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I don't get it; Kickstarter isn't a store. I personally never expect anything to come through and get it in the mail when I back a Kickstarter project. I might

by tibbon 12y ago

I don't get it; Kickstarter isn't a store. I personally never expect anything to come through and get it in the mail when I back a Kickstarter project. I might get something, but it isn't a promise. Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. There's no more due diligence than watching a video and reading over some text frequently in funding a project. Even projects with competent people in well funded companies fail all the time and get shut down (see Google Buzz, Google Health, etc). There is no such thing as a promise that things will succeed. I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"

makomk 12y ago
> Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. VCs back huge numbers of companies and expect most of them to fail, hoping that the few which succeed make back enough money to compensate for all the failures. Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. We can't expect people who back Kickstarter projects to accept VC-level failure rates because Kickstarters simply don't - and can't - give enough back when they succeed to make up for the failures.
- pessimizer 12y ago
  >We can't expect people who back Kickstarter projects to accept VC-level failure rates The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Kickstarter backers should expect VC-level failure rates as a lower bound.
  - eropple 12y ago
    You assume that people are able to evaluate risk effectively and knowledgeably. Is there any substantiation for that assumption? (I know, it's rhetorical. VCs get a lot more information and have a lot more experience than Kickstarter backers.)
    - pessimizer 12y ago
      (To be pedantic) I don't. I allow that VC information and experience supply no information about the outcome, and that the failure rates of VC-backed projects and Kickstarter projects could be identical. I didn't allow for information and experience negatively effecting VC success rates, though. edit: I accept that that's entirely possible, I just think it's a better subject for a academic study than for a rule of thumb.
  - PhantomGremlin 12y ago
    > Kickstarter backers should expect VC-level failure rates as a lower bound. True, but it's even worse than that. VC funded companies sometimes have an upside. E.g. Oculus Rift got over $2 billion from Facebook. The Kickstarter "backers" received exactly zero percent of that upside.
  - dragonwriter 12y ago
    > The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Another difference is a lot of Kickstarter projects are well below the scale that VCs would notice, and are offered by businesses that are going concerns as a way of mitigating risk -- there not all startup firms using Kickstarter as an alternative (or supplement) to VC funding.
  - wisty 12y ago
    Yeah, but VC backed companies usually deliver a product. Whether they make money is an entirely different issue.
  - dsugarman 12y ago
    there is some power in the knowledge of the crowd
- sanderjd 12y ago
  > Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. Then they're doing it wrong. Supporting a project on Kickstarter is a donation. A vote of confidence. That people are using it as a store and a ridiculously high-risk low-return investment vehicle is completely absurd. The blame should probably be put on Kickstarter themselves for what seems to be a major failure to establish the right expectations.
  - Loughla 12y ago
    I think it's deeper than that, though. Look at r/shutupandtakemymoney. Of the 25 posts on the first page right now, 11 are either kickstarter or indiegogo. Is it Kickstarter and Indiegogo's fault that individuals are using that form of venue to market and sell a product that doesn't exist yet? Is it reddit's? Or, is it the creator's fault for submitting the link? I pose that it is inevitable that these sort of sites are used this way. People want to market their crowd funding opportunity to enable their company to get off the ground. It is easier to market a future product compared to a donation, so creators and marketers are going that route.
    - sanderjd 12y ago
      I really have no problem with people marketing future products. My problem is with the view that there is a simple transaction of "I give you money and you give me product eventually" going on, which Kickstarter (et. al.?) seem to me to either encourage or endorse through silence. I think they should instead make it explicit and obvious that there is no expectation of any prize delivery at all. They don't want to do that though, because then the absolute amount of money going in (which is what they make their money on) will be smaller. Basically these sites are profiting off of these really huge campaigns without taking on either the financial risk of the backer or the delivery risk of the project, without making it very clear (at least to the backers, and arguably to the projects) that those risks exist.
dublinben 12y ago
>I might get something, but it isn't a promise. It actually is a promise. The Kickstarter terms of service require successfully funded projects to deliver the rewards that backers have paid for. If a project can't guarantee that they can deliver a finished hardware product, they shouldn't offer it as a reward.
- pbhjpbhj 12y ago
  >If a project can't guarantee that they can deliver a finished hardware product, they shouldn't offer it as a reward. // Shouldn't that be: If a project can't guarantee that they can deliver a finished hardware product if the project is successful, they shouldn't offer it as a reward. Otherwise surely no project can offer the product as a reward to backers as success is never guaranteed.
  - maxerickson 12y ago
