In many ways, Nic Meliones is your typical startup entrepreneur. He’s young, lives in San Francisco and recently launched an exciting new Internet company, BitWall, which has the potential to revolutionize how digital media companies can make money from their online content.
But the story behind how Meliones came to start his company is where things get more interesting. His founding moment came during a “hackathon.”
Usually held over a weekend or a few days, hackathons and their variants—like Startup Weekend, StartupBus and Hack Days—have become increasingly common and more popular in recent years, not just in Silicon Valley but, thanks to the emergence of organizations like Hacker League, Major League Hacking and HackMatch, all over the country.
Designed to Succeed
Most events usually follow a set formula. First, participants present their ideas and teams form to tackle concepts they're interested in, sometimes with the idea-generator working to persuade the most skilled individuals, especially programmers, to join their team.
The team then works together to execute the concept—usually a Web or mobile app—by working day and night (caffeine is always a must at these events) to develop a prototype within the time frame of the contest. When the time’s up, each team presents its prototype to the judges, who often include a combination of peers, venture capitalists and host reps. Winners usually receive a prize of cash or free products.
More important, the winners may also walk away with the seeds of a new business idea, just as Meliones did.
Meliones, a graduate of Duke University in Durham, North Carolina, studied business in college but also spent a year in a computer science immersion program. It was there that he learned about what his fellow students were calling “hackathons.”
“At first, I thought they were talking about breaking into the phone system or something,” Meliones says. “But then I realized these events were more about innovating and approximating something like starting a company. I was hooked.”
After landing a job in financial services after graduating from Duke in 2012, Meliones began attending hackathons whenever he could. And, like other frequent participants, he began to build a team that traveled together to compete as a unit.
“I'm not a programmer,” Meliones says. “But I do understand the nuances of what it takes to build products. I just can’t do it on my own. I went to hackathons so I could build a team.”
Over time, Meliones says he formed a core group of four people, including himself, who competed in a variety of hackathons, four of which they won. His team even flew to Las Vegas to compete in a challenge hosted by General Motors, where they won a new car.
Getting Off the Launch Pad
But the big turning point came in May 2013, when Meliones entered the Bitcoin Conference Hackathon. Prior to the hackathon, he had done some research on bitcoin, the controversial electronic currency, to see how it might be able to solve problems in e-commerce (but research was all he did—as Meliones points out, while his team might talk before a contest about an idea, they’re not allowed to do any actual coding ahead of time).
What he hit upon was a paywall system that would allow customers to make micropayments of as little as $0.01 to buy digital content using bitcoins.
After winning the contest, Meliones and his team—now called BitWall—were invited to join Boost, a startup accelerator program in San Mateo, California, which also invested in their fledgling company. Just as important, they landed their first customer, ZeroBlock, which provides real-time bitcoin market data and was interested in using BitWall’s micropayment engine for its own content.
BitWall has since evolved its paywall to embrace other kinds of payments, such as when a user gains access to an article in exchange for tweeting about it. The system also recently received its first full-blown test when the Chicago Sun-Times used the technology to solicit donations for the Taproot Foundation, a nonprofit pro bono services provider, by charging for access to their online content.
As Meliones says, “We have a huge opportunity to be an economic engine for the world of digital publishing.”
While hackathons are increasingly becoming forums to launch startups like BitWall, they actually began as a way to develop technologies, not businesses. “Hackathons have been around for a long time,” says Christian Catalini, an assistant professor of technological innovation, entrepreneurship and strategic management at the MIT Sloan School of Management. “Coders have been coordinating events where they try to out-compete each other, either on a technical problem or on a set of constraints, for some time.”
The first two events ever to be called hackathons were held in 1999, about two weeks apart, by two unrelated groups: the developers of OpenBSD, an operating system; and Sun Microsystems.
