Marcus Shingles, CEO of XPRIZE Foundation, Joins Denver Frederick

The following is a conversation between Marcus Shingles, CEO of the XPRIZE Foundation and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.

xv2y7drp8dalfslzz739Denver: As the world changes with some 3 billion people able to connect online….. and with so many of them holding extraordinary computing capacity right in the palm of their hand……it only stands to reason that the way we go about trying to solve our most complex social problems would change as well. One of the very first to recognize that was the XPRIZE Foundation, and it is a great pleasure to have with us this evening their Chief Executive Officer, Marcus Shingles. Good evening, Marcus and welcome to The Business of Giving!

Marcus: Thank you! I’m glad to be here. Appreciate it.

Denver: So tell us, Marcus, what is the XPRIZE?  And how did this whole thing get started?

Marcus: The XPRIZE is a nonprofit. It’s a foundation that’s based in Southern California.  Dr. Peter Diamandis is the Executive Chairman and the founder of the XPRIZE Foundation. He was CEO up until a few months ago when I was honorably given the privilege to take over that role. Peter is a prolific inventor and entrepreneur innovator. He’s wired in a very interesting way. He completed a doctorate from Harvard and has two degrees from MIT, so he  understands the science and the technology. He’s one of these individuals that is just a dreamer and an innovator.

A couple of decades ago, he announced the XPRIZE Foundation, which essentially was a competition that he arranged, inspired by Lindbergh crossing the Atlantic and that prize.  He was looking at a situation in which NASA and the government was really starting to shut down an era of space travel. There was this period in time a couple of decades ago when you saw NASA and others kind of backpedaling on the whole space exploration piece. Peter grew up very interested in that space, focused on it. At one point, he wanted to be an astronaut himself. As a matter of fact, I think he aspired for most of his life to be an astronaut. And so he wanted not to rely on the government to do this. He wanted to rely on entrepreneurs and innovators to do this, even private citizens to do it. So he launched a $10 million XPRIZE, which was to put a spacecraft up into sub-orbit– or 100 kilometers– and back down, and to do that twice in a two-week period.

Now, the reason why it was twice in a two-week period was the goal was to demonstrate that there was a “there” there in terms of private commercial space industry, and it had to be reusable technology, very similar to what you see Elon Musk doing right now with the repurposing and reusing of rockets. So he launched this prize– $10 million. It was called the Ansari XPRIZE. X was actually a placeholder until he got a sponsor because he didn’t have the $10 million he announced.  He thought that was going to be the easy part, and of course, he had a lot of people telling him:  “No!” mainly because they were worried:  “What if someone gets killed doing this?”

Long story short, Burt Rutan and his team– I think it was 2007– demonstrated with SpaceShipOne the ability to do this, and they won the $10 million XPRIZE. That SpaceShipOne is now hanging in the Smithsonian – I think it’s a space and science museum – right next to the Lindbergh plane that inspired the whole thing. So, just a really interesting background. Peter had a very good ecosystem around him, just with his colleagues and his friends and his ecosystem. He knew Elon Musk and Larry Page and all these individuals.

Denver: It’s a good crowd.

Marcus: Very good crowd!  And they’re all on the board today of XPRIZE.  But he knew them at a time before they were completely the rock stars that they are; I guess maybe they’ve always been rock stars, but they’re super rock stars now. They looked at the model and said, “This is very interesting.  If you think about what just happened, not only did we achieve the goal, but think about some of the things that just happened.

We put out a $10 million prize, and we had basically rapid experimentation through a bunch of diverse lenses of people that competed on this prize… teams that competed that we didn’t ask them for their resume, or their background, or their education. If they wanted to compete, they could compete. So we didn’t filter anything; there was no cognitive bias as far as who can compete and how they compete. It was: ‘Here’s a problem. Here’s how we want you to solve it. We’re not going to tell you how you’ve got to solve it. You’ve just got to put something up 100 kilometers into the orbit, back down safely, and do it twice.’” So, $10 million prize, but those teams cumulatively spent over $100 million to win the $10 million prize.

It was people donating their time and effort and finances to win the prize because it was for an impact.

Denver: That’s a way to leverage $10 million; that’s for sure.

Marcus: Exactly. So that was interesting, right? It was strong economics, strong leverage. It was people donating their time and effort and finances to win the prize because it was for an impact. The other thing that was interesting about that whole model was that you only pay if someone accomplished it. So that’s another good way to underwrite or mitigate your risk is: you’re only paying if somebody comes up with a breakthrough, and you’re getting a lot of R&D; you’re spurring a lot of R&D as a result of putting out the $10 million, but getting a lot of teams to focus on it.

And that ultimately was a domino that needed to be tipped at a time when people were losing  a line of sight on the private space industry. There was none. And Peter is very much attributed and XPRIZE is attributed with creating that line of sight to the private space industry that we have today. Richard Branson was literally on the final ceremony buying the intellectual property from the winning team that he then used as his inspiration and first domino with Virgin Galactic, which he has today. So it’s attributed to being a very important historical force in getting the private space industry launched, which you see now is a multi-billion dollar industry.

