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Corporations Adopt the Hackathon

Small businesses are using hackathons as cost-effective tools to tackle problems, recruit talent and unleash innovation. The hackathon presents a quicker, scrappier way to tackle large-scale problems with whatever resources they have on hand.

September 12, 2012

For Manhattan entrepreneurs John Kluge and Michael Lindenmayer, progress in solving the world's sanitation crisis—helping the 2.6 billion people without connections to a public sewer, septic system or latrine—wasn't happening fast enough. To move things along, the duo, co-founders of Eirene, a three-employee for-profit holding company that invests in large-scale social ventures, tapped partners including the Gates Foundation and the World Bank to organize a two-day hackathon in early 2013.

More than 1,000 hackers in seven countries will converge virtually, competing for internships and mentorships with water and sanitation companies, as well as a cash prize for the best idea. "It's not just a bunch of plumbers and geeky engineers and social workers who are already passionate about this," said Lindenmayer. "We're bringing to the table people who have nothing to do with sanitation and have them apply their minds to deep data."

Welcome to the evolved hackathon. Once the domain of talented geeks who were trying to create the next hot startup, hackathons—events where developers compete on deadline to create the most compelling software-based projects—have moved out of the offices of Facebook and Foursquare and into the mainstream corporate culture. New York's small businesses are using hackathons as cost-effective tools to tackle problems, recruit talent and unleash innovation.

"This is the way that people are going to solve problems in the future. There's something about the [hackathon] model that really works," said Kathleen Brennan, public affairs leader at global business ethics coaching firm LRN, which has partnered with San Francisco design firm Frog to organize its second hackathon in New York City in December. The goal: coming up with ways to change society's negative view of corporate culture.

The purpose of a hackathon usually decides its design. If a company's management is trying to solve an internal problem, it may host a short in-house session. Some hold regular hackathons to routinely jump-start creativity among employees. And companies working on bigger problems and those trying to identify talent may invite students or issue general invitations to the developer community.

By their nature, said Brennan, hackathons allow companies to reach "untapped resources within their organization—folks who are put into boxes or silos."

Apprenda, a cloud platform software firm with offices in Manhattan and Clifton Park, New York, finds that putting its developers head-to-head during its twice-yearly hackathons often yields concepts for new products. There is a time constraint—but unlimited coffee, pizza and beer.

"We give [employees] the freedom and capacity to work on things that aren't defined on a road map," said Abraham Sultan, vice president of engineering at the 42-person firm, which has revenues of under $10 million. "They have pretty much nothing to worry about—no other meetings, no distractions—and everyone gets into the zone."

Apprenda also says its hackathons help attract the right caliber of developer it's looking to hire. In New York City, hackathons at tech startups and incubators have become vehicles for recruiting talent.

"For a fraction of the price, you're able to find, discern and evaluate a bunch of talent in the sort of hyperbaric environment that interviews just can't re-create," said Jordan Lampe, director of communications at Dwolla, a 30-person mobile-payments startup that helped organize New York City's first e-commerce-centric hack day in August. Dwolla, a Des Moines, Iowa, company that recently opened an office in Manhattan, hired one person from the event. It typically spends $20,000 to $30,000 per hire in headhunting fees, labor and time, so the thousands it costs to host a 36-hour hackathon looks like a bargain in comparison.

Medidata Solutions, a $200 million public cloud-technology company based in Manhattan, saves money with its Black Hat Fridays—daylong events where staff engineers race to hack into their own code and expose bugs. Medidata used to farm out the process to third-party vendors; today, the company awards $50 per bug.

"I've just about cut my budget for penetration tests in half," said Glenn Watt, Medidata's vice president of information security and privacy.

For other New York companies, the hackathon model presents a quicker, scrappier way to tackle large-scale problems with whatever resources they have on hand.

"In hacking, there's a certain degree of street punk that goes along with the unraveling of problem sets, the mentality of an engineer or someone that likes to build and take apart and rebuilt code," said Kluge of Eirene. "The way we look at problems is something that needs to be taken apart, understood and reformulated, and you do that with the kind of energy that comes along with lots of caffeine."

Maggie Overfelt for Crain's New York Business, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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