Insights at UBC Sauder

Hackathons can mean big business for tech companies: study

Posted 2021-01-13

If you’re a big-name software developer like Google, Amazon or Facebook, you want to cultivate a following of third-party developers who create and build software for your platform — things like games, apps and other tools. 

For example, third-party companies like Doordash and Uber might create apps that rely on Google Maps to set their routes — which generates a revenue stream for Google and further solidifies the tech giant’s place in the market, at almost no cost.

But the billion-dollar question is: how do you entice software developers to use your platform, and not the competition’s? According to new research from the UBC Sauder School of Business, one highly effective route is to sponsor “hackathons.”

The popular events — which are often held on weekends at universities, and structured as competitions — attract thousands of software developers who congregate, share ideas, work out kinks and focus intensively on a single piece of software. By the end of the event, many will have built and executed an early version of their software. 

The hackathon sponsors not only provide financial backing for the events, but pros from their firms regularly run training sessions to teach the developers the ins and outs of their platform, adding to its ease of use.

At first, study co-author and UBC Sauder assistant professor David Clough and his collaborators set out to examine the effectiveness of those sponsorships in cultivating platforms — but as they delved into hackathon culture, they soon discovered something else was taking place in tandem.

“It became clear that a lot of what's happening at hackathons is peer-to-peer learning, where the developers are actually being influenced by one another,” says Clough. There’s also an element of coordination, he adds, because using the same tools as their peers allows third-party developers to collaborate on projects. 

“It's about figuring out which platforms other people are using, and what the capabilities of the platform are. What cool piece of software can I build using this tool?”

For the study, titled Platform diffusion at temporary gatherings: Social coordination and ecosystem emergence, the researchers used a large dataset they collected from the website Devpost which tracks hackathons and is heavily used by event organizers. 

They then used that data, which involved 1,302 developers and 167 hackathons, to track down the online profiles of participants through the open source website GitHub. From there, they applied text analysis to the participants’ source code to determine whether or not they had adopted the platform that sponsored the hackathon. 

Published in Strategic Management Journal, the study confirms that sponsorship has a significant impact on whether third-party developers adopt a particular platform. The authors also found what Clough calls “a large diffusion effect”: when developers at the hackathon had used the platform in the past, other developers were more likely to adopt that same platform. 

“It’s evidence that these platforms are spreading by word of mouth and that these temporary gatherings, where people are face to face and interact in a very focused way, have a big influence,” says Clough, who co-authored the study with Tommy Pan Fang and Andy Wu of Harvard Business School.

“These events are often 48 hours, and within that 48 hours they can actually have a large, long-term impact on what technologies people are adopting.”

The researchers also found that software developers pay close attention to which projects land prizes — so if there’s a technology that underlies a project that wins a competition, it in turn draws attention to that platform. 

Of course during COVID-19, having large in-person meetings is not an option. Clough observed that, as hackathons moved online and conferences went virtual, participants could view and listen to a speaker, but informal interactions among peers became much harder. As a result, participants lost that essential interaction.

But overall, what struck Clough about the findings was how significant an effect the in-person hackathons have.

“The technology companies are getting a lot of return on whatever resources they're putting into these sponsorships,” he says. Some companies are even sponsoring hackathons for non-tech types, he adds — so instead of writing code they might explore business models. 

“There are opportunities for even broader audiences to attend hackathons and learn from their peers in these short-term intensive interactions,” says Clough, who has a final piece of advice for tech firms. 

“Sponsorship of these events is something that, if they're not doing it, they should consider starting. And if they’re already doing it, they might consider ramping it up.”