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BigCarrot uses crowdsourcing to allow anyone to create and fund an inducement prize. The process is simple. First, click on the Start a Prize button on the home page and draft the rules for your proposal. Next, everyone in the BigCarrot community will have the ability to help revise and improve your rules. Once you’re satisfied with them, the prize will be opened for contributions from the public. Finally, when someone submits a claim for the prize, all the contributors will get to vote on whether to award it.

What Are Inducement Prizes?

What is an inducement prize? An inducement prize is a cash reward offered to the general public to encourage the pursuit of a specific goal. Throughout history, many of mankind's greatest achievements have been the result of inducement prizes—from invention of canned food to Charles Lindbergh's famous trans-Atlantic flight. Unfortunately, unlike paying a salary or providing a grant which allow money to be doled out in incremental sums over a period of time, inducement prizes require the money be available up front which has traditionally limited their use to governments and the very wealth. BigCarrot makes it possible for the first time for individuals with similar interests to pool their money and create an inducement prize that advocates their own cause.

What benefits do inducement prizes have over grants? Inducement prizes are an enormously efficient method of encouraging exploration, research and achievement. A grant only ensures that an effort is made to achieve a certain result while inducement prizes reward actual results. Also, a grant is given to a specific individual or organization, but an inducement prize is available to anyone able to achieve the goal. This produces many benefits to the contributor:

First, there's no need to select in advance from a pool of prospective participants who's the most likely to produce the desired result. Instead, the competitors determine for themselves whether they believe they can meet the terms of the prize. As a result, unconventional solutions, which are often shunned because they are deemed too risky, are allowed to compete equally against less innovative approaches.

Secondly, multiple participants can pursue an objective simultaneously without increasing the cost to the contributors. Although only one participant will claim the prize, the others often benefit from the increased development of the field and the attention inducement prizes typically generate.

Lastly, an inducement prize is only awarded once a successful solution has been found, whereas grant-funded research can require endless financial support without ever producing usable results.

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How BigCarrot's Inducement Prize Process Works

Who is the prize organizer? Typically, the organizer of a prize is the same person who originally proposed the prize. However, under some circumstances, a different person may be appointed organizer by either the current organizer or by a vote of the prize’s contributors.

What are the obligations of a prize organizer? It’s at the discretion of a prize’s organizer whether to propose a prize merger or revision to the rules. However, if the organizer fails to look after the prize on a regular basis, a new organizer, as voted for by the contributors to the prize, may be appointed.

What if the organizer of the prize fails to adequately administer a prize? If the current organizer of a prize is failing to fulfill the obligations required to oversee a prize, the process to appoint a replacement will be initiated. With their approval, a selection of contributors and frequent forum participants will be nominated to replace the current organizer. Contributors to the prize will vote for their preferred replacement, and the nominee who receives the most votes will appointed the new organizer.

Under what circumstances would a prize be canceled? Any prize that is illegal in the United States or promotes illegal activity will be removed from BigCarrot. In addition, BigCarrot reserves the right to remove any prizes that are considered to be immoral, unethical or otherwise in poor taste.

Why don’t inducement prizes at BigCarrot have deadlines? The prizes at BigCarrot aren’t time sensitive because often creating artificial deadlines emphasizes the least important factor for encouraging an achievement. Our goal is to create an atmosphere where potential claimants are competing against one another to be the first to provide a solution; not to beat the clock. Competition inherently encourages the market place to deliver a result as quickly as possible.. Additionally, how reasonable a deadline might be is very dependant on the value of a prize: For example, a prize worth $25,000 might motivate a potential claimant to work on a solution during nights and weekends, but if the value of the prize climbs to $100,000, the same claimant might choose to pursue a solution full-time.

What if the rules for a prize prove to be flawed? If, after considerable time and effort, it is determined by the prize organizer that the rules for a particular prize are flawed and the objective of a prize is either impossible or at odds with the requirements, then it is possible to propose a revision. The organizer will draft a revised set or rules to be voted on by the contributors to the prize.

What if there are two prizes with similar objectives? Can they merge? Yes. If the organizer of two similarly-focused prizes agree that it would make sense for the prizes two be merged onto one prize with a common set of rules, they can put the proposal up to a vote by the contributors to each prize. The contributors to both prizes must agree to the merger for it to take place.

