In the book, Anderson — who was also one of the co-authors of Post Industrial Journalism: Adapting to the Present, a recent report on the future of journalism published by Columbia University — looks at the evolution of the media industry in Philadelphia over the past half a decade. In particular, he describes the rise of community-led journalistic efforts such as the Philadelphia Media Network, and the simultaneous decline of the city’s twin bastions of traditional journalism, the Daily News and the Inquirer.

Collaboration blocked by journalistic hubris

These two themes are inextricably linked, Anderson argues in an excerpt published at the Nieman Journalism Lab, because the traditional media failed to see the potential for collaboration with new digitally-focused entrants, and maintained that they were the only ones who could reliably fulfil the goal of informing the public about the news. As Anderson puts it:

“In particular, local journalism’s occupational self-image, its vision of itself as an autonomous workforce conducting original reporting on behalf of a unitary public, blocked the kind of cross-institutional collaboration that might have helped journalism thrive in an era of fractured communication.”

Anderson says his research shows that legacy systems — both the mechanical and other systems that were used to publish the city’s traditional newspapers, as well as the management systems that governed their behavior — made the news organizations he studied “behave in deeply irrational ways.” And one of the underlying concepts that made the situation even worse, he says, was the idea that traditional journalism had to consist only of reporting original news.

Anything else — including curation, aggregation and other practices common to digital-first media outlets such as blogs and social media — was seen as a lesser form of journalistic life, Anderson says, and scorned by most journalists working for traditional outlets.

“My research demonstrated that the practice of original reporting was far from being either pure or unproblematic. The kind of work that constituted “original reporting” seemed increasingly difficult for journalists to define. Reporting existed side by side with other forms of newswork such as blogging and aggregation, often within news organizations that heaped rhetorical scorn on these so-called lesser practices.”

Roadblocks to a post-industrial version of the news

The author — a journalism professor at the City University of New York — also describes another roadblock to change: namely, the newspaper industry’s devotion to the traditional industrial approach to the news, which he says one executive in a 1970s study of the business by Herbert Gans called “screwing nuts on a bolt.” This assembly-line process is one of the reasons why the Columbia report (which Anderson helped write with media theorist Clay Shirky and Tow Center director Emily Bell) said the industry should be thinking about “post-industrial journalism.”

The road to this kind of post-industrial future has been filled with potholes and detours, Anderson says, and a big part of the problem has been the inability of traditional outlets to collaborate with new members of the digital-media ecosystem, which they invariably see as not worthy of their attention:

“Developments in the local Philadelphia news ecosystem seemed to be creating a situation in which it made rational sense to ‘network the news’ through institutional collaboration, hypertext linking, and formal and informal partnerships [but] such collaboration and innovation not only did not occur; it seemed to be purposefully thwarted.”

As newspapers and other traditional outlets have continued to cut back on staff and resources (layoffs and buyouts have been announced recently at The Guardian, the Financial Times and the New York Times, among others) there has been more of an effort in some parts of the industry to collaborate and find new partners or models — although some of those, including the Chicago Tribune‘s experiment with a journalistic outsourcing service called Journatic, have been problematic.

In some cases, collaboration has been beneficial for both sides, as American University’s J Lab recently noted in an in-depth study of some new-media ecosystem efforts in San Francisco, Portland and several other cities — although coming up with revenue models continues to be difficult. And just like Anderson found in his research, the J-Lab report said that hostility towards non-traditional sources was a huge barrier to collaboration in many cases. Until mainstream media can find a way to shed those kinds of prejudices, real adaptation or collaboration will be difficult.

Post and thumbnail images courtesy of Flickr users Klobetime, George Kelly and Jason Parks

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“We were looking for a creative outlet that lets us work with our hands,” said Jojo, who is a consultant most days of the week.  “In New York, because it’s so rich with an artisan craft scene, it drives you to do something that gets you away from the computer, to create something that’s more tangible.”

Since May, they’ve sold their goods, under the name Le Petit Monster, on Etsy and Craigslist. But starting Wednesday, the part-time handcrafters are getting a full-time virtual storefront on Zaarly, as the San Francisco startup expands its new marketplace of people to New York.

“It’s the city of the side hustle,” joked Zaarly CEO and co-founder Bo Fishback. “It’s a community of people who are super engaged on more than one axis.”

