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When I said that it was silly to simply donate money to a commercial venture without gaining any stake in it, they called me a naysayer. Who's saying nay now?

by Camillo 13y ago

interpol_p 13y ago
How is it a donation if you receive the item you backed? Most people backed Oculus to get their hands on a dev kit (I did). I don't feel like I donated — I feel like I got my money's worth.
- zyx321 13y ago
  A lot of people backed for the "change the world" promise: "Changing the way people experience video games forever." Of course nobody should be surprised if that turns out to be a bold-faced lie, but that doesn't mean it's not disappointing.
  - interpol_p 13y ago
    Did you personally back for the "change the world" promise?
drcode 13y ago
nay
noonespecial 13y ago
You are quite right, of course. But kickstarter is a brand new animal in the world of products and financing. There aren't any laws or even any concrete social norms around it yet. Perhaps people should "know better' but I'm not sure that's helpful. In the absence of laws or codified rules we should expect to fall back on manners. What Oculus did feels bad because its rude. At the very least, they should recognize that they are in uncharted territory. A bunch of random strangers gave them gifts because they believed in the vision. If that vision turns into a multi-billion dollar payday, they might consider giving a few gifts back to those kind strangers. Its not like they don't have a list of them all with contact info and everything. It would be polite to do so.
- avar 13y ago
  What do you mean there aren't any laws? You hand people money in exchange for their non-legally binding vague promises. This model of exchange has been around for hundreds if not thousands of years. Legally speaking Kickstarter is nothing new. If I meet someone on the street that promises me to try out some new idea and I give them money the courts aren't going to give me any more credence than someone who handed a $50 bill to a bum. How is this in any way a new and novel legal situation? The only thing that's new is that now due to the Internet more people have the ability to easily give out their money to potentially stupid initiatives.
  - noonespecial 13y ago
    In that reguard, its the same thing it's always been. A gift. Reciprocity is not required by law, only common decency. The new about kickstarter is it seems we're looking for something more than a gift, less than a regulated investment and not quite a sale. That's novel.
    - avar 13y ago
      Maybe you're looking for something more than a gift, but are you actually entitled to more than that? Are you a shareholder in these companies than you fund through Kickstarter? I think not. So why do you think you have any rights beyond someone who's donating money to a cause that may never pan out? It's perfectly fine to fund something through Kickstarter, but for some reason it seems that some people doing it think they're entering into a deal that isn't really there. Generally when you give money through Kickstarter you're giving it away without any string attached, only if the company pans out might you actually get some small gift, not a share of the profit. What's so hard to understand about that? The model's fine. The problem is that for some reason people donating to it think of themselves as shareholders, not donors.
      - gfodor 13y ago
        You are not listening to the person you are responding to. Nobody is going to argue that kickstarter backers are entitled to equity in the company, or that they have legal rights beyond what is guaranteed in the kickstarter. What the person is trying to get across is that in any financial transaction there are non-legal aspects involved. There are human relationships. The world runs on favors as much as it runs on contracts. No single transaction stands alone: you have a personal reputation based on your actions and ethics dictate what other people are going to think of you. If someone gives you a deal on favorable terms, it's generally understood that you will remember that and act accordingly in the future. It's not specifically outlined and it's not a hard rule, but in general, when people donate to a kickstarter they are doing so under the assumption that the person receiving that money is going to act in a way that doesn't undermine their trust. Turning around and selling your company to Facebook leaves a bad taste in peoples' mouths, since the company was built on the money they donated to make it possible. Do they have a legal right to compensation? Of course not. Do they have a right to be emotionally hurt by this? Sure, and it's not unjustified.
InclinedPlane 13y ago
True. But back then there was no other option for crowd funding. That's only changing just now as the SEC is finally implementing the crowd funding provisions of the JOBS act.
- anigbrowl 13y ago
  Yeah, I'm surprised there hasn't been more discussion of that here, though obviously the slow nature of the rulemaking process causes people's interest to wane. Considering the fact that large acquisitions will continue in the future (even if we are in a bubble or unusually inflated period right now), and that even a micro-investment at the right time can lead to huge multiples, it'll be very interesting to see how this changes the landscape. Not being a game or graphics developer I was very interested in Oculus but decided to wait for the consumer version of the technology. However, if I could have bought a tiny equity position for $100 I would probably have done so, since I'm pretty confident on my judgment about which technology is 'hot or not,' and I would likely be celebrating a nice little uptick in my net worth right now.
  - InclinedPlane 13y ago
    Well, also, the SEC made the crowdfunding regulations a bit ridiculous so they may not actually end up having a major impact on investment funding.
    - anigbrowl 13y ago
      They can iterate. But also, they were working within some tight legislative constraints (eg $1m cap IIRC) and when you look at the public comments a lot of them 'how will you guard against grifters' and the like. I was pretty depressed by how vapid most of the comments were, incidentally...I feel bad for whoever was required to sit down and read and classify them all.
- GBond 13y ago
  Even so, KS was never about an exchange of equity for money (other platforms will fill this need like Angelist Invest). KS exchanges ownership in a project's human-level vision (and sometimes a early release of the product) for a donation. People are like Notch are peeved because Oculus was not upfront when entering this social contract.
bowlofpetunias 13y ago
Lot's of people agree with you. In crowdfunding circles, Kickstarter is considered a bubble that will burst hard when people realize they're funding companies in exchange for beads and trinkets. Sure there are plenty of projects for which the Kickstarter formula is perfectly valid. Funding companies isn't one of them, and that's where most of the money is. If that stops happening, Kickstarter's may not be enough to keep them afloat.
- thanatropism 13y ago
  To be fair, american government bonds have been ZIRPish since... You could invest in third world governments with interest rates that are too high for their S&P/Moody's/Fitch ratings. Look how revolutionary this idea.

