

Inflection point: Kickstarter has 3 $1M+ project in 2 weeks - bproper
http://venturebeat.com/2012/02/20/kickstarter-million-project-pledge-order-of-the-stick/

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unawz
Crowdfunding is a solution to high quality software development, open source
development, science funding, and sopa/pipa. It's really quite amazing and
people haven't caught on yet. It's also a solution to the startup problem of
building what people want.

Eric Ries talks about "pre-testing" - put up a landing page and seeing if you
get signups. However, this sounds scammy. A better way is to simply launch a
kickstarter/indiegogo campaign. You release the software as open source, which
is better for the world as well. But you also get paid as well. You want to
launch as startup that does project management as a saas. Instead put a
kickstarter campaign up for 1 million dollars, or however much you were
expecting to earn from the lifetime of your startup. If enough people want it,
it will get funded. The next step you build and release as open source.
Afterwards you can host it, or a bunch of other people who are expert at
sysadmin host it and get customers paying for saas. You move on to the next
project you want to build. The point is, you can have many crowdfunding
campaigns going. Think of 20 apps, list them for 60 days. The ones that get
funded, you build.

It also solves sopa/pipa. Someone has ideas for movies, launches campaigns in
parallel. The ones that get funded, he creates releases for free on youtube.

Same for science. Scientists would no longer need to be attached to a
university or do the politics that is involved in getting funding in science.
They go directly to the public.

In the above scenarios everyone wins. Customers and creators. The only people
who lose are people who were good at politicking their way up the coroorate
ladder. Although, they don't really lose. They can switch to being marketers
who launch campaigns, however they'll now need to have competence in marketing
and brainstorming ideas.

Firms only exist to solve the communication problem. Now that we have the
internet, there really is no need for organizations to exist. As more
database-based information systems are created for crowdsourcing (kickstarter,
fiverr, mechanical turk) , the more efficient this process becomes - which is
good news for startups because this is what they are creating.

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danhodgins
With enough creativity Kickstarter can almost be seen as a marketing channel
in addition to an early stage funding platform. Sounds to me like an ideal way
to cajole friends and family into funding one's project/venture without having
to formally raise a 'friends and family round', and without having to approach
angel investors.

For no upfront marketing dollars you get free exposure, and the opportunity to
reach prospects who - gasp - might even FUND your development efforts.

What a great way to reach, excite, delight and validate a market!

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itmag
I run a magazine (<http://interestingtimesmagazine.net>) as a hobby. It could
really use some funds. I've never really considered that we could raise money
this way, but now I am getting more and more interested in taking that route.

Any tips would be most welcome :)

A good goal for us would be to get $2000/month (after taxes) which would go
toward paying our graphic designer so that she doesn't have to work a full-
time job. Is this completely unrealistic?

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jeffool
I could recommend retooling your mag for single landscape screens, but, a) I
don't know your print:download ratio, and b) you asked about Kickstarter!

My knowledge does not come from using it, but instead trying to convince
friends and associates to use it, after researching and being enthralled by
the potential! First codes the news that, you can't use Kickstarter! Forever,
you can use IndieGoGo, if you don't mind the higher total fees (7%, plus afee
for not being American (money changing.))

Take inventory. What do you have that has value? Can you leverage that for
backing? You're on issue #7 and don't charge, so offering free digital issues
to low level backers didn't give you anything. But paper copies do. So any
spare stock you have, well, consider this your "fire sale" to raise cash. If
you print on demand... Ouch.

Make sure backers know this isn't business as usual, this is an event! I'd
make the push to "back Interesting Times volume 2!" And start with new
renumbering, and a quarterly schedule. This may be the time to start charging
$2 a digital issue, and push to get into digital storefronts like Amazon,
iTunes, and even Steam. Don't think this bad. I mean, if you can offer ~100
pages of content that's a great deal. And if not charge, which I understand,
consider ads. (Actually, I personally other ads. But at that rate, I see no
reason not to retool things as a website... And offering ads at reduced price
could be great high tier backing options.) If you're okay with charging,
consider subscriptions at reduced rates. Offer DRM free issues congruently
with other pay options. But I'm getting into backing rewards now... As I said
before, take stock. My point here really is, you want money to continue to
chine in, right? Even after the fund raising?

