
Kickstarter backers ready class action lawsuit against Code Hero dev - barredo
http://www.kickstarter.com/projects/primerist/code-hero-a-game-that-teaches-you-to-make-games-he/comments
======
grellas
This is a drama that will play out on the web and not in a courtroom.

In this sense, the crowdfunding forum gives a focal point for thousands of not
only backers but also spectators to debate a continuing thumbs-up/thumbs-down
narrative over whether something is great/viable/the-hope-of-the-
future/flaky/scammy or whatever. By definition, such a forum will invite
submissions from promoters who are, variously, supremely gifted, naive and
unrealistic, crafty and conniving, or just hopeful founders who see this is
their best funding mechanism, whether it turns out to be good, bad, or
mediocre at it plays out. For any given project, who can tell exactly who the
promoters are apart from the reputations they manage to build as they do
various things in the development community or otherwise in the startup world.
If they were doing a true securities offering by which they were selling
equity in their ventures, they would be liable if they raised funds through
intentional misrepresentations or other forms of fraud (which can include
making specific promises without ever having any intention of performing
them). But where is the liability when no equity is being sold and instead you
have commitments that backers will receive only little perks associated with a
completed development effort? There are all kinds of startup ventures that
never manage to bring their development efforts to completion because of
unforeseen technical issues, bad market conditions, lack of funds, and all
sorts of other reasons having nothing to do with fraud or other actionable
wrongdoing. If this is true where a venture sells equity interests that are
true securities subject to the protections of securities laws, it is doubly
true where the only thing being offered is a small perk tied to a development
effort that is not guaranteed to be brought to completion or at least that is
not guaranteed to be brought to completion within any specified time period.
In such cases, you _might_ conceive of cases where actionable wrongdoing might
be proven, e.g., if a promoter raised the funds and immediately absconded with
them, having made no effort toward development whatever. In almost every case
but that extreme one, though, it is pretty hard to prove that a promoter never
had any intention of making some good-faith effort to do the development, even
if the promoter is flaky or uses bad business judgment in how funds are spent.
In front of a jury, that one is a long shot by any measure and very likely a
loser.

Which brings us to the economics of a federal class action case. Only
specialty lawyers handle such cases. They are procedurally complex, take years
to process, and are worth doing (usually) only against defendants with deep
pockets where the remedy sought is (a) damages in a sufficient sum to make the
case economically worthwhile for the lawyers or (b) an injunctive or other
specific performance remedy aimed at curbing some abusive, recurring practice
by a large company or important player in some key market.

Those conditions, by definition, do not exist here. A lawyer billing hourly
would easily bill a six-figure sum in a typical class action case just to get
through the class certification phase. Of course, such cases are not billed
hourly precisely because the whole point of a class action is to allow the
courts to aggregate a bunch of little claims to allow for a practical remedy
for cases that would not be economically worthwhile to pursue separately.
Thus, the class action vehicle requires that one or more "class
representatives" appear in the action as named plaintiffs to represent the
innumerable small claimants. But the claims of the class representatives have
to be typical of the claims of the others, meaning that they are small claims
as well. Because of this, no named plaintiff will be fronting hundreds of
thousands in legal fees on behalf of the class and so, by definition, such
cases are always done on contingency. That means that, for the lawyer, the
case has to make sense as a business matter: it must involve the prospect of
getting a recovery that will be large enough so that a 20% or 25% (or whatever
percent) cut of such recovery will make the case attractive to the lawyer for
the likely thousands of hours that will need to be poured into it (in cases
where there is no money recovery, you still need defendants who, as part of a
settlement, will be able to pay what is usually millions in fees to compensate
the lawyers for their efforts in effecting the settlement). Of course, it is
possible that a lawyer may be willing to take on the case, at substantial
cost, just to get publicity or for some other non-monetary motive. That too
would make little sense here. Class action lawyers are highly specialized and
very busy. They will occasionally do something that is the equivalent of a
loss leader but not in an area for which there is no long-term practice
advantage. Since, for the reasons just mentioned, I don't see any long-term
future for class action lawyers pursuing smallish claims over failed
crowdfunding ventures, I can't see a lawyer doing it for that reason either.

To sum up: dubious liability, no deep-pocket defendant, a very small amount at
stake, no economic or other normal motive for a lawyer to do this = no
ingredients for federal class action.

Therefore (and conceding that I know little about the particulars here), I
would imagine that the "class action preparation" here is mostly a rhetorical
device by which to call out the promoter involved in this venture and, by the
measure of those questioning his motives, to expose the fact that he allegedly
took advantage of innocent backers in a way that went beyond the pale of what
is legitimate. This may be a worthwhile debate but it will never see the light
of day in a courtroom as a class action unless it defies all odds of how such
cases work.

~~~
ChuckMcM
An excellent analysis, except for the part that I don't doubt for a moment
that the plaintiff lawyer will attempt to tie Kickstarter in through some
theory of shared negligence and structure that demand such that Kickstarter's
percentage of it alone would satisfy the class. The person behind the
Kickstarter in question, by definition, is either insolvent or nearly so, and
that only leaves one target.

By this same reasoning I expect that if a litigator can't figure out a way to
pull in Kickstarter then the case will never be filed, or will end up being
1000 small claims actions.

~~~
wtvanhest
In the event Kickstarter is not a valid target, it is very unlikely that it
will end up with 1000 small claims since the target left would be insolvent
and only a few irrational donaters would bother going down that road.

~~~
rayiner
Excellent analysis above.

This is also why I _facepalm_ when people suggest that most regulation can be
replaced by private litigation.

