Attention Suckers: Please Send Us Your Money

I bought an early Oculus Rift developer kit as a part of the Kickstarter. I paid $300 for it and it was worth every penny. I had no expectation of equity from it, because the product was cool and something I wanted. It's the wrong thing to criticize Oculus Rift for the simple reason that hardware crowdfunding has unlocked a whole new world of things that could be built if only you could prove people want it.

The crowdfunding campaign Oculus Rift ran proved people wanted it. We see this over and over again — if you can create a new class of consumer behavior (Uber, Google, etc) then you can create a valuable company.

Articles like this are sensational in that they sometimes incite misguided lawmakers to regulate. But in this case, crowdfunding is creating new economic activity, and any new regulation would actively squelch that — and kill viable new products and companies in the process.

... Except $25 for a t-shirt and $300 for a developer kit are about market rate for such items. Not anymore of a scam than buying t-shirts to help a rock band who might later make it big. And those fans usually complain too about sell-outs.

I think the point of this article is not that people think they got a bad deal.

The point is, if those 9500 people had pooled their money together beforehand and negotiated as a collective -- maybe you could say they incorporated -- they could have probably gotten a much better deal. This is to say, hindsight is not very clear, because you don't know what the other road looked like.

If y'all had sent your $2.4m to professionals to actually negotiate the funding of Oculus, I'm pretty sure you'd have walked away with at least 500% return on investment. Instead, you're defending your decision by saying you got at least 100% return, maybe, even though the target price for the product is < $300.

And you're right -- this is a Wall Street-like way of thinking. It also turns out to be pretty effective, overall.

That article is a very large troll. Any valid criticism seems to be run over by the bulldozer of BS. To extend that argument to all of crowdsourcing from one event seems dubious considering he works for a company that was built on money from wall street markets and is very closely tied to traditional finance. Could wall street handle the same scrutiny?

People will get more savvy regarding crowdsourcing but was anyone really duped? No lies were told afaik.

While I agree with the author that people need protection from themselves in some situations, Kickstartering ain't one of them.

I paid $300 for a dev kit and funded a company to do serious research on VR - the first serious research in oh, forever. They now employ John Carmack and Michael Abrash TOGETHER to work on this problem. This is AMAZING and the next few years are going to be AMAZING because of it.

Honestly, it's stated in every Kickstarter campaign that things might not turn out the way you want. You may fund a game that never comes to fruition. There's specifically a section on "risks" that campaign starters are supposed to fill out so that backers are properly informed. We know this going in, that things might not turn out the way we hope.

That doesn't mean the model is broken, and it doesn't mean we're all sheep.

I want to take a screenshot of this article and add the classic political cartoon caption: "Christ, what an asshole."

I'm really not sure what this article is suggesting, but it makes me angry. At first glance it seems like it is simply trolling for clicks, and in that regard it seems to have succeeded. However, its stance on investor regulation and somehow relating it to crowdfunding is confusing. Are they suggesting that anyone thought they could make a profit by funding Oculus? Are they calling for tighter regulation that would outlaw crowd funding? Or perhaps they think there should be less regulation to allow the masses to purchase equity in startups? It just feels like they are purposely misrepresenting the facts, and have some sort of agenda.

"In the case of Oculus, where you weren’t even promised equity, you simply revealed yourself as clueless naifs."

This article has a fundamental misunderstanding of why people contribute to kickstarters. I think most people's motivation is closer to charity than it is to investing and I think people understand that difference.

Ironically, the author implies he knows what is best and needs to protect the "sheep" from this "scam", yet he obviously doesn't have an even basic understanding of why people contribute to kickstarter.

A much less click-baity pice on the same site by a differentauthor: http://www.bloombergview.com/articles/2014-03-28/crowdfundin...

A valid point is that what a kickstarter is exactly can be a bit ambiguous and Kickstarter arguably makes it more so. It's not an equity investment. OK. It's also not a pre-order. OK. But (according to Kickstarter's terms of service) if you don't deliver on the promised reward you have to refund the money. OK? Well, doesn't that sound a lot like a pre-order. And where's the money coming from if it's already been invested in an idea that just didn't work out?

Now, in practice, things generally work out. Lots of projects fail and most rational people realize that sometimes stuff just doesn't play out like they'd wish. (OTOH, one can certainly find discussion boards filled with unreasonable people talking lawsuits etc. for failed projects.)

This article is pretty misinformed. Title III of the JOBS act, which would allow crowdunding-for-equity, is still pending SEC rulemaking [1].

[1] http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups...

The author of this piece is pretty naive on what average people actually "Contributed" to Oculus. $25 - $5000 for actual material goods is akin to pre-orders, at market prices.

Everyone sees risk differently, the "contributors" for Oculus, saw paying $300 for a dev kit as a risk they were willing to take vs. $10K for a .01% of the company that may never produce a return.

The sale to facebook (of all places) was not reasonably foreseen and especially at the price paid.

If the author would have looked at contributions thru the lens of risk mitigation, he would see that the "contributors" actually made a very sound financial decision.

Agreed, the current crowd funding model is broken.

Though interestring, if you backed Oculus with $300 and got a devkit for that, I think that's reasonable.

So the lesson should probably be only do crowd funding when it's essentially a pre order?

The oddest thing about this article is that the author seems to think that the JOBS act is to blame for Kickstarter backers being fleeced, which is just weird.

Unless I'm missing something, JOBS doesn't have anything to say about non-equity crowdfunding:

http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups...

I don't get how this is a scam. Did the people get their thank you, their tshirt, or development kit? AND didn't the company get kickstarted? So the people got exactly what they paid for, and presumably exactly what they wanted. So where is the scam?