
The Story Of Lockitron: Crowdfunding Without Kickstarter - paulgerhardt
http://techcrunch.com/2012/10/07/the-story-of-lockitron-crowdfunding-without-kickstarter/
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ChrisNorstrom
5 years from now KickStarter will be known as "The Startup That Failed to
Pivot".

The way KickStarter wants to be used and the way the crowd is actually using
it have become 2 completely different things. It started out hosting campaigns
for plays, short films, & debut albums. Now it's known for its Apple product
accessories and tech gadget campaigns. But rather than change its funding
structure, rules, and options to accommodate pre-sales of physical products,
they've demanded less "risky product campaigns" and more easily deliverable
"fun-artsy-fartsy theatre campaigns"... They're basically betraying the very
campaigns that put KickStarter on the news and grew it to what it is today.

Over the last few weeks we've learned that KickStarter:

\- isn't a store where backers can buy pre-sales.

\- doesn't allow "home improvement products".

\- doesn't allow you to offer multiple quantities of a reward to your backers.

\- and doesn't let you use pre-rendered images of prototypes.

That's the sound of KickStarter shooting itself in the foot 4 times.

Look, I get why they're doing this, they want to protect their backers from
successful-but-failed campaigns. But most products FAIL, most companies fail,
and the failure rate and shipping delays of projects on KickStarter is normal.
I mean Jesus, people are funding, manufacturing, and shipping a product in 6
months. That's pretty incredible. Kickstarter, in their desperate attempt to
please the backers, is just going to end up destroying its own ecosystem. Well
the tech portion of it.

If the crowd wants to play Mini-Venture-Capitalist then they're going to have
to learn to deal with disappointment.

Lastly, Kickstarter doesn't even promote your campaign, it just hosts it. It's
up to you to promote your campaign's link. So I'm paying 5% of my funding goal
to KickStarter for hosting fees. Why? With Lockitron's successful self-hosted
solution we now know that we don't need KickStarter anymore. And not being
needed is the first step to obsolescence.

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mikeknoop
Kickstarter certainly did open the door to these styles of private hardware-
funding campaigns. And given how successful private Kickstarter-esque launches
can be (App.net, Lockitron), I can't see myself trying Kickstarter -- I would
go the private route first. From the article:

""" A brief e-mail exchange ensued, culminating with a firm “No” – stating
that Lockitron fell into the “home improvement” category of prohibited
projects. """

Maybe it is HN bias, but all past popular Kickstarter launches seem to be
products that would now be prohibited. I think Kickstarter is writing their
own fate by not allowing these things. All the new popular launches are going
to go off-site.

There are probably legal implications (and other problems) that come with
being a "store" and Kickstarter does clearly not want that. But I can't
envision the future of Kickstarter unless they come up with a solution to the
store problem (and not by outright banning store-like products).

~~~
ChuckMcM
_Maybe it is HN bias, but all past popular Kickstarter launches seem to be
products that would now be prohibited. I think Kickstarter is writing their
own fate by not allowing these things. All the new popular launches are going
to go off-site._

Watching Kickstarter and the various multi-million dollar projects, the
liability question was getting more and more important. And even when you've
tried to be very up front where the liability is, that doesn't stop angry
people from suing you. And that, is not a fun way to live.

So Kickstarter gets more and more explicit in their liability language and
rules and that shuts down folks who might otherwise have participated. So I
don't know if its 'fate' so much as a hard way to do a business.

~~~
mikeknoop
Someone suggested this below. Maybe they should pivot (slightly, more like
adding a new feature) and offer a Kickstarter-as-a-service SDK to products
that would fall outside their liability-acceptance zone. That way they can
still take their cut and offer a valuable service to folks who want to offer
funding campaigns.

EDIT: For clarity, the idea is Kickstarter provides some sort of white-
labelled page to show a counter and collect/skim funds. I have to imagine
liability falls back to the originating company at that point.

~~~
toomuchtodo
Stackoverflow charges ~$200/month to have your own QA site on their platform.

I'd drop at least a couple hundred bucks a month on my own Kickstarter SaaS
site that funds R&D science/technology research.

If you're on the Kickstarter team, read this ,and are interested, get in
touch. I have my credit card in hand.

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noonespecial
I find it fascinating that Kickstarter considered this a "Home Improvement"
product.

Its not an actual lock and doesn't become part of the home permanently. This
is kind of like saying that one of those desktop USB dart shooters is a
weapon, or one of those little "iPhone-bots" is a surveillance device. It
seems like the perfect, hackable "geek device" that Kickstarter was made to
fund.

I wonder if underneath the Kickstarter guys were afraid that it a) would never
get funded, or b) you couldn't deliver.

Oh well, I guess it was their $75,000 to lose. A great big congratulations to
you guys. Way to take a setback and spin it into epic win. Best of luck.