    Here is Kickstarter's language: Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill. from: https://www.kickstarter.com/terms-of-use https://www.kickstarter.com/terms-of-use So it talks about the fundraising succeeding, not the project. But it also says that is one of the terms of the contract created between the project and backer, don't pester Kickstarter about it.
    - curun1r 12y ago
      That may be what the contract says, but there's more to contract law than just enforcing a contract. There are, for example, rules governing how contracts are handled in the event of a bankruptcy or dissolution of the company. It's likely that Kickstarter backers would become creditors of the bankrupt company and the refund they were due subject to creditor recovery rules.
    - pbhjpbhj 12y ago
      Have there been any court cases that have investigated "successfully funded" to determine the exact meaning in the law [in whatever jurisdiction]. Successfully funded projects could readily be considered to be ones where the funding has enabled project success. In their terms Kickstarter make statements suggesting it is a funding program but they also say in their "Acceptance of Terms" part that any policy expounded on the site is incorporated by reference. Kickstarter state on their /learn page for example "Kickstarter is a vibrant community of people working together to bring new things to life." making it clear that success on Kickstarter is bringing a making project to fruition. It _doesn't_ say "Kickstarter is a way to acquire funding", so that's not the goal of a Kickstarter project and thus not the measure of success. To reiterate this point, in the FAQ accountability section it says: > "On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it." // Again highlighting that projects are not funding, projects are encouraged with funding. There's little about unsuccessful projects, some details about how they're swept under the rug, but there is this in the FAQs: > "If the problems are severe enough that the creator can't fulfill their project, creators need to find a resolution. Steps could include offering refunds, detailing exactly how funds were used, and other actions to satisfy backers." // See that "could", why not "must"? Why not "creators are required by their assent to our contract to find a resolution"? It seems Kickstarter consider a report of how funds used to satisfy their requirements. There is this, https://ksr-assets.s3.amazonaws.com/creator-responsibility.png https://ksr-assets.s3.amazonaws.com/creator-responsibility.p..., which appears to contradict that FAQ. [PS I'm not sure I've convinced myself but I do think someone could make this case, possibly make it stick. Kickstarter could tighten up their language in a few places but ultimately they are financially primarily motivated to get as many projects funded as possible whether they are successful or not, funded projects earn them money whilst shipped rewards don't. Kickstarters other motivations aside of course.]
njharman 12y ago
The article isn't about people not getting a product or expecting a "store". It's about how a more than tripple funding KS which got an additional 3 million in VC backing could not actually accomplish their goal. I bet they would have been more successful with less money. Money gives you freedom(to start over, to feature creep, to bikeshed, to grow faster than you can manage, etc) and security (which makes you less "hungry" and desperate).
- cyorir 12y ago
  I think the notion that having less money would have been better for them is interesting. It seems like the amount of money they received gave them the idea that they could accomplish more by spending more; what they really needed was extra time in order to accomodate their extra money.
  - ChuckMcM 12y ago
    It is a big risk for startups that take too much money that they suddenly feel like they have the capital to do all sorts of things. Too bad they didn't just ship V1 of the product.
  - megablast 12y ago
    I guess these guys haven't heard of an MVP.
    - njharman 12y ago
      The point is what is "viable" changes drastically when you have $1,000,000 vs $10,000.
- simonh 12y ago
  Frankly the whole product concept seems to me to be completely ridiculous. I doubt it was viable however much money they got. I thought long and hard before posting this, because obviously hindsight is 20/20, but I went back and looked at the product description again and I stand by my opinion. IHMO it was a turkey from the word go.
Mithaldu 12y ago
Important to note here is that Kickstarter sees two separate things in the campaign: 1. The actual project. 2. The rewards doled out to supporters of the project. The Kickstarter rules are very clear about the following things: 1. The rewards are a contract. If you fail to deliver the rewards on whose terms the backers supported you, you're legally liable. 2. The rewards may be delayed, as long as regular communication about the actual progress happens. Thus the project itself can fail, as long as you make sure the rewards are given out. The fact that most project are confident/stupid enough to offer rewards that can only become reality if the project succeeds has muddled this reality in the mind of the average person, but the rules and legal realities are crystal-clear.
- deleted 12y ago
  [deleted]
- NotAtWork 12y ago
  Can you give a project option as a reward? Example: $100 Dollar Level, tshirt + coupon for discount on items that we sell, available for use on target completion date (which just happens to be projected cost of baseline project item)? Edit: Found the answer... > Discounts, coupons and gift certificates - Offering a reward at a lower price than what it may cost post Kickstarter is fine, but a future discount or coupon as reward is prohibited. Additionally, vouchers in exchange for a particular item (a meal, a book, etc.) are fine, but monetary gift certificates are prohibited. A little disappointing, but I can understand why they'd take this stance. (Likely because of money transmitter laws.) (It's possible you could still phrase it as equivalencies, eg, "one X, OR two Y, subject to availability")
  - dm2 12y ago
