
It’s not ok for billion-dollar companies to crowdfund - tuwannu
http://www.androidauthority.com/billion-dollar-company-crowdfunding-804008/
======
kobeya
Pre-sales have always been a thing. Tesla is a $60B company. Can they not
presell the Model 3? Calling it crowdfunding is just a new branding of an old
idea.

I would argue the opposite—as a consumer I am considerably safer putting my
presale funds into a product of an established company as they are more likely
to honor the arrangement. They can’t just go belly up and move on to the next
big thing.

~~~
aaron-lebo
That it is a rebranding of an old idea shows you exactly what it is - an
attempt to sell a business model.

If established companies were just a tiny bit better with the way they do
presales, this might be okay. But I've bought too many products in the last
five years that were literally broken (videogames are the prime example) after
forking over $60. Some of those products have remained broken for months.
That's unethical. What shocks me most is this has happened with flagship
franchises, which tells me those companies simply don't give a damn. Why
should they, when the pay now, deliver later business model works?

Companies need to prove that their product is valuable, you can't do that when
you flip the relationship, the power dynamic is completely out of whack -
we're the billion dollar company, but we want you, the consumer, to give us
money now for a product which we promise will be good later.

As consumers, we should expect more.

~~~
kakarot
Imvestors beware! I've only ever purchased 3 pre-release games and all
delivered. With a keen enough eye it's pretty easy to tell if a game is going
to deliver on its promises in a satisfactory manner. If you are having trouble
discerning the lemons from the good stuff, maybe you shouldn't be investing in
games.

~~~
aaron-lebo
I was referring to Microsoft's Master Chief Collection which was almost
unplayable until six months and multiple patches after release.

You're putting all the onus on "investors" (really, consumers, because these
aren't actual investments). They're expected to pay money if they want new
products and then they get victim blamed if they aren't careful enough.
They're not the ones at fault.

~~~
egocentric
I’m with you here. But I’m not sure how I’d actually articulate why this
practice is _unethical_. There’s an at least theoretical risk that the more
pressure (of any kind) we put on the expected launch quality of so called
crowdfunded or pre-sales models, the less risky the industry is going to be in
aggregate, in terms of taking on bolder steps. While I’m sure there are
numerous instances where this gets abused, I’m not sure on which side of the
sweet spot we are.

~~~
kakarot
It's definitely unethical sometimes. Like the No Man's Sky incident.

------
ChuckMcM
I can't say I agree with the author here. The biggest problem in "product"
manufacturing has been trying to understand whether or not your "great idea"
was in fact great or just something you and you alone liked. Crowd funding
sites do two things for you, they give you a slope and an intercept. The
slope, how quickly people sign up, is a good indicator or market interest, the
intercept (the final point you end up at) is a good indicator of overall
addressable market.

Why _wouldn 't_ you take advantage of that before committing possibly millions
of dollars into a project?

That said if you're a successful company you really should execute perfectly
on your crowd funded product, it should ship when you say it will and it
should have all the fit and finish of a professional product. If, as a
company, you consider crowd funded products to be somehow a 'cheaper'
alternative to "real" products, then I have an issue with that.

~~~
ScottBurson
Agreed, as long as the fact that it's an already-successful business is
disclosed up front.

------
echan00
Sorry, I really don't agree with this. It doesn't matter how big or small you
are, any company has a right to crowdfund. Big companies have their own set of
problems, and crowdfunding can be a way to help those companies solve them.
The point of crowdfunding is to allow the "wisdom of the crowd" to determine
what ought to be funded and what not to. In that sense, if enough people
believe that a project is worthy of funding then it is worthy.

~~~
wpietri
Did somebody say they don't have the legal right? I can't find that in the
article.

~~~
seankimdesign
You're right in that nobody mentioned anything about legal rights.

The article in question, however, is titled "It's not okay for..." and alludes
to corporations who supposedly are violating the 'moral rights' by
participating in crowdfunding practices. The parent post is merely extending
the debate regarding the same moral rights but taking an opposite stance,
claiming that the right(not legal, but moral) is not exclusive to the start-
ups.

~~~
SubiculumCode
As long as funders are aware that its a corp, not 3 broke-ass code jockeys.

~~~
usrusr
In a “get the product" crowdfunder, as opposed to a "t-shirt and our eternal
gratitude" one, them secretly being a large corporation would be my least
concern.

In any case, that corporate crowdfunder could even be both at once: three low-
tier engineers with an idea who got an undecided result in the internal pitch,
a small budget for crowdfunding preparations and "all in" with a whole new
department if that succeeds to raise n money.

