It might only be me but I think more or less everybody is (or will be) a fraudster on Kickstarter. Before downvoting me, please read below...
I don't mean that people willingly steal the money / promise impossible things but the very nature of Kickstarter pushes you to do that. Think about an election, what's the biggest problem of politicians nowadays and why people are very angry at them ? Answer: broken promises. Because you need to attract votes you will need to make strong, nearly impossible claims in order to be seen, no matter if they are truthful or not. That's one of the weakness of a democratic election. If you transpose that to Kickstarter people have to "editorialize" their propositions and product features because they need to be seen. A funding pledge is like a vote and will very likely create the same dynamic as in an democratic elective system.
I don't buy the Kickstarter Kool Aid from a consumer point of view, because I think there is a lot of deceptions ahead and it has a "mob-like" mentality that typically develops around websites like Reddit or Hacker News (and you can see here just how strong kickstarter resonates in minds with a post every other day). From a developer point of view that's way better because you can fund your projects on (almost) thin air, however I can foresee that honest developers that will try to follow their claims will have a hard time completing their projects.
The benefit of funding via VC or other non-democratic mean is you have HARD deadlines, business plans, your money is on the table, it's not just an idea thrown in the air which you hope the wind will catch. I strongly believe that product innovation and creation will remain an aristocratic process.
I would be delighted if somebody can prove me wrong!
I'd agree with you if the campaign finished the moment the funding goal was reached, or if the rewards for the pledges were not tied directly to the value expected by the backers.
Instead of being a system where people could get projects to get off the ground and be tested on the market, it has become some sort of marketing/sales channel.
How many of them are successful, though? Meaning... what's the ratio of projects that upon completion would be rated successful by the backers relative to the total number of projects that met their funding goal?
For the art projects on Kickstarter, I'd assume that ratio is pretty good, but for consumer electronic devices and software I'd assume it to be very low, though of course I'm just speculating based on the small sample set of projects there that I've ever been interested in.
I've backed quite a few projects on Kickstarter, out of the 17 I have backed, so far only one has been a real disappointment (Juicies), 5 are still building their products/shipping in the near future (and are looking good, posting updates, I am confident in them), I have received 6 of my awards for projects I have backed.
So far I have been happy with the projects I have backed and received my reward for, and I've been happy with the progress shown on the other products I have kickstarted. Ultimately it is a gamble whether or not you get something back for your money. At this time I feel like I am giving someone money to try to get their dream goal fulfilled, and worst case I don't get anything in return but they have oodles of experience on what can go wrong and why, and how they could fix it the next time around or what they could do better. Sometimes believing in something/someone is better than just dismissing it outright, especially when it is just money. If you can't afford to lose it (or gamble it) then really you shouldn't be putting that money into projects on Kickstarter you should be using it to pay the bills.
Does is suck when you lose money? Absolutely, but it hasn't stopped me from actively backing more projects. Juicies was my first project I backed, if I had stopped there because of the guys failure to actually complete in time then I would have missed out on helping friends from college and I would have missed out on awesome rewards from many of the other projects I have listed below who did come through and get me my award.
That being said, the only production of physical goods I have backed were (I've also backed a couple of games/art/shows):
It is reasonable to assume that Double Fine and Pebble -- the two Kickstarter projects I know in any detail -- will be able to deliver on their promises. This is probably an important criterion for people to choose to put in their money, and it was certainly an important criterion for me when I chose to back DF.
Lofty, unrealistic promises will not likely attract the same kind of backing.
The thing is, you're discounting how often "properly" funded projects fail. How often do little startups who have had tons of VC poured into them fail? How often do even publicly traded companies fail?
The advantage of being small is increased openness and a smaller level of risk if a single project fails. There are lots of properly vetted VC funded startups who are beholden to "hard" deadlines who are burning through $3 million per week, or maybe even per day and yet will ultimately end in failure.
I don't think the analogy is valid. In a 'properly funded' company the people putting money in are sophisticated investors (for the case of private investment) or at least buying something that's supposed to have some financial rigour associated with it (public investment).
The same isn't necessarily true of people funding things on kickstarter. People may not realise/understand that they're actually taking a risk when they fund things (and therefore feel more aggrieved when things don't go as expected).
Funny, I don't remember buying stock in Goldman Sachs or GM...