    That would make a lot of sense and avoid a lot of confusion. All projects that offer items that don't exist yet should only be allowed to have coupons for "1 free" or "half off" of the final product, if it's ever produced.
    - 12y ago
incision 12y ago
>'I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"' I can't see that happening. Though, I'm not sure what if anything has changed since I was discussing this [1] on HN over a year ago. 1: https://news.ycombinator.com/item?id=5708427 https://news.ycombinator.com/item?id=5708427
eropple 12y ago
> Why is it a shock that Kickstarter projects fail? Because regular people aren't equipped to evaluate risk and projects go out of their way (often dishonestly, even if understandably) to minimize the perception of risk. It's a system that takes advantage of suckers. Some folks find that to be okay, but it bothers me even as I consider using it (because of not having any other real choices for funding a game in 2014).
- simonh 12y ago
  What were your choices for funding a game in 2008?
  - eropple 12y ago
    My expenses were much lower in 2008. :-)
  - eropple 12y ago
    My expenses were much lower in 2008. :-)
markbnj 12y ago
Kickstarter may not be a store, but it is not an investment either. VC knowingly take risks in pursuit of significant returns. I've always wondered just what people are getting when they back kickstarters. Basically just the vague hope that they might get a product some day.
- sanderjd 12y ago
  I track it in the "charitable giving" section of my budget. Thinking of it as anything else just seems silly.
  - dublinben 12y ago
    I do too, which is why I only back projects that deliver an open source/free software/creative commons product in the end. I'm not going to invest in your company for zero equity unless you're doing something meaningful.
    - sanderjd 12y ago
      I agree with you, but my definition of what I think is "meaningful" is broader than "open source/free software/creative commons". It is more like "is this a thing that I would like to see exist in the world?"
  - tibbon 12y ago
    Same here. I treat Kickstarter like I do the Awesome Foundation grants I help fund (one of the original founding members)- I just give money away to make awesome stuff happen in the world. If I get a benefit in return that's nice, but really I just want the world to be a more interesting place.
ghshephard 12y ago
Couldn't agree with you more. If anything, I'm always shocked when I get something from a kickstarter, and pleased beyond imagining when it works out well/is high quality. I've certainly gotten some stinkers, and some no shows - but also been really happy with others (my CNCd iPhone Dock, for one) Kickstarter should really emphasize "The risk of failure is high, and you stand a good chance of never receiving anything for your money"
smackfu 12y ago
Kickstarters wants the backers to think it's a store, because the reality isn't very attractive. "It's like a store where you preorder, except 10% of the time we just throw your preorder away and you get nothing but we still charge you."
- ultimape 12y ago
  But the other 90% of the time that something does come through, it is something that likely wouldn't have been able to come to market to begin with. Granted some of those are for a good reason...
  - lmm 12y ago
    Is that the reality though? The biggest category on Kickstarter is board games, and many of those I've seen (and backed) there are being made by traditional publishers who would be more than capable of bringing the thing to market in the conventional way.
    - dragonwriter 12y ago
      A lot of board games are things that are speculative in that production and initial print run costs might result in a money losing effort (and a lot of board game companies don't have great access to financing, even if they are confident that such a thing would be sufficiently profitable for the expectations of that industry -- there's not a lot of investors throwing money at the sector, unlike tech, because while there is some money to be made there, no one expects something on the scale of the next Facebook shoot off there.) So Kickstarter with product-as-reward makes a lot of sense for going concerns there because they have fairly good ideas what production costs are going to be like and what scale they need to reach to get a product with particular features out. Its not the sexiest use of Kickstarter, but its probably the most sustainable, and it does enable things that would otherwise be too risky to produce.
soneca 12y ago
No one is shocked that it failed, people are shocked that it didn't ship! You can't fail if you didn't even ship. Every VC backed company, or big company project that fails without any shock has shipped. If a kickstarter campaign ships the product and it falls short of expectations, no matter how short it is, it is ok. But if it says it is all set and done to ship, get the money and don't ship, that is a problem.
megablast 12y ago
You don't get that other people see it as a promise of having something delivered? You can't understand that people think about kickstarter differently to you? You don't see that people get excited about a project, because of what it offers, and pay because they want to get what is promised? I mean, even if you don't agree with that sentiment, you can see that other do, right?
dragonwriter 12y ago
> I don't get it; Kickstarter isn't a store. It basically is, or at least a market -- a place where buyers and sellers meet and form contracts and where the sellers get the money from the buyers in exchange for the promise of some specified future delivery. Sure, some sellers would like to have store-like inducements to the buyers to hand over money, but not store-like obligations to provide the offered goods to the buyers. > Why is it a shock that Kickstarter projects fail? Its not a shock when projects fail. Its a breach of contract when people accept money in exchange for a promise of future goods and then fail to deliver the future goods. Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable.
