5 years from now KickStarter will be known as "The Startup That Failed to Pivot".
The way KickStarter wants to be used and the way the crowd is actually using it have become 2 completely different things. It started out hosting campaigns for plays, short films, & debut albums. Now it's known for its Apple product accessories and tech gadget campaigns. But rather than change its funding structure, rules, and options to accommodate pre-sales of physical products, they've demanded less "risky product campaigns" and more easily deliverable "fun-artsy-fartsy theatre campaigns"... They're basically betraying the very campaigns that put KickStarter on the news and grew it to what it is today.
Over the last few weeks we've learned that KickStarter:
- isn't a store where backers can buy pre-sales.
- doesn't allow "home improvement products".
- doesn't allow you to offer multiple quantities of a reward to your backers.
- and doesn't let you use pre-rendered images of prototypes.
That's the sound of KickStarter shooting itself in the foot 4 times.
Look, I get why they're doing this, they want to protect their backers from successful-but-failed campaigns. But most products FAIL, most companies fail, and the failure rate and shipping delays of projects on KickStarter is normal. I mean Jesus, people are funding, manufacturing, and shipping a product in 6 months. That's pretty incredible. Kickstarter, in their desperate attempt to please the backers, is just going to end up destroying its own ecosystem. Well the tech portion of it.
If the crowd wants to play Mini-Venture-Capitalist then they're going to have to learn to deal with disappointment.
Lastly, Kickstarter doesn't even promote your campaign, it just hosts it. It's up to you to promote your campaign's link. So I'm paying 5% of my funding goal to KickStarter for hosting fees. Why? With Lockitron's successful self-hosted solution we now know that we don't need KickStarter anymore. And not being needed is the first step to obsolescence.
Kickstarter certainly did open the door to these styles of private hardware-funding campaigns. And given how successful private Kickstarter-esque launches can be (App.net, Lockitron), I can't see myself trying Kickstarter -- I would go the private route first. From the article:
"""
A brief e-mail exchange ensued, culminating with a firm “No” – stating that Lockitron fell into the “home improvement” category of prohibited projects.
"""
Maybe it is HN bias, but all past popular Kickstarter launches seem to be products that would now be prohibited. I think Kickstarter is writing their own fate by not allowing these things. All the new popular launches are going to go off-site.
There are probably legal implications (and other problems) that come with being a "store" and Kickstarter does clearly not want that. But I can't envision the future of Kickstarter unless they come up with a solution to the store problem (and not by outright banning store-like products).
Maybe it is HN bias, but all past popular Kickstarter launches seem to be products that would now be prohibited. I think Kickstarter is writing their own fate by not allowing these things. All the new popular launches are going to go off-site.
Watching Kickstarter and the various multi-million dollar projects, the liability question was getting more and more important. And even when you've tried to be very up front where the liability is, that doesn't stop angry people from suing you. And that, is not a fun way to live.
So Kickstarter gets more and more explicit in their liability language and rules and that shuts down folks who might otherwise have participated. So I don't know if its 'fate' so much as a hard way to do a business.
Someone suggested this below. Maybe they should pivot (slightly, more like adding a new feature) and offer a Kickstarter-as-a-service SDK to products that would fall outside their liability-acceptance zone. That way they can still take their cut and offer a valuable service to folks who want to offer funding campaigns.
EDIT: For clarity, the idea is Kickstarter provides some sort of white-labelled page to show a counter and collect/skim funds. I have to imagine liability falls back to the originating company at that point.
Maybe they should pivot (slightly, more like adding a new feature) and offer a Kickstarter-as-a-service SDK to products that would fall outside their liability-acceptance zone.
This seems like a natural, albeit complicated and delicate evolution. It shifts the burden from ks on high-risk projects elsewhere and in doing so can put it in the hands of people with experience navigating the niche-fields. It further expands and helps crowdfunding grow; go for it I say.
I've sponsored Lauren Ipsum (a book about computer science for kids), the recording of a country music CD, an archiving project by Jason Scott (of archive.org), homicidewatch.org and the restoration of an old printing press among others. Most under $10k, all under $50k. These are small projects but they're the vast majority of what you'll find on Kickstarter. They all got funded and as such are successful by their own standards. I always got my rewards, too.
Huge projects that require hundreds of thousands of dollars in funding, like games and hardware, are a relatively recent phenomenon on Kickstarter. And while those projects are potentially more transformative, I wouldn't mind at all if Kickstarter decides that that game is too risky to play for them.
I find it fascinating that Kickstarter considered this a "Home Improvement" product.
Its not an actual lock and doesn't become part of the home permanently. This is kind of like saying that one of those desktop USB dart shooters is a weapon, or one of those little "iPhone-bots" is a surveillance device. It seems like the perfect, hackable "geek device" that Kickstarter was made to fund.
I wonder if underneath the Kickstarter guys were afraid that it a) would never get funded, or b) you couldn't deliver.
Oh well, I guess it was their $75,000 to lose. A great big congratulations to you guys. Way to take a setback and spin it into epic win. Best of luck.
Thanks! There were a number of projects involving replacement power outlets and light switches that were accepted without question, so I believe that we were not only tangled in their new policies, but also that they started enforcing their prohibited categories more closely.
There's an interesting subtlety here: "We won’t charge your card until your Lockitron is ready."
