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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

by 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.

avar 13y ago
I'm listening. Are you? The parent of this thread quoted: "And I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition." If you didn't chip in ten grand of seed money for that purpose why didn't you make that part of the deal then? There are no non-legal aspects of financial transactions. When you give someone money they're going to try to retain that money and not give it back to you to the best of their legal ability. There really isn't a non-legal aspect involved in it unless you're a sucker who's willing to get screwed over. Who cares about the value of their reputation when they've been bought by Facebook for some undisclosed value? Surely that's worth more to them than their reputation, seeing as they now have enough money to never work again with the people who'd care about their reputation.
- gfodor 13y ago
  I mean, we're going to disagree on this: > There are no non-legal aspects of financial transactions. When you give someone money they're going to try to retain that money and not give it back to you to the best of their legal ability. There really isn't a non-legal aspect involved in it unless you're a sucker who's willing to get screwed over. This isn't really true, if you plan on doing business for more than one transaction. If you put a poison pill in a contract, guess what, you are blacklisted and can't do any deals in the future because nobody trusts you. A similar thing is here. People chipped in money with the general expectation that Oculus was not going to sell out on the drop of a hat. It wasn't in the terms obviously but that was the expectation for many people. As such it's pretty much guaranteed for example that Palmer will never be able to do a kickstarter ever again (not that he cares at this point.) But it's a very real consequence, and so even though it was not in the deal in terms of legal consequences it is a very real outcome. If you look at negotiations and transactions as if they are strictly independent events completely detached from human relationships you're probably a terrible negotiator slash businessperson. It's the difference between law and politics. I'll happily do a deal that isn't exactly a home run for me if I want to be sure I'll have a good relationship with that person for future opportunities.
  - avar 13y ago
    Don't get me wrong. I'm disappointed in Oculus too, and I'd be even more disappointed if I'd actually invested in them. I'm just saying that people need to learn the hard lesson that when they're "investing" in something like Kickstarter they're not actually "investing" in the general sense. They're making a donation with little or no string attached, at best it's a "you give us money and we send you some doodad in the mail" investment. So they're effectively donating money with no string attached. So if you donated money to the company thinking they were going to do X and they actually do Y they can and will fuck you over if they think they can make more money doing Y than they can doing X, accounting for all the alienation from their existing customers from doing not doing X. So please everyone, if you want to invest in something and you want to have the expectations of an investor make sure you're actually investing, not just donating.
    - rhizome 13y ago
      when they're "investing" in something like Kickstarter they're not actually "investing" in the general sense I'd say they are only investing in the general sense, but not the specific one. Because, as we've seen with the Kickstarter failures and flake-outs, regardless of the HN-conventional definition of the word, the donors are certainly and legitimately invested.
- cousin_it 13y ago
  The future of Kickstarter depends on how well companies honor the non-legal aspects of their relationships with backers, which you say don't exist. I'm not saying I would have refused the acquisition offer, though :-)

by gfodor 13y ago

avar 13y ago

I'm listening. Are you? The parent of this thread quoted: "And I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition." If you didn't chip in ten grand of seed money for that purpose why didn't you make that part of the deal then? There are no non-legal aspects of financial transactions. When you give someone money they're going to try to retain that money and not give it back to you to the best of their legal ability. There really isn't a non-legal aspect involved in it unless you're a sucker who's willing to get screwed over. Who cares about the value of their reputation when they've been bought by Facebook for some undisclosed value? Surely that's worth more to them than their reputation, seeing as they now have enough money to never work again with the people who'd care about their reputation.

gfodor 13y ago
I mean, we're going to disagree on this: > There are no non-legal aspects of financial transactions. When you give someone money they're going to try to retain that money and not give it back to you to the best of their legal ability. There really isn't a non-legal aspect involved in it unless you're a sucker who's willing to get screwed over. This isn't really true, if you plan on doing business for more than one transaction. If you put a poison pill in a contract, guess what, you are blacklisted and can't do any deals in the future because nobody trusts you. A similar thing is here. People chipped in money with the general expectation that Oculus was not going to sell out on the drop of a hat. It wasn't in the terms obviously but that was the expectation for many people. As such it's pretty much guaranteed for example that Palmer will never be able to do a kickstarter ever again (not that he cares at this point.) But it's a very real consequence, and so even though it was not in the deal in terms of legal consequences it is a very real outcome. If you look at negotiations and transactions as if they are strictly independent events completely detached from human relationships you're probably a terrible negotiator slash businessperson. It's the difference between law and politics. I'll happily do a deal that isn't exactly a home run for me if I want to be sure I'll have a good relationship with that person for future opportunities.
- avar 13y ago
  Don't get me wrong. I'm disappointed in Oculus too, and I'd be even more disappointed if I'd actually invested in them. I'm just saying that people need to learn the hard lesson that when they're "investing" in something like Kickstarter they're not actually "investing" in the general sense. They're making a donation with little or no string attached, at best it's a "you give us money and we send you some doodad in the mail" investment. So they're effectively donating money with no string attached. So if you donated money to the company thinking they were going to do X and they actually do Y they can and will fuck you over if they think they can make more money doing Y than they can doing X, accounting for all the alienation from their existing customers from doing not doing X. So please everyone, if you want to invest in something and you want to have the expectations of an investor make sure you're actually investing, not just donating.
  - rhizome 13y ago
    when they're "investing" in something like Kickstarter they're not actually "investing" in the general sense I'd say they are only investing in the general sense, but not the specific one. Because, as we've seen with the Kickstarter failures and flake-outs, regardless of the HN-conventional definition of the word, the donors are certainly and legitimately invested.
cousin_it 13y ago
The future of Kickstarter depends on how well companies honor the non-legal aspects of their relationships with backers, which you say don't exist. I'm not saying I would have refused the acquisition offer, though :-)