~~~
ChuckMcM
In a sad way I suppose it suggests a business opportunity to robo-file small
claims actions on your behalf.

BTW, I don't think this is a good example of replacing regulation with private
litigation, I expect it will be an example of behavioral change in the
presence of more literal examples of the risks. As lots of people point out in
this thread, clearly a large number of people were thinking "store" not
"random guy who might come up with the goods" when they backed a project,
having a few of these get a lot of press might have a chilling effect on
backers.

~~~
rayiner
I wasn't trying to suggest that Kickstarter should be regulated because of
situations like this, but pointing out that grellas's analysis of why nobody
would bring suits in this case applies with equal force to most situations
where large numbers of people have their rights infringed in ways that are not
patently easy to prove.

In theory, a class action suit would resolve whether the failure to deliver
was just over ambition, etc, or due to some malfeasance, but for the reasons
grellas outlined, such a suit is unlikely to be filed or carried through to a
conclusion. In effect, the deck is systematically stacked in favor of the
potential wrongdoer. He wins not only if he really did nothing wrong, but even
if he did something wrong but it is non trivial to prove that he did something
wrong.

------
saurik
I cannot say much about how Alex would have used funds, but I can speak to his
passion for this project: I have known Alex Peake for many years (not very
well, mind you), and even had a meeting with him back while he was still
living in Santa Barbara (late 2007, I believe), regarding initial funding for
his project.

The main thing I could tell is that this is the thing he seemed most to want
to accomplish in the world (even though I wasn't certain it would work,
thought he hadn't thought through the complexities, and might not have enough
experience to pull it off).

In the intervening years, I have run into him at various conferences, and his
interest in Code Hero has never seemed to wane: he even was making credible
progress on it, and supposedly the game actually got released (although I am
currently unable to find it? I'm on an iPhone, though).

I also recently ran into him at Science Hack Day last year, and I was
_floored_ at how well he was interacting with the kids there, teaching them
enough JavaScript and Unity3D to make a "game" (actually, just a model and
some floating platforms that you could move through; I don't even think you
could land on the platforms: no collision detection).

I thereby highly question the validity of a malfeasance claim against him. I
can appreciate that "he didn't spend the money well and the stated improvement
project failed", but honestly: welcome to KickStarter... it is your
responsibility to decide whether your money will be used effectively, as the
entire point of the site is speculative funding.

~~~
mnicole
Regardless of if he is indebted to fulfill the Kickstarter project itself,
he's still required to send out the rewards. Furthermore, his lack of
transparency on the issue (while continuing to give the media attention) is
really what people are pissed off about. There's no excuse for that. He may
very well be an incredibly passionate guy, but he's lost the trust of those
who were willing to support him even if things hit the fan simply due to the
lack of communication.

~~~
waterlesscloud
I think Kickstarter would be very well served by creating higher expectations
in terms of project updates.

Set a standard. Say once a month for a minimum. If you don't have _something_
to say to your backers once a month I have to wonder if you are placing the
proper priority on the project.

If projects don't meet that standard, turn their page amber or something
similar. A big visual sign that the project is not meeting the standard. If it
goes 3 months with no update turn it red. Make it stand out. Make people feel
some pressure to communicate.

In the end, it's best for Kickstarter to push projects to better relationships
with the backers.

~~~
toomuchtodo
Perhaps Kickstarter needs a project liaison for projects over a certain dollar
threshold; people who ask "How is it going? What are you doing?". Kiva does
this for the people I lend money to (even though I lend without the
expectation of the money ever coming back, I want to know how the borrow is
doing regardless of the outcome).

This can be built into the cost of the Kickstarter project, and for projects
$100K and above, believe it to be completely reasonable.

~~~
DannyBee
Kickstarter doesn't want this because it can bring possible liability. They
want as little to do as possible with the actual projects success or failure
while still seeming to be wanting them to win :)

~~~
toomuchtodo
This isn't copyright law, and turning their head isn't going to remove
liability (a la Craigslist sex workers debacle). Good luck arguing financial
safe harbor provisions ("we're just a marketplace! It's not our place to
regulate!").

~~~
DannyBee
Craigslist was never actually found liable that i remember, they settled.

But yes, they are basically trying to present it as a marketplace they have no
control over, to avoid liability and getting themselves regulated by the
SEC/others.

Whether this is going to be effective, I actually tend to agree with you and
think it won't, but it's almost certainly _why they are doing it_.

------
FireBeyond
From the guy who seems to be leading the Class Action charge:

"Guys, I want to love you so badly... I met you at PAX and was worried how the
exchange was going to go, considering we're so far behind schedule, updates
are very insufficient, and I pledged at a high level ($313). You were very
apologetic and assured me that things were going to take off right after PAX,
but that is another commitment that hasn't been met. I'll be happiest if I can
get my money back, but I doubt that's a possibility. I had time and energy to
dive into this stuff earlier this year. Now I'm married, working different
hours, and have a very different life. Lots has changed since the estimated
delivery date flew by."

You were funding a product that you were told may or may not meet with
success. You're now going to need to show in a civil court that there was
wilful recklessness in the use of funds.

Kickstarter sits on the fence, too - it states that the creater is obliged to
deliver pledges or refund, but that it hopes requests for refund will only be
used for bad faith projects.

Given that he gave a video interview in November stating he felt the project
had a year to go, and that the pledges specify "Estimated Delivery" only, I
think that's a hard road to plow, leaving aside the fact that a malicious, or
even unlucky/ill-planned project could keep pushing out the dates.

Some investments fail. Too many people view Kickstarter as an online store.

