TopCoder was founded in 2001 by Jack Hughes and was acquired by Appirio in 2013. TopCoder built and manages a marketplace platform for hosting contests and hackathons in order to crowdsource software design and programming solutions. The company administers the contests on its platform and then licenses the developed software or designs to its customers. These competitions focus on a number of different areas: algorithms, software design, development, architecture assembly, and others. Currently the community is composed of over 1 million programmers and they now host more than 7 thousand contests per year.
The platform sits between designers, developers, and algorithmists on one side and companies or others that need solutions on the other side. Those needing solutions work with TopCoder to create a challenge with detailed specifications and requirements for a certain amount of prize money. The programmers on the other side can then jump in or compete by creating content for the challenge with the prize money being awarded if their solution is chosen. Companies needing solutions gain access to a sizable community of programmers and receive multiple potential solutions to their problems, with the ability to select the best option possible. Programmers get access to showcase their abilities and talents, with the possibility of winning prize money and getting to work on interesting and challenging projects. To facilitate this process, TopCoder works directly with companies on the challenges, making sure they are specific enough to yield viable solutions. On the other side, TopCoder uses a ratings system and peer review to evaluate the programmers, ensuring a strong pool of available programmers and quality content generation. TopCoder is additionally developing tools and strategies to continue improving this process.
Value Creation and Capture
TopCoder creates value for both sides of their marketplace platform. Companies gain access to a large community of programmers with varied skillsets and capabilities rather than having to hire employees or outsource their work to a specific company they find. They also have access to many different solutions that are built for the challenge and can choose the one that best meets their needs. On the other side, programmers gain access to interesting and fun challenges where they can showcase their abilities and potentially win prize money. The ratings system and peer review also allows them to effectively have proof of their abilities that can further help market them as contractors. Lastly, they get to pick and choose the projects or parts of projects that they would like to work on. In terms of value capture, TopCoder often retains the rights to the software or solutions that are developed and can then license them out to their customers or receive a part of the prize money that is awarded on behalf of a company requesting a solution.
Future of the Business
To date, TopCoder has hosted over 22 thousand contests and awarded over $80 million in prize money for solutions. It manages a growing community of over 1 million programmers with various backgrounds and capabilities and has continued to grow this side of their marketplace. TopCoder posits itself as a disruptive model for solution development that provides on demand access to a large number of programmers and capabilities. The company has continued to build on its growth thus far and has increasingly partnered with larger enterprises to develop solutions and other capabilities it can market. A recent example of this was their partnership with IBM on developing new Watson APIs and other capabilities that other companies could leverage through the TopCoder Marketplace, where they can buy licensed or other solutions. They recently also added functionality, named Hybrid Crowd, that helps protect the IP of clients by ensuring that for sensitive projects clients can set requirements for programmers to have enough security clearance or the right credentials, under three groupings (Public, Certified, and Private), to see or participate in the challenge. It will be interesting to see how TopCoder will continue to leverage its corporate relationships in the future as they continue to grow and expand their platform through new capabilities like the Hybrid Crowd.