I don't get it; Kickstarter isn't a store. I personally never expect anything to come through and get it in the mail when I back a Kickstarter project. I might get something, but it isn't a promise.
Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. There's no more due diligence than watching a video and reading over some text frequently in funding a project.
Even projects with competent people in well funded companies fail all the time and get shut down (see Google Buzz, Google Health, etc). There is no such thing as a promise that things will succeed.
I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"
The article isn't about people not getting a product or expecting a "store". It's about how a more than tripple funding KS which got an additional 3 million in VC backing could not actually accomplish their goal.
I bet they would have been more successful with less money. Money gives you freedom(to start over, to feature creep, to bikeshed, to grow faster than you can manage, etc) and security (which makes you less "hungry" and desperate).
Frankly the whole product concept seems to me to be completely ridiculous. I doubt it was viable however much money they got.
I thought long and hard before posting this, because obviously hindsight is 20/20, but I went back and looked at the product description again and I stand by my opinion. IHMO it was a turkey from the word go.
This functionality currently exists for any online password on Windows/Mac/iOS in 1PassWord, and I'm sure there are many other wallets and password managers for other platforms that do similar things. Having a USB key for this almost feels like a step backward - how do you plug that into your phone or tablet? 1Password will automagically enter and submit any remembered password in your browser, and any non-web password can be stored and retrieved from the app itself at any time. I didn't even care about that feature when I bought the app, but it has become a lifestyle changer for me and I'd say it's the killer feature.
The worst part is, I can buy 1Password for Mac for $50, and the iOS version is less than $20. Anybody interested in this sort of thing should really check out the alternatives already!
I think the notion that having less money would have been better for them is interesting. It seems like the amount of money they received gave them the idea that they could accomplish more by spending more; what they really needed was extra time in order to accomodate their extra money.
It is a big risk for startups that take too much money that they suddenly feel like they have the capital to do all sorts of things. Too bad they didn't just ship V1 of the product.
Important to note here is that Kickstarter sees two separate things in the campaign:
1. The actual project.
2. The rewards doled out to supporters of the project.
The Kickstarter rules are very clear about the following things:
1. The rewards are a contract. If you fail to deliver
the rewards on whose terms the backers supported
you, you're legally liable.
2. The rewards may be delayed, as long as regular
communication about the actual progress happens.
Thus the project itself can fail, as long as you make sure the rewards are given out.
The fact that most project are confident/stupid enough to offer rewards that can only become reality if the project succeeds has muddled this reality in the mind of the average person, but the rules and legal realities are crystal-clear.
Example:
$100 Dollar Level, tshirt + coupon for discount on items that we sell, available for use on target completion date (which just happens to be projected cost of baseline project item)?
Edit:
Found the answer...
> Discounts, coupons and gift certificates - Offering a reward at a lower price than what it may cost post Kickstarter is fine, but a future discount or coupon as reward is prohibited. Additionally, vouchers in exchange for a particular item (a meal, a book, etc.) are fine, but monetary gift certificates are prohibited.
A little disappointing, but I can understand why they'd take this stance. (Likely because of money transmitter laws.)
(It's possible you could still phrase it as equivalencies, eg, "one X, OR two Y, subject to availability")
That would make a lot of sense and avoid a lot of confusion. All projects that offer items that don't exist yet should only be allowed to have coupons for "1 free" or "half off" of the final product, if it's ever produced.
It's easy enough to make the coupons exchangeable for more promo items (such as stickers, tshirts, hoodies, etc), so they're never worthless, exactly. You just might not be able to buy the project item, and only get really overpriced shirts instead.
(You could even make mod versions with "failed" on them after the fact, and use the coupons to buy those.)
Naturally, you should have giant, red, all caps letters explaining you're funding development, and might never accomplish the project successfully. Coupons only cover items posted for sale in the store, etc etc.
I'm mostly just curious about it as a legal method to give the reward at a tier without promising the exact reward.
(Side note: is this also an end-run around the multipack rule?)
This is just beating around the bush. If kickstarter wanted they could have just said that project owners are not required to provide the product since things may fail. But they don't say that because a lot fewer people would support projects.
The problem here is that as much as kickstarter wants project owners to be clear about the risks, they themselves don't want to do anything site-wide that may reduce overall revenue. At some point they'll realize they can't have the cake and eat it too.
This is the real disconnect with Kickstarter. It's not a preorder but, you are--in principle--on the hook to deliver the product (unless you don't include the product as a reward in which case you'll get a lot less interest). But, if you could actually afford to reimburse everyone if the project fails then why are you using Kickstarter anyway other than for marketing purposes.
The reality of course is that projects do fail and there may be breathless rhetoric about lawsuits and such on discussion boards but there's typically no money to be had and the online temper tantrums don't go anywhere. So the Kickstarter requirement doesn't have any real teeth.
Yeah presumably people doing kickstarters are at a minimum using an LLC, in which case if the project fails and the company goes bankrupt, nobody is getting anything from the dead entity.
> Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail.
VCs back huge numbers of companies and expect most of them to fail, hoping that the few which succeed make back enough money to compensate for all the failures. Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. We can't expect people who back Kickstarter projects to accept VC-level failure rates because Kickstarters simply don't - and can't - give enough back when they succeed to make up for the failures.
