The Contest Challenge

Two weeks ago Danielle asked me what I thought of entering the WE Media Pitch IT! Challenge. I took a quick look at the site and quipped “I don’t see a downside”.  I knew that Danielle had most of the information needed for the application ready to go and a strong network of Food+Tech Connect readers, Twitter followers and Meetup group members to engage as potential voters in the challenge. A quick cost-benefit analysis made the challenge seem worthwhile.  The allure of $25,000 in seed funding was a siren’s call.

However, the Murphy’s Law of entrepreneurship should be that if you don’t see ANY downsides you haven’t thought through the idea. There is ALWAYS a downside or risk. And the job of an entrepreneur is to identify the downsides and the risks and then make appropriate judgments about which risks to take on.

For online contests the downside risks are:

1. Time – specifically the opportunity costs of spending time to promote voting on the idea or contest rather than any number of other things that would otherwise be the top of your to do list.
2. Relationship management – every “ask” from your followers is a form of debt. Of course, voting in the We Media challenge is a small and easy ask, but before launching any kind of social media campaign its important to think through the ask and the timing. Is this the right time and reason to ask friends and followers to spend their relationship capital?
3. The loser effect — Tereza Nemessanyi, founder of Honestly Now Inc,  wrote a blog post about competitions noting that no matter how many hours an entrepreneur puts in the contests are (usually) all or nothing – so all the majority of applicants get is a politely worded “no”. (Honestly Now is a recently launched social networking site/app that helps you gather honest opinions from friends you trust. As founder, Nemessanyi knows exactly how demanding start-ups are.)

Nemessanyi goes on to recommend a “game-changing” redesign of these contests so that every ‘loser’ walks away with some legitimate value, in exchange for the gift of their very scarce time and no pay. Optimally, it should be value that feeds back into their business. After all, isn’t the larger goal more and better startup businesses that succeed?

Here are Nemessanyi’s off the cuff ideas for enhancing the “Loser Experience”:

• A day or a evening lecture and mixer with a heavy-hitter speaker, where applicants who’ve passed a minimum threshold of application quality get invited
• A gift card for free credit in the iTunes App Store, Amazon.com, or Amazon Web Services — something I can put right back into my business
• An opt-in list of “people we think you should meet” or networking circles of similar interests

The downside of online competitions for funding or pitch contests was clearly highlighted through Danielle’s experience in the WE Media Pitch IT! Challenge. The jury is still out on whether entering the challenge was a good idea (or not) for Food+Tech Connect.   TIME is the factor that drives success. And for Danielle, time is the one resource that is already too tight.

The one outcome we can control right now about this contest is to be sure to learn from this campaign so we can do better risk-evaluations and improve any social media campaigns Food+Tech undertakes in the future.

What do you think about online contests? Are they a good use of time and relationships? What makes them worthwhile (or not)?