The Kickstarter model has a few appealing characteristics for hardware: evaluate product-market fit, gauge initial order size, and get upfront capital.
By giving up the upfront capital (presumably because they don't need it), they can allow refunds or cancellations, unlike Kickstarter. This is great for customer confidence and relationships. But they keep the other incredibly valuable parts of the Kickstarter model, which are crucial for hardware startups.
Pre-order vs pre-buy is a subtle difference that might make riskier projects workable. Projects get a lot of the benefits but the risk of customers & kickstarter getting burned is much smaller.
Some projects may not need the funding so there's no reason to introduce that risk. Others might be able to live without it. I imagine that having 500k of pre-orders could be leveraged for financing via another route (investment, loans, credit lines).
If Kickstarter is watching learning, maybe they can fix problematic categories by tweaking the model rather than banning them entirely.
Ever since App.net raised 500k using the same model, I believe that there is a need for someone to build a "Crowdfunding as a Service" app.
Imagine if I too wanted to make a crowdfunding campaign that was completely independent of kickstarter, indiegogo, or any other platform. I would have to build all this functionality on top of Amazon that would take credit cards, store them, charge them when a threshold has been met, and then ship my product out to those people who funded me when manufacturing has been completed.
I believe that if a company were to automate all of this and allow anybody to have their own platform independent crowdfunding campaign on their site, just like PayPal allowed anybody to have their own e-commerce site, they could truly rival the market share of Kickstarter.
Such a model could have tremendous benefits over the traditional kickstarter platform routine we see many crowdfunding sites copy today.
Seems like the challenge there is that you're setting yourself up for the liabilities without the control.
If anyone can use your service, you're going to have fraudsters left and right. If you have to vet them before they can use it, aren't you just another version of kickstarter?
What about a counterparty that just does due diligence? They can dig further and figure out if the team can actually accomplish the task and if the service is vaporware or real.
This could be a simple badge program (for some upfront fixed vetting fee) that lets people say they have been verified.
The problem is that Kickstarter isn't just filtering for viability. Some sort of DD would help say that the project is feasible and eliminate the politics.
That's a good idea. There's room for someone to come in and rate the viability of various projects. A need, really. Even with Kickstarter, as we've seen before.
Good point. I imagine you would have to find the right balance. Somewhere in the middle of anybody can join, and personally reviewing every single applicant.
I don't know a thing about this industry, but I'm sure if you make the applicant validate that they have a business license, and that they somehow prove their real identity, you could keep fraud to a minimum. Even when fraud does happen, I'm sure a company like Amazon (which you would probably build your service on top of) would return the funds back.
It seems to me that more and more companies will just run their own "kickstarted" campaign without Kickstarter like the Lockitron guys. The companies will also no longer be at Kickstarter's mercy to shut down their campaign when they feel like, and don't have to pay the commission. Now it's so easy to setup credit card payment with Square and put up your own"Kickstarter" page.
I commend the Lockitron team for pursuing their own corwdfunding effort and then open sourcing the system. You may have just opened up a chink in Kickstarter's armor.
If Kickstarter cracks down on product related projects maybe we will see a new crowdfunding platform emerge that is friendlier for those trying to fund and launch physical products. Kickstarter should be careful here or they may be creating an opportunity for a serious competitor to emerge.
ChrisNorstrom - couldn't have said it better myself. I was going to point out many of the same arguments and showcase that while Kickstarter is a great idea and can wield it's massive brand to potentially attract visitors to your campaign with startups like App.net and Lockitron running their own campaigns, Kickstarter has to be a little worried about how they're trying to solve the problem that is crowdfunding...
The way KickStarter wants to be used and the way the crowd is actually using it have become 2 completely different things. It started out hosting campaigns for plays, short films, & debut albums. Now it's known for its Apple product accessories and tech gadget campaigns. But rather than change its funding structure, rules, and options to accommodate pre-sales of physical products, they've demanded less "risky product campaigns" and more easily deliverable "fun-artsy-fartsy theatre campaigns"... They're basically betraying the very campaigns that put KickStarter on the news and grew it to what it is today.
Over the last few weeks we've learned that KickStarter:
- isn't a store where backers can buy pre-sales.
- doesn't allow "home improvement products".
- doesn't allow you to offer multiple quantities of a reward to your backers.
- and doesn't let you use pre-rendered images of prototypes.
That's the sound of KickStarter shooting itself in the foot 4 times.
Look, I get why they're doing this, they want to protect their backers from successful-but-failed campaigns. But most products FAIL, most companies fail, and the failure rate and shipping delays of projects on KickStarter is normal. I mean Jesus, people are funding, manufacturing, and shipping a product in 6 months. That's pretty incredible. Kickstarter, in their desperate attempt to please the backers, is just going to end up destroying its own ecosystem. Well the tech portion of it.
If the crowd wants to play Mini-Venture-Capitalist then they're going to have to learn to deal with disappointment.
Lastly, Kickstarter doesn't even promote your campaign, it just hosts it. It's up to you to promote your campaign's link. So I'm paying 5% of my funding goal to KickStarter for hosting fees. Why? With Lockitron's successful self-hosted solution we now know that we don't need KickStarter anymore. And not being needed is the first step to obsolescence.