------
shopkins
Agreed. Obviously they have every right to do this, but what are these
companies actually contributing to the crowdfunding community, outside of
(seemingly) inferior products like the Nebula Capsule [0] or Opal Nugget Ice
Maker [1]? Why do we need to sacrifice more of our sacred startup / maker
spaces to megabrands?

[0] [https://www.indiegogo.com/projects/capsule-the-world-s-
most-...](https://www.indiegogo.com/projects/capsule-the-world-s-most-
advanced-pocket-cinema-party-travel#/)

[1] [https://www.indiegogo.com/projects/opal-nugget-ice-
maker/#/c...](https://www.indiegogo.com/projects/opal-nugget-ice-
maker/#/comments)

------
bdibs
I understand the general consensus in this community will be one of "pro-
business" (large corporations should crowdfund), but I'd like to share the
contrary.

The whole purpose of crowdfunding is to hedge the financial risks of bringing
a product to market. This is something that "3 college kids" should consider
(and may even be necessary), but a business with hundreds of millions in
revenue should be able to avoid for the consumer's sake.

Why should we, as the consumer, accept to pay for something before it's even
made? If the product ends up being subpar, the company has nothing to lose, so
what's their incentive to make a quality product?

I'm not coming from a legal standpoint, this is just my opinion, of course
they _can_ do whatever they want.

~~~
comstock
I agree in general, if the product was going to be made anyway.

But one situation where crowd funding might be appropriate is where a product
manager or developers can’t get budget to fund development. So unless a
crowdfunding project is successful, the product will never get developed.

That may or may not be the case here, but in general I can see a few scenarios
where crowdfunding in large companies might be appropriate as a way of seeing
if a real market exists and gaining traction internally, prior to development.

------
seankimdesign
Hard to agree with the sentiment behind this article, as the entire argument
seems to be rooted on this arbitrary idea that crowdfunding is some sort of
sacred ritual that's reserved for the underdogs only. Who mandated this rule?
I certainly didn't agree to abide by it, and will continue to fund any product
that I deem to be fund-worthy regardless of the current financial capabilities
of the creator entity.

~~~
oelmekki
I had the same impression while reading the article. I think that somehow,
author is equating crowdfunding to charity (which would explain why they would
think it's outrageous rich companies are trying to take advantage of it).

To me, crowdfunding is more about testing market fit, which is especially
critical when building physical products that need manufacturing - so it's for
everybody. Actually, the simple fact that refund is automatic when campaign
goals are not met is probably better than any usual presale.

~~~
usrusr
To be fair, if you only look at the kickstarter model of crowdfunding, where
campaigns can claim anything they want no matter how factually wrong and the
only guarantee given is that your card won't be charged unless the funding
goal is met, then charity is the closest analogy. It works best as a money
collection tool for community projects were trust is already established off-
site.

------
josephpmay
It’s part marketing campaign, part pre-sales to prove demand with an easy out
if nobody wants to buy it. There’s nothing wrong or unethical about it IMO

~~~
usrusr
Depends on the amount of deception involved. There is outright lying on
kickstarter because truthful claims of "smallest/first/only in the world" of
some campaigns has been mindlessly cargoculted by those who are clearly not.

Presales by established companies would not do that. Next are expected product
features that turn out to be impossible/too difficult to deliver on time or
budget. Happens all the time, there are entire software development processes
built around this uncertainty. For presales, this is really solved by precise
language clearly differentiating between the definite and the possible. With
zero effect on customer enthusiasm and disappointment, because we all ignore
them every single time. Just be careful to not "not-promise" too much.

Then there is the pre-sales rebate. The least suspecting of all pre-sale
perks. But many products get cheaper over time. How long does the announced
"post-presale price" have to stay valid so that the pre-sale rebate is not
deceptive? Clearly it would be ok to slash prices when when the successor
model is announced two years later. Clearly, it would be absolutely outrageous
of they only sold one unit to a guy hired by marketing at the announced full
price on release day, to then immediately go below pre-sales price. At what
point between those extremes does a pre-sales rebate become deceptive?

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icodestuff
It seems the core of the objection is "billion-dollar companies using
crowdfunding platforms violates the spirit of crowdfunding platforms". Doesn't
seem to be much in the way of hard evidence as to why it's a bad thing though.