Have people vouch for you. Any connections you've made, use. Ask people if
they'd consider giving you blurbs. "Required reading for world domination. Or
at least dominating your social circle." - Semi-Popular Person,
Company/Culture X. This may play to the mainstream to give you credibility,
but of course it also appeals to fans of that person's fans.

Find someone to help make you a worthwhile video. You have to know someone who
can film and edit high quality video. If you don't, you can shoot it yourself
on a cell phone, and use open source video editing equipment, all for nothing,
but you have to make it "work." Get across not only yourself, but the idea
that you're offering. Not "a magazine," but that after reading your magazine,
your readers will be better equipped to succeed I the world around them. That,
somehow, is your video.

And that video is probably the most important thing.

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jeffool
I guess one thing I was dancing around in this was said by someone else. If
you don't find a way to turn this into a money making venture, you'll find
yourself right back in this spot in a year. And if you do, you may not even
need something like Kickstarter/IndieGoGo.

/edit: I also typed all of that on my phone. Wow at those typos. And how
longwinded I got. By the I finished, I couldn't bring myself to editing on
that tiny screen. Sorry about that. Feel free to ask or email if anything was
too confusing.

Of course, that said, you can find all the same material I've read with a
little Googling, I'm sure.

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itmag
Wow, quality advice. Maybe I should contact you, eh? :)

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deyan
What I find most impressive about Kickstarter is that they are becoming more
of a marketplace with every passing day. In the beginning, it was mostly a
tool to help project owners collect donations from close friends and family -
and their immediate friends. That is changing by the day and witnessing the
transformation is very exciting.

~~~
unawz
There are over 300 sites similar to kickstarter now. Competition will drive
down the 5% fee kickstarter gets, and sites will start competing by providing
api's for managing multiple campaigns, as well as differentiating on providing
marketing support.

This is a great opporunity for startups - both getting funded on crowdfunded
sites and launching crowdfunded sites, because unlike the usual ad-supported
business model or saas offering, serious money changes hands and every sector
of the economy can be flowing through this.

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wtvanhest
In 2 sided markets network effects can keep margins high since going to one of
the 300 kick starter competitors may mean not getting your project funded.

I doubt their fee will go down ever.

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unawz
There isn't a network effect in kickstarter. Whether you get funded is
basically up to your social media campaign. Unlike ebay, you cannot be
anonymously selling your wares with your seller score being your reputation.
In crowdfunding you have to go all out - you already need a solid track record
that is publicly visible. Funders are basically doing a due diligence check on
you. You need a profile on many different sites and email newsletters etc.
Crowdfunding sites are basically an reverse bounty system - a kind of api for
gathering and dispensing money. The only differentiation between indiegogo and
kickstarter at this point is the percentage they keep.

As regards ebay, their network effect hasn't worked out - amazon has taken
their business. In the future Amazon or Google might come in take out all the
crowdfunding sites by offering a reverse bounty api. At that point, the
crowdfunding sites should move in to the function of providing marketing
services for creators seeking funding.

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wtvanhest
I don't agree with you for many reasons:

1) Creating an account and entering banking numbers etc. is a real friction
which is not easy to overcome.

2) People can go on Kickstarter and see a number of projects which they can
fund without any prior knowledge of the person they are funding.

3) eBay is a $45B business which almost all of the value comes from network
effects. Sure, Amazon is doing great (80B+) and is taking some of their
business, but eBay is still a cash machine.

4) Looking at Indigogo it says that if you raise the money the fee is 4%. If
you don't raise your goal the fee is 9%. While the 4% is better than 5%, my
guess is that the total expected fee is actually above 5%.

6) Crowdfunding is not as simplistic as it appears on the surface. While not
having the funding as an investment gets around many of the issues associated
with the Securities and Exchange Commission, making a mistake could land an
owner in jail or with substantial fines. Even if the owner did not mean to
make something sound like an investment, if they do, it is a huge penalty. A
simply API to create many more reverse crowd funded sites would not work out
well on the average.

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smokeyj
Question: Why aren't kickstarter backers required to be accredited investors?
I ran into that problem trying to join SecondMarket. How is the kickstarter
model different?

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Danieru
I don't know of any kickstarter that has offered equity.

I think the reason you do not need to be an accredited investor is that: they
are not investments.

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nextparadigms
Doesn't the success of Kickstarter mean we need to rethink investment laws? I
imagine this sort of businesses, where they help start-ups get funding, would
explode if people could get equity in the companies. The equity per investor
could stay small, so random people don't have much of a say in how the start-
up is run.