Notable Inducement Prizes

Longitude Prize: In 1714 the British Parliament offered a £20,000 prize to the first person who could develop a method for accurately determining a ship's longitude to within half a degree. The prize was claimed by John Harrison in 1761 for his development of a clock which maintained it's accuracy even on the rolling ocean. Used in conjunction with measurements of the sun's position, the ship's navigator could precisely calculate the boat's longitude.

Society for the Encouragement of Industry: In 1795, Napoleon needed a better way to preserve food for his long military campaigns and chose to offer a ₣12,000 prize to whomever could devises a suitable solution. Nicolas Appert claimed the prize in 1810 for his invention of the canning process.

Deutsch-Archdeacon Grand Prix de Aviation: Fearing that France's national reputation was at stake after Americans Orville and Wilber Wright were the first to successfully fly, aviation enthusiasts Ernest Archdeacon and Henri Deutsch de la Meurthe offered ₣50,000 to the first person who could fly an airplane around a 1 kilometer course. The prize was claimed by Henri Farman in 1908.

Orteig Prize: Hotelier Raymond Orteig offered a $25,000 prize to the first solo aviator to fly non-stop across the Atlantic Ocean. It was famously claimed by Charles Lindbergh on May 21, 1927, when he landed in Paris after a 33 hour and 30 minute flight.

Parking Meter Prize: Oklahoma City resident Carl Magee, fed up with how difficult it was to find parking downtown, figured there must be a fairer way to share the limited number of spaces. To solve the problem, in 1933 he offered a $240 prize to anyone who could build a working model of a coin-operated parking meter.

Fredkin Prize: In 1980, computer science professor Edward Fredkin offered $100,000 to the developer of the first computer program to successfully challenge a world chess champion. The developers of IBM's Deep Blue won the prize in 1997 after beating Garry Kasperov.

Ansari X Prize: Eager to jump start the civilian space travel industry, the X Prize Foundation offered $10 million dollars to the first non-government entity which could launch a reusable three-person vehicle into outer space twice in two weeks. SpaceShipOne, developed by Burt Rutan and financed by Paul Allen, won the prize on October 4, 2004.

Methuselah Mouse Prize: Established by the Methuselah Foundation, the M-Prize (as it is know) offers over $4 million to encourage longevity research in mice which it is hoped will one day lead to methods of greatly extending humans' lifespan.

DARPA Grand Challenge: Originally $1 million prize offered by the Defense Advanced Research Projects Agency (DARPA), an arm of the Pentagon, for the creation of a autonomous vehicle which could navigate a 130+ mile course without any human intervention, the bounty was upped to $2 million after none of the entrants managed to complete the course on the first try. At the second race, held on October 9, 2005, four of the 47 entrants crossed the finish line, with a team from Stanford University claiming the prize.

Netflix Prize: In September 2006, Netflix, the DVD rent-by-mail company, offered a $1 million prize to whomever could improve their movie recommendation algorithm by 10%. Thousands of teams from all over the world are competing to claim the prize, and their current standings can be seen on the Netflix Prize website.

Starting a Prize

How does starting a prize work? It's easy, just click the Start a Prize button and you can propose a prize on any topic. You'll be asked to write the rules for your prize, but don't worry if you don't know exactly how to define the exact requirements. After you've provided as much information as you can, you'll be asked how long you'd like the proposed prize to be available for review. During the review period, any member of the BigCarrot community able to provide additional input will be invited to revise and improve the initial rules you proposed. Once the review period has ended, you'll be given the option to accept the community's revisions, modify them some more yourself, extend the review period or withdraw your proposal. When you're satisfied with the rules that have been drafted, click the submit button, and your prize will be available to receive contributions from the public.

What's the Review Period? Writing a set of rules for a prize can be pretty intimidating, which is why BigCarrot has developed the Review Period. Instead of expecting any one person to possess all the expert knowledge required to perfectly define the goals of a prize, the review process mines the collective intelligence of the entire BigCarrot community. This allows everyone with information on the topic to provide their input and draft a better set of rules than any one individual could on his or her own.

After a prize has been proposed, every member of the BigCarrot community will be invited to provide improvements to the rules. The prize's creator will define the duration of the review period, after which time, he or she can choose the accept some or all of the revisions, make additional improvements, extend the review period or withdraw the prize.

If I choose to withdraw a proposed prize before finalizing it, why isn't my initial $100 contribution refunded? BigCarrot believes it's important that whomever proposes a prize has a strong enough belief in the objective to make it worth the potential time and effort others in the community might expend to help review and refine the proposal.