>We can't expect people who back Kickstarter projects to accept VC-level failure rates
The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Kickstarter backers should expect VC-level failure rates as a lower bound.
> Kickstarter backers should expect VC-level failure rates as a lower bound.
True, but it's even worse than that. VC funded companies sometimes have an upside. E.g. Oculus Rift got over $2 billion from Facebook. The Kickstarter "backers" received exactly zero percent of that upside.
(To be pedantic) I don't. I allow that VC information and experience supply no information about the outcome, and that the failure rates of VC-backed projects and Kickstarter projects could be identical. I didn't allow for information and experience negatively effecting VC success rates, though.
edit: I accept that that's entirely possible, I just think it's a better subject for a academic study than for a rule of thumb.
> The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects.
Another difference is a lot of Kickstarter projects are well below the scale that VCs would notice, and are offered by businesses that are going concerns as a way of mitigating risk -- there not all startup firms using Kickstarter as an alternative (or supplement) to VC funding.
> Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid.
Then they're doing it wrong. Supporting a project on Kickstarter is a donation. A vote of confidence. That people are using it as a store and a ridiculously high-risk low-return investment vehicle is completely absurd. The blame should probably be put on Kickstarter themselves for what seems to be a major failure to establish the right expectations.
Look at r/shutupandtakemymoney. Of the 25 posts on the first page right now, 11 are either kickstarter or indiegogo. Is it Kickstarter and Indiegogo's fault that individuals are using that form of venue to market and sell a product that doesn't exist yet? Is it reddit's? Or, is it the creator's fault for submitting the link?
I pose that it is inevitable that these sort of sites are used this way. People want to market their crowd funding opportunity to enable their company to get off the ground. It is easier to market a future product compared to a donation, so creators and marketers are going that route.
I really have no problem with people marketing future products. My problem is with the view that there is a simple transaction of "I give you money and you give me product eventually" going on, which Kickstarter (et. al.?) seem to me to either encourage or endorse through silence. I think they should instead make it explicit and obvious that there is no expectation of any prize delivery at all. They don't want to do that though, because then the absolute amount of money going in (which is what they make their money on) will be smaller. Basically these sites are profiting off of these really huge campaigns without taking on either the financial risk of the backer or the delivery risk of the project, without making it very clear (at least to the backers, and arguably to the projects) that those risks exist.
It actually is a promise. The Kickstarter terms of service require successfully funded projects to deliver the rewards that backers have paid for. If a project can't guarantee that they can deliver a finished hardware product, they shouldn't offer it as a reward.
Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill.
That may be what the contract says, but there's more to contract law than just enforcing a contract. There are, for example, rules governing how contracts are handled in the event of a bankruptcy or dissolution of the company. It's likely that Kickstarter backers would become creditors of the bankrupt company and the refund they were due subject to creditor recovery rules.
Have there been any court cases that have investigated "successfully funded" to determine the exact meaning in the law [in whatever jurisdiction]. Successfully funded projects could readily be considered to be ones where the funding has enabled project success.
In their terms Kickstarter make statements suggesting it is a funding program but they also say in their "Acceptance of Terms" part that any policy expounded on the site is incorporated by reference. Kickstarter state on their /learn page for example "Kickstarter is a vibrant community of people working together to bring new things to life." making it clear that success on Kickstarter is bringing a making project to fruition. It _doesn't_ say "Kickstarter is a way to acquire funding", so that's not the goal of a Kickstarter project and thus not the measure of success.
To reiterate this point, in the FAQ accountability section it says:
> "On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it." //
Again highlighting that projects are not funding, projects are encouraged with funding.
There's little about unsuccessful projects, some details about how they're swept under the rug, but there is this in the FAQs:
> "If the problems are severe enough that the creator can't fulfill their project, creators need to find a resolution. Steps could include offering refunds, detailing exactly how funds were used, and other actions to satisfy backers." //
See that "could", why not "must"? Why not "creators are required by their assent to our contract to find a resolution"? It seems Kickstarter consider a report of how funds used to satisfy their requirements.
[PS I'm not sure I've convinced myself but I do think someone could make this case, possibly make it stick. Kickstarter could tighten up their language in a few places but ultimately they are financially primarily motivated to get as many projects funded as possible whether they are successful or not, funded projects earn them money whilst shipped rewards don't. Kickstarters other motivations aside of course.]
I'm not a lawyer, but I think specific language in the TOS would be given more weight than any incorporated policy from the website. And (of course) ultimately, some actual court cases will be more valuable than any speculation.
I also wouldn't give money to a Kickstarter project if I thought I cared enough about the money that I would end up chasing it in court (that is, none of this is a practical concern for me personally).
It basically is, or at least a market -- a place where buyers and sellers meet and form contracts and where the sellers get the money from the buyers in exchange for the promise of some specified future delivery.
Sure, some sellers would like to have store-like inducements to the buyers to hand over money, but not store-like obligations to provide the offered goods to the buyers.
> Why is it a shock that Kickstarter projects fail?
Its not a shock when projects fail. Its a breach of contract when people accept money in exchange for a promise of future goods and then fail to deliver the future goods.
Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable.
"Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable."
This is actually an excellent point, but...