Earlier this month, Zaarly launched Storefronts in San Francisco, moving its platform from what some have called a “reverse Craigslist” where people can request any item to a marketplace showcasing the goods and services talented local people can provide.

A people-first marketplace

By the end of the week, about 100 hand-picked New Yorkers will have live Zaarly storefronts to sell everything from personal training packages for couples to custom jewelry and furniture to specialty grilled cheese sandwiches and baked goods.  Over the next few months, the site will add sellers in New York and San Francisco and will expand to other cities across the country.

Fishback said about half of the featured sellers are using Zaarly to promote a growing full-time business and half are trying to give their so-called “side hustle” a more professional presence.

Since launching, Zaarly has processed about $40 million in requests through its original platform that allows people to ask for any item or service (like “I’m looking for an iPhone 4s for $50” or “I need someone to install shelves”) from people in a local area. But, as I wrote when Storefronts launched, the new people-first marketplace really sets Zaarly apart from other startups, like OfferUp, Grabio and HipSwap, that want to update eBay and Craigslist.

The new strategy, which cuts across all verticals, makes Zaarly a bit more competitive with other locally focused startups, such as SideTour, which offers unique local experiences, and TaskRabbit, which lets people outsource errands.

Fishback acknowledged that the company’s approach is ambitious but said, “what Airbnb is trying to do for spaces, we can do for people.”

Professionalizing hobbies

Especially in a place like New York that has such a high density of multi-talented people, I’m really curious to see the kinds of new services Zaarly brings to a larger audience of buyers and the kinds of opportunities it opens up for creative sellers. With technology, the nature of work is changing so much and platforms like Zaarly give people a chance to try on multiple professional hats as well as create new revenue streams.

For example, Diana Spalding, a Brooklyn midwife, told me that she and her graphic designer husband Cam always seem to be the go-to couple for planning friends’ baby showers and birthday parties. Through Zaarly, they now have a way to sell their party-planning services and see what it might be like to professionalize an activity that they love.

“My parents always said that if you have the opportunity to turn a hobby into a job, you should go for it, and this is exactly what that is,” she said. “We figured it would be a great opportunity to test the waters and see what it’s like on a professional level.”

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There has been a debate raging in the media sphere lately over the practices of a journalism-outsourcing startup called Journatic, which used to provide hyperlocal news content to papers like the Chicago Tribune and the San Francisco Chronicle. The service was dropped by several newspapers after it was revealed that some stories it distributed had fake bylines on them, and others have stopped using it due to more recent reports of plagiarism. But those errors don’t invalidate the idea of outsourcing and/or automating the kind of information that Journatic specializes in — something more cash-strapped newspapers are likely going to have to consider, even if they produce or manage it themselves.

The latest incident occurred last Friday, when the Chicago Tribune said it had found evidence of plagiarism by a Journatic writer — who allegedly used a quote from another news report without attributing, and fabricated a second quote — and said it was suspending its use of the service (which it is also an investor in) indefinitely. Shortly afterward Journatic’s editorial director, Michael Fourcher, resigned, saying, “The founders and I fundamentally disagree about ethical and management issues as they relate to a successful news business.” Journatic, meanwhile, said that it had planned to fire Fourcher anyway.

Outsourcing is a reality, like it or not

For many critics, this cavalcade of errors reinforced their views about the whole idea of outsourcing local journalism in the first place, something former Journatic freelancer Ryan Smith compared to the sort of “pink slime” processed food that some companies have been accused of serving their customers. But as journalist and author Craig Silverman noted in a recent post at Poynter (and as we have pointed out before as well), that doesn’t change the fact that newspapers are going to need alternative processes — including outsourcing and/or automation — in order to survive the financial pressures they are under. As Silverman put it:

[E]ven as I abhor the plagiarism, fabrication and fake bylines, I also know that no matter how bad the behavior, there will absolutely be more companies like Journatic. Outsourcing, content farming, Mechanical Turk-like records/data processing — these things are going to increase and find their place within journalism at news organizations large and small.

As Silverman correctly points out, the idea of aggregating data around local communities isn’t unique to Journatic: A Knight Foundation–funded startup called EveryBlock, founded by pioneering data journalist and former Washington Post staffer Adrian Holovaty, started doing exactly that five years ago and was eventually acquired by MSNBC. While critics complain about Journatic’s impact on hyperlocal journalism, much of what the service was doing involved police blotters, real-estate sale reports, community award presentations and other kinds of information that are seen by many (including journalists) as a commodity.

