Is Kickstarter covering up a scam? An open letter to CEO Yancey Strickler | Hacker News Reader

Is Kickstarter covering up a scam? An open letter to CEO Yancey Strickler

joanielemercier.com

351 pointsnallerooth77 comments

I was surprised to learn that the familiar "Kickstarter Staff Pick" badge can be used by any project and is sometimes an outright lie. That's ridiculously deceptive.

This is ridiculous. Their home page has a 'Staff Picks' section currently showing 15 projects, 7 of them have that badge visible in their image there. It's stupidly misleading not to expect people to make that connection.

That's very odd. Searching for "Kickstarter Staff Pick" seems to indicate that it actually is what it says it is. On the search page, https://www.kickstarter.com/discover/recommended , Staff Picks is a search criteria and has considerably less projects than "Everything".

If their position is that anyone can use the image, why not take it a step further? Make a new badge, like "Kickstarter Verified Technology" or worse.

The staffer appears to have misinterpreted the question. As I understand it, there are staff picks, but this doesn't result in getting badged automatically. Some projects elect to display a badge themselves. That's what the answer says. It's not responsive to the question of fake badges. Possibly it's a canned answer to "why isn't my staff pick project showing a badge?"

I don't understand how that isn't a huge trademark issue for kickstarter, since american trademarks are on the base of "protect it or lose it".

Edit:

To make it clear, here are some quotes from http://www.inta.org/TrademarkBasics/FactSheets/Pages/LossofT... :

"it is possible to lose rights in a mark by allowing third parties to use the mark without controlling how it is used. This can include failing to control the nature and quality of the goods and/or services offered under the mark by the third party."

"improper use by a trademark owner or third parties also may result in the loss of trademark rights. A trademark should not be used in a manner that strips its significance as an indicator of the source of goods and/or services."

(emphasis mine)

You can only use it within the context of kickstarter projects. You can't use it if your crowdfunded project is not on kickstarter.

I know someone who is currently running a Kickstarter and who is also a 'Staff Pick.'

As far as I understand, some (not all) campaigns receive an email at some point to congratulate them on being named a 'Staff Pick.' The email isn't 100% clear as to what being named a SP means. KS actually discourages the campaigns from putting up a badge, but many of the projects do anyway.

There is little to no policing. So, my guess is that some projects use the badge regardless of whether or not they're a SP.

Personally, I think they should formalize the process and bop the heads of those that are misrepresenting themselves.

The quote from Kickstarter, according to the author:

"[The graphic] is not an official Kickstarter badge, nor is the badge granted by Kickstarter"

Note that this doesn't necessarily say "we are okay with people using this." In fact, the quote could easily have gone on to say "people who use this are violating our trademark and we intend to pursue removal".

>american trademarks are on the base of "protect it or lose it" //

Pertinent to the supposed "failure to police" please cite where that is in the USC, thanks.

You have a trademark by virtue of use. You have a registered trademark by virtue of paying for the registration and continued payment of renewal fees.

>To help avoid such adverse consequences, the trademark owner should police its mark by enforcing [...] While some courts have determined that a trademark owner need not necessarily prosecute every infringing third-party use of its mark, such third-party uses can still affect the distinctiveness of the mark in the mind of the public. [...]

Sounds like they think you should rather than they determine that there's an actual "failure to police" clause in the USC.

An additional aspect is that you can offer a license to any user you come across. So if "failure to police" were true you still would not need to prosecute people for infringements in order to retain the mark provided they agreed to your [as liberal as you like] license terms.

That's...half right.

If a term becomes generic, a trademark is abslutely lost under US law. And one of the easiest ways for a term to become generic is via unauthorized third party use. If Kickstarter didn't immediately threaten to sue, eg, Indigogo asking people to "come kickstart a project on Indiegogo" then they would be on a short path to losing their trademark by virtue of, yes, their failure to police their trademark.

