Kickstarter project spent $3.5M to finish a prototype and ended in disaster
arstechnica.com
arstechnica.com
Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. There's no more due diligence than watching a video and reading over some text frequently in funding a project.
Even projects with competent people in well funded companies fail all the time and get shut down (see Google Buzz, Google Health, etc). There is no such thing as a promise that things will succeed.
I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"
VCs back huge numbers of companies and expect most of them to fail, hoping that the few which succeed make back enough money to compensate for all the failures. Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. We can't expect people who back Kickstarter projects to accept VC-level failure rates because Kickstarters simply don't - and can't - give enough back when they succeed to make up for the failures.
The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Kickstarter backers should expect VC-level failure rates as a lower bound.
(I know, it's rhetorical. VCs get a lot more information and have a lot more experience than Kickstarter backers.)
edit: I accept that that's entirely possible, I just think it's a better subject for a academic study than for a rule of thumb.
True, but it's even worse than that. VC funded companies sometimes have an upside. E.g. Oculus Rift got over $2 billion from Facebook. The Kickstarter "backers" received exactly zero percent of that upside.
Another difference is a lot of Kickstarter projects are well below the scale that VCs would notice, and are offered by businesses that are going concerns as a way of mitigating risk -- there not all startup firms using Kickstarter as an alternative (or supplement) to VC funding.
Then they're doing it wrong. Supporting a project on Kickstarter is a donation. A vote of confidence. That people are using it as a store and a ridiculously high-risk low-return investment vehicle is completely absurd. The blame should probably be put on Kickstarter themselves for what seems to be a major failure to establish the right expectations.
Look at r/shutupandtakemymoney. Of the 25 posts on the first page right now, 11 are either kickstarter or indiegogo. Is it Kickstarter and Indiegogo's fault that individuals are using that form of venue to market and sell a product that doesn't exist yet? Is it reddit's? Or, is it the creator's fault for submitting the link?
I pose that it is inevitable that these sort of sites are used this way. People want to market their crowd funding opportunity to enable their company to get off the ground. It is easier to market a future product compared to a donation, so creators and marketers are going that route.
It actually is a promise. The Kickstarter terms of service require successfully funded projects to deliver the rewards that backers have paid for. If a project can't guarantee that they can deliver a finished hardware product, they shouldn't offer it as a reward.
Shouldn't that be:
If a project can't guarantee that they can deliver a finished hardware product if the project is successful, they shouldn't offer it as a reward.
Otherwise surely no project can offer the product as a reward to backers as success is never guaranteed.
Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill.
from:
https://www.kickstarter.com/terms-of-use
So it talks about the fundraising succeeding, not the project.
But it also says that is one of the terms of the contract created between the project and backer, don't pester Kickstarter about it.
In their terms Kickstarter make statements suggesting it is a funding program but they also say in their "Acceptance of Terms" part that any policy expounded on the site is incorporated by reference. Kickstarter state on their /learn page for example "Kickstarter is a vibrant community of people working together to bring new things to life." making it clear that success on Kickstarter is bringing a making project to fruition. It _doesn't_ say "Kickstarter is a way to acquire funding", so that's not the goal of a Kickstarter project and thus not the measure of success.
To reiterate this point, in the FAQ accountability section it says:
> "On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it." //
Again highlighting that projects are not funding, projects are encouraged with funding.
There's little about unsuccessful projects, some details about how they're swept under the rug, but there is this in the FAQs:
> "If the problems are severe enough that the creator can't fulfill their project, creators need to find a resolution. Steps could include offering refunds, detailing exactly how funds were used, and other actions to satisfy backers." //
See that "could", why not "must"? Why not "creators are required by their assent to our contract to find a resolution"? It seems Kickstarter consider a report of how funds used to satisfy their requirements.
There is this, https://ksr-assets.s3.amazonaws.com/creator-responsibility.p..., which appears to contradict that FAQ.