The reasoning behind this "pre-sale" approach is about the perceived value of the reward. An traditional gift might be acceptable (T-Shirts, etc) but there is something unique about being offered something that's not on the market yet. It makes the customer feel special, something they might be able to brag about if the product is a success.
Something akin to the concept of "Collector Edition" in the game industry.
That will add value to a reward, will attract more customer an in turn increase the chances of a successful campaign (even though successful campaign does not mean successful product).
It is a good way to kickstart a business.
Riskier? Yes.
Short sighted? Yes and no (Actually no).
Short term cost is 0 (great), long term cost is your manufacturing cost + distribution cost (ouch).
That doesn't seem right?
Actually it is.
You're actually paying for:
+ User acquisition
+ Early product validation (Lean Startup)
+ Momentum
+ Beta testing for the whole product pipeline and the product itself
I think that as a company it is definitively worth the risk.
You have to be able to take risks sometimes in order to be successful.
Your view is certainly not the same as the way many people view Kickstarter.
But let's not quibble over what Kickstarter is. There is obviously a lot of value in having some kind of market where people hand over money with the risk of project failure, in order to potentially get a new product that they want to exist built.
How would you create such a marketplace and communicate clearly that that's what it is? I ask because I thought Kickstarter was exactly this, but apparently you don't agree, so I wonder where our difference of opinion stems from..
> Your view is certainly not the same as the way many people view Kickstarter.
My view is based on things like Kickstarter's terms of service and contract law.
And the complaints about failed delivery of rewards indicate that it is also consistent with the way many backers see Kickstarter.
Certainly, I can see why each individual project team would like the idea of getting funding without giving up either equity or an obligation to pay money later (as they would in traditional financing) or an obligation to provide product (as they would in a preorder, or in Kickstarters existing terms if they offer the product as a reward), while still using the product as an inducement.
> There is obviously a lot of value in having some kind of market where people hand over money with the risk of project failure, in order to potentially get a new product that they want to exist built.
And Kickstarter can be that without product-as-reward -- after all, if the project is for a product to be offered to the public, people who back the project can "potentially get" the product (contingent on project success) when it is offered to the public.
> Even projects with competent people in well funded companies fail all the time
Competent technical people. The non-technical leaders of for example Google Wave did not really show any apparent competency, leading to a project that has been excitedly received to stall just because someone thought it a good idea to do a closed beta (the closed beta worked for Gmail because the early Gmail users could communicate with any E-mail user, but competent people would have anticipated that this would not work with Wave; they effectively created a super-nerd ghetto, which obviously no sane person wanted to be part of after the beta was over).
Have you ever heard of hindsight bias? Many experiments have shown that people overestimate how easy it would've been to guess future outcomes. They did this by actually asking people to guess certain outcomes, then asked them a year later what their guess was - people's self-reported guesses were usually off, in the direction of what actually happened.
One of the problems with this is that our brain tricks us into believing that we're better guessers than other people, because hey, look at all the times we were right in the past! Except we weren't right - it's just our memory deceiving us.
All of this is to say - Google hires extremely smart people. I would really hesitate to call them incompetent, both because what you say was "sure to happen" is a big dose of hindsight, and also because you have no idea what their goals were - for all you know, they took a risk that the project would either stall or become super-successful, so they shot for the moon. That's a legitimate option.
Kickstarters wants the backers to think it's a store, because the reality isn't very attractive. "It's like a store where you preorder, except 10% of the time we just throw your preorder away and you get nothing but we still charge you."
But the other 90% of the time that something does come through, it is something that likely wouldn't have been able to come to market to begin with. Granted some of those are for a good reason...
Is that the reality though? The biggest category on Kickstarter is board games, and many of those I've seen (and backed) there are being made by traditional publishers who would be more than capable of bringing the thing to market in the conventional way.
A lot of board games are things that are speculative in that production and initial print run costs might result in a money losing effort (and a lot of board game companies don't have great access to financing, even if they are confident that such a thing would be sufficiently profitable for the expectations of that industry -- there's not a lot of investors throwing money at the sector, unlike tech, because while there is some money to be made there, no one expects something on the scale of the next Facebook shoot off there.)
So Kickstarter with product-as-reward makes a lot of sense for going concerns there because they have fairly good ideas what production costs are going to be like and what scale they need to reach to get a product with particular features out.
Its not the sexiest use of Kickstarter, but its probably the most sustainable, and it does enable things that would otherwise be too risky to produce.
Kickstarter may not be a store, but it is not an investment either. VC knowingly take risks in pursuit of significant returns. I've always wondered just what people are getting when they back kickstarters. Basically just the vague hope that they might get a product some day.
I do too, which is why I only back projects that deliver an open source/free software/creative commons product in the end. I'm not going to invest in your company for zero equity unless you're doing something meaningful.
I agree with you, but my definition of what I think is "meaningful" is broader than "open source/free software/creative commons". It is more like "is this a thing that I would like to see exist in the world?"
Same here. I treat Kickstarter like I do the Awesome Foundation grants I help fund (one of the original founding members)- I just give money away to make awesome stuff happen in the world. If I get a benefit in return that's nice, but really I just want the world to be a more interesting place.
No one is shocked that it failed, people are shocked that it didn't ship! You can't fail if you didn't even ship.
Every VC backed company, or big company project that fails without any shock has shipped. If a kickstarter campaign ships the product and it falls short of expectations, no matter how short it is, it is ok. But if it says it is all set and done to ship, get the money and don't ship, that is a problem.
