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Rejected By VCs, Pebble Watch Raises $3.8M on Kickstarter
- smoody 15y agoalready outdated... they are already north of $4M. :-)
- matdwyer 15y agoGood, I'm glad they were rejected - If they weren't, I wouldn't have known about them, nor would I have purchased one. This way they get their money in the form of guaranteed, up-front orders, and I get a cool new product "before" anyone else. I feel exclusive and I'll have the hot new gadget to show off. It's a win-win, and I hope more companies opt for this route - it is true market validation. (On a related topic, September can't come soon enough. I want mine now)
- furyofantares 15y agoIs Kickstarter a platform for funding cool projects or a store?
- bambax 15y agoIt should develop the "store" part. It's very frustrating to stumble upon a project that's already funded and for which you don't know where to get the product anymore. It would be a natural extension to let late comers buy products after they were launched.
- xal 15y agoAlmost all the funded hardware projects end up on Shopify afterwards. Including pebble. The "store" part is actually a tremendously complex software to do well, hardly a feature you add to an existing system.
- unavoidable 15y agoWhy can't it be both? It acts a bridge between an unmet demand and an unmet supply: there are consumers thinking, "I wonder if X has been invented? I would pay money for that." And there are designers thinking, "I wonder if anyone would buy X if I made it?" It's conceptually a great match. The hard part was making it credible enough to gain trust. That's Kickstarter's biggest strength.
- deleted 15y ago[deleted]
- furyofantares 15y agoI think it can be and sort of is both right now, yeah. And I'm loving it, but it also makes sense for people to have different expectations from a store than from a project they are backing. When I give a store money, they owe me a product. When I back a project, they owe me their effort. So it's a bit weird to me when the language being used is mostly store language rather than funding language. I don't think anybody has purchased a Pebble yet.
- paulrosenzweig 15y agoI love that their brand's credibility enables projects to launch that wouldn't have been able to otherwise. But, once a project far exceeds its launch goal Kickstarter becomes a store that charges 5%.
- baddox 15y agoIs there a difference in this case? I doubt they could have afforded to produce 4 million dollars worth of the watches without a good, semi-guaranteed estimation of consumer interest.
- chmike 15y agoThe problem wih upfront selling is the risk to not be delivered. Some buyers are not really aware of the risk. The amount of money in play is quite low but the disapointment will be as big as the initial expectation. If everything goes well then it's a win win, but amounts in play will start to attract crooks. It looks like too easy money. As long as kickstarter was under the radar, only well intended people where using it. When the offered rewards are goods or services, then kickstarter is an upfront selling shop and these are high risk deals. The risk could be evaluted, but buyers have only videos and some text to evaluate it by themselves for now.
- ericd 15y agoThat's a good point. From my experience in dealing with marketplaces where scammers can earn 10k/scam, they're quite hard to effectively suss out beforehand and block, and they adapt. I can only imagine what the lure of a 100k or or more will draw in terms of creativity. I really hope there's some effective structural or procedural safeguards that we're not aware of, because the obscurity is gone. If they can get past that, I think Kickstarter has a very bright future.
- GFischer 15y agoThere are a lot of Kickstarter clones (or re-spins) starting up, as it is often said, imitation is the sincerest form of flattery :)
- randomdata 15y agoI've come to learn that people will copy everything. I once built an iPhone app that seems to have topped out at around $500/year in income; barely enough to secure a developer for a day. Yet, I found two apps that I would consider clones of mine with many similar characteristics, not just someone trying to enter the same market. I was quite flattered to see them, but I remain curious why they'd go after such small potatoes? It seems like copying something that has a sustainable business model would be the better choice.
- backspace 15y agoI humbly offer a contrary view. It's the fashionable thing to joke about VC's making wrong investments, investments at bubble prices, not knowing what they are doing, etc. But let's face it, it's their job to make sound investments. Sure, they may not get it 100% right, or even 50% but their job is to continually improve this success metric. It's great that companies like Kickstarter are giving average consumers the capability to fund these sorts of companies but let's not equate the consumers' endorsement of the startup as the potential for value or ability to succeed. VC's do their due diligence for a reason, they want to back successful companies. Average consumers funding on Kickstarter are not doing their due diligence, they're looking at the marketing pitch and handing over their hard earned dollars. I fear this is bad for both the startup ecosystem as well as for consumers. There will be companies on Kickstarter that take money and fail. My prediction is that it will be higher than the startup space. So before we get caught up on buying exclusivity with this fundraising, let's do our due diligence.