~~~
fusiongyro
Well, that's the grey area, isn't it? It's one thing if I invest in something
and it fails. It's another thing if someone pretends to take your money as an
investment and instead goes to Vegas and blows it. In other words, the
difference between merely a bad investment and fraud.

Kickstarter can't afford to conflate the two, or people will stop investing.
So they're in a tricky spot, trying to ensure that users understand that they
aren't customers and that the startups can fail, while also ensuring that
customers have faith that the vast majority of startups will succeed.

~~~
Silhouette
Isn't the problem with that whole argument that, in reality, the vast majority
of startups do _not_ succeed?

I'm glad that Kickstarter is trying an alternative business model, but I do
worry for their long term viability/growth prospects. People reading HN
probably understand concepts like investment and lack of guaranteed rewards.
People who sign up to a $1,000,000 project for what looks like a really cool
game that their friends showed them, and who then get told they weren't really
buying anything but a possibility, might not. And in the long run, whether or
not those people should have understood their role, they are the only ones who
get a say in whether they open their wallets again in the future to support
someone else's project.

~~~
potatolicious
> _"People reading HN probably understand concepts like investment and lack of
> guaranteed rewards."_

Investments usually have an upside commensurate with the perceived risk.

"Pay the regular price of a game, and you have a 50% chance of getting the
game, and 50% of getting nothing" is not really an investment - it's a
charitable contribution to someone's dream that you _might_ see something out
of.

This is why I think the current Kickstarter model is doomed in the long run.
Once it becomes clear that a large portion of Kickstarters will never deliver
anything close to what they promised (if they deliver anything at all!), the
whole concept of crowdfunding will become a whole lot less attractive to a lot
of people.

Not unless prospective projects were willing to take a substantial discount to
soften the risk - but that destroys the viability of Kickstarter for many
projects.

~~~
saurik
> Investments usually have an upside commensurate with the perceived risk.

My mental model of Kickstarter is more like giving money to the EFF: maybe
they give me a hat (they did, actually; I didn't want it; they seemed to
refuse to let me leave without the hat... it was weird, as it almost made me
want to give them money less, as they apparently were spending some of it on
hats people didn't want, but hey: maybe it was some accounting thing), but the
real reason I do it is I know I contributed to something that I believed in,
_even if_ it sometimes doesn't accomplish the things that they wanted to get
done.

When I see a Kickstarter, I think the same way: I think of it more like
deciding whether or not to give the guy on the street corner some money in the
hat (more hats...) that they have next to them; I don't really get anything in
return for that money (arguably I got the music they already played, but I
could have easily freeloaded that): I'm just contributing to his life as an
artist, in the vague hope that I've helped something beautiful exist in the
world.

~~~
dragonwriter
That may be your mental model, but what's enforceable is the terms of service,
not your mental model.

~~~
saurik
No: this has nothing to do with terms of service, this is "what do people use
the service for". If your mental model of Twitter is "a place to have group
discussions, in public" (a common use case), I think you are pretty crazy, but
it obviously has nothing to do with the terms of service. The EFF gave me that
hat: they seemed to consider it _imperative_ that they did so; I did not for a
second consider myself to be purchasing a hat.

I maintain that if Kickstarter is "pay money now for gifts later" then they
are not in compliance with either Visa's terms of service (no delayed
renumeration for payments, a policy explicitly there to avoid "I have money
ten months ago, and am now angry"), as well as laws regarding collecting sales
tax (which are quite clearly written in a way that keeps you from just
claiming "oh yeah, this thing where people give me money and I give them
products? trust me: that's not a purchase... don't tax me, bro").

------
dljsjr
I originally came here to make a "Kickstarter is not a store" comment. I
totally side with the backers and their ire, and if the devs really did
squander the money "recklessly" as indicated then they have what's coming to
them but the chorus of "I'm officially requesting a refund" was making me
thinking of Michael Scott declaring bankruptcy.

Come to find out, from the Kickstarter ToS[1]:

    
    
      Kickstarter does not offer refunds. A Project Creator is not required to grant
      a Backer’s request for a refund unless the Project Creator is
      unable or unwilling to fulfill the reward.
    

If Alex Peake really _did_ blow through $170k and the product is in fact
totally scrapped, then these folks (the Primer Labs folks) seem to be in a
world of hurt, owing out a lot of money that they seemingly don't have
anymore. And call me a jerk if you want, but I think this is probably the best
thing that could happen to Kickstarter; a decent precedent gets set for what
happens when you don't deliver on a physical product before the service gets
so big that it gets totally out of hand.

[1]: <http://www.kickstarter.com/terms-of-use>

~~~
TillE
"unless the Project Creator is unable or unwilling to fulfill the reward."

Read that again. If they haven't fulfilled their explicit promises, a refund
_is_ required.

~~~
kayge
Unfortunately, I think that statement is written too loosely to hold up in
court. It will be too easy for a lawyer to say "my client is both willing and
able to fulfill these rewards, he just needs more time/money/etc". Unless
there are more specific constraints in the full TOS (which I haven't looked
at), this statement won't offer much protection to the backers.

~~~
dllthomas
"He is able, he's just not able"?

~~~
DigitalJack
I am able to get a degree from a college. I just need more money and time.