The magic comes from: you have a haystack and you’re getting a needle in that haystack to incentivize to come to you. And that haystack, you have to think of as a crowd… someone out there– could be anyone–who’s just wired in a way to think about how to solve for X in a way that maybe the experts say can’t even be done.

All of the smart people don’t assimilate right around your neighborhood necessarily. They’re anywhere in the world, and now you can reach them through internet and communications and social media.

Denver: Well, it certainly is a milestone achievement. And this XPRIZE competition is essentially, I guess from what you’re saying, Marcus, a form of “crowdsourcing.” What exactly is crowdsourcing?

Marcus: So that was what that ecosystem around Peter at the time realized: “Well, this is interesting!” with everything that I just described – the economics of the whole thing, the way to drive impact, the way to launch a new industry. The magic comes from:  you have a haystack, and you’re getting a needle in that haystack to incentivize to come to you. And that haystack, you have to  think of as a crowd…the crowd being just basically the world population. That is: there is some needle in that world population of someone out there– could be anyone– who’s just wired in a way to think about how to solve for X in a way that maybe the experts say can’t even be done.

What we found in subsequent XPRIZE competitions is that formula is almost always the case. That if you brought in your aperture; you don’t screen individuals; anyone can compete, and you have to solve for X.  If you get the crowd big enough, if you get the haystack big enough, you will find more needles in it. Now the thing that’s interesting is we’re headed into an era right now, if you think about it, where the crowd, the world population, now we have easier access to reach them through social media and other means.

When Peter did this back nearly two decades ago, even advertising that the XPRIZE competition was happening to get to that haystack was difficult to do. You had to have that media attention. It had to be on national news, which it was. Now, you can launch something and within moments, it spreads out globally. So that’s really important. Because now the crowd, statistically speaking, you have a much bigger crowd, and you get 1% or 2% or  3% of that crowd that has needles in the haystack that come to you.  That’s a lot more diamonds in the rough that you’re seeking out.

The other kicker on all of this– which makes this model very important – which is one reason why I changed my whole life around to focus on this right now because I’m a true believer in the integrity and legitimacy of this model – is that the crowd itself, the global population, not only is connected, it can collaborate. You can form a team to compete on the XPRIZE. You could be in Bangladesh and get a guy from Atlanta. So you can find that resource anywhere, which is very important to problem solving. All of the smart people don’t assimilate right around your neighborhood necessarily. They’re anywhere in the world, and now you can reach them through internet and communications and social media.

The second thing that’s the kicker on this is the tools that the crowd has have exponentially improved since Peter launched the first XPRIZE. That first XPRIZE, you had a dozen or so teams competing because it still required big dollars, big investment. Now you can launch an XPRIZE, and you got a world of people walking around with supercomputers in their pockets, literally. That is equivalent to, if not better, than this technology 20 years ago that only big government and big business had, and now that’s been democratized into your pockets. So the technology being democratized into your pocket, into your phone, into your computer, in that computing power, really has the effect of democratizing problem solving.

…what we find out is any good XPRIZE… if you really widen the aperture to where we get the haystack outside of just the expert community, you get all walks of life involved.

Denver: Sure. You can get high school kids to participate in these competitions.

Marcus: Yes, and we do. And they can come from any walk of life. As a matter of fact, what we find out is any good XPRIZE… if you really widen the aperture to where we get the haystack outside of just the expert community, you get all walks of life involved. I like to describe it as: You get different angles of shots on goal, and you need one shot to go in. But having that real diversity in terms of the different angles of the shots really does matter. It’s part of this discretion. I can even share with you some instances where the finalist teams were really like these needles in the haystack, these diamonds in the rough, that you would have never expected. But it really makes sense when you think through “Well, now I get why.” That genius in the crowd, or the wisdom of the world, was harnessed in a way that didn’t require only going to the expert “community” to solve for it.

Denver:  The potential crowd is a lot bigger than it’s ever been, but you still need to draw that crowd. So how do you provide incentive and motivation for the crowd?

Marcus: There’s a variety of motivational factors. If you think about the model, the model is: we’re actually “gamifying” innovation. I used the word “gamifying” meaning: we’re making into a game the ability for people to innovate because we’re dressing it up like a competition. And to the point you were making, now that we have things like artificial intelligence or 3D printing, or biotechnology, or nanotechnology, the block chain, CRISPRCas9. CRISPRCas9 is in the news right now because it’s one of the biggest inventions of our history of the human race. It’s gene-editing tools that you can buy for $100 off the internet.

…. they’re putting in this time and effort because they’re passionate about it.  But at the same time, XPRIZE is creating a community for them that they want to participate in.

We’re trying to put something out there that seems like science fiction when we announce it, but we know that it’s science fact.  It’s just the exponential trend hasn’t caught up with it yet.

Denver: That’s all they were talking about at Davos.

Marcus: It’s significant. Some people– they get their news– it’s the cover of Time Magazine or it’s Sunday night on 60 Minutes, and the reality is this is a major invention that democratizes gene editing to where anyone can do it. Now there are a lot of implications to that, some positive and some negative, but we will cure diseases this way.  We will create new organisms in our species that will have properties and powers that we think are conducive to the world. There’s just a lot that’s happening with this gene-editing capability. Years ago, it was billions of dollars to do this.  Now you can buy it off the internet for $100.