Two of the earliest adopters of the hackathon concept were Facebook and Yahoo. Mark Zuckerberg famously embraced the model of bringing developers together in a party atmosphere as a way to innovate within his fledgling startup. (This idea was originally introduced in 2005 by SuperHappyDevHouse, a sort of free-for-all coding party held at various locations around San Francisco, which has since become a global phenomenon.) Today, Facebook is well known for its recurring hackathons, which take place every month or two and draw hundreds of staff members who code through the night. In 2010, Facebook also began hosting Campus Hackathons at colleges across the country, with the student winners receiving a trip to Facebook headquarters.
Yahoo has been hosting “Hack Days” every year since 2005. Today, they're held all over the world and have a two-day conference-like format with free food, entertainment and expert speakers. This hack day model has infiltrated many other industries and disciplines, from music to science.
Most participants see hackathons more as a way to network and practice their skills than to start a business. While there have been plenty of product ideas generated through these hackathons, there have been fewer lasting enterprises created. It’s not easy, after all, to launch a sustainable business in a single intense weekend.
And yet, with the rise in popularity of mobile apps, sometimes a compelling product is all you need to launch a business.
“[Hackathons] have become more popular mostly because it’s become increasingly easy to launch a software business,” Catalini says. “Not every hackathon leads to a viable business, but they can be a way to find co-founders and people you like to work with—you can build an eco-system. There’s also an increasing trend for bringing in not just technical people but people with business expertise and other skill sets.”
The most prominent example of a successful company emerging from a hackathon is probably GroupMe, a mobile group text-messaging app business that was hatched at the 2010 TechCrunch Disrupt hackathon in New York City and was eventually acquired by Skype for more than $43 million.
The barriers to starting a new company are so low, in fact, even an 8-year-old can do it. At least, that’s what happened last year with Nicolas Come, who asked his dad to take him to the Sacramento Hacker Lab's Hackathon. It was there that Come pitched his app idea to older developers, who rallied to build Come’s design for Nicolas’ Garden, a mobile app and digital platform that helps encourage kids to eat healthy foods. Come and his team ended up earning a second-place slot at the hackathon.
Now 9, Come has since parlayed his idea into not just a growing business platform (he recently raised $65,000 after being accepted into the University of California, Davis' revered “Entrepreneurship Academy”) but also into a photo opportunity with President Obama, where he handed the president his business card. As his spokesperson Drisha Leggitt puts it, “Nicholas’s vision is to build a brand like Good Housekeeping for kids and families.”
Narrowing the Focus
Organizations and companies have also turned to hackathons as a form of crowdsourcing, where events are specifically held with the idea of getting participants to tackle a particular challenge from which the seeds of a new business could emerge.
“Sometimes [hackathons] are very targeted,” Catalini says, “where there’s a clear goal and people are trying to solve problems. They focus everybody’s attention on a specific issue, which can be very powerful, because once you can define the specs of what you’d like the outcome to be and you get a lot of smart people in the same room, you may come up with a solution in a pretty efficient way.”
One business platform that's risen to help companies and organizations focus their hackathons is called ChallengePost. Over the past year, ChallengePost has powered more than 55 in-person hackathons for organizations like TechCrunch Disrupt, PenApps, MHacks and HackMIT as well as some 45 online challenges for such organizations as Samsung, Evernote and even the New York City Department of Education, says founder Brandon Kessler.
“We provide a way for organizations that want to tap into external programmers to help them solve their problems,” Kessler says, adding that programmers who compete get to keep any intellectual property they contribute during the competition—which can be a key element in launching a new company.
The online challenges hosted on ChallengePost run a little differently than those held in person: They're held over the course of several months instead of mere days as a way to give teams more time to attack the goal of the contest.
One such online challenge was sponsored by the Federal Trade Commission (FTC), which was looking for a way to block the ever-growing volume of so-called “robocalls,” phone calls that use a computerized auto-dialer to deliver pre-recorded messages to landlines, cell phones VoIP phones and more. The prize for winning: $50,000.