So yes, there is absolutely a requirement to police third parties using your trademark in a way that treats the term as generic...which isn't the case here. Even if every damn project on Kickstarter said they were a "Kickstarter staff pick" it doesn't make "kickstarter" into a generic term for "crowdsourced funding".

Genericisation is pretty orthogonal to supposed "failure to police". Moreover genericisation is definitely not an issue here as the trademark is being used to refer to the services of the trademark owner.

>one of the easiest ways for a term to become generic is via unauthorized third party use //

Yes, sort of. The third parties are the public though. In practice words used as marks don't become generic terms because your competitors infringe your trademark, they become generic when you corner the market and in the public perception your product becomes synonymous with that type of good/service. Ordinarily when people raise this "failure to police" argument they're claiming that Jack Daniels have to sue - for example - a writer for using a similar style of writing on their book-cover or they'll lose their RTM.

>I don't understand how that isn't a huge trademark issue for kickstarter, since american trademarks are on the base of "protect it or lose it". (Mithaldu up-thread) //

The badge does appear to use the authority of Kickstarter's mark, in order to sell Kickstarter's product, this isn't a competitor appropriating a mark but a customer using a mark without express permission. There might be a case for exhaustion of rights (where a supplier can't sue a customer for retailing goods with their TM on). It's not deceptive of origin and apparently it's also truthful.

Incidentally "kickstart a project" is perfectly acceptable - you can't trademark common language, or rather you can sometimes but still not prevent others from using that language. "Kickstarter" wasn't and isn't a term in the relevant fields, indeed the part of a motorbike is just a kickstart but normal extension of language would have someone who kickstarts something termed a "kickstarter" - it's a terrible choice for a RTM and should probably have been rejected by the USPTO.

In truth Indiegogo should triumph over such an attempt by Kickstarter to sue for RTM infringement, but Indiegogo would probably be shy as IP cases are seemingly often poorly judged.

"kickstart" is already common language, "Kickstarter" isn't however: "I'm looking to kickstart this project" doesn't use the RTM.

I don't understand why KS created that badge if it's self appointed and doesn't mean that the staff actually endorsed the project somehow. It looks like customer deception now, both from projects and KS.

For those who don't know Joanie Lemercier, he is a famous artist that have been working with unusual displays,projections and hollograms for the last 15 years. I think he should be taken very seriously by anybody who is willing to pay for Holus.

493 backers have paid 600$ in average for something they might not expect. If you have a friend that backed that project, at least make him read the article. If he still want to spend money on this so be it.

I think what we’re seeing here is that well-funded projects get a “most favoured nation” pass to flout the already weak oversight that Kickstarter exercises.

A true indie shop running a crowd-funding campaign has very little money to buy marketing and PR, so they’re essentially consuming Kickstarter’s brand and traffic.

Whereas, some of these new-breed well-heeled campaigns spend more money on marketing than the campaign is designed to raise. These campaigns are not consuming Kickstarter’s traffic and brand, they’re contributing to it.

And whatever we might think of using words like “hologram” for this magic pixie-dust product, the odds are reasonable that something will ship to the backers, so Kickstarter’s reputation is less likely to be tarnished by a VC-backed campaign than by a truly independent project where they don’t have the budget to hire an experienced team.

So from Kickstarter’s perspective, well-funded “crowd-funding” campaigns that are actually marketing stunts is very good business, and I predict they are going to shift more and more of their emphasis this way, just as consumer-facing companies often gradually shift to becoming enterprise-facing companies.

As a prospective backer, this is far less attractive to me, so I am not advocating for this shift. But I do believe it is happening, and I believe that this explains why Kickstarter seem to have done little more than send an email saying, “Hey, bro, cut out the CGI, this gadfly is turning into an embarrassment for both of us. And good job, please bring us more campaigns, we love doing business with you.”

p.s. I’m curious as hell about their pricing model. I wonder if VCs can secretly negotiate lower fees than indies.

I'd suggest that unfortunately the incentives for sites like Kickstarter/Indiegogo/GoFundMe etc are to get as many projects successfully funded as possible that that predicates against rigorous scrutiny of them and exclusion of dubious projects.

