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.
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.
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.
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?
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.
The middleman is there(kickstarter gets 5%) but is way more reasonable than old middleman.
(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.
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 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
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.
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.
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.
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.
"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.
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.
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.
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.
Afaik, Ron Gilbert has been trying to make a traditional adventure game for years and has been unable to get it funded until now.
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.
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.
I found that odd as well. Where's the websocket goodness?
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...
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.
Or, to my understanding, even if it goes to a person. Being a sole proprietor does not preclude you from deducting your business expenses.
disclaimer: I am even less of an accountant, etc.
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?
I'm looking forward to seeing how it grows and what other projects crop up now that people have seen this incredible milestone passed.
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.)
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.
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.
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.
Then CloudFlare (I really like their story and pivot).
Just wish it was open to those outside the US as well.