- eden-san 12y ago
  "Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable." This is actually an excellent point, but... The reasoning behind this "pre-sale" approach is about the perceived value of the reward. An traditional gift might be acceptable (T-Shirts, etc) but there is something unique about being offered something that's not on the market yet. It makes the customer feel special, something they might be able to brag about if the product is a success. Something akin to the concept of "Collector Edition" in the game industry. That will add value to a reward, will attract more customer an in turn increase the chances of a successful campaign (even though successful campaign does not mean successful product). It is a good way to kickstart a business. Riskier? Yes. Short sighted? Yes and no (Actually no). Short term cost is 0 (great), long term cost is your manufacturing cost + distribution cost (ouch). That doesn't seem right? Actually it is. You're actually paying for: + User acquisition + Early product validation (Lean Startup) + Momentum + Beta testing for the whole product pipeline and the product itself I think that as a company it is definitively worth the risk. You have to be able to take risks sometimes in order to be successful. My 2 cents.
- edanm 12y ago
  Your view is certainly not the same as the way many people view Kickstarter. But let's not quibble over what Kickstarter is. There is obviously a lot of value in having some kind of market where people hand over money with the risk of project failure, in order to potentially get a new product that they want to exist built. How would you create such a marketplace and communicate clearly that that's what it is? I ask because I thought Kickstarter was exactly this, but apparently you don't agree, so I wonder where our difference of opinion stems from..
SoftwareMaven 12y ago
That shock is the reason allowing crowd funding for stock is a frightening proposition for the SEC.
tmflannery 12y ago
I think the issue is how it happened. They had a product prototyped and ready to go, went back to the drawing board and revised it. Constant feature creep kept causing them to go back and revise revise revise, spend more money, and delay. Hardware doesn't have constant iteration. This is what happens when you try to apply software principles.
jacalata 12y ago
People are shocked because the only reason kickstarter is a big deal is that most of the audience has absolutely no familiarity with VCs and startup failures. They are normal people who see "$75 - receive Thing" and absurdly, strangely, interpret that as "I give you $75 you give me Thing". If Kickstarter wasn't a store then they wouldn't allow projects to list prices next to the products they are selling, all reward levels would be "stickers!" and not the successful project. And I bet all the self-righteous jerks who say "I don't even expect to get anything when I back a project!" would instantly stop backing projects, once they actually couldn't expect to get anything for being a backer.
- totally 12y ago
  Must one be a "self-righteous jerk" to say "I don't even expect to get anything when I back a project!" ?
  - jacalata 12y ago
    Only when they also say anything similar to "I don't even understand why people are surprised when projects fail!", as all of them have in my experience. I guess even then they could just be stunningly oblivious, fair enough.
    - totally 12y ago
      "all of them have" ... "in my experience". I posit that you don't have experience with everyone who's lost money on kickstarter and uttered that particular phrase. And not knowing the sample size of your experience, I don't really trust your opinion on people, except that some are oblivious and some are jerks. Some are. People's oblivion does not stun me anymore. I don't expect drivers to stay on the road. People do things that are terrible for their health, and can generally be counted on to make objectively bad decisions, especially my mother. But the thing is, if you get all the human souls in a room, and get them to guess how much a mountain weighs, the mean average is consistently closer than any individual guess. So I guess some people's idiocy is a counterbalance to the wise people. I hope I've filled your heart with hope just a little bit.
_pmf_ 12y ago
> Even projects with competent people in well funded companies fail all the time Competent technical people. The non-technical leaders of for example Google Wave did not really show any apparent competency, leading to a project that has been excitedly received to stall just because someone thought it a good idea to do a closed beta (the closed beta worked for Gmail because the early Gmail users could communicate with any E-mail user, but competent people would have anticipated that this would not work with Wave; they effectively created a super-nerd ghetto, which obviously no sane person wanted to be part of after the beta was over).
- edanm 12y ago
  Have you ever heard of hindsight bias? Many experiments have shown that people overestimate how easy it would've been to guess future outcomes. They did this by actually asking people to guess certain outcomes, then asked them a year later what their guess was - people's self-reported guesses were usually off, in the direction of what actually happened. One of the problems with this is that our brain tricks us into believing that we're better guessers than other people, because hey, look at all the times we were right in the past! Except we weren't right - it's just our memory deceiving us. All of this is to say - Google hires extremely smart people. I would really hesitate to call them incompetent, both because what you say was "sure to happen" is a big dose of hindsight, and also because you have no idea what their goals were - for all you know, they took a risk that the project would either stall or become super-successful, so they shot for the moon. That's a legitimate option.