People are shocked because the only reason kickstarter is a big deal is that most of the audience has absolutely no familiarity with VCs and startup failures. They are normal people who see "$75 - receive Thing" and absurdly, strangely, interpret that as "I give you $75 you give me Thing". If Kickstarter wasn't a store then they wouldn't allow projects to list prices next to the products they are selling, all reward levels would be "stickers!" and not the successful project. And I bet all the self-righteous jerks who say "I don't even expect to get anything when I back a project!" would instantly stop backing projects, once they actually couldn't expect to get anything for being a backer.
Only when they also say anything similar to "I don't even understand why people are surprised when projects fail!", as all of them have in my experience. I guess even then they could just be stunningly oblivious, fair enough.
"all of them have" ... "in my experience". I posit that you don't have experience with everyone who's lost money on kickstarter and uttered that particular phrase. And not knowing the sample size of your experience, I don't really trust your opinion on people, except that some are oblivious and some are jerks. Some are. People's oblivion does not stun me anymore. I don't expect drivers to stay on the road. People do things that are terrible for their health, and can generally be counted on to make objectively bad decisions, especially my mother. But the thing is, if you get all the human souls in a room, and get them to guess how much a mountain weighs, the mean average is consistently closer than any individual guess. So I guess some people's idiocy is a counterbalance to the wise people. I hope I've filled your heart with hope just a little bit.
Couldn't agree with you more. If anything, I'm always shocked when I get something from a kickstarter, and pleased beyond imagining when it works out well/is high quality. I've certainly gotten some stinkers, and some no shows - but also been really happy with others (my CNCd iPhone Dock, for one)
Kickstarter should really emphasize "The risk of failure is high, and you stand a good chance of never receiving anything for your money"
> Why is it a shock that Kickstarter projects fail?
Because regular people aren't equipped to evaluate risk and projects go out of their way (often dishonestly, even if understandably) to minimize the perception of risk.
It's a system that takes advantage of suckers. Some folks find that to be okay, but it bothers me even as I consider using it (because of not having any other real choices for funding a game in 2014).
You don't get that other people see it as a promise of having something delivered? You can't understand that people think about kickstarter differently to you? You don't see that people get excited about a project, because of what it offers, and pay because they want to get what is promised?
I mean, even if you don't agree with that sentiment, you can see that other do, right?
I think the issue is how it happened. They had a product prototyped and ready to go, went back to the drawing board and revised it. Constant feature creep kept causing them to go back and revise revise revise, spend more money, and delay. Hardware doesn't have constant iteration. This is what happens when you try to apply software principles.
Sounds like a larger version of the problems that most hardware crowd funding campaigns run into. I think that we've done ourselves a disservice as a hardware community by promising to deliver consumer electronic devices for less than $250k in a few months. It doesn't seem to matter how complete your design is, what manufacturing partner you've lined up, or what pedigree your team has - everyone is spending more than they raise and taking longer than they budgeted.
I think it would be wise for hardware companies to collectively start lowering expectations from campaigns like the one described here.
The team at Spark Devices did a great job with this process. Their first project, the wi-fi bulb socket [0], had a large funding goal and a more realistic timeline. When the campaign failed to materialize they shifted directions to the Spark Core [1], which was much more successful and delivered very close to the projected timeline if I remember correctly. Now they are closing a sizable series A [2] to build an operating system for the internet of things.
If they had originally made the Spark socket goal $100k they would have reached their goal and then likely failed to deliver with the cash they raised, which would have pulled them down into the mess that is described in this article.
Maybe more hardware teams should take a good hard look at how they view failure and decide if they want to be the next Spark or the next myIDkey.
I have no evidence, but it seems like as a community people significantly underestimate the challenges of hardware development.
I'm not sure whether it's because the community thinks "Oh, hardware is so much easier than software! This will be a snap!" or if it is the more subtle "We haven't done this before, so we aren't aware of the pitfalls"
> Oh, hardware is so much easier than software! This will be a snap!
I've literally never heard anything say or think that. Myself included, nearly every software developer I know is intimidated by how hard hardware seems.
Whew! it's not just me then! I've been picking at a bluetooth/arduino 9 degree of freedom accelerometer for about 6 months now. It's terribly difficult to deal with. All the wires, the voltages, the heat and power, the damn bluetooth, letting all the magic smoke out, etc. All the physical details that aren't 'documented' like with a language or other programming project, mostly because...physics ...isn't well documented. I love, it don't get em wrong, but yes, hardware/software interfacing is like pulling teeth. I think the main issue is that you don't even know what to ask Google, let alone anyone else. It's hard just to formulate the right questions, let alone get answers.
Maybe it's just because we approach it from different sides of the fence, but I always found accelerometers very easy to use in hardware but impossible to use in software!
I'm not good enough at DSP to isolate the signal from the noise.
Bingo! I2C is just 4 wires, but getting that data out is the trick. You have hiccups in the transmission, some bit flips, and then the actual data to contend with.
Signal to noise is actually pretty easy, just have a Fourier transform to pick out the differences between a background you set before. Typical applications are pretty immune and the ratios are very high usually.