When I said that it was silly to simply donate money to a commercial venture without gaining any stake in it, they called me a naysayer. Who's saying nay now?

by Camillo 13y ago

When I said that it was silly to simply donate money to a commercial venture without gaining any stake in it, they called me a naysayer. Who's saying nay now?

interpol_p 13y ago

How is it a donation if you receive the item you backed? Most people backed Oculus to get their hands on a dev kit (I did). I don't feel like I donated — I feel like I got my money's worth.

zyx321 13y ago
A lot of people backed for the "change the world" promise: "Changing the way people experience video games forever." Of course nobody should be surprised if that turns out to be a bold-faced lie, but that doesn't mean it's not disappointing.
- interpol_p 13y ago
  Did you personally back for the "change the world" promise?

drcode 13y ago

nay

noonespecial 13y ago

You are quite right, of course. But kickstarter is a brand new animal in the world of products and financing. There aren't any laws or even any concrete social norms around it yet. Perhaps people should "know better' but I'm not sure that's helpful. In the absence of laws or codified rules we should expect to fall back on manners. What Oculus did feels bad because its rude. At the very least, they should recognize that they are in uncharted territory. A bunch of random strangers gave them gifts because they believed in the vision. If that vision turns into a multi-billion dollar payday, they might consider giving a few gifts back to those kind strangers. Its not like they don't have a list of them all with contact info and everything. It would be polite to do so.