~~~
dllthomas
When talking about abstract capability, sure, but that's never what it means
in a legal sense...

------
woah
I used to live with Alex, and saw several iterations of Code Hero (originally
called Primer after a book in Niel Stevenson's "The Diamond Age"). His
enthusiasm for teaching kids to code, singularity stuff, etc was infectious.
He was able to recruit developers very easily at Noisebridge, and various
events.

When I first met him, his game was very rudimentary- basically just a tree in
space. That was actually pretty much it. He was able to weave such a
compelling story around the project that a lot of people pitched in to help
him with it. He was able to actually get some pretty high calibre people to
spend a lot of time advising him and giving him contacts.

At one point, he had 5-6 developers working with him to get the game ready for
a YC application. He was actually able to get someone to let him use a large
office for free in SOMA, while they waited for the response from YC. When the
YC funding didn't come through, a lot of people were pissed at him. But
honestly, nothing is certain in a startup, and they should have known that.

I've personally always found his ideas very inspiring, although maybe his
business sense lags behind. He really has thought out an entire dream for what
he would like to build, and it is very compelling in a way. It's unfortunate
that he's let his gift of gab get ahead of him.

It looks like his main mistake here was not sending people their trinkets? not
sure from the KS page, and I haven't talked to him in a while. Honestly, so
many startups fail, and it seems like it would be pretty tough to build a full
3d game with a built in code editor on 170k. There are many many startups that
have gone through way more money and not shipped.

~~~
dbecker
Everyone who has interacted with Alex says he is a stand-up guy... and that
counts for something.

But if I took people's money to build them an X, and I failed, I would feel
really bad about it. I would offer a heartfelt apology, and I would give them
what I could to compensate them for my failure.

Alex may have tried hard. And he probably doesn't have the money to refund to
people. But he could help his case by being honest about the project, and to
recognize that he failed to deliver to those who invested in him.

Not only will that calm many upset investors, but it's the right thing to do.

~~~
woah
He's a good guy, but some of his practices resulted in people getting very
angry at him. He definitely believes in what he's trying to do and is very
good getting other people to believe as well. People coded for him for weeks
and sometimes months, under the assumption that some type of funding was going
to come through. When it didn't, they were less than pleased. But I'm hesitant
to comment any further because I may not have the full story on anything,
having never been directly involved.

Like I said, he sometimes let his gift of gab get ahead of him, promising
things that were not possible with the resources he had at his disposal. He's
one of the most persuasive people I know, and had an easy time talking people
into things.

Here's a previous venture of his, which also resulted in a lot of bad blood,
although he seems to have resolved it to some degree:
<http://blog.sinthetik.com/?tag=tacticalcorsets>

------
vegashacker
I saw Alex speak at a Unity meetup in San Francisco on October 17th of this
year. He demoed Code Hero, and (I thought) he said it was available for
purchase. I thought he came off as passionate about the project. I wasn't
convinced that this would necessarily be a good way for noobs to learn
programming, but nevertheless I thought it was a pretty impressive demo. Just
my 2¢. (I'm not a kickstarter backer of the project, and this is the first
I've heard of these allegations.)

~~~
nickpinkston
Yea, I saw him pre-Kickstarter at the Open Science Summit over a year ago. Saw
a pretty cool demo and always wondered what happened to this cool project.

This is a shame. He's not a "scammer" as some here are saying. He's a guy
who's in over his head and probably in depressive paralysis. They say
entrepreneurs are people who jump off a cliff and build a plane on the way
down - this is what can happen when you hit the ground first.

Just remember: bad news is ALWAYS better than no news. This was probably
salvageable a few months ago, but now it seems unlikely.

What other suits (other than the 3D Systems v. Kickstarter & FormLabs) is
Kickstarter currently involved with?

------
ktrgardiner
At the very least, I would be wary of any project which offers so many rewards
for so little money. It's poor planning and poor allocation of money. And thus
it reflects poorly upon the project creators.

For this project you have 1217 backers at the $42 level who get a digital
download, a usb drive boxed up and signed by the whole team, and a t shirt.
Obviously for such little money and so much in return, this is going to be
incredibly popular. So now you have to sit your entire team down to sign their
name 1200 times, purchase 1200 USBs and produce 1200 tshirts. That's too much
time and money wasted. And yet money is exactly what you're asking for.

~~~
cpeterso
How much would it cost to buy and ship 1217 USB drives and t-shirts? That's
probably $5-10 for each $42 backer.

~~~
veemjeem
You think just like every first timer on kickstarter. A friend of mine says
she's never going to offer t-shirt rewards on her kickstarter projects
anymore. In the end, it cost a lot more than what she thought, and involved
significant physical labor which detracts from the purposes of the actual
project at hand.

~~~
cpeterso
I think you misunderstand. I was suggesting that the rewards would consume a
nontrival amount of the funding. I thought my estimate of $5-10 per backer was
a generous underestimate. <:)

------
jacquesm
For sure some lawyers will make some money, assuming they can find one to take
the case. But I'm thinking they'll need _another_ kickstarter project to get
it funded unless it is on a contingency basis.

If you invest on Kickstarter do it on the assumption that you'll never see the
project realized and that there will be no net benefit to you personally. Do
it because you wish to back the people, not the project per-se and if it works
out then be happy.