See, I have no trouble reliably getting the data out of the sensor and into a variable. But I can't implement the fft() in C for the life of me, and even if I could, my little itty-bitty microcontrollers probably don't have that level of number crunching.
Ahhh! Yes, I do all the post processing off the chip. You could play with a ...oh geeze, its Friday, what are they called...? The things that configure themselves to be a circuit and can only be configured once. Jeeze, sorry on the name here. JFET maybe? I'm sorry. Try arduino as a good intro. I think they have some fft libraries.
I used to hear it frequently when I rubbed elbows with more software guys. Maybe not in exactly those words, but you can tell, when a software guy budgets 1 month to design the hardware and 11 months to "do the majority of the work" (aka write the software)
E.g. at one company the engineering VP was a quintessential hardware guy. He understood hardware complexity; he knew little about software. He never could understand that software could also be hard to do.
I didn't mind, I was a hardware guy. But the software people were definitely sucking hind tit.
I'm not sure how people could think this. Hardware is a much less forgiving medium than software:
- If your web application requires three times the resources you thought it would, you can easily add more servers. But a device that needs to fit in a USB key has hard limitations on size, memory, power dissipation, etc. You can't ask people to carry around a briefcase-sized device (or even another phone-sized device) to hold their passwords.
- If your web application has a horrible bug, you can wake up your developers and have them fix it at 3:00 AM. If you find a bug in your embedded software after you ship, it can only be fixed by getting all your users to upgrade their software (assuming your embedded software is in flash memory, not in ROM). If you find a bug in your hardware after you ship, you need to send everyone a new device.
Planning fallacy is planning fallacy. Perhaps it's more exaggerated in hardware, but doesn't negate the fact that it will always exist and planning is hard.
This kind of project needs something like 2 engineers max who really know what they're doing. Unfortunately, very few people know what they're doing.
Anything more than that and you are doomed. The hardware is about $100K to develop if you know what you're doing. Probably closer to $250K if you don't.
Everything else is time--software, debugging, user testing, etc.
Andrew "bunnie" Huang's blog is great for understanding all the crap you are going to wade through to do production.
http://www.bunniestudios.com/
The DEFCON discussion is always especially interesting because it is a VERY constrained problem: low volume overall (for electronics <50,000 is low volume) but high volume in terms of units-per-time, tight cost constraint, generally a tight battery constrain, and a desire for hackability.
Operations is hard. Let's go shopping.
There is a reason why there is a Chief Operations Officer in manufacturing companies ...
It's a bit of a cliché at this point that the bottleneck for DEFCON badges is Customs and they always arrive at the very last minute.
The exception was DEFCON 19's non-electronic, titanium badges, which were not just on time but arrived so early that the DEFCON staff hadn't taken over the conference location yet, so they ended up getting stored in someone's hotel room.
Please remember this article the next time you're inclined to say "Why did Paypal freeze pre-orders of a promising new startup when they clearly look like intelligent, diligent founders and have not a whiff of scam risk about them?"
They are deciding whether or not to take on the risk of essentially underwriting the project. PayPal is on the hook for chargebacks; recently I got back $400 we had paid last November to a company that turned out to have been incompetent / scammy. I didn't initiate a chargeback until a couple of months ago.
Whether or not you agree with the outcome of their decisions, you can't simply huff that PayPal has no "right" to decide whether to take on those kinds of risks. They clearly have skin in the game.
But they shouldn't have skin in the game. Treating people like children without the capacity to make grown up decisions will only encourage this type of behaviour. Whytf do we need something like charge back?! To me it just seems like a poor justification for having a centralised router of money.
We need chargebacks because there are scammers out there and people get themselves into trouble with credit, so we made the democratic decision to require that mechanism.
So people supported project and paid for a product they were presented, but creator decided on the fly it wasnt good enough so they changed it?
How ridiculous is this.
People paid for a product (support) in order to receive what they were presented. The creator could then release version 2.0 after a year with updated features instead of making this decission. It would be like person would buy an Iphone 4 in shop and after he paid the guy behind the counter would say "sorry, I changed my mind, you will get Iphone 5 in 1 year because its better. Your money is ours now, so good bye and see you in a year."
The decisions made behind this seems to be immature - similar unfortunately to pretty large chunk of Kickstarter startups.
The Kickstarter seems to replaced government grants for some, where people would risk it to achieve success, but if they fail cause of issues/bad decision they don't care because it wasn't their money anyway. To many people with no prior life experience starting projects and businesses.
I disagree with your conclusion, that there are "to[o] many people with no prior life experience starting projects and businesses."
I think a large number of people starting projects like this is necessary. True, many of them fail. However, it is in the process of failing at a first attempt that many people will gain the experience necessary to help them in later projects. So there is nothing inherently wrong with failure.
My interpretation of the article is that the developers did not handle their failure correctly. They were not clear in communicating and responding to the difficulties they were facing. The failure was left unaddressed, and only compounded over time; this was the fault of the developers. A more adequate solution would have been to recognize that changing the product to quickly was not the right approach; releasing a project without all of the desired features at a sooner date may have been preferable.
Donating money to a KickStarter project is not the same as buying something.
You're not paying for a product, you are helping fund a company or project who has no legal obligation to give you anything.
If you are donating to a KickStarter just because you want the reward they are offering then you should do sufficient research on the company and their founders to ensure that you trust that they will deliver what they promised.