~~~
veyron
Kickstarter hasn't really faced many scammers yet, but as it becomes more
successful more people will propose projects that they dont intend on
fulfilling (and pocketing the money).

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intended
This is what I'm interested in understanding.

Right now kick starter and many other sites are handling scammers because,
there aren't that many.

What happens when they do try to abuse the sites though?

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jballanc
At what point does Kickstarter become a NGO stand-in for the more traditional
Gov't grants that are continually being short-changed in budget battles and
austerity measures?

It will also be interesting to see how a move to "crowd-sourced" changes what
pursuits are successful. Presumably, the upside to something like Kickstarter
(as opposed to tax-funded Gov't grants) is that the individual financiers have
a greater say in what they value enough to fund. The downside, I worry, is
that some of the best things to come from science and technology in the last
century would probably never have gotten funded...

Also, it bears mention, while $1M+ is a lot for an indy game developer or
starving artist, a basic biomedical research lab needs at least that much _per
year_ and the standard amount for an R01 grant from the NIH is ~$4M for a 2-3
yr project.

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smackfu
Consider that people were saying Louis CK was a chump to spend so much on the
website he had made to sell his video. That was $32k. These mega-Kickstarter
projects are giving Kickstarter at least $50k (5%).

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alanfalcon
Some of the big differences are that A) You only pay Kickstarter that 5%
($50k+ for a mega-success) if you're funded so you're reducing your risk (Tim
Schafer honestly seemed to be aware of the possibility that he wouldn't be
able raise the requested amount) and B) Kickstarter offers some degree of
discovery and promotion (not so much that you can throw a project on there and
walk away expecting people to just find it, of course, but a project like
Pixel Sand[1] likely only got funded because it was on Kickstarter [also it
benefited from serendipitous timing]).

Louis CK had reasons to expect his project would be successful and widely
promoted and so increasing his up-front expenditures instead of going with a
Kickstarter makes sense in his case (setting aside whether he could have
gotten the same custom-built website for less cash).

[1] [http://www.androidrundown.com/blog/kickstarter-spotlight-
pix...](http://www.androidrundown.com/blog/kickstarter-spotlight-pixel-sand/)

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prbuckley
I don't understand why they would want to keep business's off of kickstarter.
It seems there is a real opportunity to provide this service for small
business's.

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pkteison
The reason kickstarter projects are interesting and worth the several-months
wait for the rewards is that it's enabling unique projects which you wouldn't
get any other way. If it got overrun by businesses using it as a pre-order
catalog, it could lose a lot of appeal and end up competing with traditional
web catalogs like Amazon.

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prbuckley
I bet that there are lots of companies that have interesting project ideas but
not enough resources to bring them to market. Do you really think it would
become a pre order catalog? I think letting business's get information about
what people wanted ahead of time would increase the quality of
projects/products being created.

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paolomaffei
Let me get this straight: can you fund a startup with Kickstarter or not?

I used to think yes but the in the interview someone from their team (?) says
no.