- snowwrestler 15y agoIt's not just "make sound investments," VC's need to make investments that will pay off big enough to meet their promised rate of return over the promised time horizon. (They are investing other people's money.) It's certainly possible for VC's to think that an idea has merit, but is not right for VC-type investment. Kickstarter allows time horizons and rates of return of arbitrary size. These guys now already have everything a business needs: capital and customers. Unless they commit outright theft there is no reason they can't succeed with this project. But there is also no requirement that they keep it going after their last investor gets his or her watch. They can just do it to the size needed to hit the natural demand, and then call it quits. You can't do that with VC money.
- backspace 15y agoVC's are working for their investors, and this startup is probably more apt for Kickstarter funding. But my salient point is that average consumers cannot and usually will not do their due diligence on whether the people who are raising the money have a good chance of succeess. I hope you're not suggesting all a business needs to be successful is capital and customers. Because that's just plain dangerous.
- ph0rque 15y agoSo, their pre-orders are the size of a modest A-round, and they have 30 days to go... impressive!
- heelhook 15y agoAnd they didn't give up any equity in the process. Oh, and they validated their idea and their product. With this they can now raise an A-round at a very healthy valuation, but, why would they?
- kondro 15y agoWell, to be honest, they already had a product ready to send into production. This is probably why the product has been so successful.
- ph0rque 15y agoThis is where kickstarter is most useful in my opinion: where you have a production-ready product, and you're not sure whether you should start at your local machine shop, or get in touch with a factory in China to produce the product.
- commandar 15y agoI'm aware of someone working on prototyping a somewhat niche piece of consumer electronics (a shot timer for competitive shooting). The products on the market now are expensive and kind of suck. He seems to have the development chops to come up with something viable, and adding things like real data logging and bluetooth connectivity would actually make it better than anything on the market right now. He's mentioned that he's doing it essentially as a hobbyist project, and that things like regulatory compliance testing and funding an initial production run would be something out of reach normally. Kickstarter seems great for this kind of project. It lets you target an interested audience to get the initial capital funding to produce a product that you might not ever get off the ground beyond the personal prototype stage.
- deleted 15y ago[deleted]
- reneherse 15y agoDown the road, I wonder what is the upper boundary of hardware complexity and scale that we'll see on Kickstarter. Exciting times ahead indeed.
- helen842000 15y agoI'm really interested in how they find the manufacturers to make such aesthetically pleasing products. I've got a product I'd love to kickstart but finding companies capable is tough!
- reneherse 15y agoMaybe what this emerging ecosystem needs is a means by which design-prototype-manufacture-marketing teams can coalesce? I've been dreaming about such a system for a few years now, perhaps the iron is finally reaching striking temperature...
- helen842000 15y agoEven just the first two combined would be amazing. I think what a lot of people are looking for is a start-up style company that offers a simple way of refining a design with industry experts and taking it to some kind of prototype stage within a reasonable cost. Throwing in manufacturing and marketing expertise also would see an explosion of prospective products looking for a piece of the crowdfunding pie.
- hammock 15y agoKickstarter strikes me as Etsy (for unbuilt products) crossed with all those "5K Run/Walk For XYZ" fundraising sites. I'm skeptical it in a way that I can't put my finger on, still Kickstarter has a secret sauce that makes the people they need to host deals on it actually want to host deals on it (was eBay the same way, I can't remember). Did they ever think four years ago that they'd be running deals of this size? edit: apparently amazon doesn't hold any of the cash, i stand corrected. and yes of course 100MM is not much compared to the probably 10B in cash equivalents AMZN has ..
- alanfalcon 15y agoEtsy specifically prohibits mass production. They make it next to impossible to ever make Kickstarter type money on their website. I suppose that it helps maintain a certain culture overall, but it really sours me on the site as a whole that it pushes away anyone who has any dream of finding real financial success in that world.
- ktizo 15y agoI don't think etsy is there for that, there are lots of people making random tatt by hand and trying to sell it, not because they can't mass manufacture, but because they like making stuff by hand. Is essentially 21st century folk art and craft, much of it is rubbish, but never mind, 90% of everything is rubbish ;)
- Cushman 15y ago> It's awful nice of Amazon Payments to hold onto all that cash as well...$100MM collected in 2011. Not sure if this is what you're saying, but Az doesn't actually hold any money for Kickstarter-- they hold credit card pre-approvals, which probably costs them some nominal amount.
