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Comment by physcab | Hacker News Reader

This post says just as much about Kickstarter as a platform as it does about Ouya. It looks like the time required to raise $1m for a worthy cause is quickly approaching zero now, which is simply astounding. If I were a VC, I'd think long and hard about what value proposition I can offer to entrepreneurs over just raw capital. Because in the (near) future, it doesn't look like money will be the differentiating factor.

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I don't think VCs should be worried about Kickstarter, at least in the near future. A VC can see the long-term value of a business idea, whereas Kickstarter supporters are just excited to get their hands on a shiny new toy.

I think it's a lot harder to get crowds of people excited enough about your unreleased social app to raise significant capital than it is for a handful of VCs, who will then have a vested interest in your subsequent success.

> A VC can see the long-term value of a business idea

> Kickstarter supporters are just excited to get their hands on a shiny new toy.

Every kickstarter project I've supported is always about a product in the future. Including this one. Frequently, that shiny toy is years away.

The only difference between kickstarter and a VC is that consumers are deciding if the company will eventually deliver a product they want. You just cut out the middleman. The VC.

So, the VCs, who often are funding disruptive technologies, are now facing the new kid on the block, pretty disruptive himself. Oh, the irony.

>The only difference between kickstarter and a VC is that consumers are deciding if the company will eventually deliver a product they want. You just cut out the middleman. The VC.

I don't know if that's necessarily true.

The biggest difference is that VCs have an interest in the continued success in the company because they are looking for a return on their investment, not just the product in question.

I think the interesting thing is that you can now raise large sums while still having an exit condition that isn't "IPO" or "buyout." To me, anything that brings the focus of the CEO back to "create cool thing" is a good move for capitalism and the world in general.

Technically, the only exit condition on Kickstarter is reaching the funding goal (often set much lower than the expected proceeds). After that, the cool thing may materialise with lesser coolness or not at all, and an ambitious project may find their next incentive in venture capital.

A bright entrepreneur would have to be crazy not to ask themselves if they can come up with an interesting deliverable (ie shiny new toy) before they give up stake in their company.

I don't think it's a stretch to imagine an alternate history where Instagram raised serious money by offering supporters bonus filters or where Zuckerberg came up with incentives to raise his first few million in the early days. "We want to bring Facebook to all the major midwest universities, but we need $200,000 to build x. We'll open it up to schools X Y and Z if we get to the next level! And you'll get a badge on your profile!"

I don't think VC has too much to worry about. $99 for an Ouya is definitely selling at a loss; they're going to need VC to actually manufacture and sell the thing. Kickstarter is an excellent way to demonstrate people are interested in an idea though (just potentially not the actual product).

> $99 for an Ouya is definitely selling at a loss;

I doubt that. $99 is probably just above cost with 1 controller, depending on production volume and how you factor in NRE. Generally speaking the big price break on electronics comes at 10,000 units which I imagine would be on the low end of their intended order given the number of backers already.

Most of the cost in mobile devices lies in the screen, battery, touch panel and associated circuitry. This device doesn't have any of those. A Tegra 3 SoC only runs about $15 in volume. For comparison, Apple sells the ATV for ~$100 and the original was reported to cost ~$64 to build, I don't have any data on the newer models but I doubt the cost has changed much, if anything its lower.

They've had a number of opportunities to raise the price. They did an initial batch at $95, and then they've raised the cap on the $99 batch over and over.

At any time they could have not raised the cap on the $99 batch and opened a new one at $125 (for example), and they haven't done so.

So either they know $99 is a good price for their product or they're complete fools...

> This device doesn't have any of those

The controller has a touch panel and battery (pretty sure they're wireless).

> reported to cost ~$64 to build

Is that just the BoM or does that factor in manufacturing, QA, having to hold inventory, etc.?

> The controller has a touch panel and battery (pretty sure they're wireless).

True, however the issue is different from mobile devices. The battery in a controller is likely a standard off the shelf package, e.g. a pair of AA sized rechargeable cells. Mobile devices generally have a battery custom designed for the needed form factor. That custom design and production is very costly.

> Is that just the BoM or does that factor in manufacturing, QA, having to hold inventory, etc.?

It was a teardown by iSuppli, I can't find the original report now and I believe it was actually the Apple TV 2 not the Apple TV 1 as I originally stated, I forgot there was a huge Apple TV way back and was thinking of the ATV 2 as the original.

The price from iSuppli would be BoM + manufacturing. Manufacturing for a device like this is minimal per unit, just a few dollars and generally includes the factory level QA. For any run of decent size the electronics QA is done by a machine via flying probe or bed of nails setup, its very cheap on a per unit basis. The only manual QA needed would be checking out the packing for defects.

> Is that just the BoM or does that factor in manufacturing, QA, having to hold inventory, etc.?

Found the teardown: http://www.isuppli.com/Teardowns/News/Pages/iSuppli-Teardown...

>I don't think VC has too much to worry about. $99 for an Ouya is definitely selling at a loss;

You can buy Chinese TV sticks with Android 4.0 and better GPUs (Mali 400) right now for 50 dollars. http://www.alibaba.com/product-gs/581994032/hot_sale_mini_HD...

These will be a lot more powerful by March 2013.

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