There have now been quite a few examples of crowd-funded projects that just haven't delivered and never will (Eyez was a good early example https://www.kickstarter.com/projects/zioneyez/eyeztm-by-zion... $343,000 taken in with nothing to show for it)

To be fair, Kickstarter et al. are not shops. We had this discussion many times over the year, the point of crowdfunding was to invest in potentially interesting ideas, and not to have a preordering venue. So the risk of a project not delivering was always there, a part of the game. But when Kickstarter was busy explaining people they're not a preorder store, startups and VCs figured out that crowdfunding is an excellent marketing channel, so I don't know if anyone is sure what the whole concept is supposed to be anymore.

EDIT: to commenters responding - fair enough. There's no equity so technically it's not investing. Maybe "patronage" is a better word.

Likening Kickstarter to an investment has always concerned me. Investment implies a return if the idea is successful and (as you can see from Oculus Rift) early kickstarter backers didn't get any of the very large payout that Oculus got when the were bought by Facebook.

We're starting to see that idea come about with platforms like https://www.seedrs.com/ where if it goes swimingly the backers do well out of it, which kind of offsets the risk.

I think the problem with standard crowd-funding is the people doing the project obviously have an interest in downplaying the risks, and the platform does too, so with no regulation that's exactly what'll happen, and then we get a lot of very late, underdelivering projects which will sour people on the whole concept.

> To be fair, Kickstarter et al. are not shops

"shops" doesn't mean anything. Ultimately it will be for a judge to decide the rights and the duties of Kickstarter... or the supreme court.

You sound like Uber when they say "we're not a taxi company". It's not up to them to decide what they are and cherry pick which law to follow.

> the point of crowdfunding was to invest in potentially interesting ideas

Where is the equity? Kickstarter is certainly not an investment plateform technically.

> Kickstarter et al. are not shops. [...] the point of crowdfunding was to invest in potentially interesting ideas, and not to have a preordering venue

A purchase is when I give you money in exchange for a product. You're right, this isn't exactly Kickstarter's business model. However, an investment is when I give you money in exchange for an equity stake. This certainly isn't Kickstarter's business model.

If you give a Kickstarter money, you might get a product; you won't get any equity. Whatever that makes it, it's more a shop than it is an investment platform.

> If you give a Kickstarter money, you might get a product; you won't get any equity. Whatever that makes it, it's more a shop than it is an investment platform.

Its a donation platform with the possibility of receiving something for your donation.

As I remember it, Kickstarter was initially focussed around patronage. eg, give some money to a musician or film maker to make a new album or film, and your 'reward' might be access to a work-in-progress blog and a digital copy of the album/film once it was complete. ie, the rewards had a low marginal cost, and didn't consume most of the money raised during the funding period.

At some point pretty quickly Kickstarter turned in to a speculative pre-ordering service.

In the short term maybe but what about long term reputation? These kinds of projects damage the Kickstarter brand.

The incentive to do that is only if they are extremely short-sited and don't feel that consumer trust is important to their long-term survival.

The device proper appears to have some major flaws - https://vimeo.com/133052667.

It is deceptive at 3m in that video the co-founder says "we try to bring this holographic experience to families" - weasel words for sure. The word experience is there in anticipation of a future claim of fraud. He continues saying "most of the holographic displays and similar device, products, are focussed on [...]".

At 4:02 you can see that the system uses 4 separate images projected and is not 3D holography. In views on an angle you can see the image doesn't wrap (eg 2:51).

Flaws to my mind include the massive opaque bezel and the poor viewing position - all viewers need to be the same height. In the other use videos you can see people craning to sit at the same height as the device - seems adults and children or different height people of any age would struggle to use this together. Also you can't view from above.

I'm still very confused about the staff pick badge… Is there anyone here that ran a campaign that could confirm?

There are numerous articles dedicated to maximize one's chances to be a staff pick, and numerous advantages like being in the newsletter, promoted on their social network accounts, etc.