One of the 800 or so entrants in that contest was Aaron Foss, a freelance software engineer, who's been participating in hackathons since 2009. “I love competing in hackathons because it’s all about the pure essence of creating,” Foss says. In this contest, Foss worked alone for about three months before he submitted his idea to create a way for a computer to automatically hang up on any blocked phone number that might be calling any users registered in its system.
Despite the formidable odds, Foss won the FTC’s Robocall Challenge—calling his software solution Nomorobo. In addition to his cash prize (which he split with a co-winner), Foss was also called as an expert witness to Congress regarding the topic of robocalls. He has since launched a business, which is free to users, based on his concept. Foss makes money by selling his mounting “black list” of phone numbers to call centers.
Foss recently had his 50,000th user sign up, and Nomorobo is now blocking more than 95,000 robocalls per week. “If it wasn’t for the hackathon,” says Foss, who now works on Nomorobo full time, “I would have never known to investigate this as a potential business idea.”
Hacking to Innovate
Hackathons aren’t just for starting new ventures, however. Perhaps one of the areas where hackathons are seeing the widest adoption rates is within companies interested in kickstarting their own internal innovation projects.
Companies that hold internal events usually provide space, food and caffeine, and invite employees to either work on a specific project or bug, or follow their bliss and come up with their own innovations and fixes. Often, the company insists that employees work on something other than their usual projects and invite folks from other departments or specialties onto their team. Most companies offer rewards to the best projects (which are often judged by their peers), and many have created processes for taking exciting ideas through to fruition, whether as internal innovations, new products or tweaks to existing products.
Case in point: Animoto, an online video creation service with 65 employees in offices in New York City and San Francisco. As a way to inspire its engineers to tackle products they're passionate about, the company has implemented what co-founder and CEO Brad Jefferson calls a “Hackimoto,” an internal hackathon the company holds twice a year to help harness the collective creativity of the company.
“We wanted a fun and competitive way for our people to come up with whatever crazy ideas they wanted to pursue,” Jefferson says.
The company holds its hackathons when all its far-flung employees are gathered together for company-wide meetings. Anyone and everyone is invited to participate and spend three full workdays to come up with something innovative the company might be able to use. The 15 or so teams who usually participate each then give a five-minute presentation before awards are handed out.
“I'm always so inspired to see our people stand up in front of the whole company and think through a problem and justify a business application,” Jefferson says, adding that teams compete for four different prizes. “It’s amazing how much progress they can make in just three days.”
While many business owners may frown at the fact that they might be missing out on three days of billable time, Jefferson says his “Hackimotos” return an impressive return-on-investment: Not only do they help boost morale and camaraderie across department lines, but each challenge results in at least a few improvements to Animoto’s product itself. Examples include the winners who improved the efficiency of the site by cutting its code base in half and the team that shaved the buffering time customers experienced in watching their videos.
“I'm a big believer in the power of hackathons,” Jefferson says. “You make up for the cost of holding them in improved employee happiness, collaboration and team building. It’s way better at that than doing trust falls.”
Similarly, the hackathons held at kCura, a Chicago-based technology company that develops e-discovery software for attorneys, have led not only to new innovations in the company's product line—such as Binders, its first mobile product—but also to letting its 170-person engineering team get creative.
“What makes engineers like me tick is that we want to work on cool things we're passionate about,” says founder and CEO Andrew Sieja. “We experimented by using hackathons as a way to let our people blow off steam and have some fun. But it turns out they're also these awesome engines for innovation.”
Interestingly, Meliones from BitWall hasn’t stopped competing in hackathons despite his success in founding a company of his own.
“I'm competitive and have played sports my whole life,” he says. “I like to win. And a hackathon is the closest thing I've seen to a competitive environment where you work collaboratively and push yourself to do new things. You need to learn to communicate and define what needs to be done in a short period of time. It’s about executing on an idea and putting it in motion. That kind of experience is invaluable to any entrepreneur.”
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