Commodity news needs a new business model

Founder Brian Timpone — who was trained as a journalist — said in an interview with GigaOM that the whole point of Journatic is to outsource and/or automate those tasks so that reporters can have more time for the kind of journalism newspapers would rather spend their scarce resources on, including investigative or in-depth reporting. The fact that the Tribune and other papers have laid off dozens of staff at the same time as they started using Journatic makes it harder to believe that they actually want to do this, but that doesn’t mean the principle isn’t still sound. Even Fourcher argued in his blog post that the idea behind the service still makes sense:

Journatic’s core premise is sound: most data and raw information can be managed much more efficiently outside the traditional newsroom; and, in order for major market community news to be commercially viable, it needs be conducted on a broader scale than ever before.

It would be nice to think that newspapers could continue to finance a local bureau in every small town, with a reporter who could get to know the community and cover town-council meetings, human-interest stories and so on. But that simply isn’t economically viable for many papers any more, thanks to the rapid decline in the print-advertising income that makes up the bulk of their revenue. Journatic critics argue that they should see hyperlocal reporting as more valuable, but many newspapers like the Tribune simply don’t have the resources to do that in addition to the kind of civic reporting they are supposed to be doing.

Outsourcing to an aggregator like Journatic isn’t the only solution to this problem, of course. Instead of using cheap freelancers in other countries, Digital First Media has taken a different approach by setting up “community newsrooms” in the towns it serves with its daily and weekly papers as a way of bringing members of the community into the process. Another venture in local journalism called TBD developed a network of local bloggers as an attempt to cover some of the communities it couldn’t afford to send staff reporters to.

As both Silverman and David Cohn of Circa — who also founded a previous crowdfunded-journalism startup called Spot.us — point out, there are many lessons to be learned from what Journatic has done, including the importance of journalistic standards and a professional approach. But that doesn’t mean outsourced and/or aggregated news isn’t going to be a part of the media environment, because it almost certainly is.

Post and thumbnail images courtesy of Flickr users Stewart Chambers and George Kelly

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We’ve seen a ton of digital ink spilled over the implications of media startup Journatic faking bylines for some of its content, including my post about the underlying economics that have forced newspapers like the Chicago Tribune to outsource their hyper-local content. While some critics choose to see outsourced journalism of the kind Journatic produces as unethical “pink slime,” the controversy over the startup’s practices actually says a lot about how difficult it is to find new ways of producing that kind of content — in part because the traditional media industry and its supporters want to force everything into old models and familiar formats.

Just to recap, Journatic is a Chicago-based startup founded by former journalist Brian Timpone as a way of helping news providers cover local and community news more efficiently. The company has worked with a number of mainstream outlets such as the Tribune and the Chicago Sun-Times, as well as the GateHouse newspaper chain, providing the kind of commodity news that community papers specialize in: notices of events, local residents winning awards, real-estate transactions and so forth. Journatic pays staffers and freelancers — some of whom work in the Philippines — to produce this content from publicly available data.

The company was engulfed in a firestorm of criticism last week, after a Journatic employee (who has since resigned)told the public-radio program This American Life that it routinely used fake bylines for some of the content it provided to the Tribune and others. Timpone said in an interview with me that these manufactured bylines were only used for data-based stories that came from a sister company called Blockshopper, which aggregates data about real-estate sales in various communities, not traditional journalistic stories that were provided to newspapers — but he admitted that using the fake bylines was “absolutely a mistake.”

Why does the new have to look like the old?

As media industry blogger John Bethune pointed out in a blog post about the Journatic incident, the source of the mistake was a desire to make the content that came from Blockshopper look and feel like the stories that both newspaper owners and readers would be familiar with — in other words, a traditional newspaper story with the name of the author at the top. As Bethune put it:

The real issue was not that the company used fake bylines on its stories, but that it used bylines at all. Journatic screwed up because the company wanted to have it both ways: to embrace new-media principles while trying to disguise them. Instead of looking forward, it looked backward.

Timpone effectively admitted the same thing in his interview with me — that part of the mistake Journatic made was in thinking that the content it was producing needed bylines in the first place (much of what it provides to the Tribune for that newspaper’s TribLocal sites now simply says “Neighborhood News Service). Some critics of the practice have assumed that the fake bylines were intended to disguise the fact that contributors were from the Philippines, but Timpone said the practice was mostly designed to make the content look like a traditional story because that’s what the company thought newspapers would want.