That would mean that there really is a staff pick category with hand-picked projects, but that the badge itself can be added by any campaign. Is this really true? I need more evidence, it doesn't seem reasonable.

edit: found some more info about it from a campaigner http://stonemaiergames.com/kickstarter-lesson-140-the-kickst.... It does seem that being a staff pick means that one staff member flagged the project, and the badge icon usage is largely unrelated.

What we know to be the case is this:

Kickstarter does feature some campaigns as its staff picks, Kickstarter does notify campaigns when Kickstarter selects them as a staff pick, but Kickstarter will not admit that this particular project is abusing the staff pick appellation, and Kickstarter is refusing to say anything that could be interpreted as agreeing that this campaign engaged in unethical behaviour.

My personal conclusion is this:

This project gets a free pass. There is no evidence that any arbitrary project can give itself the badge and not get censured by Kickstarter.

This story had 7 points and was #3 on HN 7 minutes ago, then it dropped 20 spots. Are people flagging it?

Anyway, the Kickstarter project looks impressive. There's an entire company built around it? If it's a fraud, it ends at 8am EST.

It'd look that way, but perhaps Kickstarter incurs a penalty automatically? Or maybe it's the crappy headline which sounds clickbaity. Maybe the author should have used something solid, like "Kickstarter is promoting scam company with fake holograph".

The video they have looks like it could have cost a fair bit of coin itself. And they claim to have a CFO, CTO, and CEO, already? Their "Our Story" page [1] says they've been around a couple years and have 20 people. So a $250K campaign gets them what, another 6 weeks' runway? It's gotta be for the press value.

1: http://www.hplustech.com/our-story/

I believe the product to be actually real, and that it will ship to the customers. So in that sense, the project is not a scam, the users will get something out of it. You can see people playing with the device in their Vimeo: https://vimeo.com/132837598 I would be willing to bet the price paid is actually a reasonable price for all the custom-made components that the device is made of.

On the other hand, the product if far from something I'd call an holographic display, so it's in a bit of a gray area for a Kickstarter, especially since they CGI'd the first trailer with faked 3D views.

Sure. So Kickstarter should pause it, and make sure all backers understand that the previous information was misleading, and be allowed to see proper new shots of what it actually is.

Also they need to clarify if it's actually a Staff Pick.

> I believe the product to be actually real, and that it will ship to the customers.

I have no doubt that a bunch of people are going to get 4 inclined triangles and a screen. I have some seaweed, which cures cancer, that the backers might be interested in too.

FWIW your claim "I have some seaweed, which cures cancer" is illegal in the UK.

https://en.wikipedia.org/wiki/Cancer_Act_1939

That's extremely awesome. So many desperate people get caught out by claims like that.

I wouldn't have much hope that its going to be addressed. I've been following another kickstarter scam, https://www.kickstarter.com/projects/181239886/jaesa/descrip..., promising legitimate AI far better than anything that actually exists that appears to be little more than ELIZA plus ads. Its had over 50k USD in funding and is 9 days away from its one year funding anniversery. Obviosly, no real progress towards an AI has been made but the group has managed to keep the scam, recently having claimed to be acquired by on of their backers who is in talks with multiple investors for funding " to the level of a global competitor".

Another example was the Goblins Comics board game, which featured the web comic writer teaming up with a supposed board game maker who than ran away with the money, scamming the board game maker and the comic writer. See more at the second to last post here on the writers continued attempts to help his backers despite being scammed by the board game maker: http://www.goblinscomic.org/the-blog/

Sorry, but I can't help but chuckle. The low-information populous just spent $600 a pop on this thing because the pictures were pretty? Good for them. I hope they enjoy their angled pyramidal screen. Someone probably shared it on facebook, their friends clicked it, looked at the pictures and clicked to back them then clicked share. Just like seems to be the norm with satirical stories anymore.

$600 seems above the level of impulse buy, but you may be on to something.

A scam? On Kickstarter? You don't say! There are a ton of those, and some of them have bigger budgets than this thing. Like the infamous Arist coffee machine [1].