[PS I'm not sure I've convinced myself but I do think someone could make this case, possibly make it stick. Kickstarter could tighten up their language in a few places but ultimately they are financially primarily motivated to get as many projects funded as possible whether they are successful or not, funded projects earn them money whilst shipped rewards don't. Kickstarters other motivations aside of course.]
I also wouldn't give money to a Kickstarter project if I thought I cared enough about the money that I would end up chasing it in court (that is, none of this is a practical concern for me personally).
I bet they would have been more successful with less money. Money gives you freedom(to start over, to feature creep, to bikeshed, to grow faster than you can manage, etc) and security (which makes you less "hungry" and desperate).
I thought long and hard before posting this, because obviously hindsight is 20/20, but I went back and looked at the product description again and I stand by my opinion. IHMO it was a turkey from the word go.
The worst part is, I can buy 1Password for Mac for $50, and the iOS version is less than $20. Anybody interested in this sort of thing should really check out the alternatives already!
1. The actual project.
2. The rewards doled out to supporters of the project.
1. The rewards are a contract. If you fail to deliver
the rewards on whose terms the backers supported
you, you're legally liable.
2. The rewards may be delayed, as long as regular
communication about the actual progress happens.
The fact that most project are confident/stupid enough to offer rewards that can only become reality if the project succeeds has muddled this reality in the mind of the average person, but the rules and legal realities are crystal-clear.
Example: $100 Dollar Level, tshirt + coupon for discount on items that we sell, available for use on target completion date (which just happens to be projected cost of baseline project item)?
Edit:
Found the answer...
> Discounts, coupons and gift certificates - Offering a reward at a lower price than what it may cost post Kickstarter is fine, but a future discount or coupon as reward is prohibited. Additionally, vouchers in exchange for a particular item (a meal, a book, etc.) are fine, but monetary gift certificates are prohibited.
A little disappointing, but I can understand why they'd take this stance. (Likely because of money transmitter laws.)
(It's possible you could still phrase it as equivalencies, eg, "one X, OR two Y, subject to availability")
However the rules state one thing clearly ( https://www.kickstarter.com/rules ):
Projects must be honest and clearly presented.
(You could even make mod versions with "failed" on them after the fact, and use the coupons to buy those.)
Naturally, you should have giant, red, all caps letters explaining you're funding development, and might never accomplish the project successfully. Coupons only cover items posted for sale in the store, etc etc.
I'm mostly just curious about it as a legal method to give the reward at a tier without promising the exact reward.
(Side note: is this also an end-run around the multipack rule?)
The problem here is that as much as kickstarter wants project owners to be clear about the risks, they themselves don't want to do anything site-wide that may reduce overall revenue. At some point they'll realize they can't have the cake and eat it too.
The reality of course is that projects do fail and there may be breathless rhetoric about lawsuits and such on discussion boards but there's typically no money to be had and the online temper tantrums don't go anywhere. So the Kickstarter requirement doesn't have any real teeth.
I can't see that happening. Though, I'm not sure what if anything has changed since I was discussing this [1] on HN over a year ago.
Because regular people aren't equipped to evaluate risk and projects go out of their way (often dishonestly, even if understandably) to minimize the perception of risk.
It's a system that takes advantage of suckers. Some folks find that to be okay, but it bothers me even as I consider using it (because of not having any other real choices for funding a game in 2014).
Kickstarter should really emphasize "The risk of failure is high, and you stand a good chance of never receiving anything for your money"
So Kickstarter with product-as-reward makes a lot of sense for going concerns there because they have fairly good ideas what production costs are going to be like and what scale they need to reach to get a product with particular features out.
Its not the sexiest use of Kickstarter, but its probably the most sustainable, and it does enable things that would otherwise be too risky to produce.
Every VC backed company, or big company project that fails without any shock has shipped. If a kickstarter campaign ships the product and it falls short of expectations, no matter how short it is, it is ok. But if it says it is all set and done to ship, get the money and don't ship, that is a problem.
