to show progress or the idea will be removed and the money will be split among other active ones. This is an evolutionary approach to allow the popular ideas to continue, while performing natural selection on the bad ideas.

Any guests that pass through would see the idea for a winter hot tub. If they like it, they'll donate to that cause. The best ideas would get the money, and eventually be implemented. This is better than an owner taking all the money and implementing what they think would be best. People are more willing to donate money if they know exactly where that money is going -- at least I am.

If Carol doesn't have much money to donate, but wants to contribute to the winter hot tub idea, she has an alternative option -- a fundraiser! She can organize a fundraiser and drop the profits into the winter hot tub bucket.

Volunteer fire departments often have suppers or breakfasts to raise funds. The department buys all the food and works the event, and generally makes good profits from the event. A workplace that I know of has improved this form of fundraiser. They call for a volunteer to organize a lunch. The volunteer sets a date and figures out a lunch, then calls for other volunteers to donate the specific food items that are needed. Once it's all together, one of the volunteers cooks the lunch, and a few others take the money during that time. Employees pay for the lunch, which is about the same price but easier than going out, and all the profits are donated to charity. Volunteers organize this sort of lunch event at least 30 times per year, and end up with over $10,000 going to charity. It's a win-win situation for everyone, which is why it's still going strong.

Volunteer-driven meals are a great idea for a resort, but only work if people have the motive to organize them. Motive in this case is that the proceeds would go to the organizer's choice improvement idea. For a whole bunch of other fundraising ideas, Habitat for Humanity has 6 pages of them. [UPDATE: Link gone, but here's a search.] Some fun ideas could be sports tournaments, parties, craft/bake sales, auctions, and raffles. Get creative! If Alice and Bob knew that proceeds from this weekend's spaghetti supper was going towards that winter hot tub, they'd plan to go and might even volunteer to bring spaghetti sauce.

In conclusion, my resort will make use of the following ideas:
  • Charge a normal rate, but give people the option to save money by working on tasks. Rich people will relax and enjoy the resort, poor people are willing to work and still enjoy the resort. Backpackers use this method and it works.
  • People are able to add tasks for others to work on without having to deal with management. Management oversees the tasks by assigning dollar amounts, and can verify that tasks are completed correctly by volunteers. This basic process is commonly used in writing software.
  • Lower the amount of maintenance in order to lower the number or complexity of the tasks that need to be done. A great reference for this is the book "Make your house do the housework" -- it's completely full of great ideas to minimize work!
  • Maintenance costs remain the same, but the method can increase the number of low-budget (younger) guests and increase the quality of the resort. It's a form of "steal from the rich, give to the poor" which seems to work for Robin Hood.
  • Improvement costs can be eliminated once a foundation is in place. Improvement ideas are generated by and funded by the public, and the best popular ideas would make it to implementation. This is standard brainstorming and crowdsourcing, and should work as long as people stay motivated by wanting stuff.
  • With motivation to generate money, fundraisers would happen often and many would provide food, tournaments, or chances to win stuff in situations where it wouldn't normally be available. This would improve resort quality, keep things interesting, keep things active, and generate money for improvements. Fundraisers work very well in small communities, which is why they are so common.

NEXT PART

1 comment:

Tom Mulhall said...

Very interesting. Removing spiders instead of spider webs goes for $5 however.

This is kind of how the idea of co-op nudist resorts started.

The hard part is motivating the people to actually do the work and do it well. I can hear the young backpacking couple argue "you clean the toilets, I cleaned them yesterday."

Tom
Terra Cotta Inn