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The old reality, with companies like Google, was that if you aren’t paying money, you aren’t the customer, you’re the product. Then Kickstarter came along, and
by braythwayt 11y ago
The old reality, with companies like Google, was that if you aren’t paying money, you aren’t the customer, you’re the product.
Then Kickstarter came along, and the premise was, “Gives us $X0,000 and we’ll do our best to give you product Y as a so-called-reward. But this is not a store.”
So now you’re giving them money, but you still aren’t a customer!
Because people are now using this as astro-turf marketing campaigns for products that are already funded by other investors, or as market research, or as a line item on their pitch deck to raise money from investors.
In this egregious case, the company seems to have had no intention of really entering into a “deal” with the backers of its kickstarter campaign, it was entering into a deal with its other investors, in accordance with a business plan its backers have never seen. Thus, they struggled to build DRM into the product, although DRM had nothing to do with the product they promised their backers, and everything to do with their other business dealings and plans. And now their backers are discarded like a one-night stand, but hey, here’s your own money back.
Frankly, this stinks.
If you go on Kickstarter and say you’re going to build product Y, that’s what you should do. If your business plan requires raising Kickstarter backing and then going after investors, you should say so up front and not pretend you are off to start work as soon as the project is funded.
And as for the investors, shame on you. If you invest in a company that has entered into an agreement with backers to build product Y, you should actually make them do that, or not invest in the first place.
Whatever pivot the go on to do, everyone has been forewarned that simply giving them money and receiving promises in return means very little to them, their attitude seems to be, “well, if we change our minds, we just give you your money back and do whatever we like.”
That is not a principled way to run a business. If they couldn’t build this thing with the funds raised on Kickstarter, then they shouldn’t have been on Kickstarter.
- Eliezer 11y agoThey gave the money back. Regardless of surrounding events or further stories, you do not get to call them unprincipled.
- hluska 11y agoFirst, he did not call the founders unprincipled, he said that this is not a principled way to run a business. I know that's splitting hairs, but I think the distinction is important. Granted, I just told a doctor about a grammatical error in her Emergency Department's mission statement, so this may just be a symptom... :) Second, the surrounding events do matter. They claimed to be raising money to build a product. Then, their efforts bogged down because they tried to build an entirely different product than they originally promised. Where I'm from, we call that lying. But, for fun, let's check out their own words: Q: Why did Matchstick select Microsoft PlayReady ? A: Matchstick intends to offer DRM on its platform and bring premium content to its users in the quickest timeframe possible. Microsoft PlayReady offers a mature technology, has relationship with premium content providers and is quick to deploy on the Firefox OS platform. Funny how a solution that is so 'quick to deploy' could sink the whole ship, hey?
- TeMPOraL 11y ago> Second, the surrounding events do matter. They claimed to be raising money to build a product. Then, their efforts bogged down because they tried to build an entirely different product than they originally promised. Let's put it differently: they raised money to build X. They attempted to build X+Y, they fucked up. Maybe they were dishonest about their plans. But in the end, they decided to give the X money back, which raises them above 99% of companies out there.
- jlarocco 11y agoI disagree. If they were principled, they would have followed through with the original product. Instead they used the money to start building something slightly different. It was a bait and switch. Giving people's money back is saving face to avoid a huge backlash.
- AndrewKemendo 11y agoSo Kickstarter companies aren't allowed to pivot? Things change, other groups get involved. That's just real life, hell, look at Oculus.
- pjc50 11y agoNot without consulting their backers. 'Pivoting' means not delivering the item people backed. On the other hand, I think the refunds should be the end of complaints.
- claudius 11y agoRefunds + appropriate interest rates for such a high-risk “investment” + penalty for not upholding their end of a promise + …. I don’t see how they could afford to satisfy any morally (if not legally) reasonable demands.
- pjc50 11y agoIt's definitely not an investment (as Kickstarter continually remind you), and there were no penalties agreed upfront. Seriously, do you want more restrictive consumer protection on KS projects than when you buy offered products at retail that have the order cancelled because it wasn't in stock? I'm normally the last person to get libertarian about "you agreed to this contract", but this seems to be one case where it's appropriate. Or does it need more warning that you're not buying an extant product?
- claudius 11y ago
- singulaire 11y agoIn addition to what other commenters said, even once the money is given back, this still amounts to a loan without interest. I would call that unprincipled.
- makomk 11y agoNo, they promised to give the money back within the next 60 days. In the past, Kickstarter projects have had a very mixed record when it comes to actually making the refunds they promised.
- sbarre 11y agoThis is a good point. Maybe come back and defend them once they've actually made good on the refunds.
- blantonl 11y agoThat is not a principled way to run a business. If they couldn’t build this thing with the funds raised on Kickstarter, then they shouldn’t have been on Kickstarter. Sounds like they tried to take something to market with an investment, and returned those investments because they couldn't make it work. Just because they didn't go to a series C and waste a ton more money doesn't make them any less "principled"
- braythwayt 11y agoExcept the “something” they couldn’t make work is not the something they promised to the backers making an investment. That’s the problem here: The Kickstarter gives the appearance of a simple proposition: Give us $X and we build $Y. If you always needed $X+W money, and always planned to build product Y+Z, and Z sinks the whole thing, then you have misled the original backers. I agree that if they couldn’t make the original Matchstick--the one they promised to their backers--work, they should return what they can. But if the thing that doesn’t work is a business that is a lot more complicated than the thing they put on the Kickstarter, they shouldn’t have been on Kickstarter to begin with.
- bsder 11y ago> Thus, they struggled to build DRM into the product, although DRM had nothing to do with the product they promised their backers, and everything to do with their other business dealings and plans. You do realize that most HDMI chips require you to sign that you will adhere to HDCP?
- jsprogrammer 11y agoI think the device only needs one HDMI chip.