This all looks like crying over spilt milk and trying to find a way to blame
someone (anyone!) for the loss of little bits of money. If you can't afford
the loss then _DO NOT INVEST_. Not in kickstarter nor anywhere else.

Going in without expectations will make it a much better experience for you as
well as for the people trying to realize their project. If this guy spent it
'recklessly' then you're going to have to come up with some iron-clad proof of
that and by definition you've already made your case impossible because
clearly you're going to have a real problem to collect.

This case is a non-starter.

------
nostromo
I have a hard time believing they're going to find a lawyer willing to take on
a class action case over $170k in damages and a defendant that is probably
broke.

IANAL but you probably want to incorporate before posting on Kickstarter to
protect yourself from backer lawsuits if things go south.

~~~
georgemcbay
Not only that but it seems like they could fulfill a lot of the tiers of
rewards pretty easily. Just release "Code Hero" in whatever its current state
is. Is it just 5k of useless spaghetti code? Well, as per the standards set by
the rest of the software industry, no claims were made about suitability of
purpose! Enjoy your game! And then they could follow through with the minimum
possible effort on the rest of the mostly vaguely worded rewards.

The most problematic reward is the $42 one with 1217 backers because it
promises a physical box and USB stick, but you could get those pretty cheaply,
much cheaper than the $51,114 of the total that represents.

~~~
drizzo4shizzo
Release the code. The backers are the code heroes. They can fix it. That's the
game.

------
ChrisNorstrom
I think we're beginning to see the major disadvantages of using KickStarter
and crowd-funding.

"Dealing with People"

Things fail by default. Look at how many companies have been started by
geniuses, funded with hundreds of millions of dollars, mentioned on blogs all
over the internet, and still the majority of them fail. So you can only
imagine how the average person running a kickstarter feels when they can't
reach their deadline. At least VCs understand the success/failure ratio.

VC investors are giving, few in numbers, and understanding. Crowd funding
backers are the opposite: large in numbers, a pain in the ass to deal with,
and irrational. If they give you $5 so help you Jesus/Alah/Buddha they will
find every reason imaginable to yell at you for spending those $5 incorrectly.
(see Amanda Palmer's kickstarter backlash story)

------
jgross206
I'm curious about the two people who pledged 10,000 to this project. That
seems like a pretty ridiculous amount for a game like this, even if you really
do believe in the cause.

Maybe the guy has a couple of reallly rich friends?

I've also heard speculation that, if a project is near it's funding goal but
looks like it won't quite make it, the people running it might pitch in the
rest.

~~~
ryusage
I've never thought about that last point, but it makes a lot of sense. If it's
the difference between getting most of the money or none of it, and the
creators can afford to make up the difference, then in a lot of cases it might
be rational to do that. That has to have happened at some point.

~~~
cpeterso
Someone should have suggested that to the developers of "Alpha Colony" who
missed their $50,000 funding goal by just $28:

[http://www.joystiq.com/2012/12/04/alpha-colony-misses-its-
ki...](http://www.joystiq.com/2012/12/04/alpha-colony-misses-its-kickstarter-
goal-by-28/)

~~~
ericabiz
Christopher Williamson (DreamQuest founder) is a friend of mine, and posted on
his FB wall that a donor pulled out at the absolute last second. There were
plenty of people who would have chipped in, but they couldn't react in time.
:(

------
EthanHeilman
Can anyone, in a short summary, explain what happened and why people are suing
code hero?

~~~
GauntletWizard
Code hero has had a rocky past; It was an indie darling, after a cool looking
demo, but along the way the creator has done all the classic scam-artist
things - Gone dark for a significant amount of time, been unclear on status in
updates, gave strange and only half believable excuses for lack of progress.
These are all trademarks of inexperienced devs, too, which is why it's hard to
prove malfeasance.

There was a demo at PAX, which I saw; It looked okay, but barely more than the
unity dev tools. There was something slightly off about the person I talked to
at the booth, they seemed oddly desperate, but I'd put it down to it being a
slow day for them.

I'm glad to see this fail, actually, if it fails - It was ambitious, and would
have been cool, but if it fails it's a good wake-up call that these are, in
fact, attempts - Not guarantees. I feel sorry for the ~20 people who put $1k+
into this for essentially nothing, but caveat emptor.

~~~
chimeracoder
> caveat emptor.

Ironically, that doesn't even apply here - 'emptor' means 'buyer', but the
whole point of Kickstarter is that you're _not_ a buyer - you're a backer.

Your point still stands; I just found the aphorism amusing, since the whole
point is - as you said - that Kickstarter projects are _attempts_ , not
guarantees (purchases).

~~~
dragonwriter
But you are a buyer. By the terms of use of the site, you are purchasing the
reward offered at the level you pledge, with a right to a full refund if the
reward is not provided.

The problem is that project creators are treating Kickstarter as if it were a
source for speculative investment with no obligation to deliver rewards when
Kickstarter's own terms make it a system for purchasing with a commit to
deliver or refund.

------
irollboozers
I never backed this project, but I did come across the project creator and I
did actually watch him and others play what seemed like a functioning version
of this game.

I don't know what happened or why the need for a lawsuit, but this could have
some very scary implications for crowdfunding. Especially as Kickstarter is
now the subject of a few lawsuits
([http://techcrunch.com/2012/11/21/3d-systems-
sues-3d-printer-...](http://techcrunch.com/2012/11/21/3d-systems-
sues-3d-printer-company-formlabs-for-patent-infringement-and-kickstarter-for-
promotion/)). It is interesting that Kickstarter chose not step in.