My point is whether it’s the block chain, whether it’s CRISPRCas9, whether it’s biotech, whether it’s 3D printing, whether it’s artificial intelligence, whether it’s advance robotics, these are all things that are driving the democratization of problem solving because individuals can afford and get access and use these things. That creates a world, like I said, of problem solvers. And so the motivational factor to get the incentive factor, to get those problem solvers to actually put in time and effort and their own resources to work on an XPRIZE – because we’re a nonprofit; we’re not paying them unless they win – you have to structure in a way where it’s designed such that people that really care about the problems that we’re focused on collectively, that they’re putting in this time and effort because they’re passionate about it. But at the same time, XPRIZE is creating a community for them that they want to participate in.

So I’ll give you an example. We have a Google Lunar XPRIZE right now that’s been running for about six years. These are not short duration all the time. Sometimes these are long horizons. It’s very much, to use an analogy, “skating to where the puck is going” with these concepts. We’re trying to put something out there that seems like science fiction when we announce it, but we know that it’s science fact. It’s just the exponential trend hasn’t caught up with it yet.

Denver: Right, and you’re just trying to accelerate that timeline which normal events would’ve taken. You try to halve it, if you possibly can, with this competition.

Marcus: Exactly. We’re bringing forth—I mean if Peter didn’t do the original XPRIZE  to show that there was a “there” there in terms of space, in private investment of space, who knows how long it would’ve taken!

Democratization technology has gotten to a point where you think: “This is feasible. I could do this. I don’t have to depend on NASA or others to do this.”

Denver: Right. It might have happened, but it may have been many, many years down the road.

Marcus: Exactly. Another good example is the autonomous driving vehicles right now with Google. If Google didn’t do that in the last five or six years, you could say that we would have not started it yet necessarily. It could be another decade or two before—because there was no market incentive maybe for the big automotive companies to actually go that route just yet.

So back to the incentive factors, with the Google Lunar XPRIZE, think about this: you’re an engineer, and you have the intellectual property, intellectual knowledge to maybe put a spaceship on the moon, or at least to put something into orbit and to do it. Democratization technology has gotten to a point where you think: “This is feasible. I could do this. I don’t have to depend on NASA or others to do this.”

So you have a group of investors around you– because you know there’s a commercial market potentially there someday– and you talk with this group of investors around you for months or years about this notion that maybe at some point, you have the knowledge to do this, and they should invest in you, and you’ll do this. Well, all of a sudden you see that XPRIZE announces a $30 million Google Lunar XPRIZE.  First thing you do is you run for the phone, and you call up the investor community that’s part of your ecosystem and say, “Hey guys, we are thinking about doing this anyway. We’ve been talking about it for a couple of years. If we do it now, and we actually win, not only does the XPRIZE underwrite our investment because we win the $30 million, but also: What a great way to test it because XPRIZE is going to help us with the regulatory reform, with the government!  They’re going to help us think about ways to test it. They’re going to get other teams competing so we have a community; we can share learnings.”

Denver: Just the catalyst we’ve been waiting for.

Marcus: “Just the catalyst we’ve been waiting for, and let’s do it now.” So every prize has a scenario like that. Sometimes it’s—in that case it’s just convenience and perfect timing. Sometimes it’s pure—another example is we have a Global Learning XPRIZE that we announced.

The nice thing about XPRIZE: We don’t have to think about the solution. We think about the definition of the problem because the crowd will think of the different solutions. We don’t want to lead the witness too much because we’ll kill the diversity in terms of the experiments that happen.

Denver: In Tanzania, is it?

Marcus: Yes. So this is another great example. I’m very proud of this XPRIZE. This is Elon Musk who’s on the board of trustees of XPRIZE, put up the money for this XPRIZE. It’s a $15 million XPRIZE. Essentially,  we think that  there are new ways to solve for a market failure of not enough teachers in very remote places in the world, and therefore people are not going to be educated. It’s just not going to happen in remote villages in parts of Africa and other parts of the world. If you do the study, and you look at the analysis: You’re never even going to have enough teachers to teach those populations, and those populations aren’t getting educated today. And how do we think that with that market failure, there is a way to educate illiterate children in populations that don’t have access to teachers or schools, et cetera?

So that was the notion; that was the market failure. The nice thing about XPRIZE: We don’t have to think about the solution. We think about the definition of the problem because the crowd will think of the different solutions. We don’t want to lead the witness too much because we’ll kill the diversity in terms of the experiments that happen. And so in this situation, we work with the government of Tanzania and UNESCO– the education group of the United Nations– on identifying 4,000 illiterate children in sub-Saharan Africa, on the eastern block of Africa in Tanzania. Very much worked in collaboration with the government there to figure out a model that worked for them and what they were trying to accomplish with their citizens. It was very collaborative.

Ultimately, we designed a prize whereby we are equipping very remote villages in Tanzania with electrical power that many of them don’t have.  And we have tablets, android tablets that Google has donated, 4,000 – they actually donated 8,000

Denver: Right. Backup for each one.