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montaguy
This doesn't sound like a real problem.

~~~
amelius
The problem would be bigger if they used their own money to fund development
of new products in existing markets; that would put small startups at a
disadvantage. What the article speaks about does not.

------
GeorgeDewar
I'm not exactly a "free markets solve every problem" guy, but in this
particular case I think we have a platform with an agreed set of rules, and
when a willing exchange can happen there is really nothing wrong with it.

I see these rules as:

1\. The vendor is using the platform to sell a product that's not ready for
market yet. They are not willing or able to develop the product without
securing the funds to do so from willing buyers. Note that the distinction
between "not willing" (a company swimming in cash that doesn't want to take a
risk) and "not able" (a guy with no financial means whatsoever) is blurry in
many real cases (e.g. three guys in a garage that _could_ spend their whole
life savings and mortgage the house but aren't quite willing to, as the in-
between case).

2\. The buyers are getting a product they can't get elsewhere, at a price they
are willing to pay. This implies they feel adequately compensated for the risk
they know they are taking on.

3\. The platform earns a fee.

A giant corporation playing by these rules seems to me to be fairly
contributing to the ecosystem just like a small player. If their proposition
is not on terms that buyers accept, they'll simply fail.

------
jansho
Not anti-crowdfunding for large companies, but consider this: what happens if
these companies start flocking in Indiegogo and Kickstarter? The main ethos of
crowdsourcing platforms is to give extra leg-up to lone inventors and small
startups so that they have a chance to be competitive too, but if you have
large companies with their big budgets and finely tuned marketing, would these
platforms still provide fair ground for everyone?

As the author pointed out, Indiegogo is supposed to focus on the "underdogs":

 _" Our mission is to empower people to unite around ideas that matter to them
and together make those ideas come to life... We know building something from
scratch is hard, so we’ve got your back."_

~~~
usrusr
The platforms have already been taken over by finely tuned marketing, no need
for large companies to get involved.

In fact, large companies might bring some refreshing linguistic restraint into
the game, as I would expect them to be much more cautious of claiming
"best/first/only in the world" about products that are clearly not. I rarely
see a product kickstarter that does not look like exactly how a highly
polished parody of product kickstarters would. At least with a big company,
you would know that they put more into the product than into the campaign.

What is currently ruining the platforms (well, at least ruining kickstarter)
are campaigns were this is clearly reversed, e.g. campaigns trying to do a
moneygrab with something as commoditized as USB power banks.

~~~
jansho
They won't just bring "refreshing linguistic restraint" though, if you have
two campaigns doing the same product idea, but one has a slicker video and can
promise bigger rewards, which would you back? For crowd-funding platforms that
proclaim support for the "small people", I can understand if some people feel
a bit cheated.

Personally, I like to go for the artsy projects because these can't be found
elsewhere (except maybe Etsy) so I've learnt to filter out the "money-
grabbing" spam. Inevitably you'll have noise in a system, like eBay's
counterfeit problem, but I just don't think that you need large companies
presence to deal with it.

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kylehotchkiss
I'd rather buy from an Anker kickstarter/indiegogo than "Three guys in college
looking to try and get their prototype into the world".

There are some really cool ideas on Kickstarter and some things that seem
incredibly well designed (they crop up on uncrate.com all the time). Execution
seems to be the challenge - a good product isn't just the design of it, it
needs to perform its task well, safely, and durably.

Would be nice to see colleges themselves forking over some of those sweet,
sweet endowments into students ideas.

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maxxxxx
I wonder if you could find a way to distribute assembly tasks and others to
the "crowd". I bet you would find a lot of people who would be willing to put
in significant work to help build some cool gadget. So you could get initial
funding from the crowd and then also let them do the actual work. The only
thing you have to do is to cash the profits. A little simplified but I bet
someone will figure that out at some point.

~~~
coryl
Its probably more efficient to just hand over money and let the organizers pay
people to do the work.

Unless the work is highly modular and distributable. But it depends on the
product being worked on, some things work well (open source software
development), other things don't (design, hardware, physical stuff).

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perpetualcrayon
I don't get the impression we'll ever be able to prevent it, but I do think
crowd funding platforms should require disclosure of this kind of thing, and
should spend time vetting new accounts (at least the ones who will want to
create campaigns) to ensure the disclosures are accurate. This way the public
will be able to draw their own line of what's acceptable and what isn't.

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mbloom1915
what better way to market test product then crowdsource interest and sales?
all points made above mine make it clear this is not a problem nor new

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jotm
_" Being asked to put money down for a product that hasn’t been finished,
hasn’t been seen by tech sites, and that definitely doesn’t have any reviews,
would normally sound crazy."_

But we can ignore that when pre-ordering games... because they look fucking
awesome!