by tibbon 12y ago

makomk 12y ago

> Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. VCs back huge numbers of companies and expect most of them to fail, hoping that the few which succeed make back enough money to compensate for all the failures. Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. We can't expect people who back Kickstarter projects to accept VC-level failure rates because Kickstarters simply don't - and can't - give enough back when they succeed to make up for the failures.

pessimizer 12y ago
>We can't expect people who back Kickstarter projects to accept VC-level failure rates The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Kickstarter backers should expect VC-level failure rates as a lower bound.
- eropple 12y ago
  You assume that people are able to evaluate risk effectively and knowledgeably. Is there any substantiation for that assumption? (I know, it's rhetorical. VCs get a lot more information and have a lot more experience than Kickstarter backers.)
  - pessimizer 12y ago
    (To be pedantic) I don't. I allow that VC information and experience supply no information about the outcome, and that the failure rates of VC-backed projects and Kickstarter projects could be identical. I didn't allow for information and experience negatively effecting VC success rates, though. edit: I accept that that's entirely possible, I just think it's a better subject for a academic study than for a rule of thumb.
- PhantomGremlin 12y ago
  > Kickstarter backers should expect VC-level failure rates as a lower bound. True, but it's even worse than that. VC funded companies sometimes have an upside. E.g. Oculus Rift got over $2 billion from Facebook. The Kickstarter "backers" received exactly zero percent of that upside.
- dragonwriter 12y ago
  > The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Another difference is a lot of Kickstarter projects are well below the scale that VCs would notice, and are offered by businesses that are going concerns as a way of mitigating risk -- there not all startup firms using Kickstarter as an alternative (or supplement) to VC funding.
- wisty 12y ago
  Yeah, but VC backed companies usually deliver a product. Whether they make money is an entirely different issue.
- dsugarman 12y ago
  there is some power in the knowledge of the crowd
sanderjd 12y ago
> Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. Then they're doing it wrong. Supporting a project on Kickstarter is a donation. A vote of confidence. That people are using it as a store and a ridiculously high-risk low-return investment vehicle is completely absurd. The blame should probably be put on Kickstarter themselves for what seems to be a major failure to establish the right expectations.
- Loughla 12y ago
  I think it's deeper than that, though. Look at r/shutupandtakemymoney. Of the 25 posts on the first page right now, 11 are either kickstarter or indiegogo. Is it Kickstarter and Indiegogo's fault that individuals are using that form of venue to market and sell a product that doesn't exist yet? Is it reddit's? Or, is it the creator's fault for submitting the link? I pose that it is inevitable that these sort of sites are used this way. People want to market their crowd funding opportunity to enable their company to get off the ground. It is easier to market a future product compared to a donation, so creators and marketers are going that route.
  - sanderjd 12y ago
    I really have no problem with people marketing future products. My problem is with the view that there is a simple transaction of "I give you money and you give me product eventually" going on, which Kickstarter (et. al.?) seem to me to either encourage or endorse through silence. I think they should instead make it explicit and obvious that there is no expectation of any prize delivery at all. They don't want to do that though, because then the absolute amount of money going in (which is what they make their money on) will be smaller. Basically these sites are profiting off of these really huge campaigns without taking on either the financial risk of the backer or the delivery risk of the project, without making it very clear (at least to the backers, and arguably to the projects) that those risks exist.

dublinben 12y ago

>I might get something, but it isn't a promise. It actually is a promise. The Kickstarter terms of service require successfully funded projects to deliver the rewards that backers have paid for. If a project can't guarantee that they can deliver a finished hardware product, they shouldn't offer it as a reward.