I mean, even if you don't agree with that sentiment, you can see that other do, right?
It basically is, or at least a market -- a place where buyers and sellers meet and form contracts and where the sellers get the money from the buyers in exchange for the promise of some specified future delivery.
Sure, some sellers would like to have store-like inducements to the buyers to hand over money, but not store-like obligations to provide the offered goods to the buyers.
> Why is it a shock that Kickstarter projects fail?
Its not a shock when projects fail. Its a breach of contract when people accept money in exchange for a promise of future goods and then fail to deliver the future goods.
Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable.
This is actually an excellent point, but...
The reasoning behind this "pre-sale" approach is about the perceived value of the reward. An traditional gift might be acceptable (T-Shirts, etc) but there is something unique about being offered something that's not on the market yet. It makes the customer feel special, something they might be able to brag about if the product is a success.
Something akin to the concept of "Collector Edition" in the game industry.
That will add value to a reward, will attract more customer an in turn increase the chances of a successful campaign (even though successful campaign does not mean successful product).
It is a good way to kickstart a business.
Riskier? Yes. Short sighted? Yes and no (Actually no).
Short term cost is 0 (great), long term cost is your manufacturing cost + distribution cost (ouch).
That doesn't seem right? Actually it is.
You're actually paying for: + User acquisition + Early product validation (Lean Startup) + Momentum + Beta testing for the whole product pipeline and the product itself
I think that as a company it is definitively worth the risk. You have to be able to take risks sometimes in order to be successful.
My 2 cents.
But let's not quibble over what Kickstarter is. There is obviously a lot of value in having some kind of market where people hand over money with the risk of project failure, in order to potentially get a new product that they want to exist built.
How would you create such a marketplace and communicate clearly that that's what it is? I ask because I thought Kickstarter was exactly this, but apparently you don't agree, so I wonder where our difference of opinion stems from..
My view is based on things like Kickstarter's terms of service and contract law.
And the complaints about failed delivery of rewards indicate that it is also consistent with the way many backers see Kickstarter.
Certainly, I can see why each individual project team would like the idea of getting funding without giving up either equity or an obligation to pay money later (as they would in traditional financing) or an obligation to provide product (as they would in a preorder, or in Kickstarters existing terms if they offer the product as a reward), while still using the product as an inducement.
> There is obviously a lot of value in having some kind of market where people hand over money with the risk of project failure, in order to potentially get a new product that they want to exist built.
And Kickstarter can be that without product-as-reward -- after all, if the project is for a product to be offered to the public, people who back the project can "potentially get" the product (contingent on project success) when it is offered to the public.
Competent technical people. The non-technical leaders of for example Google Wave did not really show any apparent competency, leading to a project that has been excitedly received to stall just because someone thought it a good idea to do a closed beta (the closed beta worked for Gmail because the early Gmail users could communicate with any E-mail user, but competent people would have anticipated that this would not work with Wave; they effectively created a super-nerd ghetto, which obviously no sane person wanted to be part of after the beta was over).
One of the problems with this is that our brain tricks us into believing that we're better guessers than other people, because hey, look at all the times we were right in the past! Except we weren't right - it's just our memory deceiving us.
All of this is to say - Google hires extremely smart people. I would really hesitate to call them incompetent, both because what you say was "sure to happen" is a big dose of hindsight, and also because you have no idea what their goals were - for all you know, they took a risk that the project would either stall or become super-successful, so they shot for the moon. That's a legitimate option.
I think it would be wise for hardware companies to collectively start lowering expectations from campaigns like the one described here.
The team at Spark Devices did a great job with this process. Their first project, the wi-fi bulb socket [0], had a large funding goal and a more realistic timeline. When the campaign failed to materialize they shifted directions to the Spark Core [1], which was much more successful and delivered very close to the projected timeline if I remember correctly. Now they are closing a sizable series A [2] to build an operating system for the internet of things.