But much of the content that comes from both Blockshopper and Journatic doesn’t really fit that model at all. Instead of being a story that a single individual produces (along with some editing), they are an amalgamation of data and contributions from multiple sources, some of whom scrape databases or make phone calls and others who edit or fact-check or perform other functions to produce the “story.”

Critics of the Journatic model, including Mandy Jenkins of Digital First Media and Anna Tarkov at the Poynter Institute, seem to want newspapers to continue to produce hyper-local community journalism in the traditional way, with reporters based in the community writing traditional stories. But given the kinds of financial pressures on the newspaper industry, that may simply not be viable for outlets like the Tribune or GateHouse. That’s not to say they shouldn’t devote resources to those communities, but it does mean that looking at alternative models for some kinds of content makes sense as well.

Not “pink slime,” just a potential new model

I think what’s important with a new model like the one Timpone is trying to implement is not to find ways of dismissing it as the “pink slime” of the journalism industry, but to see whether anything in it is ultimately worth keeping or is providing a worthwhile service for readers. Does Journatic or Blockshopper content inform readers about things that they might be interested in, and does it do so accurately? It seems to (no one has raised concerns about inaccuracy so far, just bylines). Do readers really care who wrote the post about the high-school student winning an award or the sale of a local property? I don’t know.

In a recent presentation about the future of media, Richard Gingras — former CEO of Salon and now director of news products for Google — notes that many of the models that newspapers and other media entities continue to rely on, including the traditional story format, are throwbacks to the days of print. Why do we need to use them online, where content is more fluid? Why not experiment with new forms? As Gingras puts it:

These were models that barely changed in 100 years — what, they added color? So people didn’t have a reason to evolve. [But] you now have people on the outside looking at the problem with a clean slate.

In many ways, this is related to the discussion that media theorist Jeff Jarvis and others have been having for some time now about how the news “story” needs to be blown up or dismantled, or at the very least re-thought. Since the way that news occurs and the ways in which information reaches us has been completely disrupted by the web and the democratization of distribution, the argument is that we need to have different models and formats for handling that information intelligently — whether it’s with tools like Storify or new ways of aggregating and filtering data in order to make it meaningful.

Could Journatic be one of those ways, at least for certain kinds of hyper-local content and information? It’s possible, or at the very least worth considering. And demonizing that approach as “pink slime” or something that is antithetical to journalism doesn’t really help.

Post and thumbnail images courtesy of Flickr user Zert Sonstige

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Updated: A Chicago-based media startup called Journatic, which we profiled earlier this year, has sparked a firestorm of controversy over the outsourcing of hyper-local journalism by newspapers such as the Chicago Tribune, after a staffer revealed that the company added fake bylines to its material — which in some cases is compiled by freelancers in other countries. A number of the startup’s clients have dropped the service as a result, while others are trying to essentially recreate it within their newsrooms. But despite the furor over what some see as Journatic’s unethical methods, the harsh reality is that the economic conditions that led the Tribune and others to make use of the service are not going away any time soon.

As we described in our post — which was based on an interview with Journatic founder and former journalist Brian Timpone — the service uses freelancers and staff to compile the kind of local news that typically appears in weekly community newspapers or the local section of a daily like the Tribune: that is, announcements about local sporting events, residents who have won awards, council meetings and so on. In many cases, the content is produced by a local staffer who pulls information from a database or website (or in some cases calls a local business) along with freelancers who work in the Philippines and elsewhere, and are paid either an hourly rate or on a per-piece basis.

Accelerating the death of newspapers or adapting to it?

In a recent interview with the public-radio show This American Life, a staffer who worked for Journatic described how the company would sometimes use fake bylines on its content — allegedly to disguise the fact that they were compiled by non-residents — and also how reporters working for the service in other locations would try to cover up the fact that they were not in the community they were writing about. Ryan Smith told the Poynter Institute’s Anna Tarkov that he came to believe that this behavior was wrong, in part because it was doing a disservice to local journalism:

I felt like the company I was working for was accelerating the death of the newspaper, luring many members of the industry into their own demise with the promise of short-term savings.

This week, many of the newspapers that were working with Journatic said they have severed that relationship, including the Chicago Sun-Times and a number of papers owned by the GateHouse chain. A spokesman for GateHouse told Poynter that the newspaper company is working on a project that will more or less duplicate what Journatic was doing, by centralizing the production of local community news for the entire chain — and also said that the service didn’t really achieve what GateHouse hoped it would, which was to free up staff to take on more in-depth journalistic pursuits.