While I agree with the spirit of the above comment, and am not upset when projects I fund are delayed or cancelled, you're not technically correct:
Is a creator legally obligated to fulfill the promises of their project?
Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.
If a project creator takes the money and disappears then it's fraud, that's what that quote is referring to.
From that same FAQ: "Kickstarter does not guarantee projects or investigate a creator's ability to complete their project. On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it."
In court it's probably about as valid as a Terms of Service agreement on a website or a "by reading this you must keep the contents of this email confidential" at the bottom of an email.
What if project creator takes money, then over thinks it and uses money to sponsor his ambitions? Is Kickstarter ego boost fund, or actual project funding?
Most users sponsor project to get early and discounted access to cool stuff - if you fund Kickstarter projects for other reasons - good for you. But dont expect others to follow. Some people hard earned money are in stake, they expect to get something from it and when creator just blatantly changes what he has to offer while sponsoring his high lifestyle from money received - thats just bad.
You got money for something - do it.
You want to develop something different, better? First finish what you have promised, then move on for money your company earned itself.
"Most users sponsor project to get early and discounted access to cool stuff"
There is a reason why KickStarter forbids calling a reward a pre-order.
I think a good solution would be to forbid the product being developed from being offered as a reward and instead allow a coupon (free, half-priced, whatever) to be the reward with the understanding that the technology product might never be produced.
Kickstarter has many other products that are not technology focused, these kinds of development issues and product delivery issues are less of a problem when you don't have major technical challenges to overcome.
Look at Lockitron, it seems like such a simple concept and device, but as they've shown, making it a reality is difficult.
There is a high chance of failure in the startup world, investors should be aware of this. Kickstarter should make this very clear to people and limit the types of rewards so that people (who arguably shouldn't be "investing") are not disappointed if the project just doesn't work out.
> There is a reason why KickStarter forbids calling a reward a pre-order.
Plenty of people do it anyway. For example: http://earin.se/ -- "We are live at Kickstarter. Order your Earin and help us get the world’s smallest wireless earbud to market."
I think this disconnect is a result of some drift from what Kickstarter's early examples envisioned. They had in mind rewards being more like tokens or thank-yous, taking up a smallish part of the actual funding budget: more like giving tshirts or little hand-made art things to backers to thank them for their support. The kind of thing you get at different membership tiers when you join EFF or another nonprofit. So by the terms, you had to deliver the tshirt regardless, but whether the project succeeded or not was separate and not guaranteed. But now many rewards are essentially preorders for a product, which cannot be delivered unless it's produced, so people are effectively making a binding legal promise up front that the project will succeed (which in many cases they cannot really keep).
Of course it didn't pan out, you can only do a project like this on a budget of 20-50K.
Beyond that budget everyone will focus on engineering it to work with every authentication system ever, rather than creating a simple USB HID device that types a username, the tab key, a password, and presses enter.
Problem: Users cant remember their passwords.
Actual Solution: Device that stores and recalls their passwords.
Engineering Solution: A bunch of crypto stuff, tempest hardening, pen testing, some more crypto, a provably secure RNG, 3 different interfaces and drivers to integrate the device with Linux, OSX, and Windows crypto systems, a bunch more user installable software for 3 platforms, tamper resistant chips, etc.
I remember when I first about all of the buzz about this Kickstarter project, I knew it was going to be trouble. Hardware is a notoriously expensive business to get into. As the company learned you can easily burn through a few million in cash just putting out a prototype. Once you have something ready for production, until you're manufacturing at a decent scale, your costs are incredibly high: economies of scale 101.
Call me crazy, but how about Kickstarter clamps down on ambitious hardware products like this? I don't think they are doing enough and it's tarnishing their image as a credible crowdfunding platform (at least to me anyway). It's obvious that there are very few exceptions here that a hardware Kickstarter campaign will not fail (Oculus Rift comes to mind and a few other smaller ones).
Definitely hardware failures are a PR challenge but kickstarter's margins aren't affected by COGs and hardware projects tend to require more money (as you pointed out). They've got lots of motivation to make it work.
Pebble is definitely a success, OUYA is another success, the Neil Young endorsed Pono player and service seems to be well underway and looking like another success and of course, the LIFX wifi enabled multi light-bulb as well. When you run the numbers, the percentage of success for hardware projects is quite small. But as you point out, Kickstarter get their fees regardless of success or failure. I think Kickstarter does care, the problem is just a lot bigger than they currently know how to fairly solve.
It is very curious as to why they failed if they had a working prototype. They are blaming feature creep, but I am not sure about this. If it looks like you are going to fail because of feature creep, why not just go back to the original working prototype?
Personally, I very much doubt they ever had a working prototype.
This was created in response to this if I remember rightly:
http://hackaday.io/project/86-Mooltipass
The mooltipass is an offline password keeper.
The concept behind this product is to minimize the number of ways your passwords can be compromised, while generating and storing long and complex random passwords for the different websites you use daily. It is designed to be as small as possible so it can fit in your pocket. Simply visit a website and the device will ask for confirmation to enter your credentials when you need to login.
I wonder the % of really unhappy funders and % who understand the risk. I assume most funders would know there is not 100% chance of a deliverable and fund projects hoping to contribute to a brighter future.