~~~
ccamrobertson
Thanks! There were a number of projects involving replacement power outlets
and light switches that were accepted without question, so I believe that we
were not only tangled in their new policies, but also that they started
enforcing their prohibited categories more closely.

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skdoo
There's an interesting subtlety here: "We won’t charge your card until your
Lockitron is ready."

The Kickstarter model has a few appealing characteristics for hardware:
evaluate product-market fit, gauge initial order size, and get upfront
capital.

By giving up the upfront capital (presumably because they don't need it), they
can allow refunds or cancellations, unlike Kickstarter. This is great for
customer confidence and relationships. But they keep the other incredibly
valuable parts of the Kickstarter model, which are crucial for hardware
startups.

~~~
netcan
I agree.

Pre-order vs pre-buy is a subtle difference that might make riskier projects
workable. Projects get a lot of the benefits but the risk of customers &
kickstarter getting burned is much smaller.

Some projects may not need the funding so there's no reason to introduce that
risk. Others might be able to live without it. I imagine that having 500k of
pre-orders could be leveraged for financing via another route (investment,
loans, credit lines).

If Kickstarter is watching learning, maybe they can fix problematic categories
by tweaking the model rather than banning them entirely.

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krashidov
Ever since App.net raised 500k using the same model, I believe that there is a
need for someone to build a "Crowdfunding as a Service" app.

Imagine if I too wanted to make a crowdfunding campaign that was completely
independent of kickstarter, indiegogo, or any other platform. I would have to
build all this functionality on top of Amazon that would take credit cards,
store them, charge them when a threshold has been met, and then ship my
product out to those people who funded me when manufacturing has been
completed.

I believe that if a company were to automate all of this and allow anybody to
have their own platform independent crowdfunding campaign on their site, just
like PayPal allowed anybody to have their own e-commerce site, they could
truly rival the market share of Kickstarter.

Such a model could have tremendous benefits over the traditional kickstarter
platform routine we see many crowdfunding sites copy today.

~~~
waterlesscloud
Seems like the challenge there is that you're setting yourself up for the
liabilities without the control.

If anyone can use your service, you're going to have fraudsters left and
right. If you have to vet them before they can use it, aren't you just another
version of kickstarter?

~~~
niggler
What about a counterparty that just does due diligence? They can dig further
and figure out if the team can actually accomplish the task and if the service
is vaporware or real.

This could be a simple badge program (for some upfront fixed vetting fee) that
lets people say they have been verified.

The problem is that Kickstarter isn't just filtering for viability. Some sort
of DD would help say that the project is feasible and eliminate the politics.

~~~
waterlesscloud
That's a good idea. There's room for someone to come in and rate the viability
of various projects. A need, really. Even with Kickstarter, as we've seen
before.

~~~
niggler
The domain veri.fi is still available :)

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ricksta
It seems to me that more and more companies will just run their own
"kickstarted" campaign without Kickstarter like the Lockitron guys. The
companies will also no longer be at Kickstarter's mercy to shut down their
campaign when they feel like, and don't have to pay the commission. Now it's
so easy to setup credit card payment with Square and put up your
own"Kickstarter" page.

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raheemm
One advantage of being on Kickstarter is the traffic. How did Lockitron get
the initial traffic and buzz?

~~~
noirman
Hacker News, mostly. And Word-of-mouth.

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prbuckley
I commend the Lockitron team for pursuing their own corwdfunding effort and
then open sourcing the system. You may have just opened up a chink in
Kickstarter's armor.

If Kickstarter cracks down on product related projects maybe we will see a new
crowdfunding platform emerge that is friendlier for those trying to fund and
launch physical products. Kickstarter should be careful here or they may be
creating an opportunity for a serious competitor to emerge.

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francov88
ChrisNorstrom - couldn't have said it better myself. I was going to point out
many of the same arguments and showcase that while Kickstarter is a great idea
and can wield it's massive brand to potentially attract visitors to your
campaign with startups like App.net and Lockitron running their own campaigns,
Kickstarter has to be a little worried about how they're trying to solve the
problem that is crowdfunding...

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gojomo
Could Lockitron and/or App.net open source their campaign
pledge/reporting/administration scripts?

~~~
ccamrobertson
Yes, we will have it on github in a few days!