Marcus: Backup for each individual – 4,000 tablets. So here’s the plan. We’ve been working with the government, working with the population, working with the village and the leaders in those villages on how and what we should do around this competition. Where it is manifesting itself is this Fall:  We are going to take the 690 teams that had registered. Now just think about that, 690 teams of rapid experimentation. Where can you go that you can drop 690 rapid experiments?

Denver: Absolutely, and that’s a long way from where you started. That is broad-based participation.

Marcus: Of course, from all over the world. We’ve got artists in Amsterdam. We have developers in Bangladesh. We have just people from all over the world, all walks of life, competing on this XPRIZE. We’re going to find five finalists that get downselected to take their software solution– probably built with artificial intelligence and new forms of technology– and they will be given a cohort of the illiterate children in these villages to put their software on the tablets that we’re providing them, with the electricity we’re providing them. And then for an 18- month run, after a pre-evaluation and pre-assessment, we will identify which group of illiterate children were able to reach a metric of a third-grade proficiency in reading, writing and numeracy or basic Math.

Denver: And for your prizes, unless that threshold is met, the prize will not be paid.

Marcus: Yeah, exactly. So if you do that, you win $15 million.  But here’s the kicker. The goal is that we’re nonprofit. Our objective is: whether someone succeeds in winning the XPRIZE or they “have an ingenious bold failure” –meaning they don’t get to third-grade proficiency but they get to second grade or first grade, we have milestone prizes, first of all. But what’s more important is the model still creates the change that we want in a sense that—

Denver: No question about it.

Marcus: Yes. First of all, you have five apps that are developed in Swahili. There’s no market for that. So that wasn’t going to happen, right? That’s not going to happen. Number two: What happens when you take a population and expose them to modern-day technology and see how it changes the dynamics of even the village? What if there are girls in the village that start to learn the technology and are able to teach their peers or their elders? Does that do something to girls’ confidence in the villages? There’s a whole lot of sociological and anthropological understanding that happens in this model as well, that people are interested in seeing what happens.

It’s interesting, too, because I’ve heard some of the discussion about:  Is it this Western imperialistic model where we’re coming over and dropping tablets in a village in Africa and leaving for 18 months and seeing what happens?  And that’s really undercutting or circumventing the real notion of what we’re trying to do here. Our goal is to experiment with new things. We don’t know what we don’t know.

The government of Tanzania– the villages that we’re working with– they appreciate the fact and they want to see us come in. They want to see us collectively work together to do a really sound experiment.  Because if it works, even if it slightly works, we know we can go in a different direction with innovative ways to educate people. If it fails fast, then we learn a lot. We learn there isn’t a “there” there. What’s the next way we should think about educating and solving for this market better?

Denver: And this competition is open to anyone in the world.

Marcus: Anyone in the world, yes.

Denver: So, it doesn’t have to be from the West, it can be from anywhere.

Marcus: And it is coming mostly from anywhere in the world. And that’s the goal. We advertise it in that way. We want to make sure it’s centric to a world view. The goal is this, too. The artist I mentioned in Amsterdam, their way of thinking about how to educate people is very much from an artistic learning perspective. Well, let’s see if that works. Another group in Bangladesh, they’re all into game theory, gamifications. They’re going to try to make the education process feel like it’s playing a game because they know that these kids who are seeing technology for the first time, some of them have never even seen reading and writing. So how do you crawl-walk-run to get a young mind exposed to something? Well, they’re going to gamify and make it feel like it’s playing a game. Maybe it’s some type of hide-and-go seek. Who knows? But they’re going to use that as a way to train and get educated.

We are literally in a time and history right now where we’re having an entrepreneurial renaissance. If you haven’t gone out there and gotten exposure to how much this democratization is leading to people of all walks of life starting their own business, starting their own ventures–it’s just phenomenal!  

Denver: Well, I always think the cross-disciplinary nature of some of these teams is just fantastic. They come together from all different sectors on a single team, and that’s when breakthroughs occur.

You’ve talked about crowdsourcing and said that today, there isn’t an arena around where you can’t crowdsource. They’re everywhere.  And I’m going to ask about one or two of them. One which I was really fascinated by–I think there was an article in the Harvard Business Review about it was Tongal. Tell us how Tongal works.

Marcus: So in my previous life before I started working with XPRIZE, I was a partner in a management consulting firm– one of the largest, Deloitte Consulting. It was a great place to be. I had a great role. It was really looking at all these disruptive, innovative practices. I spent most of my time in innovation ecosystems around the world: in Silicon Valley, where I live out west, to Tel Aviv, to Berlin, to New York, Santiago, Chile– basically where there is an entrepreneur renaissance happening of just people creating innovations and inventions. We are literally in a time and history right now where we’re having an entrepreneurial renaissance.  If you haven’t gone out there and gotten exposure to how much this democratization is leading to people of all walks of life starting their own business, starting their own ventures–it’s just phenomenal!

So in the business world where I was, I saw first-hand in the last few years– working directly with these start-up communities, directly with the CEOs and executive teams of the largest companies in the world. I literally hosted field trips out to some of these ecosystems with the CEOs of the largest Fortune 500 companies. In the last few years, I’ve seen them make that transition, have that perspective shift, that “You know what? As a large organization, the smartest people in the world don’t work for me.They work somewhere out there in the 7 billion people on the planet. That’s where the smartest people in the world are.” So, if you think you’re going to compete with a model  where the smartest people work for you in your box, in your environment, Good Luck!