Journatic founder Timpone, meanwhile, told media blogger Jim Romenesko that the idea of using fake bylines was implemented for a sister company called Blockshopper, which automates and aggregates real-estate listings. He said that fake names were used because some freelancers had been the target of harassment — and also because the items were often produced by a combination of algorithms, U.S-based editors and freelancers rather than a single person. That practice has stopped, said Timpone, and items that are part of the Tribune’s TribLocal sites now say they come from the “Neighborhood News Service.”

Much of the reaction to the Journatic story has focused on how the fake bylines — and the way reporters described who they were in phone interviews — were designed to simulate hyper-local content, and how this is an unethical or at least unappealing thing for newspapers to do (although some have pointed out that newspapers have always used content that appears with “fake” bylines, including advice columns such as Ann Landers). Mandy Jenkins, who works at Digital First Media and writes a blog called Zombie Journalism, said that readers should demand locally-produced content from their newspapers as part of a “Buy Local” campaign.

Outsourcing and automation are part of the future

The uncomfortable reality, however, is that the Tribune and other newspapers started using Journatic because it was a lot cheaper than generating that kind of content with staff reporters, and newspapers have been scrambling to cut costs as their print-advertising revenue continues to free fall. The Tribune, for example, laid off 22 employees when it outsourced its hyper-local content to Journatic — and while GateHouse says it plans to create similar content in-house, it is still centralizing the production of that content somewhere else (although it may be closer than the Philippines).

Even AOL, which has tried hard to recreate some of the community-newspaper model with its Patch network of local bloggers and reporters, has found that the costs of doing this are almost prohibitive (it has spent over $150 million so far) and the advertising revenue that it derives from those operations is barely worth the trouble. Local bloggers — who have a much more personal connection to their audience — can fill some of the gap, but that is likely to be more of a labor of love than a commercial enterprise.

Is faking hyper-local content the answer? Probably not. But it’s also true that most newspapers can’t afford to continue producing a lot of the kind of content that Journatic generated. The fake-byline issue is a bit of a red herring in that sense: while it would be nice to think that a “Buy Local” campaign would convince newspapers to devote more resources to it, the fact is that most people don’t buy that kind of content at all. And the newspapers that outsourced it wanted to do so in part so they could (theoretically at least) concentrate on more important journalism, although whether they actually do so or not remains to be seen.

At the end of the day, centralized and partly-automated production of that sort of generic content is likely a reality for newspapers — or even fully-automated production, from services like Narrative Science, which generates sports stories, business stories and an increasing range of other content using algorithms instead of human reporters and editors. It may not be the kind of future that all journalists or news consumers would like to see, but it is probably the future nevertheless.

Update: In a phone and email conversation after this post was published, Brian Timpone said that the Journatic contracts with both GateHouse and the Chicago Sun-Times had already expired before the fake-byline report came out, and that only one client has dropped the service because of the report. He also said that fabricated names were only ever used for BlockShopper real-estate listings, and that most of these were created in 2009 and was given to newspapers as a placeholder until more local content could be created. The Journatic founder said the decision not to remove these fake bylines was “absolutely a mistake” and that the company is changing its process so that doesn’t happen again — and also to prevent writers from using pseudonyms, which happened with some Journatic stories from one writer that ran in the San Francisco Chronicle.

Post and thumbnail images courtesy of Flickr user David Boyle and Jim Romenesko

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In an attempt to keep a lid on costs and employee attrition, London-based outsourcing company Xchanging Plc., which has 30 percent of its staff in India, is experimenting with locating some of its business in the hinterland. Or, at the very least, a six hour drive from the nearest airport. That’s enough to ensure that real estate is cheap, as is the work force. And best of all, it’s far enough to deter the competition from coming in and swooping up trained staff, the company says….

Alok Sinha, president and head of its IT outsourcing division, says the experiment to take work outside Bangalore was driven primarily by an attempt to curtail escalating costs. Real estate prices have increased 15 percent, wages, on average, have shot up by up to 12 percent while the amounts billed to clients have gone up only 3-4 percent, says Mr. Sinha.