If they had originally made the Spark socket goal $100k they would have reached their goal and then likely failed to deliver with the cash they raised, which would have pulled them down into the mess that is described in this article.
Maybe more hardware teams should take a good hard look at how they view failure and decide if they want to be the next Spark or the next myIDkey.
[0] - https://www.kickstarter.com/projects/sparkdevices/spark-upgr... [1] - https://www.kickstarter.com/projects/sparkdevices/spark-core... [2] - http://techcrunch.com/2014/07/08/spark-io-raises-4-9-million...
I'm not sure whether it's because the community thinks "Oh, hardware is so much easier than software! This will be a snap!" or if it is the more subtle "We haven't done this before, so we aren't aware of the pitfalls"
I'm not sure how people could think this. Hardware is a much less forgiving medium than software:
- If your web application requires three times the resources you thought it would, you can easily add more servers. But a device that needs to fit in a USB key has hard limitations on size, memory, power dissipation, etc. You can't ask people to carry around a briefcase-sized device (or even another phone-sized device) to hold their passwords.
- If your web application has a horrible bug, you can wake up your developers and have them fix it at 3:00 AM. If you find a bug in your embedded software after you ship, it can only be fixed by getting all your users to upgrade their software (assuming your embedded software is in flash memory, not in ROM). If you find a bug in your hardware after you ship, you need to send everyone a new device.
People like to think that their discipline is the hardest discipline- that means they are smart just by association.
Also, if you are a software guy you might never have even heard of key steps like DFM, DFT, etc, which makes it easier to say "hardware seems so easy"
I've literally never heard anything say or think that. Myself included, nearly every software developer I know is intimidated by how hard hardware seems.
E.g. at one company the engineering VP was a quintessential hardware guy. He understood hardware complexity; he knew little about software. He never could understand that software could also be hard to do.
I didn't mind, I was a hardware guy. But the software people were definitely sucking hind tit.
I'm not good enough at DSP to isolate the signal from the noise.
Signal to noise is actually pretty easy, just have a Fourier transform to pick out the differences between a background you set before. Typical applications are pretty immune and the ratios are very high usually.
I think "Hardware won't be THAT much harder" is more like it
This kind of project needs something like 2 engineers max who really know what they're doing. Unfortunately, very few people know what they're doing.
Anything more than that and you are doomed. The hardware is about $100K to develop if you know what you're doing. Probably closer to $250K if you don't.
Everything else is time--software, debugging, user testing, etc.
Andrew "bunnie" Huang's blog is great for understanding all the crap you are going to wade through to do production. http://www.bunniestudios.com/
The discussions about what goes into producing the DEFCON badges each year are also fascinating: http://www.nutsvolts.com/uploads/magazine_downloads/DEFCON-1...
The DEFCON discussion is always especially interesting because it is a VERY constrained problem: low volume overall (for electronics <50,000 is low volume) but high volume in terms of units-per-time, tight cost constraint, generally a tight battery constrain, and a desire for hackability.
Operations is hard. Let's go shopping.
There is a reason why there is a Chief Operations Officer in manufacturing companies ...
The exception was DEFCON 19's non-electronic, titanium badges, which were not just on time but arrived so early that the DEFCON staff hadn't taken over the conference location yet, so they ended up getting stored in someone's hotel room.
Whether or not you agree with the outcome of their decisions, you can't simply huff that PayPal has no "right" to decide whether to take on those kinds of risks. They clearly have skin in the game.
People like the safety net of chargeback and it encourages them to fund you.
How ridiculous is this. People paid for a product (support) in order to receive what they were presented. The creator could then release version 2.0 after a year with updated features instead of making this decission. It would be like person would buy an Iphone 4 in shop and after he paid the guy behind the counter would say "sorry, I changed my mind, you will get Iphone 5 in 1 year because its better. Your money is ours now, so good bye and see you in a year."
