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The Story of 2 $1 Million Projects in 24 Hours (kickstarter.com)
345 points by zachh on Feb 10, 2012 | hide | past | favorite | 78 comments

Hi HN, Casey from the Elevation Dock project.

People use the term disruption pretty loosely, I think crowd-funding is really doing it. Goodbye middlemen, sayonara to the massive traditional barriers to entry. Hello bootstrapped projects like this that would otherwise never see the light of day.

I think one important thing here to note about crowd-sourced funding is that it doesn't just eliminate the middle-man, but rather it connects the end consumers with the product directly. It may seem a small difference, but it is real.

Consider this, when a company goes to get funding, it is the company and the investors together who are postulating what consumers might want. In this model, the consumers fund what they actually want, not what some guys who got lucky once or twice (VCs) assume people want.

Add that to the fact that VCs like to fund things that are going to be like winning the lottery, whereas consumers want to fund things that seem useful to them right now. Huge difference.

Indeed. Consider how many layers of buffering exist between consumers and makers in traditionally financed projects. Not only do you have a convoluted connection during creation (capital investments, layers of management, etc.) you have an equally convoluted connection during production (retailers, distributors, marketing, management). All of this blunts the strength and the edge of the consumer-creator feedback loop.

That's not only a huge efficiency and effectiveness difference (how do you tell what someone really wants when there are N levels of bullshit between the creator and the consumer?) but it also makes for a much stronger emotional connection.

Hi Casey,

First off - Congratulations!

I have a burning question. Have you figured out how you're going to do shipping and handling? Are you using a 3rd party to do all of the distribution, or do you have the workforce yourself to do it? Kickstarter and Amazon don't do it for you, do they?

Kickstarter doesn't, but Amazon does have a fulfillment service. IIRC, you send your stock to their warehouses and they ship it from there.

I did calculations for my (failed) kickstarter campaign between Amazon Fulfillment and me personally packing and mailing everything.

Amazon Fulfillment would have cut my profit in half. Yes it saves you time but depending on where you live and where the fulfillment warehouse is, the size of the products you're making, and the cost of shipping them. For my specific case it wasn't worth it. Hiring a few neighbors and working out of the garage for a few days would be far more feasible.

There are cheaper alternatives then Amazon for fulfilment.

Can you list them?

Thx. Probably will use Shipwire or a local fullfillment company.

"Goodbye middlemen, sayonara to the massive traditional barriers to entry."

The middleman is there(kickstarter gets 5%) but is way more reasonable than old middleman.

In classic "disruptive technology/business model" terms, I agree.

(1) What is disrupted? Existing means of accessing capital (banks, individual investors, corporations).

(2) It's coming at it from the low end of the market. Small little projects getting funding, nothing that hits the bigger players' radar. But slowly, it starts to grow in terms of volume, and funding project size.

(3) It's addressing an end of the market that was really underserved by mature sources of funding.

Based on all this, I would say crowdfunding is disruptive, with Kickstarter leading the way.

Casey way to go man! Huge fan of what you did. If you ever want to talk about growing a manufacturing business with an e-commerce component reach out to me. I have some experience from building dodocase.com, my email is patrick (at) dodocase.com.

Congratulations on the success!

Other than having a great product, are there any marketing things you feel added to your success? Particularly things that could be applied to other projects.

I am going to write a long post about it soon b/c so many people have asked.

I would say polishing your video and articulating your widget well are the most important things you can do - you don't want to waste anyone's time. I did a million revisions to our video over the course of a year to get to where I thought it was launch worthy. Double Fine's is exceptional. I also found I am horrible in front of a camera unless I am the only one in the room.

We did no PR or anything before hand. A friend sent a link to Gruber a half hour after launch, he wrote one nice sentence about it, then it exploded around the web.

It also helped that Apple makes crappy docks and few people challenge Apple on anything. And that's a testament to Apple because they do usually kill at design. Marco Arment says it concisely here - http://www.marco.org/2012/02/09/elevation-dock

This is really starting to show the potential of Kickstarter.

So many of the successful Kickstarter projects have been unknowns. Just really smart and driven people with a dream.

If established companies can bypass publishers and investors by promising to sell a product directly to the consumer then we have a whole new ballgame here.

Double Fine has successfully funded a game where the only promise is that they will release it. That's it. No percentage of revenue to the publisher. The publisher can't demand they add DRM, etc. Their only obligation is to do what they do best because they are only answering to someone who wants a great game, not a return on their investment.