“It’s a brilliant idea,” Bhavin Shah, an IT analyst at Equirus Securities, is quoted as saying in the WSJ article. “They will face some challenges in recruiting, but if they can overcome those, it will work very well.” Like many successful rural sourcing initiatives here in the U.S., Xchanging partnered with schools to deal with this challenge, asking colleges located in the towns where the company set up shop to tailor their curricula to turn out students that wouldn’t require much expensive training.

Finding talent was an easy enough problem to sort out, but Xchanging had to get more creative when it came to real estate. There were no suitable buildings in the area, so the company initially took “over the local wedding hall as there were no office buildings that were large enough to house all its employees.” It has since built its own campus.

This sounds like good news for the job-starved hinterlands of countries like India, but are there any pitfalls or downsides to the idea?

Image courtesy of Flickr user Paul Keller. 

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Despite the firm’s international outlook, COO Larry Mieldezis struggled to make offshoring work for some parts of the business, so decided instead to cook up a rural sourcing plan with his alma mater Southern Illinois University, snagging well-educated but lower-cost recruits from a region not exactly known as tech hotspot. We called him up to ask how it’s going and what advice he has for other organizations who are considering setting up shop in America’s heartland.

Why did you decide on rural sourcing versus offshoring?

I’m responsible for our technical delivery services, so basically our managed services. I’ve done that with this company for about 12 years. Over those years, just like our competitors, we went down the path of offshoring to try to lower our costs but also expand our just-in-time capacity in terms of development, technical delivery and customer service. We’ve run at that for a number of years, but we’ve had mixed results, ranging from quality issues with the data that came back, to availability, to turnover and really understanding the business practices that we’re trying to solve. The solutions that we’re delivering aren’t just people that can go in the corner and code. They actually have to interact quite a bit with our customers.

Some years back I had had an idea. I’m from a rural part of the country. I know there’s some good talent that comes out of local university systems in those areas, yet the opportunity for those people to stay is typically limited. I thought, let’s try an alternative to offshoring.

The experience we saw with offshoring, and what we were able to do with people here in the U.S. – common time zones, business cultures, communications and all the security issues — have been completely more than what we had anticipated. We still do some selective offshoring on our development side, but we’ve moved managed services 100 percent to rural sourcing.

Are you happy with the workforce in Illinois? Have your turnover issues decreased?

I definitely think we’re seeing better results than what we saw in offshoring. The offshoring model has become so fluid and transient from the perspective of employees moving from one company to the other, and then in recent years providers moving from country to country because of the wage escalation in those markets.

What we’ve seen in rural sourcing is quite the opposite. I think the key was to build really strong relationships between our company and a local university, so as a result of that we partnered with Southern Illinois University, which is a pretty good-sized university with very good computer science and applied engineering programs. We went in and worked with the deans and professors to identify top candidates out of those programs — candidates that are from that region and want to stay in that region. You’re going to find people coming out of school that want to go to New York, L.A., San Francisco, whatever it may be. That’s fine. But you’re also going to find people that want to stay local, raise a family, invest in a way of life and are strong, intelligent contributors in technology. We’re seeing a lot less turnover if you target the right people with the right message.

Let me say, our population up there is not exclusively recent graduates. A third are seasoned people who have either moved back to the region after having a high tech job elsewhere or people that have found opportunities in the region even though they were sparse.

How were you able to locate those more seasoned people?

Basically, tap into those local communities, the Chamber of Commerce, professional networks in those markets. You’re not going to necessarily get there by using things like Monster and Indeed. People don’t look there if they want to stay local, so it’s mainly been people on the ground, word of mouth, and making an investment in the community. These communities embrace this like you wouldn’t believe because it’s an opportunity for these people to take on some important, challenging technology roles. Otherwise they’d be working for a local bank or an attorney.

How about on the financial end – was this a money saver for you?

I look at it overall as a winner. There’s a cost component, and there’s the ability for us to respond competitively. There’s new business that we’re able to obtain that otherwise we would not. On the pure cost side, I have data that shows anywhere from 1.5 to two offshore resources can be replaced by one domestic resource – just the effectiveness, the creativity, the understanding of the business, all the other challenges of offshoring. I’m hiring less people than I have to hire if I go overseas, so obviously that’s a cost savings.

The cost in that part of the country, whether it’s rural Illinois or Kansas or Indiana, is obviously going to vary, but I am seeing somewhere in the area of probably a ten to 15 percent higher salary rate than what you can find overseas, in some places a little bit more than that. But that, by far, gets offset by what I see as more effective resourcing.

