
Watchmaker That Raised Money Through Kickstarter - Pebble (YC W11) - gleb
http://online.wsj.com/article/SB10001424052702304441404577478732360629906.html
======
furyofantares
I'm baffled, how do I read the entire article? It ends at "Within 28 hours of
being ..." in the third paragraph and I see no way to expand it.

edit: AdBlock (Chrome/OSX) was hiding login/subscribe buttons.

------
rdl
Most successful YC hardware company ever, I think.

------
seiji
Unmentioned insanity: the raised amount is reduced by almost a million dollars
because of 8% to 9% kickstarter fees ($820k to $925k of the raised amount
vanishes right off the top).

Anybody interested in my 4% fee bootstrapping site? It'll go live next month.
If you want to have a project featured on it for launch day, let me know.

~~~
patio11
Assuming you're serious about that:

1) Anyone even peripherally involved with transaction processing as a business
rather than a hobby will take you aside privately and say "Look, you _need_ to
charge more." It is _incredibly_ difficult to make money taking 0.5% to 1% of
transactions as your margin and then paying your expenses out of it -- you
need flowing rivers of cash to make a living that way, and they (sadly) do not
occur spontaneously. One engineer will cost you $400k a month in transactions.
(There exist many examples of HN-launched/YC businesses which did not know
this on launch day. If you keep an eye on them, they _universally_ accede to
reality and bump their fee or they fail catastrophically.)

2) You seem to be of the impression that people choose bootstrapping sites
based on fees or that this is their primary value proposition. Bootstrapping
sites are like mobile platforms: they charge for access to a built-in audience
who demonstrably pay money for things. Kickstarter has this. Apple has this.
You don't.

3) The people you successfully lure from Kickstarter will not be the folks who
are going to make $X,000 videos to promote their products which go on to sell
$10 million. These folks, who are clueful, are going to choose based on
network effects. The customers, and I use that term loosely because most won't
actually pay you a penny, that you will successfully recruit are going to be
pathological customers terrified of someone making an entire $3 off of the $30
they're going to raise. You will not successfully support a business on them.
They'll give you lots of headaches when you try.

~~~
seiji
Thanks for the amusing breakdown. Here's a counter-breakdown:

1) Point taken, but you're assuming I have a cost overhead and I care about
income. Perhaps I just want to destroy something beautiful?

2) (fuzzy) I don't feel most people sit around kickstarter.com looking for
ways to spend money. They get led in through media, websites, friends, viral
virulence, etc. Kickstarter is basically the world's most expensive webhost at
this point.

3) The fun projects may drift over if we shift the narrative towards "Would
you rather give Kickstarter $10k for having a pretty website or do you want it
in your pocket?" (Based on the Light Table raised amount and a kickstarter fee
of $25k-$28k versus a $13k fee for my pricing model. I have spreadsheets and
everything -- you can't argue with spreadsheets. Up and to the right, baby.)

~~~
mechanical_fish
Laugh while you can about Kickstarter's brand. Donors are going to be happier
sending money via an entity they've actually heard of, that has a track record
of delivering millions of dollars as promised. Vendors are going to ask
themselves how their use of a cut-rate bootstrapping vendor reflects on the
quality of their _own_ brands.

These problems will all get worse once the first Kickstarter clone goes under
and a bunch of people with Twitter feeds get burned. That will happen.

Meanwhile, consider this excerpt from _Founders At Work_ , chapter one:

 _MAX LEVCHIN: It was pretty funny because [at the time of PayPal's launch] we
met with all these people in the banking and credit card processing industry,
and they said "Fraud is going to eat you for lunch." We said, "What fraud?"
They said "You'll see, you'll see."

I actually had an advisor or two from the financial industry, and they said,
"Get ready for chargebacks. You need to have some processing in place." We
said "Uh huh." They said "You don't know what a chargeback is, do you?"_

If Levchin had done nothing else for the world than dictate these words, it
would have been sufficient. Every time I hear someone, often myself, utter a
phrase like "that business is so simple; it's just a glorified Perl script and
some JPEGs" I try to envision Levchin, reading these words to me.

