Ze Frank's Kickstarter post-mortem

>Now thinking what I can do to stimulate even a fraction of this level of customer feedback in my startup...

giving your customers $150k is probably a good starting point.

kickstarter is another of those online businesses that challenges the traditional definition of customer and supplier. Ze Frank isn't really their customer in this instance, he's more like a supplier, providing a service worth a large amount of money to kickstarter's customers (the donors). that much feedback from standard customers isn't really something you can expect, but if your startup has any transactions of that scale it's not unreasonable to ask for a meeting to get very detailed feedback as part of your contract.

Agreed. I really appreciated his candidness about the whole process. For example, I've often wondered how the whole give away a t-shirt thing makes any sense considering the work that has to go into shipping them and the relatively higher cost to produce the prize for the backers.

And I've seen the waterfalling prizes before, where you could end up with several things for what seems to negate your original backing offer. Ze Frank's word of warning here is incredibly valuable.

I suspect Ze has some form of corporate entity. But that is unlikely to change the taxable nature of the income unless it's a designated non-profit organization.

He must have already filed at least as a sole proprietorship. The first benefits to becoming an LLC or an S-corp is the liability limitation: it lets you distinguish between your assets and the business's assets in a legal sense, so you don't (for example) lose your house because your company gets sued. The next benefit is business-related tax deductions. This goes hand-in-hand with business-related tax complications, so if he isn't planning on taking deductions and can't see a legal need for separating his business assets, it might be amounting to a more complex (and therefore expensive) tax situation for no tangible benefit. Of course, other things he may decide to do (such as hiring employees or issuing stock) could force him to incorporate.

I'd be surprised if it didn't make more sense to become at least an LLC, but tax law is complex. If I were him I'd do whatever my accountant told me to do.

Kickstarter is very much "just" a system for people to use. From my own experience with backing projects I back projects from people with pedigree and some sort of proven value. Anyone can promise something but when I'm backing a project I want someone I know can deliver, especially when Kickstarter provides no assurances or guarantees a project will be made, you're relying entirely on the project creator to be honest and stick to what they say they will do. If I found a project via browsing the Kickstarter website and there wasn't some sort of outside influence driving the funding of the project (be it the project creators twitter followers, a group of people that are interested in the same field and have worked with the project creator, a previous product the creator has produced) I would shy away because if this is a persons first project they are inevitably going to be issues.

Here's an example of a guy who walked away with $90k and didn't deliver anything but broken promises for over a year and only recently gone back and worked on the project: http://www.kickstarter.com/projects/schuyler/lockpicks-by-op...

The man has a degree in Neuroscience from Brown University, he is not unfamiliar with critical thinking, analysis or statistics.