Anyway, I think kickstarter does enough to make sure people understand the risks involved. If anything I'd say kickstarter funders probably have as good a grasp of the level of risk they're taking on as the average new home buyer or 401k program participant. At the end of the day there's only so much hand holding that can reasonably be justified, I think kickstarter is probably pretty close to the appropriate level of such.
These are early days. What will probably happen is that a m"middle layer", such as consumer reports, or more modern recommendation engines such as amazon will develop that will evaluate the risks.
"Quantification" of kickstarter and indiegogo etc. is a great opportunity for startups.
I'm more worried about VC's lobbying against it once it becomes too popular. But is this legal with Pebble? Kickstarter has a donation system right? Isn't Pebble like a start-up? Are you allowed to "donate" money to companies like this?
I don't see any reason why donating money to a company would be illegal, and I am sure Kickstarter did it;s due diligence. Also, keep in mind, many people are 'donating' money, but they are getting a functional product delivered to them. In essence, Kickstarter is just a method to get pre-sales for a product, with the understanding that their is risk that the product might not get delivered.
Clearly there are fraudsters already there, you can see it in projects which get 'funded' but don't deliver. And of course the folks like the 'Pen Type A' people who take a lot longer than you might expect given that they can be learning just as much as everyone else about the joys (or heart breaks) of manufacturing something.
That being said, the model as a disruption in the production of goods is really interesting.
I think it is only a matter of time before there is a big, public fraud funded by Kickstarter. Not that it should change anything about Kickstarter...that potential is implicitly embedded into the whole idea.
But the cynical side of me says that someone is going to pull a fast one soon =(
Adding to the problem, I think, is Kickstarter's TOS that absolves them of anything a funded project does after receiving funding. As well as not asking project creators to state what will be done with the money in the event the project fails to deliver.
Look at the ZionEyez kickstarter ($343,415 pledged, $55,000 goal, July 31, 2011), for instance. I'm not a backer, and I've only read the comments, but it seems the project isn't going so well. In the comments, backers talk about Kickstarter not being helpful in resolving issues. Backers are talking about class actions, FTC complaints, and small claims courts to resolve their problems.
If ZionEyez is 100% legitimate, and they deliver the product as promised, they've still shown countless others how easy fraud could be.
There is no good reason why the article couldn't include a link to the Kickstarter page in the actual article text, preferably at the top where they first mention it. Are they that worried that people will leave and not come back?
... I think there's a fine line between newsworthy-news and "here's the link to buy the watch!" that they would rather not cross, and thus err on the side of caution.
Just to point out, there is a link, but it's hidden at the bottom of the page under "Related Internet links." That's pretty bad, but it at least beats the many articles I've seen that discuss something on the Internet without ever providing a link that I could reasonably find.
I really don't see why this is a surprise: unlike many other projects this one shows a more or less finished product that works as advertised, not a "idea on paper" or pie-in-the-sky, and you can get the watch by backing the project, a win-win situation.
In a way this was more like a presale for the watches, which is not a bad idea considering these guys could've gone broke if they had built the watches and not sold enough to make their investment back.
This is a good way to test the waters before getting in.
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[ 3.5 ms ] story [ 63.0 ms ] threadI don't mean that people willingly steal the money / promise impossible things but the very nature of Kickstarter pushes you to do that. Think about an election, what's the biggest problem of politicians nowadays and why people are very angry at them ? Answer: broken promises. Because you need to attract votes you will need to make strong, nearly impossible claims in order to be seen, no matter if they are truthful or not. That's one of the weakness of a democratic election. If you transpose that to Kickstarter people have to "editorialize" their propositions and product features because they need to be seen. A funding pledge is like a vote and will very likely create the same dynamic as in an democratic elective system.
I don't buy the Kickstarter Kool Aid from a consumer point of view, because I think there is a lot of deceptions ahead and it has a "mob-like" mentality that typically develops around websites like Reddit or Hacker News (and you can see here just how strong kickstarter resonates in minds with a post every other day). From a developer point of view that's way better because you can fund your projects on (almost) thin air, however I can foresee that honest developers that will try to follow their claims will have a hard time completing their projects.
The benefit of funding via VC or other non-democratic mean is you have HARD deadlines, business plans, your money is on the table, it's not just an idea thrown in the air which you hope the wind will catch. I strongly believe that product innovation and creation will remain an aristocratic process.
I would be delighted if somebody can prove me wrong!
