

Kickstarter Updates Terms of Use Section Related to Failed Projects - BobbyVsTheDevil
http://techcrunch.com/2014/09/19/kickstarter-updates-terms-of-use-section-related-to-failed-projects/

======
ghaff
These new terms of use seem more realistic in one area. The prior terms
stated:

"Project Creators are required to fulfill all rewards of their successful
fundraising campaigns or refund any Backer whose reward they do not or cannot
fulfill."

The new terms state:

"If the problems are severe enough that the creator can't fulfill their
project, creators need to find a resolution. Steps should include offering
refunds, detailing exactly how funds were used, and other actions to satisfy
backers."

In my book, this is more in keeping with the reality of a project that
(honestly) failed. If the money's gone and things just didn't work out for
whatever reason, it's just not realistic to expect all funds to be returned.
If the person or persons doing the project had this kind of financial reserve,
why would they even use Kickstarter, other than as a marketing tool?

I'm not sure how much difference the new terms will make in practice but they
do soften a black and white rule that, frankly, shaded Kickstarters more
toward pre-orders than speculative project backing.

Edit: As noted elsewhere, the new terms also explicitly further remove
Kickstarter from imposing any specific requirements if projects fail--and
therefore any implications of a role in enforcing said requirements.

~~~
janetic
Totally agree - both that the new terms are more closely aligned with the idea
of a Kickstarter project (and the creator-backer relationship) and that their
real effect will probably be pretty minimal.

What I find compelling is the softening of the ‘refund’ language - I think
that the notion of refunds is sort of at odds with the idea of a project being
sort of a joint effort between creators and backers for the reason you
mentioned. Emphasizing the communication/accountability reinforces the
collaborative creator/backer relationship that exists elsewhere in the site
(like in their deliberate naming of ‘backers,’ ‘creators,’ ‘rewards,’ etc.).
It encourages backers to think of themselves of investors taking a risk
because the believe in something, rather than consumers. To me that’s
definitely more compelling and a huge part of the value of crowdfunding
platforms as a funding mechanism that is changing the relationship between
consumers and the things (products, games, artwork, etc.) we consume.

In reality, most people will only be perusing the ToS as it pertains to
refunds once they’re already agitated and are looking for their legal
recourse. If the relationship between a project and its backers has already
eroded, I’m skeptical of the impact of wording changes in the ToS that don’t
concretely impact anyone’s obligations.

For those interested in the space, though, it does let us speculate about what
Kickstarter is thinking about, and what pains it perceives.

------
prawn
Instead of just trying to remove themselves from the process for legal
reasons, surely they're at the size where they could entertain providing
project managers to help coach entrepreneurs through their venture? It's not
like YC steps back and abandons each batch to see who survive, they coach them
through to maximise success.

If a Kickstarted project is tackling manufacturing of a physical product for
the first time, they risk making the same mistakes as others before them. YC
in a case like that would put entrepreneurs in touch with advisers or others
who've gone before them who learnt from their experience.

Or is this something they already do? Kickstarter hasn't been opened up to
Australian projects until recently, so I'm not sure.

~~~
janetic
Kickstarter does a quick review of projects to make sure they meet their
project guidelines/rules, and provides a Creator Handbook, but is otherwise
pretty hands-off.

I think from Kickstarter’s perspective, it doesn’t make a ton of sense to move
into what would effectively be the management consulting space with projects -
it would represent a huge expense on their end for no real reward (YC operates
by investing in their companies and then giving them various tools to succeed;
Kickstarter is a platform with no investment in whether or not projects are
ultimately successful). Obviously they have some interest in projects being
successful to maintain the credibility of the platform, but that seems to have
largely self-regulated (a few bad apples get lots of press, but a foray into
the unsuccessful projects reveals the power of group vetting).

IMO, expanding post-campaign creator support is something that would greatly
enhance the ‘Kickstarter community,’ and somewhere they currently fall down,
especially for tech and gaming projects that tend to be some of their highest
earners, and also most susceptible to problems in delivery. That sort of
service might find a home at Indiegogo, which is far more company/startup-
friendly.

The new guidelines are definitely a step in the right direction, and represent
a clearer understanding on the part of KS with regard to what’s possible for
creators who truly try, and simply fail. Shifting the focus to reparative
measures like providing expense breakdowns, alternate plans, explanations,
etc. seems more inline with the idea(l) that creators and backers are all part
of the project, sharing in the risk and reward.

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ChuckMcM
This is a good update, I know that if I were running a Kickstarted package I'd
create a fully auditable expense ledger so that in the event it was impossible
to complete I could provide a complete record of all expenses. Scanning
everything is pretty trivial these days, something like Evernote can organize
it, although a think a sort of "Evernote - Kickstarter Edition" would actually
be a really interesting project. Basically a tool that captures everything
into a repository that can be burned on to a self contained DVD at the
completion of the project, even if it was successful the resulting database
would be an epic way of figuring out a better way to do it next time.

~~~
reboog711
If you want to use Evernote to keep track of the financial records of a
business; you may want to reconsider starting a business.

At least until you learn a bit more...

~~~
ChuckMcM
One of the things I like about Evernote is that its "notebooks" databases are
just sqlite DB files. You can take them apart with a variety of tools, and
they are easy to back up and move around.

What I _don 't_ like about QuickBooks (which I've also got) is that its data
bases are rather opaque. You can copy them and back them up but the format
changes more often than I like and I don't have any third party tools that can
open them. That said, lots of businesses trust their business to Quickbooks (I
mostly use it to track expenses so they are easy to import into TurboTax)

What is it about Evernote that makes it a problem in your mind? (other than
perhaps it doesn't really have any sort of ledger function like Quickbooks
does)

~~~
typicalrunt
You should try Ledger [1] if you want transparent data formats and ease of
use. I've been using it for years to track both personal and corporate
expenses.

[1] [http://www.ledger-cli.org](http://www.ledger-cli.org)

~~~
ChuckMcM
That is _really_ cool. Between that and a database of PDF scans of my receipts
I'm good to go.

------
btown
The new FTC rule the article links may be of interest to others in the
e-commerce space, especially those with drop-shipping or custom-made products:

[http://www.business.ftc.gov/documents/bus02-business-
guide-m...](http://www.business.ftc.gov/documents/bus02-business-guide-mail-
and-telephone-order-merchandise-rule)

> The Rule requires that when you advertise merchandise, you must have a
> reasonable basis for stating or implying that you can ship within a certain
> time. If you make no shipment statement, you must have a reasonable basis
> for believing that you can ship within 30 days. That is why direct marketers
> sometimes call this the "30-day Rule."

> If, after taking the customer’s order, you learn that you cannot ship within
> the time you stated or within 30 days, you must seek the customer’s consent
> to the delayed shipment. If you cannot obtain the customer’s consent to the
> delay -- either because it is not a situation in which you are permitted to
> treat the customer’s silence as consent and the customer has not expressly
> consented to the delay, or because the customer has expressly refused to
> consent -- you must, without being asked, promptly refund all the money the
> customer paid you for the unshipped merchandise.

It's worth reading over the document in its entirety - lots of interesting
points and details.

------
drawkbox
The key section: [https://www.kickstarter.com/terms-of-
use#section4](https://www.kickstarter.com/terms-of-use#section4)

"The creator is solely responsible for fulfilling the promises made in their
project. If they’re unable to satisfy the terms of this agreement, they may be
subject to legal action by backers."

