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SPIE Professional January 2015

Crowds, Clouds, and Open Innovation

Photonics product development can benefit from resources offered by these new approaches.

By Matt Weed and Jason Eichenholz

image for crowd funding article

Financing and executing disruptive technology development in the competitive photonics marketplace is an enduring challenge. The advent of crowdfunding, cloud computing, and open innovation practices are emerging tools that just might be essential to the societal impact of photonics technology going forward.

These three concepts emerged over the technosphere in recent years, and have produced new platforms in hardware and software meant to leverage an extended body of resources. Whether that resource is a distributed crowd of investors, off-site computational power in the cloud, or an open network of specialized innovators, the underlying concept is the same: sharing a large resource pool relieves the burden of resource scarcity.

This democratization of resources underpins our company, Open Photonics Inc., (OPI) and has led us to a business model pivot to meet the needs of photonics product development. We started OPI solely focused on open innovation – bringing the world’s innovators together with technologically needy industries and letting them run. In this article, however, we explore the tools mentioned above in order to drive a disruptive product-development process that the optics and photonics community should not ignore.

Crowds

Hardware is expensive to develop and even more expensive to commercialize. Few know this as intimately as those in the photonics space, where tolerance requirements can tend toward the limits of fundamental physics, and sales volumes are traditionally low. Crowd-sourcing, whether through something like Kickstarter or on your own terms, addresses this problem in two ways.

First, fundraising campaigns are broken up into small, easy-to-digest donations that return to the consumer some sort of incentive — a first-generation product, a T-shirt, a sticker, or simply the technocratic “street cred” that comes along with supporting cool new technologies.

Second, a good marketing campaign through the right crowdfunding portal has the potential to reach an enormous addressable customer base. Along the lines of a lean startup approach, this technique provides access to customer feedback during the development process.

As an example, the founders of Misfit Wearables had already gathered the necessary financing to launch the Shine activity monitor in late 2012. Instead of putting their heads down and driving toward the development of what the team believed would be the perfect product, Misfit launched an Indiegogo campaign in order to garner feedback from customers on the product’s details. The pre-order pile up that followed was simply a bonus.

A funding vacuum has been created by venture capital investors who favor low-risk, high-payoff projects and who have set return-on-investment expectations on a trajectory that foreshadows a potential new dot-com bubble. Finances will always be needed to develop and commercialize new hardware; crowdfunding offers a model for bridging the valley of death through direct engagement with customers.

Clouds

Many companies and startups alike are reducing the size, weight, and cost of their products by off-loading to server farms much of the power and space requirements demanded by computational analysis.

Big data, the Internet of Things, and cloud computing are pieces of the paradigm shift related to crowd-sourcing that moves data-based product development concerns offsite into extended resource bodies.

The peripherals market has captured worldwide attention and is fueled by sensor technologies from the photonics community. These sensors for computers, smart phones, cameras, and other electronic devices also occupy the lion’s share of optics- and photonics-related projects in crowdfunding circles. They provide background data collection so users can gain insight into their own health, safety, and happiness — an easy-to-grasp value proposition.

In the optics and photonics field, this means computationally intensive activities like image processing and chemometrics can be moved off the device. Designers can now focus on making effective measurements without the restrictions of complicated onboard electronics.

Through these bare-bones advanced sensory devices, cloud-based data analysis, and user interfaces that leverage the booming social-media movement, progressive photonic technology has found a lucrative pathway to the mainstream.

Open innovation

The foundation of OPI began with, and continues to be, a low-risk method for mature industry partners to identify new technology solutions. Those embracing open innovation, through OPI or on their own, build relationships in the innovation space of their choosing by looking outside the four walls of their company. As a form of crowd-sourcing, open innovation benefits industry by leveraging external research infrastructures while supporting the research establishment by providing viable paths toward commercialization.

The most common barrier to open innovation is intellectual property rights. Defining this landscape and the full collaborative arrangement early is essential. Commonly, the inventor will maintain IP ownership; this de-risks the arrangement. Further, both parties acknowledge that future project funding and commercialization activities depend on agreeable licensing arrangements from the inventor.

In our experience, it is key to lay out a thorough, collaborative agreement at project launch. Identification of shared resources, time scales, and milestones can serve to ensure productive communications and eliminate redundancy down the road. Photonics is an extremely diverse field, and so open innovation is a perfect tool for those who find their technology scouting activities require more bandwidth or expertise.

Managing risk

Together, crowdfunding, cloud computing, and open innovation are a fantastic congruence of technological capability and business ideology.

Having the customer pay is not a revolutionary notion by any means. The practice of off-loading non-recurring engineering (NRE) costs to customers and even pre-orders are well established methods of de-risking new projects. What exists now in the age of crowds, clouds, and open innovation is connectivity at such a thorough level that individual customers and investors can be targeted.

Implementing anything new is risky. Crowdfunding may be full of false promises, outsourcing analysis to the cloud may be hard to manage, and open innovation may expose you to an unfavorable intellectual property agreement. Without a tolerance for risk, however, we will never get anywhere new. Fortunately, these risks may be readily managed in today’s democratized landscape.

Crowdfunding, cloud computing, and open innovation are manifestations of the same movement toward distributed resource management. These tools, together, have become the new focus of OPI, and we suggest the optics and photonics community as a whole work toward adopting them so we can drive forward together.

The startup perspective

In a 2013 report, the research firm Massolution noted the overall crowdfunding industry raised $2.7 billion in 2012 and this number was estimated to reach more than $5 billion in 2013. The ceiling for fundraising goals of this type depends heavily on which level of “prize” the venture offers. Ventures promising a product in return for donation have raised millions of dollars.

Whether intentional or not, crowdfunding the development of a disruptive product carries with it a possibility of technical failure that leaves investors in the lurch. Recent projects like TellSpec and SCiO from Consumer Physics have ignited intense debate in the spectroscopy community for just this reason. For the sake of consumer confidence in sensor technology companies, we all hope these projects can deliver.

Additionally, projects like Oculus Rift that have successfully attracted actionable levels of crowdfunding inevitably need bigger investment to ramp production. Once shareholding ownership changes, they run the risk of disappointing early adoption investors by changing the technology’s direction.

The Academic Perspective

Scientific grant proposal rejection rates are soaring and recruitment of students and researchers is suffering due to economic pressures, according to a Chronicle of Higher Education survey.

Photonics21 in the EU and the National Photonics Initiative in the US aim to reinvigorate the public funding landscape, but researchers are already seeking alternative ways to fund their work.

Open innovation offers a pathway to industrial funding, but targets immediate product potential. Crowdfunding portals like Experiment.com are dedicated to harnessing the crowd for funding scientific projects but are predominantly based in altruistic donation — reaching $25,000 would be considered an upper-tier success.

For the right type of research project, an innovative approach like Walacea in the UK pays educational dividends like tutorials, short courses, and lab practicums which incentivize parents of school children and the would-be scientists of the world to contribute.

SPIE Member Matthew Weed-Matt D. Weed is director of R&D at Open Photonics, a product development company that focuses exclusively on the commercialization of optics and photonics technology. He received his PhD in optics from University of Central Florida. He is a member of SPIE and the National Photonics Initiative Steering Committee.



SPIE Senior Member Jason Eichenholz-Jason M. Eichenholz is a parallel entrepreneur and CEO of Open Photonics. He received his PhD in optical science and engineering from University of Central Florida, and is interested in finding new markets and applications for optics and photonics technologies. He is a Senior Member of SPIE.


DOI: 10.1117/2.4201501.03

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