- pbreit 15y agoPeople need to stop thinking that (m)any companies do anything for float reasons. First, as the other replier states, in the Kickstarter case, Amazon is not holding the funds so there is no float. But let's pretend they do charge your card. And let's further pretend that they hold your funds for 365 days (in actuality they hold it for a few weeks or months). And let's further pretend that they get 1% on that money (money market rates are closer to 0.5%). That would be a rounding error of $1 million.
- deleted 15y ago[deleted]
- sparknlaunch12 15y agoI don't really get Kickstarter. Backers essentially are paying the startup company for a product (or early prototype). Sure the company gets some money upfront, but they eventually have to deliver on the product? And what else does the backer get, apart from the product? Equity? No. How much money will Pebble be left with after this process?
- unimpressive 15y ago>And what else does the backer get, apart from the product? The whole point is to see the product come to market. A good project is expected to try and sweeten the deal somehow for backers who pledge more money. (Signed pieces, interviews with founder, etc etc.)
- jseliger 15y agoYou get the thing you want, which you wouldn't get otherwise. It's also a way for people to put their money where their mouths are: instead of bullshitting and saying, "Yeah, I'd love X, I'd pay for X" on some forum, if you want X and someone has it on kickstarter, you can prove that you want it. Plus, sometimes Kickstarted projects end up in all kinds of places; for example, I got a CustomSLR strap: http://www.customslr.com http://www.customslr.com , which is exactly as good as I'd hoped, and the product / company was originally funded through Kickstarter.
- unavoidable 15y agoCash-wise, they get the profit margin off each sale (of course we don't know what that number is, but on pure volume alone based on this launch, it might be fairly substantial). But they also gain reputation, brand recognition, and may attract other VCs now that they are famous, and they also have the upper hand because they have a better bargaining position.
- grey-area 15y agoFor a hardware product like this, They also get a tested production system which has gone through all the initial snagging and is capable of churning out 100k products in x days, which is invaluable for a hardware startup and very hard to get in place without serious funding. Best of all, they didn't have to give away part of their company to do it by going straight to the customer. It would be fascinating to see a breakdown from pebble afterwards though to see what they felt the advantages and disadvantages are, and what they would have done differently.
- deleted 15y ago[deleted]
- jyothi 15y agoThe last line in that article is a killer In his pitch to potential new hires, he tells them to check Pebble’s Kickstarter page at the beginning of the phone interview to see a live tally of investments. “After we stopped talking,” he said, “I told them to refresh.” When I viewed kickstarter page it went from 28,369 to 28,493 backers in less than 30 minutes with atleast $20K added in those 30 minutes. This is incredible. edit: I think it was probably more money - $50K in 30 min. Did not note the old $ number - just an estimate
- ww520 15y agoDoes software project got funded by Kickstarter? It seems most projects are hardware related (physical).
- hboon 15y agoYes, eg. games. But Kickstarter isn't doing the funding, in case that wasn't clear.
- minalecs 15y agoyes. I think the fastest to a million was this video game http://www.kickstarter.com/projects/66710809/double-fine-adventure?ref=live http://www.kickstarter.com/projects/66710809/double-fine-adv...
- randomdata 15y agoDefinitely. Rails.app (http://www.kickstarter.com/projects/1397300529/railsapp http://www.kickstarter.com/projects/1397300529/railsapp) was a hot topic here in the past weeks.
- deleted 15y ago[deleted]
- harscoat 15y agoThis wasn’t just a one-day, one-hit thing; we’ve been working on it for about four years now. Sam Altman, who is one of the partners at Y Combinator, has a great bit of advice: Don’t die; don’t let your company die. That’s the key. http://www.communitech.ca/vcs-took-a-pass-on-crowdfunded-pebble-watch/ http://www.communitech.ca/vcs-took-a-pass-on-crowdfunded-peb...
- mayneack 15y agoPotential strategy: 1. Acquire VC/other funds 2. Put product on kickstarter 3. Use initial funds to hype up and create explosive kickstarter trends 4. Let the hype do the rest. It's like the Palin PAC strategy.
- shadowmint 15y agoYou know when you see something, and everyone who touches it makes a mountain of money, and everytime it happens, the $ values just go upwards, and it seems too good to be true? It is. That's called a bubble. ...and it'll burst as soon as there's a high profile kick starter ($million+) that fails and delivers nothing to the people who think they've pre-ordered something. I like kick starter, and I appreciate what they're doing, but this isn't going to end well. It's all very well to let people to setup their funding projects go, yeah, I can ship as many t-shirts as people signup for $20! Easy! ...but the reality is, shipping 50k t-shirts for $20 each isn't as easy as people expect. This is really the problem: People are notoriously bad at making estimates for cost, time, size of projects. Good luck to Pebble I say, I hope this works out for them. I hope we see this stuff all settle down and turn into a new awesome funding model and not into scammer hell~
- unimpressive 15y ago>This is really the problem: People are notoriously bad at making estimates for cost, time, size of projects. Relevant: http://www.kickstarter.com/projects/starcommand/star-command-sci-fi-meets-gamedev-story-for-ios-an/posts/208395 http://www.kickstarter.com/projects/starcommand/star-command... (Also, I like your example of the 50K 20$ T-shirts. Demonstrates the problem perfectly if you just think about it for a second.)
