
The Newest Lean Startup Tool: Kickstarter - ianstormtaylor
https://segment.io/academy/the-newest-lean-startup-tool-is-kickstarter/
======
dakrisht
Agreed with shawnc, the article should state Crowdfunding and not Kickstarter.
But that aside, I definitely agree with others that using crowdfunding as a
"startup tool" doesn't make everything and everyone on there a "startup." If
anything, it allows people to get very important market validation which can
lead to a startup environment and lead to more outside capital.

I personally don't think software has big potential with crowdfunding
platforms since crowdfunding success has been inherently hardware-driven. I
also think developers run the risk of pitching a software "idea" to a huge
audience where one dev browsing the site can steal the idea and make it while
you wait to raise your $50k for "coding." I also don't think it's in the
nature of any dev to do that; perhaps kids who have "ideas" for apps, can't
code and don't want to spend the money on a 3rd party dev.

There's also an inherent risk with crowdfunding. Sure, we look at success
stories like Ouya and Pebble who have both raised a ton of equity-free capital
- but those are rare. I never saw the value or appeal of Pebble, to me it's
just another useless watch with a display. Similar to a useless Nike Fuelband,
but people like gimmicks and "new stuff" so more power to Pebble. Pebble has
been plagued with a few issues as well as Ouya and I think a lot of these
Cinderella stories are glorified on TechCrunch while forgetting to mention the
fact that creating hardware is a very tricky business.

The consumer, of course, doesn't care about your supply chain, tooling,
manufacturing, QA, warranty, logistics and 20 other things associated with
launching a successful hardware product. They paid for a good, they want it
shipped. If it doesn't work, they want a return. And they'll most likely bitch
and moan just so you can suffer a little more.

So while we may see certain success stories in the Crowdfunding space, they're
primarily hardware, tangible goods driven and rarely reach the $1M range. It
is very difficult for any hardware product, even with a high margin and low
COG, to make a profit with a sub-$300k crowd raise. So when you see someone
raise $125k for some hardware which looks great (renders), has a great video,
and a 2 month ship date - that's not reality. They're most likely losing money
on that deal. I've personally been involved (as an advisor) with a company
that raised over $220k for a high-margin / low COG consumer electronic and
they are bleeding money.

On the surface it's like everything else - glistening. But inside, these
things are tough. With that said, market validation is the biggest gain you
can get from crowdfunding, unless you're pushing the $750k raise range. And
I'm sure the Pebble guys made some nice money since that campaign raised so
much cash, the HTML on Kickstarter couldn't even handle the number.

I also wonder what kind of products we'll see on crowdfunding platforms. I
foresee a lot of informercial-like products coming up, imagine the Shamwow guy
selling that crap in front of millions of online users - it could be a big
market or rather, a shift from traditional dead media (TV) to the Internet.
This includes the funding of independent films, Zach Braff's latest project
was somewhat disruptive when it comes to how movies are traditionally made. Be
in no doubt, Hollywood and all the other traditional media old farts are all
over these sites, forming strategies on how to crowdfund their projects by
making it seems like the actors themselves are seeking funds.

~~~
BHSPitMonkey
> I personally don't think software has big potential with crowdfunding
> platforms since crowdfunding success has been inherently hardware-driven.

I'm not sure this is true. I've backed a few game development projects on
Kickstarter that ended up far exceeding their campaign goals. Maybe you're
making a distinction between games and other types of software (which, indeed,
haven't been too successful).

------
danielfriedman
Great points by Michael here. Kickstarter has opened the doors as a tool to
gain initial funding to meet producing an exact product or service.

What I loved most about Michael's post is he talked about the importance of
outreach - tweets from other relevant organizations, guest blog posts and
contributing to online forums. Though Kickstarter is a "marketplace" - it
likely won't get you all the backers you need without doing your own outreach
to potential customers and backers. It's essential to understand their pain
points and meet it with your product, just as Real Python did.

~~~
mjhea0
It's really key to do your own inbound marketing. Like I said, I spend about
half my day doing it. I know other people who went at it full time. There's a
direct correlation between the amount of outreach/content marketing you do
with pledges.

------
shawnc
This article should say 'Crowdfunding' instead of 'Kickstarter' - that's truly
the part of the 'newest lean startup tool'. It's not about Kickstarter being
that tool, but what Kickstarter enables when using them. There's plenty of
options, including doing it on your own site.

Crowdfunding is indeed a good qualifier for knowing if you're on the right
track or not. We actually crowdfunded our product, from the start, on our own
website, and it went well enough that we're still at it.

It's actually a product to crowdfund on your own website, so we essentially
ate our own dogfood by using it to garner our first 100 customers.

------
jonathanjaeger
I think Kickstarter is one tool to validate that your idea has people who are
interested (assuming you market it well). Since you're putting up one
"project", even with stretch goals it's not really the most data-driven way to
get to product market fit. You don't really have people using the product in
real-time and iterating on it as you would a live web app, for example. But
it's still better than putting in thousands of dollars on a hardware
investment without even knowing there's interest!

The other problem is if you find you're not building the right thing, you
can't scrap it and build something entirely different because if you're funded
you've made an obligation to your backers. And that can be a long arduous
process to fulfill orders/incentives/perks. Not really the lean startup
philosophy, but I still like that Kickstarter is a great way to find demand
for an idea.

~~~
mjhea0
Good points. Depending on how far along you are in the development process,
you can have potential users testing a barbones mockup in real time. This
could even help the performance of the Kickstarter.

As far as pivoting: you are absolutely right. If later on, you find out that
you are not building the right product, you still need to fulfill your
promises to your Kickstarter backers. That said, if your KS is a success, it's
probably a good indication that your business model, at the very least, is
viable.

It comes downs to planning and determining what your end goals are, and then
tailoring the KS campaign as best you can to meet those goals.

------
derefr
If I recall, Kickstarter doesn't allow you to run a campaign for something
that will be a subscription service after launch. That sort of conflicts with
the "best practice" advice[1] for the modern startup, doesn't it? Or does it
complement this advice, giving an channel to early revenue for B2C startups
that previously had to rely on "runway"?

[1] i.e. do B2[SM]B, do SaaS, do locked-in monthly recurring then try to get
yearly up-front for cashflow.

------
niftylettuce
We'd love to help any startups/projects in need of swag.

<https://teelaunch.com>

------
biot
By this definition, everything on Kickstarter is a lean startup. How does one
draw the line? I'm having a hard time grasping how this is different than,
say, Neal Stephenson raising money for a new scifi novel. Would that be a lean
startup as well?

~~~
dakrisht
People, and particularly this article, love to throw around "industry terms"
to get clicks and create buzz. You can't fathom how many times "entrepreneurs"
making the latest Instagram throw out the "change the world" line. It's
fashionable. And I also hope it goes away real fast.

~~~
mjhea0
You're right that sometimes it's just about using some buzz words to grab
attention, but I would hope that beneath the surface there's more there. Yes,
you could consider every KS project taking on the lean approach - but to
explicitly state that and approach a KS like that is quite a bit different
altogether.