[1] https://www.kickstarter.com/projects/236195807/arist-brews-c...

...or the SmartMaker scam by Harold F. Timmis and Dimitri Albino, which kickstarter and indiegogo didn't stop. (1,2)

[1] http://kicksucker2013.blogspot.com/2014/09/be-maker-smartmak... [2] http://www.mathias-wilhelm.de/arduino/reviews/smartmaker/

To be clear, this device costs a couple million of VC to create. This Kickstarter is a market launch activity and not raising useful money for this project.

This device is 4 inclined planes and a screen. God I wish I could get a couple million in VC for this shit.

Is that allowed on Kickstarter? Kind of defeats the purpose...

Sort of, but that's what is happening now. My friends did a successful Kickstarter campaign of a hardware product and I know first-hand that the idea came from their investors and it was done purely for market research. The Kickstarter event was pretty much break-even effort for my friends. VCs seem to have figured out that crowdfunding is a cheap way of checking if a company is worth further investments, while at the same time giving it some marketing boost.

Lots of Kickstarter projects are "proof of interest" ventures. If you make your target, it triggers additional funding you've pre-negotiated..

I don't see how it's a problem in general (not talking about this particular KS here) since it's a useful tool for showing investors that enough people are willing to pay for your product.

Doppler Labs' recent KS for "Here Active Listening" closed successfully last week with $635k in funding, and they just announced a $17M series B funding round this week.

I'd have to assume these two events are related, and as a backer of the KS campaign, I'm actually happy to see this, since it means the product probably won't be a one-off, and they will continue to update the software post-release, etc..

I think a successful kickstarter to trigger funding is better than a fully funded product which has a kickstarter as a launch. The latter isn't really "fundraising" at all and so seems to stray from the KS mission.

It's a little strange that they share their offices with an investment bank? https://www.bnymellon.com/ca/en/index.jsp#ir/offices

Generic shared space office building, I would be more interested if other Kickstarter groups had offices there or members of the Kickstarter in question were part of companies before their current.

Not really, very few investment houses or banks own their own real estate anymore.

They all learned that after going public the next step to getting large payouts was to sell their real estate to management companies or REIT's.

Or less cynically, they follow Joel Spolsky's idea of focusing on your core competence and out source the rest to others.

Kickstarter will promote anything that has the chance to make it big. Their only goal is to make sure most pledged dollars go towards ultimately funded projects, and that hype and funding grow in them to the maximum extent possible.

Documentaries and so on, that's another story, I guess their cash cow are non-art projects while what they enjoy are art projects. So don't expect a tech project to undergo minimally rigorous analysis if it looks like it will make it big. They only question your project to the extent it could be a waste of real estate in their website for not getting funded.

It reminds me of this old video game:

https://en.wikipedia.org/wiki/Time_Traveler_%28video_game%29

This is why I've never pledged any money on Kickstarter or any equivalent site. It's too easy to make something look too good to be true in an age of CGI and clever pitches. I'm all for micro-financing, but the way I see sites like Kickstarter as just another way to get around the known regulations for financing (some which seem dumb, but some that are very effective imo).

If folks really want to help creators and artists make cool stuff then I suggest do your homework and give directly to those people (and avoid Kickstarter).

Isn't the startup mantra "fake it til you make it"?

\sarcasm.

Of some, definitely, with the meaning of "make it" not related to making a working product.

"Holus is a 2D display based on “Pepper’s Ghost“. The reflected image has no depth, and has nothing to do with the term hologram. "

Wrong and Right. The reflected image will have depth and can be viewed from a (small) range of angles. Just like a reflection in a mirror is actually 3d. But NO, this has nothing to do with holography as stated.

> The reflected image will have depth and can be viewed from a (small) range of angles. Just like a reflection in a mirror is actually 3d.

Isn't that the same as saying that a drawing on a sheet of paper is actually 3D because you can change the viewing angle? At least when viewing a real 3D object through a mirror you could potentially get more information by changing your viewing angle. This project, however, appears to be more akin to viewing a flat screen through a reflective surface.