This is big.

They already decided to use DRM. They use Steam. I'd be among the backers if I would get a simple standalone installer or even zip archive without any honest-customer-punishment.

True. They've decided to go with the least invasive form of DRM that is typically excepted.

I agree with you that a stand alone installer would be best but because of how easy Steam is I am gladly willing to give them $30 for said game.

DF/Tim is/was already famous in the gaming community beforehand though. This helps. It's a bit like if Paul & Ringo created a Kickstarter project saying they're thinking of making a new Beatles album, and wanting to know if anyone would front them the production costs upfront.

That was his point.

To reiterate: Up till now, it has basically only been the "unknowns" using Kickstarter, hoping that their product and pitch video are good enough. Some of them have done well, but the Double Fine project has made more than any other project in 24 hours.

This project shows what can happen if an already well-known brand goes with crowd-funding. To me, the craziest part is that they didn't even pitch a specific game, just the genre.

One has to wonder though, if you priced out your Kickstarter project because you wanted to make one for yourself and well if you could get 100 other people to kick in you would be able to get the better price on parts, and then 10,000 people kick in and now you're looking at something which was 'spend the weekend building up a hundred or so foo-widgets' becomes 'spend the next six months building 10 thousand foo-widgets' that has to suck.

Kickstarter is really about funding a project, not really about selling merchandise. You can put "perks" for various funding levels, and many projects use the product as a perk at some level, but you don't have to. And KS lets you put limits on rewards. For example the DoubleFine page says

Pledge $1,000 or more 84 Backers • Limited Reward (16 of 100 remaining)

Mini portrait of YOU, painted by the game's artist, and all previous reward tiers.

From what I understand you have the choice of setting limits or end funding early.

That problem is easy to solve. Kickstarter makes it easy to set limits on the total number of rewards (often pre-orders) you offer.

I think that's a problem we'd all like to have.

Actually its not. Let me phrase it differently and you tell me if you'd volunteer :-)

"Hi! I need you to work for slave labor wages for the next six months, if you don't you are going to be pilloried and your reputation destroyed, no one will ever work with you ever again, you may not be able to find future employment.

How about it?"

The situation arises when you haven't covered all of the possibilities. Generally the one over looked by Kickstarter participants is the 'wildly successful' one. The dilemma is as follows, to make one of something by hand might take an hour of your time. If you are going to make 10 you might create a couple of frames or something to hold parts to make it go more smoothly so it takes three or four hours, to make 100 might involve some slightly more elaborate frames and all weekend. Now if you've priced your kickstarter such that you 'make' a couple of dollars on each unit, then you've spent your weekend making a hundred widgets and you've got $200 to show for it. If you need to make 10,000 things get more complicated. You can invest in more sophisticated jigs and holders (that eats into your profit), or more sophisticated machinery (that eats into your profit), or more help (that hugely eats into your profit) So you still 'make money' after making 10,000 but its like $2,000 over 6 months, rather than $200 over a weekend. I suspect you could find better work for $350/month. However if you had priced your widget such that you could make money building 10,000 of them, well then you're golden because you've included the cost of paying for tooling at a small factory nearby and having them make the widgets. Now the second 10,000 are like 'free' since you've already got the overhead of setting up manufacturing paid for. The downside is that at the higher cost your Kickstarter might not fund that many.

Its just a cautionary tale for would-be kick starters to think though the various scenarios and internalize what each scenario would mean to them and then price out accordingly.

Really interesting point, but since kickstarters aren't technically obligated to offer their product as an incentive, it would be pretty simple to get around that without messing with pricing by just saying 'first N backers get a widget' (though, this in itself does also require the foresight to consider your scenario).

Right, I guess I assumed that any manufacturing plan of items put up to KickStarter would include considering mass production and sourcing options in case of major success. But just this morning I had a conversation with an inventor who would be similarly unprepared so this has been helpful to understand.

Not if you are pricing your own labour at a lower cost than it's possible to outsource it. An episode of Big Bang Theory, where Penny makes penny blossoms, illustrates this pretty well: http://www.imdb.com/title/tt1256028/

Anecdotally, this is also a problem that a lot of medium-sized Etsy sellers run into. When their sales scale up, they realize they need to either scale up their operations from something that is more than just one person at a kitchen table making crafts, or they need to spend dozens of hours a week just cranking out their craft projects.