avar 13y ago
What do you mean there aren't any laws? You hand people money in exchange for their non-legally binding vague promises. This model of exchange has been around for hundreds if not thousands of years. Legally speaking Kickstarter is nothing new. If I meet someone on the street that promises me to try out some new idea and I give them money the courts aren't going to give me any more credence than someone who handed a $50 bill to a bum. How is this in any way a new and novel legal situation? The only thing that's new is that now due to the Internet more people have the ability to easily give out their money to potentially stupid initiatives.
- noonespecial 13y ago
  In that reguard, its the same thing it's always been. A gift. Reciprocity is not required by law, only common decency. The new about kickstarter is it seems we're looking for something more than a gift, less than a regulated investment and not quite a sale. That's novel.
  - avar 13y ago
    Maybe you're looking for something more than a gift, but are you actually entitled to more than that? Are you a shareholder in these companies than you fund through Kickstarter? I think not. So why do you think you have any rights beyond someone who's donating money to a cause that may never pan out? It's perfectly fine to fund something through Kickstarter, but for some reason it seems that some people doing it think they're entering into a deal that isn't really there. Generally when you give money through Kickstarter you're giving it away without any string attached, only if the company pans out might you actually get some small gift, not a share of the profit. What's so hard to understand about that? The model's fine. The problem is that for some reason people donating to it think of themselves as shareholders, not donors.
    - gfodor 13y ago
      You are not listening to the person you are responding to. Nobody is going to argue that kickstarter backers are entitled to equity in the company, or that they have legal rights beyond what is guaranteed in the kickstarter. What the person is trying to get across is that in any financial transaction there are non-legal aspects involved. There are human relationships. The world runs on favors as much as it runs on contracts. No single transaction stands alone: you have a personal reputation based on your actions and ethics dictate what other people are going to think of you. If someone gives you a deal on favorable terms, it's generally understood that you will remember that and act accordingly in the future. It's not specifically outlined and it's not a hard rule, but in general, when people donate to a kickstarter they are doing so under the assumption that the person receiving that money is going to act in a way that doesn't undermine their trust. Turning around and selling your company to Facebook leaves a bad taste in peoples' mouths, since the company was built on the money they donated to make it possible. Do they have a legal right to compensation? Of course not. Do they have a right to be emotionally hurt by this? Sure, and it's not unjustified.

InclinedPlane 13y ago

True. But back then there was no other option for crowd funding. That's only changing just now as the SEC is finally implementing the crowd funding provisions of the JOBS act.

anigbrowl 13y ago
Yeah, I'm surprised there hasn't been more discussion of that here, though obviously the slow nature of the rulemaking process causes people's interest to wane. Considering the fact that large acquisitions will continue in the future (even if we are in a bubble or unusually inflated period right now), and that even a micro-investment at the right time can lead to huge multiples, it'll be very interesting to see how this changes the landscape. Not being a game or graphics developer I was very interested in Oculus but decided to wait for the consumer version of the technology. However, if I could have bought a tiny equity position for $100 I would probably have done so, since I'm pretty confident on my judgment about which technology is 'hot or not,' and I would likely be celebrating a nice little uptick in my net worth right now.
- InclinedPlane 13y ago
  Well, also, the SEC made the crowdfunding regulations a bit ridiculous so they may not actually end up having a major impact on investment funding.
  - anigbrowl 13y ago
    They can iterate. But also, they were working within some tight legislative constraints (eg $1m cap IIRC) and when you look at the public comments a lot of them 'how will you guard against grifters' and the like. I was pretty depressed by how vapid most of the comments were, incidentally...I feel bad for whoever was required to sit down and read and classify them all.
GBond 13y ago
Even so, KS was never about an exchange of equity for money (other platforms will fill this need like Angelist Invest). KS exchanges ownership in a project's human-level vision (and sometimes a early release of the product) for a donation. People are like Notch are peeved because Oculus was not upfront when entering this social contract.

bowlofpetunias 13y ago

Lot's of people agree with you. In crowdfunding circles, Kickstarter is considered a bubble that will burst hard when people realize they're funding companies in exchange for beads and trinkets. Sure there are plenty of projects for which the Kickstarter formula is perfectly valid. Funding companies isn't one of them, and that's where most of the money is. If that stops happening, Kickstarter's may not be enough to keep them afloat.

thanatropism 13y ago
To be fair, american government bonds have been ZIRPish since... You could invest in third world governments with interest rates that are too high for their S&P/Moody's/Fitch ratings. Look how revolutionary this idea.