Ethan Clime is a serial entrepreneur with a past crowdfunding experience. Ethan successfully crowdfunded and ran projects for $500K+. Currently, Ethan is the Co-founder and CEO at Crowdholding, the UK co-creation platform based in Czech Republic. The platform brings together the crowd and entrepreneurs who want to launch projects. Crowdholding allows individuals to give feedback and share ideas in return for future revenue. It also enables businesses to use crowdsourcing and learn from the crowd in order to create more innovative products or services.
In this interview for Magazine MN, Ethan shares insights into his entrepreneurial journey and talks about how Crowdholding got started, how it works and benefits businesses, customers and society.
Magazine MN: Ethan, tell us a bit about yourself. How did you start your entrepreneurial journey? What projects have you worked on that were particularly interesting?
Ethan: It all started in 2010 when I joined the United States Peace Corps as a volunteer in the Republic of Moldova. I lived in a rural village, working and starting business and community development projects. Basically, I was building projects from scratch, which was a type of apprenticeship on how to be an entrepreneur and the challenges of making projects sustainable, especially in an economically struggling country. What I learned the most is that people from Moldova just needed jobs. And it made me realize that a focus on creating industry was the biggest need in that country. Mostly, the money in the international development field had little focus on creating jobs. This contributed to my ambition to create a business that can employ (in a way) anyone who signs up.
Magazine MN: What inspired you to create Crowdholding? How did Crowdholding get its start?
Ethan: The idea came about when I was reading the book Bold by Peter Diamandis. In particular, after reading one section where he discussed a case study from 1916 regarding Henry Ford.
That year, Ford wanted to give back his company’s dividends ($40 million) to his employees and to lower the cost of his cars for his customers. However, the Dodge Brothers who owned 10% of Ford Motors decided that they deserved the money as shareholders and sued Ford.
In court, Ford said that giving back to the employees and customers wasn’t just an ethical approach to society, but would in fact create better long term value of the company. Virtually, more customers would afford his cars and his employees would prefer to buy his cars over all increasing the stock for the shareholders. However, his case lost in court and his vision of redistributing his money to the people who were the most important to him (employees and customers) was never accomplished.
I believe the time is now to begin this new approach to business, especially when we are seeing industries being automated every day, which is leading to fewer and fewer jobs in the future. Allowing people to choose who they want to work for and what skills they want to develop is a future I see will improve the economic landscape.
Magazine MN: Please, describe how Crowdholding works. What problem does it attempt to solve?
Ethan: Crowdholding connects the crowd with entrepreneurs, allowing them to give feedback and ideas for future revenue. We enable people to invest time rather than money. Basically, 1% of revenue equals 1 million shares, ie. crowdshares. Entrepreneurs then post tasks on an upvoting forum with each task having a specific amount of crowdshares as its reward. When a task is completed, the crowdshares are distributed out by the ranking of the comments upvoted by the crowd. As of now, in beta, crowdshares last one year, starting the day an entrepreneur/company begins making revenue. In a year, the crowdshares are recycled back to the business to be used again for future work.
Magazine MN: What makes Crowdholding a unique solution?
Ethan: Companies spend on average 10% of their revenue on ads and 16% on research and development. Everyday ads are pushed in our faces. Why not use some of that revenue to have people crowdsource by validating and innovating the product you’re are making or selling. And, if you succeed, so does the crowd, who will organically share what you are creating. Think of it this way: If you helped co-create a new soft drink on the market, wouldn’t you want to tell your friends? Word of mouth marketing is far more effective than paid advertising.
Magazine MN: Who can use Crowdholding?
Ethan: Anyone, including startups. You can be from any country in the world. You are able to share revenue legally, which has been a common practice since the middle ages. Similarly to Airbnb, the users, ie. Crowdholders, who earn money must file taxes in their country of residence.
Magazine MN: How does Crowdholding ensure that “crowdholders” will actually receive the revenue they earned?
Ethan: Companies must show their crowdholders their revenue earned. As of now, startups only need to do it annually around the time they file their taxes. Right now, it will be based around trust which will be indicated in our terms & conditions. If a company is cheating and is uncovered by us or the crowdholders, they will be warned and then later be kicked off the application if they don’t oblige.
As a crowdholder, you are investing your time, thus picking startups that are transparent and which include a diversification in their portfolio will be important. Some companies cheat even on Wall Street, so there will be a small percentage that will do it. That’s the risk involved and we must be transparent to let our users know this.
Magazine MN: How can Crowdholding benefit businesses, crowdholders and, ultimately, society?
Ethan: Crowdholders will want the business they are co-creating with to succeed. So, business will have active sharing of their project from their users. Word of mouth marketing is way more effective than paid advertising. So, the buzz around sharing their revenue with the public gets the attention. In addition, the tasks they give allow their customer or future customer to co-create. Through crowdsourcing you hear what customers want and the content is sorted by the customer. Say “Goodbye” to high Research & Development costs. Crowdholding will in fact be a massive focus group for the businesses.
For crowdholders, people finally can choose who they work for/co-create with. They get to influence their favorite brands and be part of new technology being built for them. In addition, they get to showcase their ideas and skills. By contributing, they will have the opportunity for employment by the companies. Our leaderboard will show the most popular crowdholders who give the best solutions to the businesses. In addition, they get the opportunity to make extra income from their support.
Magazine MN: Crowdholding is currently in beta. What new features do you plan to add to the platform?
Ethan: On our newsfeed we will allow people to make comments directly to the tasks of the businesses they are following. It is similar to how Quora.com works. Soon, we will allow entrepreneurs to create their own project page and have a leaderboard set up showing who earned crowdshares from the first round of tasks. As of now, we just have Facebook sign up, but we discovered that people want to be more unanimous. Therefore, we will have email signup and notifications to our users by the end of April. In the future, we will also allow the crowdshare to become an asset that you can buy or trade. We will formulate a second financial market around this asset, which we will call “revenue futures.”
Magazine MN: How big is the Crowdholding team?
Ethan: We are 3 founders and 18 volunteers. In fact, people are coming to us because they want to be part of this. In a way, our system is the same as being a project on our website. All our volunteers are earning crowdshares!
Magazine MN: How can our readers get in touch with you?
Ethan Clime was interviewed by Natalie Myhalnytska
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