And so the perfect example of where that’s manifesting itself in real ways of doing business– and whether you’re profit or nonprofit is:  How do you harness that wisdom of the crowd as a business? Tongal is a great example because Tongal is a model where they said — basically, they’re based in Hollywood California, in Santa Monica — “You know what? There’s a lot of people walking around here with excess capacity… that are directors or lighting or sound editors or actresses or actors. There’s a lot of unemployed going around in Hollywood, and on nights and weekends, they love to get together”—and I live in California, in Hollywood. It’s true. People love to get together, “Let’s go film a commercial.”

Denver: That’s what they do!

Marcus: Or “What are we going to film? What content are we going to create? I don’t know. Joe is going to bring some script. We’re going to do that.”  So they’re doing it anyways. And what Tongal realized was:  If there’s this group… community out there that’s in the crowd, that’s actually going out and producing creative content on their nights and weekends because they’re passionate about it…”  It’s their craft; they practice. Just like an artist goes and practices guitar over the weekend, or what have you. They’re practicing their craft.  Someone said, “You know what? I wonder if we can create a model where we gamify and put into a competition that we crowdsource– all of these creative people that are doing this anyways, but do it to a specific  purpose, to serve a specific client.”

And so the way the model worked was: Company A, B or C, you’ve got some creative content you need for your brand, come into Tongal; we have a crowd. That crowd is now about 100,000 people globally, so it’s outgrowing Hollywood. And out of that 100,000—and that’s a small crowd compared to a lot of crowd-sites today—out of 100,000 people, we’re going to put a competition out there that says:  If you can create content that serves the need of my brand and kind of the creative direction I want to go, I will give you X dollars.

The real kind of success story with Tongal…that it launched their business model to where a lot of major advertising companies use them today, and major brands use them today… was one of the major consumer product goods brands, I won’t mention—it’s public information, you can look it up—but one of the major consumer product goods companies had a deodorant stick that they wanted to use, and they didn’t have any money; they didn’t want to invest a lot of money. They had $17,000, I’m pretty sure was the number, which in big CPG companies—I used to work at the Kellogg Company—$17,000 is hard to have a meeting with that much money. So they had $17,000, and they said we’ll put this out on Tongal as the prize money. So it’s just $17,000. Remember, it’s not even about the money at that point. The “crowd,” when they see that a major brand has put a major product out on this competition, and they want content that might be put into a web video or something–

Denver: That’s their own brand if they get it.

Marcus: That’s their own brand if they get it. So, if I’m that out-of-work actor or actress or director.  First of all, I’m going to do this anyways on the weekend. Second, now I’ve got a motive because someone is going to judge me. I want to see how I even compare.

Denver: How you stack up!

Marcus: How I stack up. So there’s lot of psychology in this model working. In that case, the case study is: They put out the $17,000; they  got a lot of shots on goal, some really great ones, some really bad ones.  But you only have to pick the winner.

Denver: Only need one.

Marcus: They pick the winner,  and guess what happened to that video! Almost unedited. It was supposed to be maybe a web video. It became their 2012 Super Bowl ad. Is that a surprise?

Denver: For $17,000.

Marcus: For $17,000. Is it a surprise that that happened? No. Because the most creative people, the smartest people in the world, don’t work in your ad agency.

Denver: That’s right. That’s a good rule of thumb.

Marcus: They’re somewhere out there in the crowd. As a matter of fact, it’s a brilliant model because you want diversity of creativity when you’re thinking about brand image and brand equity. You want to see different shots on goal. What a great way to be if you’re a brand manager of the brand, and you can just pick and choose! And now Tongal is off, and you see a lot of the news about Procter & Gamble and BMW and all these others—McDonalds, others that are using Tongal now.

Data scientists are in high demand right now. Everyone is talking about big data and doing big data analytics…By the way, these people, they work at your company. On lunch or breaks, or maybe a little bit during office hours, but for sure on nights and weekends… they’re part of the crowd.

Denver: And that’s just one. There are so many out there for whatever the discipline might be.

Marcus: So many. So Tongal is with the creative side. Data scientists are in high demand right now. Everyone is talking about big data and doing big data analytics. At Deloitte, we have a lot of data scientists, but it was hard for us to even hire these folks because there’s not a lot of them.

Denver: No, it’s a supply and demand issue, for sure.

Marcus: Supply and demand issue. So, sure enough, Kaggle and TopCoder and all these other players created these crowds of not thousands, but hundreds of thousands. I think TopCoder is up to 800,000 in this community. By the way, those 800,000 people, they work at your company. On lunch or breaks, or maybe a little bit during office hours, but for sure on nights and weekends.

Denver: That’s right and no point in trying to rein them in.

Marcus: No. They’re part of the crowd. As an HR policy, you shouldn’t try  to limit them on that. It’s actually—

Denver: No. You’ll lose them.