>> Udo 3 hours ago

> The reflected image will have depth and can be viewed from a (small) range of angles. Just like a reflection in a mirror is actually 3d.

Oh well that's different then. TFA likened it to an illusion that reflected an object. If that object is an LCD panel then no it's not 3d.

I got the chance to play with Holus last month during one of H+'s open houses. The unit itself is pretty neat and the holograms (yes, they are just Pepper's Ghost) is of good resolution. The use of iPhones and iPads to control the perspective is really cool, but still glitchy.

However, my friends and I found no practical non-game application of the technology yet; maybe this is the case with anything new, where it answers a question nobody has yet to ask.

I do agree with the OP that the images in the KS campaign aren't real (or even possible). The Holus simply doesn't look like that and I wouldn't be comfortable if my company was promising images in a KS campaign like that. At the very least, H+ should have added an asterisk on each image that said "CGI rendered" or something to that effect to inform potential backers.

Finally received a response from Kickstarter's CEO:

http://joanielemercier.com/is_kickstarter_covering_up_a_scam...

I don't know if they cover up scams but they do not provide any good means for people to voice concerns. I looked at a project for a portable wind charger (on Kickstarter I think) and the claims that were made for it were rather implausible so I did a few simple calculations and sent a message to the promoter. All I got back was some well meaning waffle. And in this case I don't think they were trying to cheat anyone, they just weren't competent. If anyone is interested I'll try to remember which project it was.

https://www.kickstarter.com/projects/skajaquoda/trinity-the-...

Is this it?

I quit Kickstarter after that Potato Salad kickstarter crap got popular. It lost all legitimacy to me at that point. I can't believe more people didn't put up a fuss.

The Kickstarter bubble is finally starting to burst, for better or worse. That’s a bit troubling for the creative and tech community. Bad press due to these failures/ scams is a scary thing. I had personally written to KS about another scam that unfolded right in front of eyes, but they didn't respond. I even pinged the founders on Twitter but they didn't care a bit. So much for trusting this system.

Yancey Strickler answered. Here's my response: https://medium.com/@sableraph/kickstarter-failed-us-e7b6d98f...

While Kickstarter clearly need to get sharper about identifying fraudulent pitches, I think as a whole Kickstarter is a "hate the player, not the game".

I don't know man. No one got this upset with the Potato Salad kickstarter.

some update on the holoscam. http://joanielemercier.com/kickstarter_is_broken/

To be fair, why don't you let people spend money how they want? People should have a right to be fooled if they wish so...

Blatantly lying to people by showing fake products and fake badges hardly counts as "if they wish".

It's funny how people talk about voluntary trade when the whole point of advertising and marketing is to remove the 'voluntary' part.

The "whole point" of advertising isn't to remove the voluntary part of trade. It's to improve discoverability and to encourage you to buy. At no point does it compel you to buy.

> At no point does it compel you to buy.

What?

https://en.wikipedia.org/wiki/Marketing & https://en.wikipedia.org/wiki/Advertising

It's a little more than brand names on bill boards.

compel: force or oblige (someone) to do something.

nope, that's not what happens. really, really, really, really wanting something is not the same as being forced to buy it. it's not even close, in fact, even if the desire is super strong. the inability to make this distinction is not a useful argument, it is a personal failing.

I see. When compel is used with an object, it always means "to force". And advertising textbooks go out of their way to clarify that ads persuade but they do not compel. Though you could call an ad "compelling".

Remind me to never do business with anyone you work for.

But somehow people are fine of how that works in democracy.

Sick setup for that scathing sociopolitical commentary!

Sure, and kickstarter has the right to be punished by the market if people do not like what they are doing.

It is a free market, right? Kickstarter deceives, people talk about it, kickstarter falls.

For the risk you're taking, you'd be better off as an investor. If they fail you get nothing, but if they succeed you'd have equity, not just a product or service.

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