I loved that episode. Way back there was a robotics circuit board called a 'Miniboard' that used a Motorola HC11 and an Hbridge part etc. Some people would get together and organize 'group buys' (kind of like an improvised kickstarter project) where if more than 'n' were bought they could be had for $y. (I believe you can still find some of the emails about these in the archives of comp.sys.robotics) anyway, a couple people who did this got waaaaaaay over their heads, (kitting a few is easy, kitting a few hundred is harder, and kitting a thousand was at the time insanely time consuming for what was essentially no-profit). People were actually sued, sad actually (although I know some Kickstarter projects where the money has vanished and I suspect they are heading for lawsuits too but only time will tell).

That being said, these are some great examples of what you can do with this concept. It is very disruptive. It has never been possible before to have capital so directly influence the creation of a good or service, that is new territory for the economics geeks out there.

Sounds like a key problem is the lack of advice that an investor or bank manager could give based on his/her experience.

As long as you're not losing money on each unit but making it up in volume...

So if Blizzard does a Kickstarter and raises $10M in pre-sales for a new game, is that within the mission of the site? I was under the impression that it was a site for projects by people who otherwise wouldn't be able to fund them. This seems to be pushing that boundary.

I'd rather rephrase the question to ask generally what it would take to break the spirit of the site. A lot of projects already use it as a shop-like site.

And as far as big companies are concerned, Kickstarter and Amazon take a combined 7.9% cut, which is quite significant.

I'm also not entirely sure whether companies with DRM-encumbered games will manage to attract donours in a similar fashion to Double Fine who seem to be using the Steam platform, which is widely used and loved.

Blizzard could probably pull it off with their games (MMOs not included) because of Battle.net, but it would turn into a major shitstorm, if they funded something like Call of Duty, which is a magnet to controversy and uproar. Then there would be the ensuing hell of charge-backs and refunds.

With Kickstarter, you generally invest in an idea more so than a product. What but a product do you invest in by giving Blizzard money? With Double Fine, you revive the adventure genre, have a chance of disrupting the videogame industry and bring back some of the biggest videogame developer legends and give them free reins over their product without having to go hat in hand and pander to producers. With Blizzard, it would just be business as usual.

I don't know whether Kickstarter will ever lose its indie feel, but if it does, or some project starters do, they will be subjected to a level of scrutiny orders of magnitude higher than what we are used to.

I think Kickstarter projects depend more on goodwill than most of us imagine.

Steam games are DRM encumbered. If Valve decide they don't like you any more, you can no longer play the games on your Steam account.

I didn't mean that as mutually exclusive but yes, Steam - obviously comes with DRM. Valve have so much goodwill that it isn't a problem with its users.

Steam is a DRM platform, but as a gamer, I would say it's a DRM platform done right.

The Double Fine Kickstarter pitch video does a pretty good job of explaining why it can't fund an Adventure game, primarily because publishers generally won't fund anything that isn't a guaranteed success. The Double Fine kickstarter projects shows a shift in power from the publisher to the developers/players.

Ultimately it's a place where anyone can post a project and try to raise some money to make it happen. I don't think it's limited to only people who couldn't raise it otherwise.

Why can't Apple launch the iPad 3 on there? There's no reason they can't, except why would they give Kickstarter a cut of their profits when they've proven they can sell them directly with no middleman.

Comparing Double Fine to Blizzard is a little extreme. Although Double Fine has an experienced team with a long history in the industry, none of their games have been huge commercial successes, and they've had some spectacular commercial failures over the years. Most of their projects up until this one have been funded by traditional game publishers (Majesco, EA, Warner Bros., THQ, etc.) and this is a genre no one wants to touch, even at the small scale for download only titles on XBLA\PSN\Steam ($500K-$2 million range).

Afaik, Ron Gilbert has been trying to make a traditional adventure game for years and has been unable to get it funded until now.

I see your point, but I feel like the true success of any platform is achieved when people start using (in a positive way) for things you hadn't even thought of.

Congrats to Kickstarter!! This is the type of win-win startup I want to create/work at. Gives a simple example of pg's essay about wealth not being a fixed cake to share but that it can be created (http://paulgraham.com/wealth.html).

Two things that piqued my interest:

1) They kept saying that they were refreshing the project page to say when it'll hit 1M. Surely a company like Kickstarter has created visualization tools that create nice, real-time graphs of selected projects. No?