The decisions made behind this seems to be immature - similar unfortunately to pretty large chunk of Kickstarter startups.
The Kickstarter seems to replaced government grants for some, where people would risk it to achieve success, but if they fail cause of issues/bad decision they don't care because it wasn't their money anyway. To many people with no prior life experience starting projects and businesses.
You're not paying for a product, you are helping fund a company or project who has no legal obligation to give you anything.
If you are donating to a KickStarter just because you want the reward they are offering then you should do sufficient research on the company and their founders to ensure that you trust that they will deliver what they promised.
Is a creator legally obligated to fulfill the promises of their project?
Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.
https://www.kickstarter.com/help/faq/kickstarter+basics
This isn't just hypothetical: http://www.pcworld.com/article/2150780/firstofakind-kickstar...
From that same FAQ: "Kickstarter does not guarantee projects or investigate a creator's ability to complete their project. On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it."
In court it's probably about as valid as a Terms of Service agreement on a website or a "by reading this you must keep the contents of this email confidential" at the bottom of an email.
Most users sponsor project to get early and discounted access to cool stuff - if you fund Kickstarter projects for other reasons - good for you. But dont expect others to follow. Some people hard earned money are in stake, they expect to get something from it and when creator just blatantly changes what he has to offer while sponsoring his high lifestyle from money received - thats just bad.
You got money for something - do it. You want to develop something different, better? First finish what you have promised, then move on for money your company earned itself.
There is a reason why KickStarter forbids calling a reward a pre-order.
I think a good solution would be to forbid the product being developed from being offered as a reward and instead allow a coupon (free, half-priced, whatever) to be the reward with the understanding that the technology product might never be produced.
Kickstarter has many other products that are not technology focused, these kinds of development issues and product delivery issues are less of a problem when you don't have major technical challenges to overcome.
Look at Lockitron, it seems like such a simple concept and device, but as they've shown, making it a reality is difficult.
There is a high chance of failure in the startup world, investors should be aware of this. Kickstarter should make this very clear to people and limit the types of rewards so that people (who arguably shouldn't be "investing") are not disappointed if the project just doesn't work out.
Plenty of people do it anyway. For example: http://earin.se/ -- "We are live at Kickstarter. Order your Earin and help us get the world’s smallest wireless earbud to market."
I think a large number of people starting projects like this is necessary. True, many of them fail. However, it is in the process of failing at a first attempt that many people will gain the experience necessary to help them in later projects. So there is nothing inherently wrong with failure.
My interpretation of the article is that the developers did not handle their failure correctly. They were not clear in communicating and responding to the difficulties they were facing. The failure was left unaddressed, and only compounded over time; this was the fault of the developers. A more adequate solution would have been to recognize that changing the product to quickly was not the right approach; releasing a project without all of the desired features at a sooner date may have been preferable.
Beyond that budget everyone will focus on engineering it to work with every authentication system ever, rather than creating a simple USB HID device that types a username, the tab key, a password, and presses enter.
Problem: Users cant remember their passwords.
Actual Solution: Device that stores and recalls their passwords.
Engineering Solution: A bunch of crypto stuff, tempest hardening, pen testing, some more crypto, a provably secure RNG, 3 different interfaces and drivers to integrate the device with Linux, OSX, and Windows crypto systems, a bunch more user installable software for 3 platforms, tamper resistant chips, etc.
Call me crazy, but how about Kickstarter clamps down on ambitious hardware products like this? I don't think they are doing enough and it's tarnishing their image as a credible crowdfunding platform (at least to me anyway). It's obvious that there are very few exceptions here that a hardware Kickstarter campaign will not fail (Oculus Rift comes to mind and a few other smaller ones).
Definitely hardware failures are a PR challenge but kickstarter's margins aren't affected by COGs and hardware projects tend to require more money (as you pointed out). They've got lots of motivation to make it work.
Personally, I very much doubt they ever had a working prototype.