pbhjpbhj 12y ago
>If a project can't guarantee that they can deliver a finished hardware product, they shouldn't offer it as a reward. // Shouldn't that be: If a project can't guarantee that they can deliver a finished hardware product if the project is successful, they shouldn't offer it as a reward. Otherwise surely no project can offer the product as a reward to backers as success is never guaranteed.
- maxerickson 12y ago
  Here is Kickstarter's language: Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill. from: https://www.kickstarter.com/terms-of-use https://www.kickstarter.com/terms-of-use So it talks about the fundraising succeeding, not the project. But it also says that is one of the terms of the contract created between the project and backer, don't pester Kickstarter about it.
  - curun1r 12y ago
    That may be what the contract says, but there's more to contract law than just enforcing a contract. There are, for example, rules governing how contracts are handled in the event of a bankruptcy or dissolution of the company. It's likely that Kickstarter backers would become creditors of the bankrupt company and the refund they were due subject to creditor recovery rules.
  - pbhjpbhj 12y ago
    Have there been any court cases that have investigated "successfully funded" to determine the exact meaning in the law [in whatever jurisdiction]. Successfully funded projects could readily be considered to be ones where the funding has enabled project success. In their terms Kickstarter make statements suggesting it is a funding program but they also say in their "Acceptance of Terms" part that any policy expounded on the site is incorporated by reference. Kickstarter state on their /learn page for example "Kickstarter is a vibrant community of people working together to bring new things to life." making it clear that success on Kickstarter is bringing a making project to fruition. It _doesn't_ say "Kickstarter is a way to acquire funding", so that's not the goal of a Kickstarter project and thus not the measure of success. To reiterate this point, in the FAQ accountability section it says: > "On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it." // Again highlighting that projects are not funding, projects are encouraged with funding. There's little about unsuccessful projects, some details about how they're swept under the rug, but there is this in the FAQs: > "If the problems are severe enough that the creator can't fulfill their project, creators need to find a resolution. Steps could include offering refunds, detailing exactly how funds were used, and other actions to satisfy backers." // See that "could", why not "must"? Why not "creators are required by their assent to our contract to find a resolution"? It seems Kickstarter consider a report of how funds used to satisfy their requirements. There is this, https://ksr-assets.s3.amazonaws.com/creator-responsibility.png https://ksr-assets.s3.amazonaws.com/creator-responsibility.p..., which appears to contradict that FAQ. [PS I'm not sure I've convinced myself but I do think someone could make this case, possibly make it stick. Kickstarter could tighten up their language in a few places but ultimately they are financially primarily motivated to get as many projects funded as possible whether they are successful or not, funded projects earn them money whilst shipped rewards don't. Kickstarters other motivations aside of course.]

njharman 12y ago

The article isn't about people not getting a product or expecting a "store". It's about how a more than tripple funding KS which got an additional 3 million in VC backing could not actually accomplish their goal. I bet they would have been more successful with less money. Money gives you freedom(to start over, to feature creep, to bikeshed, to grow faster than you can manage, etc) and security (which makes you less "hungry" and desperate).

cyorir 12y ago
I think the notion that having less money would have been better for them is interesting. It seems like the amount of money they received gave them the idea that they could accomplish more by spending more; what they really needed was extra time in order to accomodate their extra money.
- ChuckMcM 12y ago
  It is a big risk for startups that take too much money that they suddenly feel like they have the capital to do all sorts of things. Too bad they didn't just ship V1 of the product.
- megablast 12y ago
  I guess these guys haven't heard of an MVP.
  - njharman 12y ago
    The point is what is "viable" changes drastically when you have $1,000,000 vs $10,000.
simonh 12y ago
Frankly the whole product concept seems to me to be completely ridiculous. I doubt it was viable however much money they got. I thought long and hard before posting this, because obviously hindsight is 20/20, but I went back and looked at the product description again and I stand by my opinion. IHMO it was a turkey from the word go.

Mithaldu 12y ago

Important to note here is that Kickstarter sees two separate things in the campaign: 1. The actual project. 2. The rewards doled out to supporters of the project. The Kickstarter rules are very clear about the following things: 1. The rewards are a contract. If you fail to deliver the rewards on whose terms the backers supported you, you're legally liable. 2. The rewards may be delayed, as long as regular communication about the actual progress happens. Thus the project itself can fail, as long as you make sure the rewards are given out. The fact that most project are confident/stupid enough to offer rewards that can only become reality if the project succeeds has muddled this reality in the mind of the average person, but the rules and legal realities are crystal-clear.

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NotAtWork 12y ago
Can you give a project option as a reward? Example: $100 Dollar Level, tshirt + coupon for discount on items that we sell, available for use on target completion date (which just happens to be projected cost of baseline project item)? Edit: Found the answer... > Discounts, coupons and gift certificates - Offering a reward at a lower price than what it may cost post Kickstarter is fine, but a future discount or coupon as reward is prohibited. Additionally, vouchers in exchange for a particular item (a meal, a book, etc.) are fine, but monetary gift certificates are prohibited. A little disappointing, but I can understand why they'd take this stance. (Likely because of money transmitter laws.) (It's possible you could still phrase it as equivalencies, eg, "one X, OR two Y, subject to availability")
- dm2 12y ago
  That would make a lot of sense and avoid a lot of confusion. All projects that offer items that don't exist yet should only be allowed to have coupons for "1 free" or "half off" of the final product, if it's ever produced.
  - 12y ago