Marcus: You’ll lose them for sure. So Kaggle and TopCoder and these other sites did the same model that Tongal did. But now it was:  Put out your competition out there with your data; put it in a lock box so the confidential information is stripped out.  But put your data out there, and see if a data scientist can come up with an algorithm that’s better than your actuary or your staff that is trying to work on these data scientist algorithm models for you. Again, all the case studies show that when you put that out there, there is definitely a data scientist out there in the world that is wired in that way, just to think about that equation in a way to figure out that solution for you.

Now the motivation factor in that was Kaggle, in particular, demonstrated how when you create a Leader Board… and you put your mugshot up on a 30-person Leader Board–if you were one of the top 30 Kaggle competitors on that Leader Board, it meant you are one of the legitimate, best data scientists in the world.  You get hired by someone just by that fact alone; they don’t even need to see your resume at that point.

Denver: That’s right. That’s a nice way to benchmark yourself. Well, let me see if I can follow where this is going. If you can crowdsource the very best people in the world to tackle a very specific assignment… and just for the period of time you need them, how is this going to change talent sourcing at places like Fortune 500 companies?

Marcus: A lot of the work that I had been doing previously in the management consulting world– but now I’m actually doing it with XPRIZE, where we’re trying to use the crowd more in what we do. What happens is your organizational framework changes as a result. The notion that you have to have departments like finance and logistics and operations and advertising and marketing; That dematerializes; it disintegrates because you only need what is core to your business.

If you’re not in the business of building software– being an IT shop– you make widgets. Stick to making widgets and perfecting what you do best, which is your supply chain and your operations piece. Even that, you could crowdsource a little bit; but keep that to your core. All the non-core activities, you should start thinking about a model whereby you don’t create departments. You used to have to create departments because those brains had to be in one room working with your core people. Now, you don’t. With virtual reality and augmented reality especially, but also the fact that we have video conferencing capabilities on our phone today, you can actually work pretty well with people that don’t work in your office.

You should really be thinking about how to crowdsource those smarter brains out there, those more creative brains out there, and leverage them in the model… versus the ones that you think you normally have to employ…It’s faster; it’s better, and it’s definitely cheaper.

Denver: Right. Younger people I think prefer that, from what I’ve noticed.

Marcus: Yes. I have two kids, and they don’t even think about having to go work in an office with someone. They can contribute any way that they want to remotely, and they prefer that. So now you have a situation where you can create an organization where you’re complementary, even if there are strategic imperatives…that they’re complementary to your core.  You should really be thinking about how to crowdsource those smarter brains out there, those more creative brains out there, and leverage them in the model… versus the ones that you think you normally have to employ. Now they can be complementary, or can be replacement of– you have to determine for your own model. But what I will say is that usually when companies do this, they realize it’s faster; it’s better, and it’s definitely cheaper.

We at XPRIZE– one of the first things I did a few months ago when I started… I’ve been working with XPRIZE for years… but one of the first things we did is—I got there and said, “We need to have some apps, some technology, some apps.” So when you’re a partner with XPRIZE,  and you contribute the funds required to launch the XPRIZE, we want to give you an app as a partner that manages that relationship with you.  So you can see how your money is being used, transparency as to how the investment is being used, success stories, even risk factors because it’s a nonprofit model; it’s more of a partnership model. So we want to build this app, and we were doing this before, but it wasn’t enabled by technology as much.

So our Chief Technology Officer launched a competition on TopCoder to give us the design of these apps. And for literally pennies on the dollar of what it would cost normally to get that done, we had seven shots on goal.  We had seven brilliant designs on ways we could go with the technology within days. Within a couple of weeks, he’s already sharing the designs, and then we’re able to choose the one we liked, reward that person, and take it forward from there. So we don’t need a big IT department; nor should we have one at XPRIZE. We just need someone who is a chief technology officer who’s the lead that understands how to work the crowd model.

Denver: You need a quarterback.

Marcus: Yes. Now you’ve extended that to the marketing group or the sales group or others, you can really scale. The other thing I’ll mention, too, and I talk about this a lot. If you’re a CIO, you’re in a real dilemma because with all this technology happening so quickly, you don’t know…to use an analogy, if things are going to go Betamax or VHS. You don’t know which direction the technology is going to go. It’s changing too quickly.

Denver: And there’s so much of it.

Marcus: And there’s so much of it. So, what are you going to do? You’re going to hire a bunch of people? You’re going to go through the recruiting process, the interview process, the hiring process, get people on staff, hiring them for a specific skill set and then realize, “Oh, bummer! It’s not going Betamax. It’s going VHS direction.”

Denver: You’ve got the wrong guy.

Marcus: You’ve got the wrong guy. What are you going to do? Fire all those people? So you’re almost forced to think about how to use a more dynamic and agile talent crowdsourcing model. Now consulting firms– like where I used to work at, Deloitte– are really good with putting all those widgets together. Meaning the crowd works right now, but it doesn’t work strategically and contextually to put all that together as a real operational excellence. So what you still need is, “Yes, I can get the widgets created by the crowd, but I need some intelligence here to bring all that together to make it work in my model strategically.” And I think what you’re going to see is the management consulting industry, the tech industry, some of them are going to be disrupted by this model because they’re going to get commoditized in terms of some of the services they offer. And some of them are going to figure out a broader strategy to take all of this widget building and these pieces of puzzle, but make the puzzle work at the end.

