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Comment by azundo | Hacker News Reader

I'd like to see Kickstarter cap the maximum amount a project can raise at some (low) multiple of the minimum goal. I think projects get into a lot of trouble when they raise 6x or 100x more than they expected. That traction is exciting so people dream big and make promises when the cash is rolling in before they've even executed on the core idea.

If a project estimates correctly, they should be able to 'kickstart' once the funding goal has been met. After that they can set up their own sales and marketing channels to sell to follow-on customers after the original Kickstarter backers get their rewards. To me this matches the original intent of Kickstarter.

Obviously capping funding amounts cuts into Kickstarter's short-term gains. In the long run however I think it would minimize the risk of a high-profile project (or several) failing to deliver and sinking their whole model.

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Yes.

Yeah, stretch goals are stupid.

Rewards tier X. Costs $ to provide and ship to customer. Minimum pledge amount is Y. Amount of 'extra' you make is PROFIT; Y-X.

Stretch goals seem to imply that if you hit the funding target $$$ now everything over that is Pure Bonus PROFIT and goes towards making an Extra Awesome version of whatever the project was.

...but it doesn't work like that does it?

Backers aren't stupid; they will by and large pick the most optimal pledge level (you see it all the time on successful projects). That's the pledge level that minimizes the PROFIT level to the project runners.

So really, when you make a million on top of your goal, what you're probably making is 1,000,000 * low profit factor, and the stretch goals you see for some projects are just ridiculous (eg. we'll ship extra stuff to all pledge levels! <--- totally smashes your PROFIT total for these pledge levels).

Poorly thought out is exactly how I would describe it.

Kickstarter should make people submit a budget excel spreadsheet that details exactly how much they expect each reward tier to cost, and how both a exactly-on-budget successful funding, and the 10x surplus funding will broken down into spending on delivering the project.

That doesn't have to be made public, but how can kickstarter stand there and go "we're good guys" when they're running projects for people who clearly haven't done this, and as such neither kickstarter nor they themselves have any idea if they'll actually be able to pull of the project when if its funded.

Three words: Economies of Scale

A lot of stretch goals I have seen are things like upgraded components, extra colors, and the like which are wuite possible as your order sizes push your per-unit costs down. This is doubly so for software based offerings since marginal costs are zero for each additional pledge so you can take what would be pure profit to fund additional features.

If they've planned for that, then sure. Great!

...many projects don't seem to have any idea how scale works though.

All I'm advocating is that creating a project requires you to submit a budget detailing how you'll spend the funds.

Spreadsheets are easy to parse; it'd be trivial for them to automate checking the sheet for stupid values (cost of manufacture: 0, cost of shipping: 0, profit: 100%) or people who have no idea (100% of funding -> making the game (that's not a budget doofus)) or people trying to exploit the system (excessive total units shipped) and give them some idea of what projects need closer scrutiny before being approved.

The problem with capping highly funded projects ("hits") is that they make up a pretty small percentage of the Kickstarter project space, but they get a ton of press. It varies by category, but in most of the categories, the projects doing better than 3x their goal are less than 5%.[0]

The real problem (alluded to by both the article author and other comments) is that project creators don't ask themselves hard questions about how their project will scale. Unfortunately, this is more of a problem in the Technology and Design categories, which tend to have a higher hit rate than others. Many project creators envision doing the work themselves, or using hard to source parts. The Open Locksport guy even planned his reward tiers so that he was operating at a loss for each pledge. That's just poor planning.

[0] http://tachycline.com/index.php/kickstarter-funding-rates/

I agree 100%.

If anything, an enforced cap will increase the exclusivity of an offer, and reduce the number of people who hold off until the last day to back a project - they're the people who are really preordering a product name, not backing an idea.

I think an enforced cap and the exclusivity of an offer is a great idea, I'd love to use that in the future.

I'd like to see the reverse: don't let the project go through unless it raises at least two or three times the minimum goal. Okay I know that wouldn't actually work because people would start taking it into account, but the problem is that people always underestimate what projects will cost; the most likely failure mode is you get the money you ask for, the project is unexpectedly hard and the money runs out long before you're done. Of Kickstarter projects that have actually delivered products, I bet many have been saved only by the raised money far overshooting the underestimated minimum goal.

I agree on the cap idea. Another issue I've come across when projects have been oversubscribed is that the project's level of "customer service" (for lack of a better word) is inversely proportional to the amount pledged. In my case I contacted the Elevation Dock guys twice regarding my pledge, but I never got a reply from them - which is frustrating to say the least. A cap will definitely ease any potential bottleneck and distribution issues as well as focusing/providing good service to a reasonable number of customers.

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