Writing a Good Set of Rules

Objectively define the goal of the prize. Don't just request a better widget, precisely define what would constitute a better widget. Is it larger? Lighter? More efficient? Specifically, what would be required to meet the prizes' goal? Is it 15% larger by volume? Does it weigh 10 lbs. less? Can it perform the same functions as previous versions but consume 5% less energy.

Let the community lend a hand. If you're unsure how exactly to objectively define the goal of your prize, don't let that stop you from proposing it. The collaborative efforts of the BigCarrot Community can generate thoughts and insight that could elude any one individual and result in a superior set of rules.

Make the goal commensurate with the potential value of the prize. When defining the objective of your prize be sure that the amount you project the prize will eventually be worth is a fair reflection of the effort it will take to produce a result. For example, finding a cure for a specific disease can cost hundreds of millions of dollars, so perhaps a better goal would be to spur research in a narrowly defined area related to the disease that will significantly advance the larger search for a cure while, just as importantly, increasing awareness of the disease.

Consider how successfully meeting the objective will be defined. Below are a few examples of common means of demonstrating the successful fulfillment of the rules of an inducement prize.

Measured Performance — This is the most common, and probably most obvious, method for defining the success of an inducement prize. The objective can be absolute (the first widget to travel 100 meters under its own power) or relative (a widget that travels 10% farther than the previous record).

"Best Entry" Contest — This type of prize typically involves a contest to be held on a specific day where the participant with the best performance claims the prize. Though there are no deadlines for BigCarrot prizes, a best entry challenge would come the closest to providing an end date. Best entry contests are well suited for challenges with no reasonable objective measurement, for example a prize to build the most attractive widget. It is important to be clear when drafting the rules exactly what criteria will be used to declare a winner; will it be the first to complete a race? The best submission as determined by a panel of judges? If so, who will comprise the panel?

Sales Race — In this type of prize, the first participant to surpass a certain number of units sold would be awarded the prize. Of course, this type of prize doesn't need to be limited to just sales volume; the evaluation of an informational website could be judged by the number of monthly visitors. A sales race is well suited to ensuring that the objective of a prize is actually implemented. For example, a prize to develop a longer-lasting widget is meaningless if the production costs are so steep that the widget will never enter the marketplace. However, a prize for the first long-lasting widget to sell 10,000 units ensures that the solution is practical.

Patent approval — In this instance, the first person to get a patent approved for a solution that meets all the requirements of the rules would claim the prize. It's important to specify which country(ies) the patent needs to be obtained in.

Publication — It might be difficult to demonstrate and verify a prize based on pure research, therefore, it might be preferable to define success using a separate but related measurement. For example, a prize to encourage specific psychological research might require that the results be published by a peer review journal recognized in the field with a certain minimum circulation.

Decide how a submission will be verified. While there are some measures that are readily verifiable, a widget that must weigh 25% less than those previously available can be readily tested, other challenges might require an outside authority to validate the claim. Specify in the rules exactly how a submission will be verified. For example, proof of a more efficient widget might require a letter from a leading authority in widget production verifying that the submission has been tested and performs as required.

Who should own the intellectual property rights to the winning entry? Typically, the claimant retains the intellectually property rights and maintains the ability sell or license the submission as an additional means of compensation for time and effort required to claim a prize. The value of the prize might need to be higher if the intellectual property rights are assigned to a third party or required to be entered into the public domain.

Contributing to a Prize

How does contributing work? If you see a prize that you're interested in contributing to, just click the Contribute Now button located on the prize page. You'll be asked to provide the amount of your contribution and payment method via our secure server. Your contribution, minus a 5% service fee, will be added to the total value of the prize.

Why can't a make a pledge to a prize? It's important for anyone working to claim a prize to know that the prize money will actually be there when a solution is submitted. Since BigCarrot has no way to ensure that a donor will make good on a pledge, accepting only contributions is the best way to ensure that a claimant's hard work will be fully compensated.

Are contributions tax deductible? No, they are not. However, that may change in the future.

Claiming a Prize

How do I claim a prize? If you'd like to submit your solution for a prize and claim the prize money, simply click the Submit button on the top of the page for the prize. You will be asked to supply any information documenting that your submission fulfills the requirements along with personal contact information which will be supplied to all the prize's contributors.