Denver: What about the nonprofit sector? There are some disruptive changes that are going to be coming down the pike as you have suggested. So many nonprofits are just so financially strained and so focused on trying to serve the clients– whether it be in education or training or medicine.  They just don’t have the bandwidth sometimes to  get their arms around this. Would you have any advice for them as to how to get started?

Marcus: Yes. maybe I’m a little cynical. I think it’s a little bit of a cop-out because the reality is XPRIZE is nonprofit, and we have a very small reserve, meaning that we get funding for our investment as we need it. So we’re pretty thin, in other words. And so we’re able to take our model, like I just gave the example, and very quickly with just a couple of people. That’s another nice thing. The crowd platform is already there. I don’t have to have my CTO.

Denver: You don’t have to create it.

Marcus: “Hey, go create a platform; go on the internet; create Kaggle.com or TopCoder.com, go create this whole thing and get people interested and get the community built.” That’s the big undertaking. Well, good news is there are hundreds of crowdsourcing sites for everything you can think about right now. And the communities are already getting matured. Remember this is the dot-matrix version. This is not the laser printer version, to use another analogy. Meaning, this where it’s starting. This is not where it’s ending.

So if you’re not cutting your teeth right now on this model and using it, you’re going to be caught flat-footed in a few years when this crowd thing really takes off, and it will take off. It will take off just by the sheer fact you mentioned on the internet. We got 3 billion people today connected to internet. So today, on this planet, you got roughly 3 billion people that have access to the internet and 3-4 billion that don’t. There are a number of initiatives going on right now that within the decade, we’ll have the whole planet online– probably for free– at a much faster rate of megabytes per second.

Denver: I think one of your board members, Elon Musk, wants to have the whole planet on wifi in seven years. So there’s a tremendous change coming.

Marcus: So you got Elon Musk, who was just in the paper recently, talking about all the satellites, I think it’s 4,000 satellites that are going to give access to the internet for everybody. You’ve got Astro Teller and Larry Page working on Google’s Loon Project, which is putting balloons; they’ve already given the whole country of Sri Lanka access to the internet. You’ve got Mark Zuckerberg and Facebook and Internet.org working on Facebook drones. Bottom line–within 5 to 10 years, we should have the whole planet online. And within 5 to 10 years, we might have a planet of 7-8 billion people. So that’s 7-8 billion people connected with supercomputers in their pocket that today do 5 to 7 to 10 years more doubling power, which means it’s not just 10% more powerful computers in our pockets. It’s 10x. It’s a doubling, it’s significant. And so you’re in a situation where we have a profound situation happening in the world with our ability to solve things.

So, back to the question you asked about how do nonprofits take advantage of these internally? Yes. With a couple of people, the fact that this platform is already out there, go experiment. Go try a few of these. You will be pleasantly surprised.

Denver: Don’t plan too much; just do.

Marcus: Just do.  A lot of people ask “Well, what can I do? I’m a small nonprofit.” Or even a big company says, “What can I do? I’ve got a lot of legacy and even internal cultural politics on doing this. So what do I do?”

Go do a little experiment. When you show people that there is a “there” there in terms of the model really works, then you start to get people to realize like, “Wow, maybe there’s a much better way to do this.” And it shouldn’t be thought of as replacing your current staff. Let them be the owners. Give them budgets to go run their own crowd things. You don’t want to be the CEO that says, “OK, IT group, you’re not fast enough; you’re not cheap enough, so we’re going to go with this crowd model.” No. Say to your IT group: “Start using this because we think we can get three or four times the ROI out of this group if you guys start scaling yourselves by using the wisdom of the world and doing IT or doing marketing or doing whatever.”

So how you approach it has to be sensitive to the current model and staff that you have, but it really doesn’t take a lot. You can go literally–today, you can go online, launch these crowd things, within a few hours, set up these competitions. It doesn’t take weeks or months to do it.  And have people out there that start trying to give their intellectual property—they start  putting their intellectual property, their time, their effort into solving your problem– business problem or nonprofit problem/challenge– and you’re only paying for the success. Because a lot of the crowds… not all of them… but many of them are competition-based very similar to XPRIZE where we’re part of that model, but we’re doing it for impact.

Denver: Let me get you out on this. You have spent your entire career until now in the corporate sector: Kellogg, Deloitte.  And now you’re in the nonprofit one. As you said, XPRIZE  is a nonprofit organization. And everybody I know who has made that move has found it to be quite an adjustment. Have you found that to be the case? And if so, what are some of the differences?

Marcus: Good question. So hopefully, this will help some of your  listeners who are considering moves in their careers. Not only did I work at Deloitte for five so years, I worked at Kellogg Company. So that’s big business. I worked at management consulting. I also had my own business for seven years as an entrepreneur. So I did the entrepreneurial thing. I worked at Ernst & Young for about five years, too. Not only have I had a very diverse entrepreneurial, Fortune 500 company, Kellogg Company, management consulting,  but even in the management consulting world, I was really doing work for governments, doing work for other business. So I’ve got a pretty good array of knowledge of these career choices.

