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I really think the only failure of kickstarter is that many backers don't understand the risk they're buying into. R&D always costs more than production, so wo

I really think the only failure of kickstarter is that many backers don't understand the risk they're buying into. R&D always costs more than production, so wouldn't backers in theory pay more than market value to be first and part of the creation cycle?

msandford 11y ago
The idea is usually that the project team either has already done the R&D and they're just raising money for the production run, or that they're going to do the R&D for free because they're going to own the business and make a profit on every sale after the backers get the initial production run. Both wildly naive it seems, but I suspect that's how people imagine it. The demo videos usually show a "done-ish" product and downplay how much more needs to be done to actually ship it. And they always talk about how strong their team is and how it's totally doable even though it's not done yet. The wifi lightbulb people come to mind. Total smoke and mirrors demo video and it took a major multinational getting involved to actually ship the product. That's the Belkin WeMo.
- larrys 11y ago
  Part of the appeal of a product on kickstarter is the marketing which has way more appeal than just the actual product does itself. It's the "trust us" attitude and the generally soft spoken videos and collateral doing exactly what marketing is supposed to do. In other words it all seems so genuine, possible and down to earth in tone and builds up a trust factor. Even though the people behind the product are complete unknowns. Take away those videos and there would be a drastic drop in funding and not just because the videos explain features or benefits either or can go viral.
Gibbon1 11y ago
I disagree R&D is usually a faction of the cost needed to go into production. The large the number of units, the greater that ratio is. For mass produced products it can be 10:1. Consider if you're going to ship 10,000 of something that costs $25 to produce. You need a $250,000 just for inventory. You need a way to assemble, test, and ship the product. Deal with 10,000 customers. Designing the production flow, jigs and fixtures, quality control, training up people, all requires money and engineering time. The business and sales side of things requires time and money. I've seen numbers of products stall out because the developers fail to get enough funding to go into production. Also in a lot of cases markets move slowly. You can introduce a product and the buyers will just nibble for the first year or two if you're not an established name. Your company has to be able to keep the lights on during that time.

msandford 11y ago

The idea is usually that the project team either has already done the R&D and they're just raising money for the production run, or that they're going to do the R&D for free because they're going to own the business and make a profit on every sale after the backers get the initial production run. Both wildly naive it seems, but I suspect that's how people imagine it. The demo videos usually show a "done-ish" product and downplay how much more needs to be done to actually ship it. And they always talk about how strong their team is and how it's totally doable even though it's not done yet. The wifi lightbulb people come to mind. Total smoke and mirrors demo video and it took a major multinational getting involved to actually ship the product. That's the Belkin WeMo.

larrys 11y ago
Part of the appeal of a product on kickstarter is the marketing which has way more appeal than just the actual product does itself. It's the "trust us" attitude and the generally soft spoken videos and collateral doing exactly what marketing is supposed to do. In other words it all seems so genuine, possible and down to earth in tone and builds up a trust factor. Even though the people behind the product are complete unknowns. Take away those videos and there would be a drastic drop in funding and not just because the videos explain features or benefits either or can go viral.

Gibbon1 11y ago

I disagree R&D is usually a faction of the cost needed to go into production. The large the number of units, the greater that ratio is. For mass produced products it can be 10:1. Consider if you're going to ship 10,000 of something that costs $25 to produce. You need a $250,000 just for inventory. You need a way to assemble, test, and ship the product. Deal with 10,000 customers. Designing the production flow, jigs and fixtures, quality control, training up people, all requires money and engineering time. The business and sales side of things requires time and money. I've seen numbers of products stall out because the developers fail to get enough funding to go into production. Also in a lot of cases markets move slowly. You can introduce a product and the buyers will just nibble for the first year or two if you're not an established name. Your company has to be able to keep the lights on during that time.