It's in tabloid's interests to stroke controversy by suggesting it's a store whenever projects fail.
Clickbait articles like this will continue to be made as people are gullible and easily manipulated.
It's valid to question the Kickstarter model, because sometimes, projects don't deliver.
I still think it's a great model, but I understand the risk. It is valid to inform people of the risk, though. That's news.
From their FAQ:
Is a creator legally obligated to fulfill the promises of their project?
Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.
1 (of a person) surprised and confused so much that they are unsure how to react: he would be completely nonplussed and embarrassed at the idea. 2 informal (of a person) not disconcerted; unperturbed.
usage: In standard use, nonplussed means ‘surprised and confused’: the hostility of the new neighbor's refusal left Mrs. Walker nonplussed. In North American English, a new use has developed in recent years, meaning ‘unperturbed’—more or less the opposite of its traditional meaning: hoping to disguise his confusion, he tried to appear nonplussed. This new use probably arose on the assumption that non- was the normal negative prefix and must therefore have a negative meaning. It is not considered part of standard English.
There's an easy way around that for projects, don't offer the output of the project as a reward for backing it.
> I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out.
Okay, back projects where the creators don't offer the output of the project as the reward for backing it. (Or, projects where the development is already done, and the Kickstarter is just being done for initial production costs, so the product isn't speculative.)
> And I certainly don't want people to be able to sue those creators if it doesn't work out.
The only reason people could sue the creators is if the creators offered something in exchange for money, received the money, and didn't deliver as promised.
The creators are in full control of what they offer as rewards. It seems to me that the problem is that some people want creators to be able to use the promise of a product they don't know that they can produce as inducement for people to give money, but not be obligated to actually follow through.
The "Designs" are complete, patents filed, component suppliers selected, the manufacturing process is defined, the CM [contract manufacturer] chosen so all we need is your support in this project as we size the first myIDkey production run and ship product in September 2013. Please make a pledge and receive your myIDkey!
I wonder if this is actually true and if there's any hard historical data on this. It sounds to me like a statistic he just made up.
So far it's been a 99% successful guiding principle (with the big exception early in Internet advertising I wouldn't have enjoyed anyway).
That was never going to be an easy switch. A3 is a microcontroller, A5 is a full blown cpu.
didn't bill gates already say something about it ?
the revenues from IT project investments are so high compared to investment costs, that in the end you never lose money by seeing so many projects crash like that.
Of course if the government would manage those things, it might be a little more efficient and might deliver more results... I guess that's how the silicon valley works... Freedom has the advantage of letting the market decide, but for innovation it's never really obvious...
go and downvote my political comment
What's the alternative?
The economy is an incredibly complicated system. Any top-down model will fail. What we have right now (free-market base and government regulation) kinda works. Or at least, it works better than anything else we tried.
government research, like darpa.
A top-down approach to controlling all aspects of the economy, a la communism, has pretty much been shown to be a disaster. It has to be. How can you create a bureaucracy to track millions of products and expect to 'compete' with a bottom-up approach of free enterprise? Even conceptually, at best, you'll be behind. At worst, you destroy the economy.
> How can you create a bureaucracy to track millions of products and expect to 'compete' with a bottom-up approach of free enterprise?
Because real, ground breaking research is truly expensive. Making a new product is not research. Kickstarter has its flaws because it's often made of non-experts. Meanwhile, the IT field is mostly filled with codemonkeys making products, who will only end up doing "innovation" who can benefit them but not their competitors or the whole industry.
The true innovators are entities like intel, nvidia, IBM, AMD, ARM, the IETF and IEEE who are able to create standards like USB, wifi or bluetooth. You won't see Kickstarter pushing new standard that would have a real impact on markets.
I don't see kickstarter to help funding something like bittorrent, the raspberry pi, firefox or docker for example. Kickstarter is great to give a chance to broke, talented hackers so they can get some experience in the business, but I don't think I could expect anything else really meaningful. Everything is patents, and real research is gloomy. It's lego prototypes at best, against patents holders.