- GFischer 15y ago4000 dollars in attorneys and CPAs? Ouch. The U.S. sure is expensive that way. It's nice of them to breakdown the costs. The poster also looks really nice, but I didn't know such art would cost U$ 2.000 (I know some talented guys here in Uruguay that don't make as much in a month. They should try competing for those commisions). PD: the game looks really awesome :) I didn't know about it, but now I'm looking forward to it. PD2: That much money would hire me for a year, but I wouldn't be able to make Star Command on my own in a year obviously. PD3: I'm looking forward to an X-Com remake someday...
- bradleyland 15y agoI wouldn't call this a bubble. Rather, Kickstarter is exploiting the law of averages. Take a couple of passages from the story as evidence: > Few investors were interested in betting on a hardware startup, or dealing with the headaches that often come with manufacturing goods. Let's assume "investors" are people with some knowledge of funding hardware based products. This group of individuals is going to look at the product (the upsides) as well as the challenges (the risks). A project might have tremendous upside on the product side, but an experienced hardware investor is able to identify the risks. I'm not a hardware investor, but anything involving wireless (even Bluetooth) automatically sets off warning buzzers in my head. I'm sure hardware-oriented VCs looked at this product and saw their own set of "uh oh" problems, thus they decided not to fund it. > Migicovsky said he’s more adept at pitching to consumers than to venture capitalists. I'm not sure Migicovsky is entirely aware of what he's saying here. This could be restated as "I'm more adept at pitching to laymen than people who are familiar with the challenges." That's scary. At first glance, this appears to support your hypothesis: that one day, this whole thing is going to come crashing down. However, I believe you underestimate the pool of fools ready to part with their money. I don't really mean that funders of this project are fools, just that by some people's perception, they're fools for taking the risk. Stated more succinctly, I believe that on the broad scale, there are a sufficient number of non-risk-averse individuals to sustain Kickstarter for quite some time. I believe this will remain true, even after some catastrophic funding failure.
- chris123 15y agoQuestion regarding Kickstarter: Can it really be used for commercial projects (or is Pebble not a commercial project?)? Because here http://www.kickstarter.com/help/guidelines http://www.kickstarter.com/help/guidelines it says it is only for "creative projects". I guess it is ok since the term "creative project" is not defined other than that page saying "like making an album, a book, or a work of art." Although later it says "Starting a business, for example, does not qualify as a project." Just trying to understand what can be used on the platform and what can't. Can anyone clarify?
- rmc 15y agoAFAIK you can't sell stocks or shares. So you can't use Kickstarter to raise investment money (in the traditional sense)
- psycho 15y agoWell, hardware is really headache for VCs, so Kickstarter now seems the best way to raise money AND promote your idea.
- jpdoctor 15y ago> Few investors were interested in betting on a hardware startup, or dealing with the headaches that often come with manufacturing goods. The statement above doesn't capture how much of a (relatively) recent development it is that hardware is not considered worthy of funding. For perspective: 12 years ago A rounds were running $15-20M for hardware startups. B's were $30-40M.
- runako 15y ago> Few investors were interested in betting on a hardware startup, or dealing with the headaches that often come with manufacturing goods. I wonder how many potential smartphone/tablet companies are not being launched due to the timidity of the VC community.
- web_chops 15y agoThe more I think of pebble and all the interest, the more feel that one of the bigger companies making smartphones might acquire them :)
- ImprovedSilence 15y agoI really really really hope this means they're are going to be hiring and need another RF/wireless comms guy that can do software on the side. I so want to build those!
- spahl 15y agoDoes Kickstarter get a cut?
- mhartl 15y agoThanks for posting this. I wondered why a YC company would go the Kickstarter route instead of raising money. Now I know. If VCs aren't worried, they aren't paying attention.
- vinayan3 15y agoI really want to pre-order one. Reading the comments it seems like a gamble. It is possible, I really hope not, they won't end up making the watch. Any guesses how much it will cost 'retail'? In essence, I want the discount rate I'm getting for taking a gamble on them.