Instead of being a system where people could get projects to get off the ground and be tested on the market, it has become some sort of marketing/sales channel.
For the art projects on Kickstarter, I'd assume that ratio is pretty good, but for consumer electronic devices and software I'd assume it to be very low, though of course I'm just speculating based on the small sample set of projects there that I've ever been interested in.
So far I have been happy with the projects I have backed and received my reward for, and I've been happy with the progress shown on the other products I have kickstarted. Ultimately it is a gamble whether or not you get something back for your money. At this time I feel like I am giving someone money to try to get their dream goal fulfilled, and worst case I don't get anything in return but they have oodles of experience on what can go wrong and why, and how they could fix it the next time around or what they could do better. Sometimes believing in something/someone is better than just dismissing it outright, especially when it is just money. If you can't afford to lose it (or gamble it) then really you shouldn't be putting that money into projects on Kickstarter you should be using it to pay the bills.
Does is suck when you lose money? Absolutely, but it hasn't stopped me from actively backing more projects. Juicies was my first project I backed, if I had stopped there because of the guys failure to actually complete in time then I would have missed out on helping friends from college and I would have missed out on awesome rewards from many of the other projects I have listed below who did come through and get me my award.
That being said, the only production of physical goods I have backed were (I've also backed a couple of games/art/shows):
Not Funded yet:
Pebble: http://www.kickstarter.com/projects/597507018/pebble-e-paper...
Waiting on reward/Funded:
Mobilemount Suction Kickstand: http://www.kickstarter.com/projects/674303746/mobilemountsuc...
Twine: http://www.kickstarter.com/projects/supermechanical/twine-li...
Elevation Dock: http://www.kickstarter.com/projects/hop/elevation-dock-the-b...
Received Reward:
CEE: http://www.kickstarter.com/projects/itdaniher/cee-the-usb-an...
Prop: http://www.kickstarter.com/projects/makecollab/the-prop
Revision 1 - Drafting Themed Cards: http://www.kickstarter.com/projects/onefreehour/revision-1-d...
Pulse Sensor: http://www.kickstarter.com/projects/1342192419/pulse-sensor-...
The Present: http://www.kickstarter.com/projects/scottthrift/the-present (Although, I didn't opt for a clock, I opted for "Something" as a reward level)
Disappointed/Given up hope on ever receiving reward:
Juicies: http://www.kickstarter.com/projects/laudowicz/juicies-colorf... (My first project)
Lofty, unrealistic promises will not likely attract the same kind of backing.
The advantage of being small is increased openness and a smaller level of risk if a single project fails. There are lots of properly vetted VC funded startups who are beholden to "hard" deadlines who are burning through $3 million per week, or maybe even per day and yet will ultimately end in failure.
The same isn't necessarily true of people funding things on kickstarter. People may not realise/understand that they're actually taking a risk when they fund things (and therefore feel more aggrieved when things don't go as expected).
Anyway, I think kickstarter does enough to make sure people understand the risks involved. If anything I'd say kickstarter funders probably have as good a grasp of the level of risk they're taking on as the average new home buyer or 401k program participant. At the end of the day there's only so much hand holding that can reasonably be justified, I think kickstarter is probably pretty close to the appropriate level of such.
"Quantification" of kickstarter and indiegogo etc. is a great opportunity for startups.
If you contribute to a project with nothing to show, where nobody involved is a known industry name, then of course you're taking a gamble.
That being said, the model as a disruption in the production of goods is really interesting.
But the cynical side of me says that someone is going to pull a fast one soon =(
Look at the ZionEyez kickstarter ($343,415 pledged, $55,000 goal, July 31, 2011), for instance. I'm not a backer, and I've only read the comments, but it seems the project isn't going so well. In the comments, backers talk about Kickstarter not being helpful in resolving issues. Backers are talking about class actions, FTC complaints, and small claims courts to resolve their problems.
If ZionEyez is 100% legitimate, and they deliver the product as promised, they've still shown countless others how easy fraud could be.
Double Fine Adventure wasn't the first Kickstarter project to hit $1M, it was the elevation dock a short time earlier.
(+VeloCity)
Shame on you, BBC. Shame on you.
:)
In a way this was more like a presale for the watches, which is not a bad idea considering these guys could've gone broke if they had built the watches and not sold enough to make their investment back.
This is a good way to test the waters before getting in.