I really hope Kickstarter doesn't end up like EBay and Paypal, the go-to
marketplace of scammers.

~~~
ChuckMcM
_this could have some very scary implications for crowdfunding_

One of the really interesting things about the entire kickstarter model has
been how it doesn't seem so scary to people offering up a kickstarter project.
I remember raising the first round of funding at a startup and how "real" it
suddenly got when you had a big chunk of someone else's money and some serious
expectations there. But I knew people in the dot-com days who got funded and
almost immediately blew through their series A on re-designing their workspace
and buying awesome chairs and video games for the cafeteria.

One of those weird childhood experiences that I got while growing up in Las
Vegas was seeing people suddenly come into what they consider a "lot" of
money. Some folks would get meticulous and figure out how long they could make
it cover their current expenses, some would spend it in lavishly stupid ways
for cheap thrills. The trick is that when you're walking around the models at
a car dealership and you realize you could write a check for any car they had
on the lot with no haggling, you don't succumb to that. You find the place
were you assume you have no money available and work out what the best value
is. Easy to say, hard to do.

A friend of mine from Sun cashed out his stock and asked me what he should go
out and buy. I suggested he pay off his house. That would translate the money
into a monthly 'benefit' in the form of one less bill to pay, and it would
save him a ton over the life of the loan which seemed like a pretty reasonable
rate of return. He did, and thought it was a really boring use of the
windfall. Until 2001.

------
networkjester
A note from Alex on Primer Labs site:

<http://primerlabs.com/developmentcontinues>

Changed link for the actual post.

------
antiterra
I don't think failure to deliver is the biggest issue; the real problem is
that he seems to have gone completely dark on his backers while apparently
continuing to cheerfully update his Facebook status.

I'd guess that he's somewhat overwhelmed by the situation and unable to deal
with it, so he's pretending it doesn't exist. If this is the case, I hope, for
his sake, he manages to face it long enough to get it out of his system. I
know from experience this sort of thing can eat away at you, and that letting
people know you messed up can be a huge relief.

------
lxpk
Hello Hacker News. I'm Alex the lead developer of Code Hero and here is my
response to this news story, updated as I continue to answer the specific
questions people have:

<https://primerlabs.com/developmentcontinues>

Here's the Google Hangout where you can talk to us:

[https://plus.google.com/hangouts/_/2f0778f953e6506ccb5e95232...](https://plus.google.com/hangouts/_/2f0778f953e6506ccb5e95232cf91282f361e6b3?authuser=0&hl=en-
US)

Here

Code Hero development continues. We released the first alpha build of the game
after PAX and we're releasing alpha 2 soon to show you the latest progress.

<https://primerlabs.com/download> (You do have to buy the game to play the
alpha as that is how we sustain development, but you can see how the game has
evolved over the last year in the trailers: <http://primerlabs.com/trailer>)

UPDATE: We reached Dustin Deckard by email. He said he wants the game to
succeed and that his position is being misinterpreted in some media reports.
He's not suing us, he's just trying to get answers about the project's
progress as we hadn't replied to his email before. We're answering journalist
and backer questions since posting the first response and posting them here.
Our ongoing updates will be posted below as we answer people's questions as
transparently and quickly as possible to make sure people are clear that the
game development continues and we're going to communicate everything about its
progress from now on.

UPDATE: We're on a Google Hangout you can join if you want to ask us whatever
you'd like. Some journalists have questions and a lot of our friends and
supporters who believe in us have reached out and asked how they can help.

[https://plus.google.com/hangouts/_/2f0778f953e6506ccb5e95232...](https://plus.google.com/hangouts/_/2f0778f953e6506ccb5e95232cf91282f361e6b3?authuser=0&hl=en-
US)

We are committed to finishing this game and although progress has slowed down
and the release is taking longer than we planned, we remain dedicated to
working on the project and will continue to do so because we believe in this
game and we believe in making programming fun to learn.

We are testing a second alpha release of the game to release soon so you can
see what we've added since the first alpha. We exhibited our first alpha
release at PAX and you can download it here.

Some of our Kickstarter backers are frustrated with the lack of updates on
progress, and Code Hero lead developer Alex Peake would like to make a
personal apology:

Hello backer. I owe you a thanks for your support and an apology for our lack
of updates on all the progress we've made with your help. I started the Code
Hero project to make a game that teaches people how to make games and you
backed us to help make that happen. We are going to finish this game for you
and everybody else in the world who wants to learn how to code.

I believe in this mission and I'm grateful that you and so many others have
believed in Code Hero too and supported us to work on this project. I worked
on the idea to make a prototype for a year before asking for your help on
Kickstarter, I built a team to work on it for a year since, and we are
committed to finishing this game and continuing to add to it so you can make
games of your own.

Game development is hard and many studios and projects fail, but I can't let
you down because what we're making is important. It's important to me
personally to give all the people in the world a way to learn to code that is
actually fun. I won't let any obstacles stop the Code Hero team from
completing this. It's my life purpose to make this game because I want to see
you make games of your own. Software development is hard work and we're behind
schedule and solving technical challenges to add player level creation much
harder than the already huge creative challenge we set ourselves to begin
with. But every big project faces big challenges and we're going to figure
ours out and get the game out and keep updating it and expanding it to make it
grow to keep challenging the skills of our players as they learn more and more
game coding skills.

Many of you may not have tried the latest alpha we showed and released at PAX.
I encourage you to download it and try it and see how much we've accomplished
so far. The first alpha shows a world called Gamebridge Unityversity and your
first mentor Ada Lovelace who guides you through the tour of the game. First
you visit the Arcade you can play and post player-created games built with the
world editing tools, but first you visit the Labyrinth where you learn how to
edit the game's variables to beat it. Next you visit the Library where you can
learn about Unityscript programming. Then you visit the Real Artist Shipyard
where you're introduced to the Scenebox world editor to make and ship your
first level. The tour is designed to take the player from playing an adventure
game to making their own right from the outset. It isn't complete yet, but it
shows what we built and we're hard at work expanding on that first release to
get the new functions fully working and the new training levels fleshed out.

We're testing a new second alpha release tomorrow to show what we've added
since then and we're working towards a third more feature complete alpha that
will be ready for general use as a complete learning tool.

I know the level of frustration some people have is high right now and that it
is my fault for not communicating about our ongoing progress, but I want to
reassure everyone who has backed us not to panic: Code Hero is not dead and we
will not let our supporters and Kickstarter backers down. All our backer
rewards will be delievered along with the game. It is taking longer than we
hoped, but the game is becoming awesomer than we planned too. I'll post a more
detailed update soon with the new alpha build and answer any questions and
concerns people may have.

If you'd like to reach me, my email is alex@primerlabs.com and I'm on Google
Hangouts and skype username "empowerment" and I will answer your all your
questions or concerns.