...except it's not "investment," and projects do have a legal responsibility to deliver.
From their FAQ:
Is a creator legally obligated to fulfill the promises of their project?
Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.
If some noticable percentage of the time, you walked into Costco, and paid for something, but then they didn't give it to you, that would be news, too.
It's valid to question the Kickstarter model, because sometimes, projects don't deliver.
I still think it's a great model, but I understand the risk. It is valid to inform people of the risk, though. That's news.
Grammar Nazi Time. An excerpt from Oxford's American:
1 (of a person) surprised and confused so much that they are unsure how to react: he would be completely nonplussed and embarrassed at the idea.
2 informal (of a person) not disconcerted; unperturbed.
usage: In standard use, nonplussed means ‘surprised and confused’: the hostility of the new neighbor's refusal left Mrs. Walker nonplussed. In North American English, a new use has developed in recent years, meaning ‘unperturbed’—more or less the opposite of its traditional meaning: hoping to disguise his confusion, he tried to appear nonplussed. This new use probably arose on the assumption that non- was the normal negative prefix and must therefore have a negative meaning. It is not considered part of standard English.
This is a story? A well funded tech product didn't materialise? Typical day for a VC. Selected and paid for by the general public? That's insane. Kickstarter sounds almost destined to fail but somehow it's succeeded so well that a failure is a story.
How much value is lost through poor investments which nobody hears/cares about? "Disaster" seems a bit strong. Tough luck to the backers, but that's how it goes.
In my opinion, Kickstarter projects should not be legally obligated to deliver hardware rewards. We already have something just like that called "stores" and "preorders". I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out. And I certainly don't want people to be able to sue those creators if it doesn't work out.
> In my opinion, Kickstarter projects should not be legally obligated to deliver hardware rewards.
There's an easy way around that for projects, don't offer the output of the project as a reward for backing it.
> I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out.
Okay, back projects where the creators don't offer the output of the project as the reward for backing it. (Or, projects where the development is already done, and the Kickstarter is just being done for initial production costs, so the product isn't speculative.)
> And I certainly don't want people to be able to sue those creators if it doesn't work out.
The only reason people could sue the creators is if the creators offered something in exchange for money, received the money, and didn't deliver as promised.
The creators are in full control of what they offer as rewards. It seems to me that the problem is that some people want creators to be able to use the promise of a product they don't know that they can produce as inducement for people to give money, but not be obligated to actually follow through.
This project advertised itself as having all the development finished and only needing pre-order cash to kick off the manufacturing, so that's not really a good guide:
The "Designs" are complete, patents filed, component suppliers selected, the manufacturing process is defined, the CM [contract manufacturer] chosen so all we need is your support in this project as we size the first myIDkey production run and ship product in September 2013. Please make a pledge and receive your myIDkey!
>> But when Ars reached Chen by phone, he seemed nonplussed by his own company's failure. "Do you know what the percentage of completion is for Kickstarters in general for technology-based startups?" Chen asked. "Probably 85 percent of all startups fail."
I wonder if this is actually true and if there's any hard historical data on this. It sounds to me like a statistic he just made up.
I think HN is pretty much a biased crowd for this topic. A lot of people seem to think of it as a charity kind of thing here--which is understandable because HN is full of creators who sympathize with them--but I doubt that's what the real majority of the people who backed those projects think.
I do think that Kickstarter is a famly type project. We saw one's idea. And his plan.We back him.And there are many backers so each of backer will not loss much money. We backed a dream together, we share the risk. And we do wish a success fund project can reach their goals, build a great company.
Kickstarter is a platform where normal people can back those people have dream and great idea. As to the creators company can not acheieve their goas, kickstarter can not guarantee it. But it has already list all those rules to protect backers right.
are there any "aborted" projects where backers sued and won? it seems it's up to the justice system to decide what kickstarter terms are because their own TOS are quite vague.
well with capitalism the only viable option is to waste money until a project works...
didn't bill gates already say something about it ?
the revenues from IT project investments are so high compared to investment costs, that in the end you never lose money by seeing so many projects crash like that.
Of course if the government would manage those things, it might be a little more efficient and might deliver more results... I guess that's how the silicon valley works... Freedom has the advantage of letting the market decide, but for innovation it's never really obvious...
>well with capitalism the only viable option is to waste money until a project works...
What's the alternative?
The economy is an incredibly complicated system. Any top-down model will fail. What we have right now (free-market base and government regulation) kinda works. Or at least, it works better than anything else we tried.
Government-funded research is perfectly fine, and necessary even. Private market wouldn't send a man to the moon or build the LHC because it's just too expensive and not at all commercializable. Then again, government research can't match the rate of innovation of private industry, when it comes to products with an actual market need, across the millions of products in the industry (from cars, to smartphones, to web-apps, to blenders, to toothpaste). So you need both.
A top-down approach to controlling all aspects of the economy, a la communism, has pretty much been shown to be a disaster. It has to be. How can you create a bureaucracy to track millions of products and expect to 'compete' with a bottom-up approach of free enterprise? Even conceptually, at best, you'll be behind. At worst, you destroy the economy.
You sound like the classical nowadays ron paul libertarian.
> How can you create a bureaucracy to track millions of products and expect to 'compete' with a bottom-up approach of free enterprise?