That's why I think the capitalistic, patent holding investment model is doomed to waste money over and over until you might end up with some groundbreaking product. If a new product can threaten a company market, it will most surely land in a trash bin one way or another.
You mean all those private companies? I wasn't talking about Kickstarter. Kickstarter is a toy service for funding toy products.
When I said a top-down vs bottom-up approach to the economy, I meant a single government-controlled bureaucracy vs. private enterprise. In this case it would be government vs. IBM, AMD, Intel, Microsoft, and every other private enterprise. I didn't mean Fortune 500 companies vs. startups.
Was is the government, or did it come from private profits ? How much money private companies are willing to invest, and where do they really direct their research ?
That's why the government's spending is a little more focused and objective because it won't be research that will increase profits of certain companies. You can be sure government research will benefit everyone.
If apple invests a lot of money to have a unscratchable screen, it's not really smart research. In the same idea, intel doesn't seem to really improve its processor designs like it was able to increase frequency for so many years. That's why darpa, the DOD and NASA do more relevant research, because they know what direction to give it.
The development of computers for example, started because the army was using it. Darpa released the internet protocols to the public. The DOD made the GPS possible.
Today technology is much more complex than what it was 100 years ago, so even if the research is executed by private companies, you can't really expect private capitals to search for discoveries that might not be exclusive to them. Even patents can't always generate revenues because it's easy for china or russia or other countries to find out what discoveries were made, and find it back and sell it. That's why it's important to consider how research funds are spent, on what, for what expectations.
That's just wrong and it hurts ... Intel is improving their design every year. They extract much more efficiency per CPU cycle, per Watt than we have ever before. It turns out there are fundamental physical limits to what we can do with Silicon and we are hitting them now, after near 40 years of exponential growth driven largely by private industry. Are you purposely so ideological blind that you aren't even willing to grant that??!
You're arguing for either-or and I'm saying you need both. There are areas where, the government laid the ground work and private industry took and ran with it. The government was never going to create a smartphone. Smartphones are a product of years of iteration, coupled with runs of hundreds of millions of units.
>That's why darpa, the DOD and NASA do more relevant research, because they know what direction to give it.
No, they don't. They didn't know that people would have wanted to use computers at home or in their pocket. They didn't know you could miniaturize transistors to the extent that quantum effects would be a problem. They didn't know, and they didn't care.
I honestly don't know what you're arguing. You seem to argue for some form of traditional Communism in place of the free market system with now (with government regulation). We generally know how that goes. Focused government research will create the impressive Soviet space program and leave little room for TVs, microwaves and smartphones, and spread misery and massive waste around.
Markets will indeed improve existing technology, but they won't find anything really ground breaking. A smartphone is just a compact desktop, with less functionalities and capabilities. It's just another product, there's nothing really new about a smartphone.
DARPA and NASA can do research markets just can't do, not because the markets are not able, but because markets are just an economical tool to deliver products.
I'm not arguing for communism, but I think that real research can't be driven by profits.
> Focused government research will create the impressive Soviet space program and leave little room for TVs, microwaves and smartphones, and spread misery and massive waste around.
Since when does TV, microwaves and smartphone solve misery and waste ? I'm just saying you need space for both capitalism and government, I think today, after the end of the cold war, in the US, there is just too much space given to companies and capitalism, and not enough to research that benefits the public.
Without support of the government, Tesla would have never appeared. Markets are just not able to create real alternative, they tend to scratch for more monopoly and monolithic technologies. More lawyers, more intellectual property, less engineering and real innovation.
It's crazy to read you talk about the soviets, to even manage to have a space program without capitalism shows that capitalism is not essential. It's a catalyst, nothing more. It won't give new technlogies, because money speaks for money, not for improvements. Learn to make the difference between increased profits and globally increased efficiency.