Do you find it easier to manage on your end in terms of things like time differences, logistics, cultural differences, etc?

Absolutely. I’ve had six people in southern Illinois get in car on a Sunday and drive down to spend the weekend in Atlanta with the engineers. It’s very easy for them to do that. It’s very easy for them to communicate and plan and be a part of the product planning cycle as well, so the communication disparity is night and day, and the physical availability also is pretty extreme.

If another company were thinking about rural sourcing, what advice would you give them? 

On the university side, building that relationship with the local university. Make sure the technical programs that are being taught in that university are aligned with the skills that you need. Make a connection with the top of that school, whether it’s the president, the dean, the lead professor, to make sure there’s alignment.

Going into these regions, the flexibility that they show in wanting to help and conform to what your company needs is night and day compared to offshore. We’ve had discussions around, why don’t we take some of the real world concepts that Liaison is solving and build it into our curriculum? Then you have students coming out of the program that are trained in real world examples of technology solutions that we’re providing to the market. So number one is, really depend on that relationship to the university. You’ve got to find a university that’s willing and interested.

The other thing is, I think it’s strategic to identify a university where there’s not an overrun of a lot of other companies wanting to do this. You’ll get their undivided attention.

How about bumps in the road – did you run into any problems that others should avoid?

I guess really recruiting that one-third that’s not coming right out of the school system, and building a connection with the local community early on. We didn’t do that right up front. We mainly focused on the university, and as a result we quickly staffed up a lot of people that were freshly out of school and then had to aggressively go after some more seasoned folks for leadership, mentoring and management. So doing that up front at the same pace that you’re building a relationship with the university is critical.

You mentioned it’s a good idea to find relatively fresh territory. In your experience, are you competing with many companies interested in rural sourcing?

I think the concept has been there for a while, but it’s not been called rural sourcing. It’s been very low-key. Where we went into Carbondale, Illinois, there were probably two or three other small technology companies that recruited locally. We found there was plenty to go around. I think the area could even house some additional companies.

What’s interesting was the university’s economic research arm had just performed a study the year before we came in on how to lure technology companies into the region and what the demographics were, so we were able to peek at that to target our message. There are some universities that want to be a driving force for the economy in the region, and I think if you find a university that wants to do that, then they’ll be able to get you the data to show what the availability is and the demographics of the resources.

What are your plans for the future?

We’re actually looking now at expanding our footprint a little bit. We’ve identified two other universities in the region. Each is about 60 miles away. It’s not uncommon for folks to drive 30, 40, 50 miles there — not in traffic, by the way — to work in a role like this, so we’re expanding. The one piece that we have not tapped into that I think there’s opportunity there to help perpetuate this, is tying in to the local and state government. That’s one area I think you’re going to see us look into a little bit more. How do we get our message out through the state government entities, whether it’s through financial help or through reach and marketing?

I absolutely embrace globalism. We’ve got operations in Finland, the UK. We’re serving customers in China. We need feet on the street over there. But at the same time, if I can find a way to help employee people who live here in the US of A and help my company grow, I’m absolutely going to do that. That means we’re going to be a global company, but we’re going to do it out of rural Illinois.

Image courtesy of Flickr user tlindenbaum.

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What CrowdControl does, essentially, is partner with crowdsourcing services like Amazon Mechanical Turk (a very close partner, in fact) to provide a layer of quality assurance between the remote workers and the client needing work done. CrowdControl provides a worker-management interface, determines pricing and — most critically — uses its software to determine whether the work product is accurate.

Here’s how I described CrowdControl’s theory and methodology back in November:

Sentiment analysis already is becoming big business for companies such as IBM and SAS that are turning their predictive analytics engines on social media streams. But CrowdControl Founder and CEO Max Yankelevich says there are two big problems in the space right now. One is that current natural-language-processing technologies are better suited to identifying keywords than they are to deciphering true sentiment. The other is that humans, whose brains are inherently better at looking at text in context and working around abbreviations and poor grammar, have a tendency to underperform.

…

To cure that problem, CrowdControl contains more than 15,000 rules to determine how accurate workers are in completing their tasks. Those rules comprise much of the company’s secret sauce, but Yankelevich explained the methods for “adjudication,” the process of judging accuracy, at a high level. A big one is called “plurality,” which entails either assessing a worker’s answer in relation to everyone else’s answer on the same question, or giving the same question multiple times and looking for the same response. Another is “gold answers:” The tester continuously inserts questions to which it knows the answer and calculates how often the worker gets it right.

