Coding for Dollars - and Bragging Rights

Hughes, a computer programmer, said his inability to write elegant code at cyber-speed doesn't bother him a whit.

Since 2001, the privately owned Glastonbury, Conn., company has summoned some of the world's best programmers to its Web site with the lure of online glory -- and cash.

Thunderdome for Devs

As an online software developers' community, TopCoder.com is a chat room, practice range and gladiatorial arena for more than 145,000 members who compete for hundreds or thousands of dollars. Membership is free, said Hughes' brother and cofounder, Robert Hughes, 38, TopCoder's chief operating officer.

Online competition directly contributes to TopCoder's business , which uses contestants' programming skills to build software applications for customers through a competitive process.

TopCoder has used the contributed programming to entice major companies such as AOL, Google, Direct Energy, Eli Lilly, British Telecom and Borders to become paying clients. Last year, TopCoder, which employs 75 people in its Glastonbury office and another 75 worldwide, had US$18 million in revenue, said Jack Hughes, 46.

Jack Hughes was the head of a traditional software company, Glastonbury-based Tallan, until its purchase in March 2001 by CMGI.

A few months later, with a "few million dollars from friends and family," the brothers set about creating a company whose structure would allow it to tap into the competitive ranks of young, mostly male, programmers -- the "top guns" of the programming trade.

"We came up with this idea to run tournaments online. We wanted it to be fun," said Jack Hughes. "In the beginning it was just play."

Competitive Motivation

For the first two years, the company worked out the bugs. When the same programmers repeatedly took first place, TopCoder awarded points, redeemable for cash, based on the scoring system used in NASCAR auto racing to keep non-winners motivated to compete.

Then they invited potential clients to take a peek.

A traditionally structured software company might assign a specific team of programmers to develop an application, said Robert Hughes. But writing software is like solving a story problem: "There are many ways to do it. And some ways are simpler and more efficient than others," he said.

"We try to find the most skilled person to work on each piece of the puzzle, no matter where they live in the world," said company spokesperson Michael Schultz.

A simple programming contest might ask participants to "write code for a bank of elevators and figure out how to schedule them in the most efficient way," Jack Hughes said.

Fewer Bugs, Lower Costs

By harnessing programming's hot shots, clients can be afforded the ability to pick and choose from a range of solutions, which can translate into fewer bugs and lower costs, Hughes said.

And unlike some software development companies that might ask their clients to commit to a "long-term, multimillion-dollar contract, they can test the waters," Schultz said. "AOL, for instance, did just that."

Through a series of small-scale contests, AOL evaluated the skills of TopCoder's online community before formalizing an agreement.

At any given time, 20 to 60 programming contests of varying skill levels are in progress, Robert said.

Programmers must be 18 to build software, but that hasn't always stopped a few 13-year-olds from entering a paying contest, and at least one from winning. "He couldn't collect the prize money," Jack Hughes said.

The payoff for most contests ranges from $200 to $1,500. Second-place winners receive 50 percent of the prize money, while other participants are awarded points, which are redeemable for cash. Some client-sponsored contests offer prize pools of more than $100,000. Last year, the highest-paid programmer earned $500,000.

From Game to Product

TopCoder also earns income by selling "off-the-shelf" components that are created as a result of its online contests. As a result, TopCoder has compiled an inventory of more than 1,200 software components. The inventors get royalties.

To bring new members up to speed, there are noncompetitive practice areas for programmers, including at the high school and college level.

To a large extent, the online community is self-regulating. Members evaluate each others work, challenge their solutions and even determine contest winners, using a point system similar to one used to score chess moves, Jack Hughes said.

Programmers who talk trash, cheat or exaggerate their abilities risk being booted off the site.

A Spectator Sport?

For the past eight years the company has sponsored a face-to-face contest that pits the site's top programmers against one another in a tournament resembling a poker championship.

Portions of last year's tournament, the TopCoder Open, were broadcast live on AOL. ESPN anchor Jeremy Schaap, accompanied by Google's John Dethridge, a former TopCoder champion, called the play-by-play keyboard action.

This year's Open, a five-day event to be held May 11-15 in Las Vegas, will pit 120 of TopCoder's best programmers against one another. This year's prize pool is $260,000.

Like many big league sporting events, the tournament draws more than just fans. Recruiters from British Telecom and the U.S. National Security Agency, among others, will be scouting the players.

"Some contestants may not only walk away with cash prizes, but job offers," Schultz said.