The Problem with Kickstarter
xconomy.com
xconomy.com
For somebody to suggest that the one endeavor that needs Kickstarter type pre-funding the most, be the one endeavor that should never be entitled to it, all because they're mad because their own attempt at funding was rejected, pisses me off.
Promoting some sort of system where I get money only after I'm ready to ship, leaves me scratching my head. If I have a warehouse full of product ready to ship, I can go get traditional purchase orders the old fashioned way. What problem would such a system be addressing?
Hardware needs pre-funding more than anything. The article is opening up a discussion for alternative models that work better than Kickstarter.
The problem with Kickstarter's approach is that oftentimes, the reality of the product is divorced from the perception of the product. There are countless examples of high profile hardware products that failed to deliver on expectations. That hurts the Kickstarter brand.
Kickstarter can't be expected to guarantee projects. It's too costly. And it opens them up to liability.
I'm not suggesting that self-starter is the final version of this model. It's an evolutionary process - and an opportunity for a new startup with a different approach.
If you can demonstrate demand, funding will become a second order problem.
Hardware is just that, "hard". Crowd funding, or crowd "pre-ordering" is just one approach to give these types of companies a fighting chance at marketing and developing a product. If it were not for the lack of project accountability and poor hardware track record, I think Kickstarter would be a very good solution towards some of these issues.
Unfortunately until this changes, I think backers might have a better chance at the casinos. At least you have fun losing your money there (usually)!
One can expect bad things in any venture where the development costs exceed the expected return. If anything, this would be an argument for general purpose computing and not shouldering the cost of developing an ASIC.
If you would like to see a Kickstarter with better project accountability and a hardware focus I suggest looking at Christie Street: https://christiestreet.com
One of the problems with the Kickstarter model is that companies were offering product in exchange for funding.
They should have been offering stickers and mentions on a "Thank You" page, or tours of the factories, or some such. That would have created better expectations in the minds of funders.
Or they could have offered vouchers - "Pay $X, we give you a voucher that entitles you to one free widget if we go into production".
The current "challenges" question is not being answered as well as it could by several projects. It feels a bit like the "What are your weaknesses" interview question, where people are dodging the real answer and giving feel good sound bites. I have a lot more trust in the projects who make a solid attempt at answering that question fully.
Without a history of delivering product, a bank won't give you a loan against pledges (aka PO's), but there certainly should be lots of people who would give you a loan or buy equity.
If you can say to a VC "I've got a million dollars worth of orders, I need $500K to build them", you've got a much stronger story when talking to VC's than most do.
The project isn't up yet because my approach --having owned a hardware manufacturing business at one time-- is to have a fully engineered, DFM'd, production-ready product prior to launching the KS campaign.
I hate surprises. I've run into plenty of them in my design and manufacturing career. Things like sole-source components discontinued by the manufacturer a month before you go into production after THEY recommended we use that component and we spent eight months developing product using it.
Yes, hardware is different. That does not mean it is impossible.
I'd suggest perhaps emailing support@kickstarter.com and respectfully stating your case. Remember, this ain't Google-bots, there are people just like you at the other end of that email. Talk to a person, not to a machine.
Agreed. Hardware projects are too high-risk for a model like Kickstarter's, and it's difficult for crowdfunders to be fully informed about that risk when even the makers are often inexperienced.
Worse, they're all or nothing. If one of the major videogame projects runs out of funds, they can still release a beta version or even open source it. If someone is unable to finish a book, they can still send you the latest draft. When hardware projects fail, they probably can't ship anything.
There are flaws with this too, which I touched upon in the post. I think this is an opportunity.
I thought the whole point of Kickstarter was to "kickstart" your project with an infusion of cash allowing you to quit your job/outsource more work/whatever to get to market?
The "kickstart" part is what's missing with the selfstarter approach. We're funded so we didn't have this problem.
Maybe a new model could be a hybrid of incubator and crowdfunding. You apply with an idea. The incubator provides some up-front capital to get you started. They have expertise in hardware mentoring. Logistics, manufacturing, customer support, IP, warranties etc.
The incubator could build a brand and network of supporters, but be purely focused on cultivating innovative consumer product ideas and getting them to market.
Many people are not interested in funding hardware projects at all - hardware just has a lousy reputation.
But having a hardware incubator means you concentrate expertise in all the stuff that's traditionally thought to be hard about hardware. Things like suppliers and distribution and stock control and sub-contracting etc etc.
App.net, Lockitron and most recently Lumawake helped kick this off, with selfstarter. We contributed some changes back to help push it along: https://github.com/lockitron/selfstarter
There are flaws with this approach (no third party payment verification, no established network of donors). Which leaves room for further improvement.
Kickstarter is clearly focused on creative (which they're doing incredibly well with). The 2012 Kickstarter summary didn't mention any of the massive hardware projects.
When I saw Kickstarter I had the same feeling I had about Ebay (although initially Ebay weathered its risk storm) which was given the larger audience for the product (Ebay occasional sales, Kickstarter small investment) you could get better results than the customer could on their own. And people abused EBay too (selling stolen or counterfeit goods, ripping off buyers when nothing was shipped).
Perhaps there is a 'Craigslist' model of funding referral service to achieve the wide reach but stay hands off enough to keep out of the lawsuits. Ebay's solution to monetizing that was both a listing fee and a selling fee, something Kickstarter could also do (assuming it isn't patented).
We're using selfstarter to experiment if there's enough demand for individual developer/hacker kits. It's not economical for us to sell small orders unless they're batched together.
If you want a mobile device to locate itself indoors, why not use WiFi? Probably the entire place is flooded with access points already.
The site is strong so I'm intrigued but I have no idea what a practical application of this would be. I take it you guys don't either? :p
It's a rant about how complicated it is to finish hardware projects.
Kickstarter does movies (I didn't know that, I learned it here in the Kickstarter 2012 retrospective), lots of software, comics, publishing, etc.
So please rename to: "The problem with Kickstarter hardware projects" or something.
Kickstarter needs praise and applause because it is great and bringing joy to many backers and founders. Not criticism because one type of project have a 75% failure rate.
The goal of this post is to kickoff a discussion about alternative crowdfunding models that work better for hardware startups. It's clear that Kickstarter is moving away from these and focusing on creative.