
The Problem with Kickstarter - dpryan
http://www.xconomy.com/boston/2013/01/17/the-problem-with-kickstarter/
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pdx
Hardware is expensive. Plastic injection tooling, PCB fabrication, PCB
assembly, component purchases, FCC and EU and UL testing and certifications.
Something like Kickstarter makes it possible for an engineer, such as myself,
who does not have $200K in the bank, to use the skills I use every day for
large companies, and create something new in the world.

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?

~~~
bryanlarsen
A pledge to buy something can be converted into money. In traditional
industries it's quite common to get bank loans against accounts receivable
and/or outstanding purchase orders.

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.

~~~
dinkumthinkum
You really think a bank would give loans against Kickstarter agreements to
purchase something?

~~~
dopamean
I think that's his point. A bank wouldn't do that if you did not have a
history of delivering.

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robomartin
I would suggest respectfully engaging the Kickstarter folks in a discussion
about your project. I had a hardware project rejected in the same manner,
except I did not leave it at that. I engaged the KS staff, stated my case,
qualifications, and had a general discussion about the project. A few days
later they authorized it. In fact, I have more than one approved project in
the pipeline. I have found them to be nothing but reasonable.

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.

~~~
Bradosaur
How did you engage them? Do you know someone? When I got rejected I just got a
form with a few characters to explain why I wasn't violating the rules (they
did not say which rule I was violating).

~~~
robomartin
I need to look through my email to reconstruct it. I'm in meetings most of the
rest of the day. I'll try to get to it tonight.

~~~
robomartin
OK, as best as I can tell I simply used the online form to state my case. I
don't have any outgoing emails pleading my case, so it must have been an
online submission. I do have an internal email address that I got after the
fact but it would not be cool to post that here.

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.

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TillE
> Kickstarter has taken a half-measure when it comes to hardware projects. It
> should take a full measure—and remove hardware as a category.

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.

~~~
dpryan
This is we like the selfstarter model. Backers don't get charged until the
product is ready. And project creators are incentivised to use efficient
techniques that get their product to market quickly.

There are flaws with this too, which I touched upon in the post. I think this
is an opportunity.

~~~
pc86
s/Backers/"People who just pre-ordered something that doesn't exist yet"

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?

~~~
dpryan
Yes - but it doesn't work for hardware. It leads to projects failing to
deliver on their expectations. Failures hurt the Kickstarter brand. They know
that. Which is why they're moving away from hardware.

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.

~~~
DanBC2
Hardware incubator sounds like a really good idea.

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.

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auggierose
I don't think it is a good idea that the backers are only charged when the
product is ready to ship. After all, this is all about getting the resources
so that you are able to ship. When the backers don't pay upfront, you don't
have those resources. So to me it seems you are looking at Kickstarter as a
distribution channel, not as a funding opportunity.

------
dpryan
I believe there's an opening for a crowdfunding model focused purely on
hardware startups. Perhaps some of you are already working on it.

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.

~~~
nhangen
I'm curious, what made you go with Lockitron's model? We've been working very
hard on our cf product - IgnitionDeck, and would love to get into your head
about how/why you chose that over other solutions.

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ChuckMcM
Loved that article, it is an excellently crafted critique of Kickstarter
(general interest) which is melded to a call to action for their rejected
Kickstarter (Bytelight). So at one level it reads "Kickstarter rejected us,
we're bummed we don't have all their eyeballs, we used the Lockitron example
to try to fund our product design."

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).

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brandonsavage
Being rejected by Kickstarter doesn't make Kickstarter the problem.

~~~
therobot24
Exactly. There are good points about the problem with kickstarter's hardware
section, but when they keep pushing their own bytelight or whatever it sounds
more like complaining cause they didn't get accepted. Comes off as, 'we didn't
get accepted and we have a plan, so there must be a problem, and thus
kickstarter should remove hardware projects entirely', as opposed to, 'based
on the failure rates, kickstarter should reconsider if it needs to include
hardware projects at all'.

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rnernento
Can we talk about bytelight? What the heck does that thing do?

~~~
dpryan
Indoor positioning using LED lights. Our market is in enterprise (not the
home).

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.

~~~
DoubleCluster
You've got a nice site but I think the product is not useful enough. You've
got to install those bulbs and any enterprise I've been in uses fluorescent
lights and not the classic fittings. I couldn't even use those in my home.

If you want a mobile device to locate itself indoors, why not use WiFi?
Probably the entire place is flooded with access points already.

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martinced
It's not correct to label this "The Problem with Kickstarter".

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.

~~~
dpryan
Kickstarter has been responsible for funding Oscar nominations, museums, and
countless creative projects. Their 2012 summary is full of stunning success
stories.

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.

