CrowdFlower taps the power of the crowd to get more accurate business listings (exclusive)

CrowdFlower is one of many Web 2.0 businesses that taps the power of the crowd to get work done. Today, the company is formally releasing its Business Listing Verification service, which gives companies accurate business contact data that has been recently verified.

This kind of service is important in the current economy, where many businesses are changing locations or contact information. I could benefit from it myself; I once sent 10 people to a restaurant that didn’t exist at the location where a location-based service told me it was. The consequences of having the wrong information can also be more serious, such as having inaccurate information for a hospital location.

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The service uses web-based labor pools to verify attributes such as business name, address, phone number, and web address. The paid workforce operates much like Amazon’s Mechanical Turk, which pays people for fulfilling small jobs on the web. By getting a human to verify information, the company ensures its data is accurate, said Lukas Biewald, chief executive of CrowdFlower (pictured right), in an interview. Basically, it farms out tasks on the web and pays people to verify the information. It calls this “labor on demand.”

“We built CrowdFlower to sell crowdsourcing to the enterprise,” Biewald said.

CrowdFlower also provides redundant verification and has other ways to make sure that its workers aren’t just verifying every request without actually checking it. It does so by asking laborers to verify contacts that it already knows are accurate or inaccurate. The laborers who come up with the best results are allowed to keep working, while those who provide inaccurate help are bypassed.

The problem is that a lot of lists being sold by various directory services are old and inaccurate. CrowdFlower has set up a system by which humans can apply their own judgment and figure out quickly if a listing is accurate or not. With CrowdFlower, Biewald says that web-based workers can generally verify data with a phone call or by some other means. That way, the laborers can find out if a restaurant has shut down or a business has moved to another address. In the U.S., some 552,600 new firms opened for business in 2009, and some 660,900 closed. That means the overall annual turnover among businesses was 10 percent.

The cost of doing the verification runs anywhere from 10 cents to $2 per listing. CrowdFlower charges a small markup and says it consistently delivers an average accuracy of 95 percent. CrowdFlower can tap 11 different labor pools with more than 500,000 people from 150 countries. To encourage more workers to participate, Biewald said his company is considering rewards or making the experience of doing the work more game-like.

Companies that could benefit from this service include providers of business lists, online map makers, Global Positioning System (GPS) product makers, and owners of sales databases. The company began testing the service a while ago and verified more than 8 million listings in October.

San Francisco-based CrowdFlower was founded in 2007 with the aim of applying statistically backed, quality-controlled crowdsourcing for businesses. The founders include Biewald and Chris Van Pelt, who both worked at search engine Powerset. CrowdFlower has 49 employees. Rivals include outsourcing companies. CrowdFlower raised $5 million in January from Trinity Ventures, Bessemer Venture Partners, Freestyle Capital, K9 Ventures, and Quest Venture Partners.