2) "After not having a single million dollar project in Kickstarter's first two-plus years, there are suddenly two within four hours of each other." Call it black swan, non-normality, heavy tail, whatever, this shows how common (and lumped) rare events are.

I would be more surprised if they did. For Kickstarter to succeed, they need the entire site doing well, not so mich individual projects, so tools to monitor individual projects are probably not the useful.

On the other hand, stats about the whole site, eg donations per time period, new projects being created, total visitors, etc, would be much more relevant. Business like Kickstarter are about the long tail, not the mega-hits, and, if I were running it, I'd want my analytics to represent that.

> 1) They kept saying that they were refreshing the project page to say when it'll hit 1M. Surely a company like Kickstarter has created visualization tools that create nice, real-time graphs of selected projects. No?

I found that odd as well. Where's the websocket goodness?

This just in: Web-socket powered dashboards not necessary for success.

You're right - they're not. I'm not trying to argue that they are, though. I just assumed that a company that's dependent on projects succeeding to make their living would have something more than "keep hitting refresh" in place to track big projects like these.

Well, a web-socket dashboard could potentially lower their bandwidth costs, when people start refreshing the whole page every 10 seconds, just to watch one number change.

Well, given that this is the first time it's happened, I'd imagine the need for such a thing was small until now.

The need to track up to a million dollars was small, sure.

But if you're revenue is based on these projects, wouldn't you want some sort of real-time counter of $$ being pledged? Maybe I'm just being a statistics nut...

Oh, don't get me wrong, I am too. But I don't know how stretched Kickstarter's team are- while I'd love to see a stats counter like that on my own project, I rarely have the time to put one together.

Consider the time frame of funding for every single other project. On average, it takes a month or two just to raise a few thousand dollars of funding. Even the biggest projects only raise about a million dollars in that time frame, and those are rare. A project raising thousands of dollars per minute is exceptionally rare on kickstarter, why would they build a tool who's use case is specifically targeted to such an unusual and unprecedented event?

They do have nice visualization tools, but they don't self-update. https://farm7.static.flickr.com/6178/6162056538_ffbf3363bb_o...

Is the money raised through Kickstarter seen as income, and therefore, taxable (meaning that 20-30% of the final amount raised is lopped off)?

Trade of money in return for promise of a future good/service is unquestionably income in the US, but that does not necessarily imply that sort of marginal rate. For example, if the money hits a corporate entity who hires programmers with it, the corp will use their salaries as an expense to offset that income.

Similarly, if you raise $25k to make a foobar and spend $20k on materials, you'd only owe taxes on the profit.

I am not an accountant, etc.

> For example, if the money hits a corporate entity who hires programmers with it, the corp will use their salaries as an expense to offset that income.

Or, to my understanding, even if it goes to a person. Being a sole proprietor does not preclude you from deducting your business expenses.

One difficulty comes of the income comes in one tax year (no deduction yet), and the deduction comes in the next tax year (might not have enough income to deduct again).

disclaimer: I am even less of an accountant, etc.

I think Kickstarter is the most interesting thing happening on the net today. Simply because it aggregates the most interesting things happening in the real world, by its very nature. Browsing Kickstarter has actually become a fun activity for me.

It's such a simple and genius way of directly connecting producers and consumers, reducing risk for both parties, verifying ideas, creating relationships. So elegant. The number of opportunities this is going to enable is staggering. And Kickstarter themselves, do they have any overhead? These guys are going to be printing money.

And being a patron is fun!

One thing I'm curious about is Kickstarter's exposure to someone who fails to produce the promised rewards for funding. As a funder/patron, do I have any recourse for a producer failing to uphold their end of the bargain?

There's no guarantee that a project will be successful – your funds are treated as a donation. Here's a story from a few weeks ago of a failed kickstarter: http://a.wholelottanothing.org/2012/01/lessons-for-kickstart...

I love how enthusiastic the Kickstarter team looks in those photos - it's awesome for them to be able to share in the success of the projects on their platform.

I'm looking forward to seeing how it grows and what other projects crop up now that people have seen this incredible milestone passed.

This is really inspiring to see.

I give my respect, admiration, to the empowerment Kickstarter is enabling in the world. People say they do crap like empowerment all the time.. Kickstarter seems to say very little themselves, all I hear is the success stories.

It's a delightfully simple concept: Put a great idea out there and let it be loved and supported.

Ideas that wouldn't have seen the light of day are, fuelled by early adopters and pioneers.