Seriously, not an issue. Why would companies not crowdfund? If anything, they
have a higher chance of delivering on their promises.

~~~
Crontab
I do think that it can also be a way to get companies to make niche products
happen.

------
occultist_throw
The issue here is the following:

Crowfunding implies that you don't have enough money to start making and
holding inventory for $something. And $something is usually small, under some
hundred dollar device that the markets haven't figured out yet.

Like, the recent RISC cpu board - its new, novel, and really neat. But to make
them costs a bit per board. $25 each, which in lots of 1000, is up to $25k
capital. But the design and idea is awesome, and lots of others agree. So
people put money in, and take a bit of risk, to see that this is made, and
they get it, and prove there is a market to continue.

When big companies do this, they have plenty of capital and ability. The risk
they're taking is that if the "market bears it". And using crowdfunding
platforms, they also shunt the risk almost completely off since those
platforms offer pretty much nothing in terms of guarantees.

Big companies using crowdfunding also short-circuits the idea for these -
which is that big companies ignore many market segments because of their size.
In the short and long of it, they are bad actors.

Read my previous comment history and tslug's comment about how capitalism
reduces an infinite amount of dimensions of ethics, value, and liability down
to a single scalar : money.

Of course bad actors (read: big companies) are going to hack and use it ways
that aren't intended. They have no ethics(legally required, except for benefit
corps), only governmental fines which are some percent of the damages they
cause.

~~~
icodestuff
It seems like a ridiculously inefficient system you're promoting. Why should
companies be forced to risk spending millions developing a product using only
a best-guess system as to actual demand for a potential product, when they
could have people put their money where their mouth is? Sure, they don't have
to use crowdfunding platforms, but if they're not set up to do pre-orders for
things themselves, they might judge the platform fees worth it.

The ethics aren't what you say they are either. First, while if a startup
crowd funds a product and fails, you're SOL. When a billion dollar company
crowd funds a product, even if the platform makes no guarantees, if it fails
do deliver _then you have recourse against the company_. Second, Why should
only small players be able to address previously unaddressed markets? Isn't
that one of the complaints about big companies, that they ignore small
markets? And now that they've got the ability to actually test out a market -
and serve it in the process! - that's a bad thing too?

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filereaper
The emphasis might be on the "crowd" part as opposed to the "fund" part.
Companies can try and size the actual market for their products, once a MVP is
found properly fund it. I think this actually make it a level playing field
for products between the big and little guy.

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Jdam
On my way to work, I‘m passing a store of a bag manufacturer that‘s in
business for 25 years. Now, they advertise their Kickstarter campaign that
will still run for a few days. Out of the 100k funding goal for a new bag(!),
they reached almost 500k. Mind blowing for me.

------
donatj
I disagree. I feel like it's a great way for a company to suss out actual
product interest before investing millions in fleshing out an idea. Just think
of it as pre-ordering.

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zeep
Large companies just have better odds of delivering the product than the
average Joe (because you are not guaranteed a product on Kickstarter alikes).

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anonytrary
Yes it is, it's up to the people (i.e. the crowd) whether or not they want to
crowdfund something. Free market should do the rest.

------
cup-of-tea
Well it's not as bad as billion-dollar companies crowd-sourcing.

------
godzillabrennus
Isn’t their form of crowd funding to do a public offering to raise cash?

------
dsacco
A stylistic critique here: I think the trend of taking a quote from the
article and presenting it on its own somewhere else on the page is overused,
especially in blogs and magazines.

For example, in this article, we have a sentence pulled from the article and
presented in a larger font with italics, a quote block and green text:

 _If this was three guys in college looking to try and get their prototype
into the world, great. But this isn’t a start-up._

This seems like a poor sentence to use for two reasons:

1\. That sentence literally appears immediately before the quote block in the
article in a vertical layout, which means I read the same sentence twice, back
to back.

2\. The sentence itself doesn't seem...noteworthy?

It seems like this concept was cargo culted from the design zeitgeist of
modern magazines, to the point that it's worked in as stylistic sugar where it
doesn't really make sense.

~~~
oddlyaromatic
I agree with you. I've always assumed these things were used to catch
somebody's eye as they flipped through the pages of a newspaper or magazine,
as highlights to draw the reader into the content. I haven't been able to
figure out what value anybody thinks they provide online for the same reasons
you point out. They are just irritating repetition.

~~~
tqi
I think it's fairly common for people to read the first 1 or 2 paragraphs,
then scroll down to the conclusion + comments. Pull quotes are likely a way to
re-engage those users, thus increase their time spent on the page + ad
impressions.

| Pull quotes are likely a way to re-engage those users, thus increase their
time spent on the page + ad impressions.

I agree though, execution is pretty hit or miss.

~~~
oddlyaromatic
I guess I do that sometimes, though I scroll too quick for pull quotes to
matter. Usually I'm going for the comments anyway.

------
shitposter69
let the open market decide.