The company recently completed a survey of half of Amazon Mechanical Turk workers, which should help it further refine its algorithms and processes. As Yankelevich told me in November, where workers live and what they do for a living can have a big effect on how they perform. Presently, CrowdControl says its ideal use cases are sentiment analysis, data cleansing and data normalizing, which is the process of adding consistent structure to unruly data sets.

Image courtesy of CrowdControl.

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The “Occupy 99Designs” design contest, which launched Wednesday and will run until February 8, has garnered nearly 400 entries in its first few hours online. The winner will get $1,000 and, most importantly, a ton of exposure. According to the contest page: “This logo will live on occupy.com and @occupy on twitter. It will go on billboards, on TV, in magazines, on sidewalks, street walls, T-shirts, hats, postcards, on everything you can imagine — all over the world.”

Here’s more about what Occupy is looking for:

“We are challenging designers to think beyond the iconic Clenched Fist and create a new iconic symbol for resistance, solidarity and empowerment in the 21st century. It should appeal to a broad base and reflect the diversity of the 99%, while encompassing the values of the Occupy Movement – among them, integrity, justice, freedom, equality, compassion, community and true democracy.”

The Occupy.com logo contest on 99Designs (click to enlarge)

It may seem a bit funny that a movement that seems to be against all things corporate is looking for branding of its own. But in a way, it actually makes a lot of sense: There’s something to be said for fighting fire with fire, and having a more polished image would be a big step toward legitimacy for a movement that has been criticized for not having a unified message. And turning to a crowdsourced design site like 99Designs is more in keeping with Occupy’s message of being by and for the people than, say, commissioning a fancy custom design firm.

It makes me think of how in the Autobiography of Malcolm X published in 1968, the iconic activist wrote about why he dressed in tailored suits and ties: “In order to get something, you had to look like you already had something.” It looks like nearly 50 years later, the Occupy movement is trying to do the same thing in a modern way — on the web.

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Crowdsourcing the inventory selection

Firstly, rather than populating its site with objects selected by a group of buyers operating autonomously based on their own taste, LuxeYard is taking cues from its users on what items to sell. LuxeYard members can post photos of the type of items they’d like to buy on social media platforms, and other members can vote up on products they would also like to buy. Essentially, the items for sale on site will be crowdsourced according to users’ wants.

LuxeYard screenshot (click to enlarge)

“We’re really establishing a pattern of listening,” LuxeYard COO Steve Beauregard said in a phone interview Monday. “We’re really trying to build a conversation around certain pieces, and that will help focus our buyers and attune them to our users’ tastes, rather than just buying something they think is interesting.”

Taking group buying one step further

Secondly, LuxeYard is employing truly flexible group buying. This is where members use their social networks to encourage their friends to buy the same product on LuxeYard they’re buying, thereby driving down the price of that item. For example: I could buy a chair on LuxeYard for $150, and then post about that chair on Facebook. If a certain number of other people end up buying the same chair, the final cost for everyone buying the chair could be driven down to $100.

A unique financial starting point

And another unique thing about LuxeYard is that it’s hitting the ground running from a financial perspective. The company has raised $3.5 million from private investors, but has technically already gone public by conducting a reverse merger into a publicly-held shell company. Details are still being ironed out, so there is no public float to LuxeYard’s stock, but it will begin trading under the ticker symbol “LXRD” at some point in the coming months. Access to public market investors will potentially give LuxeYard the monetary wherewithal to compete head-to-head in the flash sales and group buying space already filled with solid players such as Wayfair, One Kings Lane and others, not to mention more general e-commerce sites such as Amazon.

But how long can exclusivity last?

Now, LuxeYard also claims it will be more choosy about the items it selects to sell on the site. According to Beauregard, if a company’s products are already being sold on existing e-commerce sites or major chain stores, LuxeYard will not sell any of its products. That’s an honorable goal, but true exclusivity is not always an easy thing to maintain when you’re also balancing the demand from investors for constant growth. And being that LuxeYard is starting out as a public company with notoriously demanding Wall Street-style investors, that could be an even harder balance to strike. But overall, LuxeYard’s offering seems unique enough that the company has a good shot at success — even in the hyper competitive world of e-commerce.

Here’s one more screenshot of LuxeYard (click to enlarge):

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