Being on the web for almost 2 decades makes everything look the same, or at least kind of blur together over time.

For me, with information and innovation; since Gutenberg, the web really was the second big thing.

Maybe enablers like Kickstarter are part of the third leap for our world where they are creating change in the real world from innovation.

I've rarely seen something successful on Kickstarter I didn't want to buy. Normally I can't decide as quickly on items in the retail market that compete with it.

The continued popping up of Kickstarter stories and dreams becoming a reality have made me think about all those things I wondered about.

Could they become a reality? Where could I start learning about how to kickstart something successfully? (I Might be a search or two away but the feeling of possibility is great.)

This must be the epitome of feel-good startup stories. Congrats to everyone involved!

Congratulations to all concerned. I think the Kickstarter model is really powerful, and it's exciting to see that these projects have got off the ground, but - without wanting to be party pooper - what happens if a fundraiser can't deliver?

It seems that Kickstarter have an incentive to raise as much money as possible. After all, they take their 5% - so as a company they've taken over $100,000 in the last 24 hours from two projects alone. Spending a vast amount of money without the necessary battle-scars and bruises gained from experience, is likely to involve a steep learning curve.

Bringing a product to market isn't easy. The fundraisers in question are in a unique position, because they have their buyers' attention and money from the start. This has to be a great thing, and to large extent levels the playing field and creates a great environment for innovation .. BUT, the hard work has just begun.

I can't help feeling that this model of funding is about to gain even more popularity - but could eventually open up a can of worms.

What I see as a problem is a failure by some projects to manage expectations. I think that a lot of people who are backing projects like this don't realise that they are not pre-ordering anything, they're making a contribution to the project startup costs and hopefully they'll receive one or more of that product when manufacturing begins. I've seen comments on some Kickstarter projects that have slipped on shipping deadlines that don't seem to indicate that the commenter understands the uncertainty of funding a project like this.

I don't think there's much risk backing an experienced person with a ready to be manufactured product, and I've backed several such projects on Kickstarter, but I think that backers need to remember that part of the Kickstarter proposition is that you get discounts on products like this as a reward for putting in fixed upside risk capital.

http://www.kickstarter.com/projects/schuyler/lockpicks-by-op... That is an example of the risk that people take when they fund a project.

Observe how it's fairly obvious from the original video and Kickstarter project that Schuyler Towne isn't exactly an experienced business guy and that these picks are nowhere near ready to actually be manufactured. Nonetheless, a lot of people (me included) contributed some money.

Well, two years later and still no picks, maybe they'll come eventually, maybe he'll never manage it. I rather suspect the latter, since he's blown through the available money and is nowhere near shipping. I'm not really bothered because that's the risk you take when you do speculative funding, but I'm not sure other backers understood that this was what they were doing.

Meanwhile there's a few people commenting on every one of his 60 or so updates who seem to have mistaken Kickstarter projects for Amazon pre-orders, having silly little fits about the money that was 'stolen' from them. Obviously it sucks that they're not getting what they wanted, but if you want a risk free transaction you're free to buy from Amazon.

So is the contribution a donation?

I think that might be an open legal question, if you use the word pre-order all over your Kickstarter page you might be creating a situation where you're on the hook, legally speaking for fulfilling those orders.

KickStarter is one of the very few businesses that's truly innovating / disrupting anything right now.

Then Stripe.

Then CloudFlare (I really like their story and pivot).

Don't forget Khan Academy.

...or Twilio

And Lynda.com

For Kickstarter, business model... Validated! Great job guys congrats! What a great story of someone not playing the startup lottery and winning.

Kickstarter continues to prove that good ideas spread quickly. Where websites show viral growth in user visits, kickstart shows it with real dollars for real products. Very inspiring. Thanks for sharing this post- it lets the community get an insider view of the excitement.

This is going to put Kickstarter well and truly in the public eye and, as a result, bring many more potential wallets browsing the site. Great time to be an entrepreneurial industrial designer in the US.

Just wish it was open to those outside the US as well.

Every startup should be like a Kickstarter project. Show your concept, find customers who pre-purchase, build product, deliver and scale.

Grow organically.

Why din't Raspberry Pi use Kickstarter?

Kickstarter is US only, isn't it?

Why is Ron Gilbert nowhere to find in the celebration photo? Is he really that grumpy & shy?

Maybe he was smiling and didn't want to be caught on camera (It would reduce the value of the $35k reward)

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