~~~
woah
Hey, great to see you in here- how is the timeshifting dubstep codetana coming
along?

~~~
lxpk
The Codetana is pretty awesome and the next step in it is to integrate the
scoring system so you can do some challenges with it.

------
oboizt
For many of the backers, it seems to me like that's just the risk of investing
in new products/companies. If they didn't receive the promised reward for
their level of contribution, that seems like a problem though.

~~~
hahnfeld
Of course it's a problem. That's what happens when you create expectations
that 100% of fully funded projects are going to go on to completion (leaving
along the murky middle ground of completed but sucking terribly.)

VC's, who are professional investors and certainly better versed than the
general public on how to triage projects going sideways probably have ~5% of
projects totally fail, where the product never reaches production.

Kickstarter needs to manage expectations and have a solid policy on how to
deal with situations like this... else, they'll be the next failure.

------
jdavid
For everyone who is a backer and has met Alex personally, please vouch for his
passion on Kickstarter. Doing it here does not help.

I don't consider Alex the most experienced dev, but I do think he is one of
the most passionate people I have met. He tries for the stars and often times
falls short, but so did the Wright Brothers, Tesla, and Edison.

Even the best of startups fail. I think the rate is like 1 in 100 that
succede. I hardly think we should hold kickstarter projects to a higher
standard.

I have contributed over a thousand dollars to Kickstarter projects, and I
don't consider any of those dollars, purchases. I consider them donations.
Some projects will succede while others fail.

Don't let the legal system make an example of this.

Prosper is still a great company, but legal quagmires made it much less than
it's original vision. I'd hate to overly regulate kickstarter.

~~~
driverdan
> I don't consider Alex the most experienced dev, but I do think he is one of
> the most passionate people I have met. He tries for the stars and often
> times falls short, but so did the Wright Brothers, Tesla, and Edison.

It doesn't matter if he's the most passionate person in the world. Lack of
communication and failure to deliver is what matters here.

> Even the best of startups fail. I think the rate is like 1 in 100 that
> succede. I hardly think we should hold kickstarter projects to a higher
> standard.

If a startup receives $170k in angel funds you'd better believe the angels
would expect frequent, regular updates on the progress (or lack thereof).

> I have contributed over a thousand dollars to Kickstarter projects, and I
> don't consider any of those dollars, purchases. I consider them donations.
> Some projects will succede while others fail.

It doesn't matter if you consider them to be donations, they're not. If a
company promises to deliver items like shirts and USB drives in exchange for
money they're legally obligated to follow through.

------
stcredzero
I met Alex personally and visited him at his apartment. He gave me a demo of
Code Hero. A lot of things worked. A whole lot of things didn't work, and if I
could understand if a programmer would feel embarrassed for the code to be
released that way. I've also had occasion to overhear discussion about the
project. From what I've seen, there was a tremendous failure of project
management. From what I understand, there was no form of automated testing.
There were team members who didn't work well with others, and the team's
overall capability (or lack of) resulted in frequent broken builds.

In short, I don't think there was any malice at work here.

------
jtchang
I totally wasn't aware Alex even had a kickstarter. I actually know Alex since
I go by Noisebridge and saw him there a few days ago. Does Kickstarter bind
you to a date to deliver a product or consider the whole thing as failed?

------
noonespecial
Part of the lesson here might be "don't delay the release of the originally
promised project because your scope has become 'awesomer' than you originally
planned. You can scope creep forever.

TL;DR: Don't Duke Nukem your backers.

------
slovette
This is the risk in investing, period. Kickstarter should do what it can to
reduce the risk of scammers (properly screen and check into submitted projects
and their founders history), but they're not in existence to be an insurance
policy on consumer's bad investments. The lesson here is even in a very
simplified world of investing, research and knowing before you invest is
crucial.

I do wish the pursuit on the side of Alex Peake success, people should ask
questions and investigate how he lost all that money. I like the idea of
crowd-funded & crowd-accountable.

------
grannyg00se
The average pledge is $23. Class action seems a little bit unreasonable.
Especially since these are supposed to be donations. Are they not?

------
brudgers
A class action lawsuit over $200,000?

This is why crowdfunding is a bad idea. Even if you are a scam artist (which I
am not saying potential defendant is).