And then now, I’m in this nonprofit world.  What I will tell you is:  For me, it is probably– even though I’m just at the early stages of it–probably the most rewarding thing I’ve done in my entire career, for sure. The reality is the nonprofit world—so here’s the XPRIZE  model. We have situations where government is losing the trust of people to solve some big problems.  And they’re not exponential; they’re linear, especially when it comes to technology. And regardless of your point of view, whether you think government helps or hurts–

I know that the model that we use of crowdsourcing– all those entrepreneurs across the world that now have problem solving technology in their pocket– is a way, and maybe the only way we’re going to solve some of the biggest problems.

Denver: They can’t move fast enough in today’s world.

Marcus: Yes. I don’t even get into that argument. What I do know is that technology is—I’m a technologist, I understand technology really well. I know that these capabilities like artificial intelligence and 3D printing and advanced robotics and nano tech and the block chain, these are transformational things that are hitting us now in human history. And there’s reason for it. It’s because computing power is being democratized. So once you understand that, you have to think about who can embrace technology and move quickly and be agile and adaptable leveraging technology? Well, it really isn’t to knock government, but it’s not government. It’s very difficult for government to be very progressive in their use of technology and innovations to solve problems. I think everybody can agree with that.

The other thing you find is:  Some businesses don’t have a profit motive, and they should focus on a profit motive. Because some of  them don’t have the profit motive to solve big problems. Some of them do; many of them don’t, or at least they don’t do it on a timeline in which a problem needs to be solved. So the XPRIZE models, we look for those gaps. We look for situations where this is a big hairy problem, big challenge that’s going to affect everybody. It has to be solved, but we find this gap where the traditional mechanisms of government or other institutions aren’t going to do it.  Maybe other nonprofit methodologies aren’t going to do it, and businesses don’t really have the profit motive to focus on it, at least not now. So we go in and we say, “How do we take that problem that’s just basically not going to be solved. And what we really say is,  “Who’s going to solve this?” It’s not XPRIZE who’s going to solve it. XPRIZE  is just an instrument to gamify the innovation to get us to solve it, to get the world to solve it.

And so if you can get into a nonprofit world like the one I’m in now–I feel great. I go to meetings, and I hear people in other nonprofits–I was at the UN General Assembly yesterday for the Novus Summit– It was a day of people talking about grand challenges. You  go to a TED Conference–it’s people talking about grand challenges. It gets pretty freaking depressing. What I love doing now is—I’m drinking the Kool Aid, I believe in this. I think it’s legitimate, and it has a high integrity. I know that the model that we use of crowdsourcing– all those entrepreneurs across the world that now have problem solving technology in their pocket– is a way, and maybe the only way we’re going to solve some of the biggest problems. And the fact that we gamify, we make it a competition, we use all the psychology of incentive to get people to put in their time and effort– some of which I described– it is a real silver bullet. It is a way to solve problems. Now it’s not going to solve every problem. At XPRIZE  you might come to us and say:  I’ve got X amount of money to fund one of your prizes, and this is what I want to focus it on.  Our first thing  is we vet it to make sure it’s prizeable. Because we don’t want to take the investment if we say to you: “You know what? Government and business is going to do this anyways; there’s no point.”

And fortunately or unfortunately, we’re hitting a period in human history where many things aren’t going to be solved unless it’s solved by the collective efforts of the brilliance of people, all of us. And the XPRIZE model… because we’re not screening you based on your resume, your background, it’s not slow; it’s really fast. It’s: Here’s a competition; here’s the parameters around it. Solve it.

Denver: And it has to be achievable, too.

Marcus: Well, we want it very audacious, almost non-achievable because we don’t want to make an easy lay-up. We don’t want to cancel the prize because it was too easy. It’s meant to stretch thinking, it’s meant to stretch innovation, and if it doesn’t fit all those mechanics… if the model doesn’t work like we say, “You know what? Great idea, great concept. Yes we can make it prizeable. But if you look at the market, the entrepreneurs and others aren’t going to come out to compete.”  So if the haystack isn’t going to be big enough for this, we’ll actually say,  “Use the money somewhere else. It’s not good for this model.” But if it does meet those hurdles to where we feel like it’s a solid design that fits into this prize theory instrument, then usually that’s a scenario where that’s the only way it’s going to get solved– is through that model.

And fortunately or unfortunately, we’re hitting a period in human history where many things aren’t going to be solved unless it’s solved by the collective efforts of the brilliance of people, all of us. And the XPRIZE model… because we’re not screening you based on your resume, your background, it’s not slow; it’s really fast. It’s:  Here’s a competition; here’s the parameters around it. Solve it.

Denver: Anybody can play.

Marcus: Anyone can play.

Denver: You’re somebody who sounds like they really love their job. Well, Marcus Shingles, the Chief Executive Officer of the XPRIZE, I want to thank you so much for being on the program this evening. If people want to learn more about the XPRIZE  or some of the really neat competitions  you have going on– and we didn’t talk about mobile health or oceans or carbon, but there’s a whole bunch of them– what’s the website, and what will they find?

Marcus: Yeah. It’s easy.  It’s xprize.org. We’ve got all of our information there. So come join the community. We’d love to have you.

Denver: It was a real pleasure to have you on the show.

Marcus: Thank you very much.


The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us at bizofgive on Twitter and @facebook.com/business of giving.

 

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