incision 12y ago

>'I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"' I can't see that happening. Though, I'm not sure what if anything has changed since I was discussing this [1] on HN over a year ago. 1: https://news.ycombinator.com/item?id=5708427 https://news.ycombinator.com/item?id=5708427

eropple 12y ago

> Why is it a shock that Kickstarter projects fail? Because regular people aren't equipped to evaluate risk and projects go out of their way (often dishonestly, even if understandably) to minimize the perception of risk. It's a system that takes advantage of suckers. Some folks find that to be okay, but it bothers me even as I consider using it (because of not having any other real choices for funding a game in 2014).

simonh 12y ago
What were your choices for funding a game in 2008?
- eropple 12y ago
  My expenses were much lower in 2008. :-)
- eropple 12y ago
  My expenses were much lower in 2008. :-)

markbnj 12y ago

Kickstarter may not be a store, but it is not an investment either. VC knowingly take risks in pursuit of significant returns. I've always wondered just what people are getting when they back kickstarters. Basically just the vague hope that they might get a product some day.

sanderjd 12y ago
I track it in the "charitable giving" section of my budget. Thinking of it as anything else just seems silly.
- dublinben 12y ago
  I do too, which is why I only back projects that deliver an open source/free software/creative commons product in the end. I'm not going to invest in your company for zero equity unless you're doing something meaningful.
  - sanderjd 12y ago
    I agree with you, but my definition of what I think is "meaningful" is broader than "open source/free software/creative commons". It is more like "is this a thing that I would like to see exist in the world?"
- tibbon 12y ago
  Same here. I treat Kickstarter like I do the Awesome Foundation grants I help fund (one of the original founding members)- I just give money away to make awesome stuff happen in the world. If I get a benefit in return that's nice, but really I just want the world to be a more interesting place.

ghshephard 12y ago

Couldn't agree with you more. If anything, I'm always shocked when I get something from a kickstarter, and pleased beyond imagining when it works out well/is high quality. I've certainly gotten some stinkers, and some no shows - but also been really happy with others (my CNCd iPhone Dock, for one) Kickstarter should really emphasize "The risk of failure is high, and you stand a good chance of never receiving anything for your money"

smackfu 12y ago

Kickstarters wants the backers to think it's a store, because the reality isn't very attractive. "It's like a store where you preorder, except 10% of the time we just throw your preorder away and you get nothing but we still charge you."

ultimape 12y ago
But the other 90% of the time that something does come through, it is something that likely wouldn't have been able to come to market to begin with. Granted some of those are for a good reason...
- lmm 12y ago
  Is that the reality though? The biggest category on Kickstarter is board games, and many of those I've seen (and backed) there are being made by traditional publishers who would be more than capable of bringing the thing to market in the conventional way.
  - dragonwriter 12y ago
    A lot of board games are things that are speculative in that production and initial print run costs might result in a money losing effort (and a lot of board game companies don't have great access to financing, even if they are confident that such a thing would be sufficiently profitable for the expectations of that industry -- there's not a lot of investors throwing money at the sector, unlike tech, because while there is some money to be made there, no one expects something on the scale of the next Facebook shoot off there.) So Kickstarter with product-as-reward makes a lot of sense for going concerns there because they have fairly good ideas what production costs are going to be like and what scale they need to reach to get a product with particular features out. Its not the sexiest use of Kickstarter, but its probably the most sustainable, and it does enable things that would otherwise be too risky to produce.

soneca 12y ago

No one is shocked that it failed, people are shocked that it didn't ship! You can't fail if you didn't even ship. Every VC backed company, or big company project that fails without any shock has shipped. If a kickstarter campaign ships the product and it falls short of expectations, no matter how short it is, it is ok. But if it says it is all set and done to ship, get the money and don't ship, that is a problem.

megablast 12y ago

You don't get that other people see it as a promise of having something delivered? You can't understand that people think about kickstarter differently to you? You don't see that people get excited about a project, because of what it offers, and pay because they want to get what is promised? I mean, even if you don't agree with that sentiment, you can see that other do, right?

dragonwriter 12y ago

> I don't get it; Kickstarter isn't a store. It basically is, or at least a market -- a place where buyers and sellers meet and form contracts and where the sellers get the money from the buyers in exchange for the promise of some specified future delivery. Sure, some sellers would like to have store-like inducements to the buyers to hand over money, but not store-like obligations to provide the offered goods to the buyers. > Why is it a shock that Kickstarter projects fail? Its not a shock when projects fail. Its a breach of contract when people accept money in exchange for a promise of future goods and then fail to deliver the future goods. Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable.