Why is there a charge for making a submission? Submitting a solution places a burden on the BigCarrot community to take the time and review its validity, so it is something that should be entered into after careful consideration. Requiring a submission fee helps ensure that only serious claims are submitted.

Why isn't my personal information private? Unfortunately, the potential for anonymity on the internet creates too much incentive for some individuals to perform malicious acts. Providing a claimant's personal information provides a first line of defense for contributors to confirm that a submission is valid by allowing them to check it against publicly available data.

How does the voting process work? Contributors have 21 days from the time of submission to review and verify that the submission meets the rules of the challenge. They can then vote to either approve or reject it. At the end of voting period,

What if someone has already submitted a solution? Only one submission can be voted on at a time. If another solution is already in the process of being verified, subsequent submissions will not be displayed until the voting process has elapsed and resulted in a rejection of the current claim. Submissions are presented to contributors for verification in the order they are received.

Can I modify my submission? You may append your submission anytime during the voting period, however, doing so will not extend its duration.

If I win, when will I receive the prize money? BigCarrot will mail a check within 21 days of the verification of the submission.

What's to prevent someone from claiming a prize that they themselves created? Nothing. Someone might determine that the best method for being compensated for their effort is to start a prize and then claim it once the value of the prize is sufficient. There's always the possibility that another claimant will step forward before the creator has the opportunity to submit his or her own solution, but in either case, the prize still yields the result that the contributors to the prize required.

Who owns the intellectual property rights to a winning solution? The assignment of the intellectual property rights for a prize will be determined when the rules are drafted. Historically, the rights to a solution have generally been retained by the claimant, however, it's possible to require that ownership be placed in the public domain or assigned to a third party. In the case of the later two options, the value of a prize would typically have to be higher in order to compensate for the claimant's loss of potential income resulting from the sale of licensing of the solution.

What if contributors maliciously vote against a valid submission? BigCarrot is the final arbitrator in deciding whether or not to award a prize. Although every effort will be made to respect the decision of the contributors, BigCarrot reserves the right to overturn any outcome if it is determined to have been unfairly manipulated in any way.

The Voting Process

How is the winner of a prize determined? All the contributors to a prize will be notified when a claim is submitted and have the opportunity to cast a vote for whether or not the submission fulfills the requirements established in the rules of the prize. If a submission receives a majority of the votes cast, the prize money will be awarded to the claimant.

How is the approval or rejection of a revision to the rules of a prize or merger of two prizes determined? The same way a winning submission is. When the organizer of a prize proposes a revision or merger, every contributor will have the opportunity to vote whether to approve or reject the proposal. If the proposal is approved by a majority of voters, the appropriate changes will be made to the prize.

How does the voting process work? For the duration of the voting process, every contributor gets to cast one vote to either approve or reject a submission, prize merger or rule revision. In order for the motion to pass, it must receive a majority of votes cast.

Can I change my vote? Yes. You may cast a new vote anytime during the voting process to replace your previous vote.

Why do contributors get one vote apiece instead of one vote for every dollar contributed? If votes were allocated by the size of one's contribution, a large contributor would have a disproportionate influence over the direction of the prize. For example, if a prize were worth $10,000, someone could contribute $10,001, submit a sham claim for the prize and vote themselves the winner.

What if, to accumulate a multiple votes, a contributor makes many small contributions? BigCarrot has taken extensive steps to prevent any one individual from making separate contributions under different user names to any one prize.

What if there is a dispute over a prize? Although BigCarrot will make every effort to respect the outcome of any vote regarding the direction of a prize, BigCarrot remains the final arbitrator over any decision and may at its sole discursion overturn the outcome of any vote to ensure that all prizes are conducted in a fair and transparent manner.

About BigCarrot

Why doesn't BigCarrot offer such-and-such feature? We've launched BigCarrot with the core features that we feel are essential to offering crowdsourced inducement prizes, and we have a long list of items we'd like to incorporate into the site in the future. However, we're also very interested in your feedback. If there's a feature you'd like to see offered by BigCarrot, please contact us.

What if the BigCarrot website isn't working properly? Our developers and testers tried to ensure everything on the site was functioning properly before launch, but if something slipped through, please contact us so we can fix it.

How can I advertise on BigCarrot? Please contact us about advertising opportunities and rates.

How can I invest in BigCarrot? Qualified investors should complete the form on the Investor Relations page.