Because real, ground breaking research is truly expensive. Making a new product is not research. Kickstarter has its flaws because it's often made of non-experts. Meanwhile, the IT field is mostly filled with codemonkeys making products, who will only end up doing "innovation" who can benefit them but not their competitors or the whole industry.
The true innovators are entities like intel, nvidia, IBM, AMD, ARM, the IETF and IEEE who are able to create standards like USB, wifi or bluetooth. You won't see Kickstarter pushing new standard that would have a real impact on markets.
I don't see kickstarter to help funding something like bittorrent, the raspberry pi, firefox or docker for example. Kickstarter is great to give a chance to broke, talented hackers so they can get some experience in the business, but I don't think I could expect anything else really meaningful. Everything is patents, and real research is gloomy. It's lego prototypes at best, against patents holders.
That's why I think the capitalistic, patent holding investment model is doomed to waste money over and over until you might end up with some groundbreaking product. If a new product can threaten a company market, it will most surely land in a trash bin one way or another.
>The true innovators are entities like intel, nvidia, IBM, AMD, ARM, the IETF and IEEE who are able to create standards like USB, wifi or bluetooth.
You mean all those private companies? I wasn't talking about Kickstarter. Kickstarter is a toy service for funding toy products.
When I said a top-down vs bottom-up approach to the economy, I meant a single government-controlled bureaucracy vs. private enterprise. In this case it would be government vs. IBM, AMD, Intel, Microsoft, and every other private enterprise. I didn't mean Fortune 500 companies vs. startups.
Of course those companies will do the work, but the difference is in where the money comes from and on what research it's spent on.
Was is the government, or did it come from private profits ? How much money private companies are willing to invest, and where do they really direct their research ?
That's why the government's spending is a little more focused and objective because it won't be research that will increase profits of certain companies. You can be sure government research will benefit everyone.
If apple invests a lot of money to have a unscratchable screen, it's not really smart research. In the same idea, intel doesn't seem to really improve its processor designs like it was able to increase frequency for so many years. That's why darpa, the DOD and NASA do more relevant research, because they know what direction to give it.
The development of computers for example, started because the army was using it. Darpa released the internet protocols to the public. The DOD made the GPS possible.
Today technology is much more complex than what it was 100 years ago, so even if the research is executed by private companies, you can't really expect private capitals to search for discoveries that might not be exclusive to them. Even patents can't always generate revenues because it's easy for china or russia or other countries to find out what discoveries were made, and find it back and sell it. That's why it's important to consider how research funds are spent, on what, for what expectations.
>If apple invests a lot of money to have a unscratchable screen, it's not really smart research. In the same idea, intel doesn't seem to really improve its processor designs like it was able to increase frequency for so many years.
That's just wrong and it hurts ... Intel is improving their design every year. They extract much more efficiency per CPU cycle, per Watt than we have ever before. It turns out there are fundamental physical limits to what we can do with Silicon and we are hitting them now, after near 40 years of exponential growth driven largely by private industry. Are you purposely so ideological blind that you aren't even willing to grant that??!
You're arguing for either-or and I'm saying you need both. There are areas where, the government laid the ground work and private industry took and ran with it. The government was never going to create a smartphone. Smartphones are a product of years of iteration, coupled with runs of hundreds of millions of units.
>That's why darpa, the DOD and NASA do more relevant research, because they know what direction to give it.
No, they don't. They didn't know that people would have wanted to use computers at home or in their pocket. They didn't know you could miniaturize transistors to the extent that quantum effects would be a problem. They didn't know, and they didn't care.
I honestly don't know what you're arguing. You seem to argue for some form of traditional Communism in place of the free market system with now (with government regulation). We generally know how that goes. Focused government research will create the impressive Soviet space program and leave little room for TVs, microwaves and smartphones, and spread misery and massive waste around.
Markets are good at making products, but markets are awful at making scientific and technological discovery.
Markets will indeed improve existing technology, but they won't find anything really ground breaking. A smartphone is just a compact desktop, with less functionalities and capabilities. It's just another product, there's nothing really new about a smartphone.
DARPA and NASA can do research markets just can't do, not because the markets are not able, but because markets are just an economical tool to deliver products.
I'm not arguing for communism, but I think that real research can't be driven by profits.
> Focused government research will create the impressive Soviet space program and leave little room for TVs, microwaves and smartphones, and spread misery and massive waste around.
Since when does TV, microwaves and smartphone solve misery and waste ? I'm just saying you need space for both capitalism and government, I think today, after the end of the cold war, in the US, there is just too much space given to companies and capitalism, and not enough to research that benefits the public.
Without support of the government, Tesla would have never appeared. Markets are just not able to create real alternative, they tend to scratch for more monopoly and monolithic technologies. More lawyers, more intellectual property, less engineering and real innovation.
It's crazy to read you talk about the soviets, to even manage to have a space program without capitalism shows that capitalism is not essential. It's a catalyst, nothing more. It won't give new technlogies, because money speaks for money, not for improvements. Learn to make the difference between increased profits and globally increased efficiency.
Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. There's no more due diligence than watching a video and reading over some text frequently in funding a project.
Even projects with competent people in well funded companies fail all the time and get shut down (see Google Buzz, Google Health, etc). There is no such thing as a promise that things will succeed.
I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"