~~~
riazrizvi
A class action lawsuit is a great idea. It is clear from the comments here and
on Kickstarter that this situation has been worsened by conflicting
expectations. A lawsuit will help clarify what the public can expect from
crowdsourcing, and for project founders it will help clarify their
responsibilities.

~~~
_chrismccreadie
I would suggest that a lawsuit will help clarify what the lawyers and judges
expect from crowdsourcing while completely ignoring what is best for
crowdsourcing.

------
madrobby
I, for one, think it's delightful that more people are getting to understand
the vagaries of product development from an investment standpoint. The more
people experience the pain, hopefully the less broken things will become.

------
rtkwe
Is there a short explanation of what's happened? I haven't heard of all this.

------
lackbeard
So what are the actual terms of Kickstarter? I always assumed it was something
more like venture capital than a loan, and if a project wasn't completed...
that's that, the funders get nothing.

~~~
dragonwriter
It's not. Its more like a loan (well, actually, its more like a sale: the
creators are obligated to provide the rewards offered to backers or to refund
any backers to whom they cannot provide the rewards.)

Which, if you think about it, makes sense -- fixed rewards (the loan/sale
model) come with obligations to provide the reward, equity stakes carry more
risk.

It wouldn't make much sense for Kickstarter to use a worst-of-both-worlds
equity-like downside risk with loan-like upside reward.

------
freddywang
I am afraid once a successful class action lawsuit is unleashed, many similar
lawsuits will be in the rise. It will definitely stifle innovation, defeating
the very purpose of kickstarter

------
scott_meade
No one should ever expect that an investment will provide any specific return.
Especially when it's not SEC regulated, audited, or otherwise credentialed at
all. And extra-especially when the platform on which the funding is made
explicitly disclaims any expectation of project completion saying "Kickstarter
does not investigate a creator's ability to complete their project. Backers
ultimately decide the validity and worthiness of a project by whether they
decide to fund it."

------
niftylettuce
Shameless plug: we handle t-shirt reward fulfillment :P
<https://teelaunch.com>

------
jayzalowitz
<http://primerlabs.com/developmentcontinues>

------
Nursie
Kickstarter is neither purchase nor investment, it's a grey area.

I guess the lawsuits were bound to start flying sooner or later.

------
dongle
How is it that the word 'hubris' failed to appear in any of the 177 comments?

------
kjackson2012
Can they request chargebacks through their respective credit card companies?
That seems like it's the easiest way to get their money back, although it's a
bit old at this point.

~~~
lwat
You can't do chargebacks on purchases from 10 months ago.

------
chrj
Couldn't the backers just request a chargeback?

~~~
tptacek
Probably not. There's a time limit on chargebacks, and Kickstarter is pretty
explicit that when you put money into a project promising some result at a
future date, you're not actually paying for a committed shipment of that
product.

~~~
ryusage
Apparently Kickstarter's terms do state that project creators are legally
responsible for fulfilling their pledge rewards, though. If those aren't
fulfilled, then backers are entitled to refunds from the project creator (at
least as far as Kickstarter is concerned).

This seems to be meant to give some legal pressure on project creators without
punishing them too much if their projects fail for whatever reason. It's
interesting though that many projects (like this one) promise rewards that
explicitly require the completion of their project, in effect making them
completely liable for refunds.

~~~
ghaff
This is a great point. Leaving aside the practical issues of getting money
from people who don't have it, this really raises some red flags about the
Kickstarter model. Unless it's just a way of raising capital up-front for a
fairly ho-hum project that basically just requires time and energy (and, even
then, stuff can still happen). But Kickstarting projects of the sort that
routinely fail a decent percentage of the time, like video games, looks a lot
less attractive if the received funds look something more like a loan than an
equity investment.

~~~
ryusage
True, but if project creators don't promise completion as part of the pledge
reward, then they don't assume so much risk.

------
jaequery
and it sure won't be the last ...

------
kreutz
Context?

~~~
Aaron138
Found this on google - [http://www.giantbomb.com/code-hero/61-39471/code-hero-
dev-ta...](http://www.giantbomb.com/code-hero/61-39471/code-hero-dev-takes-
the-money-and-runs/35-570344/)

Not sure I get it, seems a lot of people don't understand things can fail,
then people become overwhelmed and to scared or inexperienced to deal with the
issue.

Maybe there's more to it and the are still trying for money?

------
camus
This whole thing is a scam , plain and simple. I'm sorry for those who
invested in that kind of product , but when you deal with real VC , the
business you are investing in cannot just ignore you. You meet the executives
on a regular basis , you get reports , business plans , previsions , etc ...
Crowdfunding simply doesnt work if the project is just barebone. Crowd funding
should be the last step of a project industralisation , not the first. There
was close to no code in that project , only smoke... whoever invested in that
scam , i hope you learned your lesson.

------
michaelochurch
I don't know enough about the story here to have a strong or moralistic
opinion, but from what I've read, this whole thing stinks.

Kickstarter is supposed to make it easy and lightweight to raise money for
projects, but if a failed project can ruin your reputation, then that money is
coming with some severe strings.

If he really is fraudulent, then he probably should be sued and he shouldn't
get funded again, but I see a bad precedent and a chilling effect here.