eden-san 12y ago
"Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable." This is actually an excellent point, but... The reasoning behind this "pre-sale" approach is about the perceived value of the reward. An traditional gift might be acceptable (T-Shirts, etc) but there is something unique about being offered something that's not on the market yet. It makes the customer feel special, something they might be able to brag about if the product is a success. Something akin to the concept of "Collector Edition" in the game industry. That will add value to a reward, will attract more customer an in turn increase the chances of a successful campaign (even though successful campaign does not mean successful product). It is a good way to kickstart a business. Riskier? Yes. Short sighted? Yes and no (Actually no). Short term cost is 0 (great), long term cost is your manufacturing cost + distribution cost (ouch). That doesn't seem right? Actually it is. You're actually paying for: + User acquisition + Early product validation (Lean Startup) + Momentum + Beta testing for the whole product pipeline and the product itself I think that as a company it is definitively worth the risk. You have to be able to take risks sometimes in order to be successful. My 2 cents.
edanm 12y ago
Your view is certainly not the same as the way many people view Kickstarter. But let's not quibble over what Kickstarter is. There is obviously a lot of value in having some kind of market where people hand over money with the risk of project failure, in order to potentially get a new product that they want to exist built. How would you create such a marketplace and communicate clearly that that's what it is? I ask because I thought Kickstarter was exactly this, but apparently you don't agree, so I wonder where our difference of opinion stems from..

SoftwareMaven 12y ago

That shock is the reason allowing crowd funding for stock is a frightening proposition for the SEC.

tmflannery 12y ago

I think the issue is how it happened. They had a product prototyped and ready to go, went back to the drawing board and revised it. Constant feature creep kept causing them to go back and revise revise revise, spend more money, and delay. Hardware doesn't have constant iteration. This is what happens when you try to apply software principles.

jacalata 12y ago

People are shocked because the only reason kickstarter is a big deal is that most of the audience has absolutely no familiarity with VCs and startup failures. They are normal people who see "$75 - receive Thing" and absurdly, strangely, interpret that as "I give you $75 you give me Thing". If Kickstarter wasn't a store then they wouldn't allow projects to list prices next to the products they are selling, all reward levels would be "stickers!" and not the successful project. And I bet all the self-righteous jerks who say "I don't even expect to get anything when I back a project!" would instantly stop backing projects, once they actually couldn't expect to get anything for being a backer.

totally 12y ago
Must one be a "self-righteous jerk" to say "I don't even expect to get anything when I back a project!" ?
- jacalata 12y ago
  Only when they also say anything similar to "I don't even understand why people are surprised when projects fail!", as all of them have in my experience. I guess even then they could just be stunningly oblivious, fair enough.
  - totally 12y ago
    "all of them have" ... "in my experience". I posit that you don't have experience with everyone who's lost money on kickstarter and uttered that particular phrase. And not knowing the sample size of your experience, I don't really trust your opinion on people, except that some are oblivious and some are jerks. Some are. People's oblivion does not stun me anymore. I don't expect drivers to stay on the road. People do things that are terrible for their health, and can generally be counted on to make objectively bad decisions, especially my mother. But the thing is, if you get all the human souls in a room, and get them to guess how much a mountain weighs, the mean average is consistently closer than any individual guess. So I guess some people's idiocy is a counterbalance to the wise people. I hope I've filled your heart with hope just a little bit.

_pmf_ 12y ago

> Even projects with competent people in well funded companies fail all the time Competent technical people. The non-technical leaders of for example Google Wave did not really show any apparent competency, leading to a project that has been excitedly received to stall just because someone thought it a good idea to do a closed beta (the closed beta worked for Gmail because the early Gmail users could communicate with any E-mail user, but competent people would have anticipated that this would not work with Wave; they effectively created a super-nerd ghetto, which obviously no sane person wanted to be part of after the beta was over).

edanm 12y ago
Have you ever heard of hindsight bias? Many experiments have shown that people overestimate how easy it would've been to guess future outcomes. They did this by actually asking people to guess certain outcomes, then asked them a year later what their guess was - people's self-reported guesses were usually off, in the direction of what actually happened. One of the problems with this is that our brain tricks us into believing that we're better guessers than other people, because hey, look at all the times we were right in the past! Except we weren't right - it's just our memory deceiving us. All of this is to say - Google hires extremely smart people. I would really hesitate to call them incompetent, both because what you say was "sure to happen" is a big dose of hindsight, and also because you have no idea what their goals were - for all you know, they took a risk that the project would either stall or become super-successful, so they shot for the moon. That's a legitimate option.