New Kickstarter Rules Make Sense In Principle, But Raise Big Questions In Practice

Business Models

from the balancing-act dept

Kickstarter is an amazing platform that faces a lot of interesting challenges. Chief among them is a combination of quality control and expectation management — both of which revolve, in many ways, around image. As in: what is Kickstarter in the eyes of users? On the one hand, the company wants to weed out the worst projects, because it knows that a few high-profile failures could cause serious damage to its image. On the other hand, it wants users to understand that there are always risks involved in backing a project, so they should be discerning and be prepared for delays or other problems. This led to their recent changes to the rules, focused on divulging risks and challenges (which basically everyone agrees is a good thing), preventing people from treating Kickstarter like a simple store or pre-order platform (a more controversial move), and minimizing promises by banning product renderings (the source of the most debate). In the latter two areas, Kickstarter is treading a fine line.

Firstly, there’s the “Kickstarter is not a store” aspect (which was the name of their initial blog post about the rules). The core change here was prohibiting projects in the Product Design and Technology sections from offering multiple-item reward tiers (e.g. get three widgets, get five widgets, etc.) which had previously been a pretty popular strategy for launching new consumer products on Kickstarter. They felt that offering multiple items would lead to a lot of disappointment when some projects inevitably go wrong, since it gives the impression that the product is “shrink-wrapped and ready to ship” — and if it is, then it shouldn’t be on Kickstarter, a platform geared at helping products to completion, not selling finished ones. That makes sense, but it comes with a few problems:

• Kickstarter acknowledges that in some cases it makes sense to sell products as a set — but that in such cases, you won’t be allowed to sell them individually. This ignores the wide variety of versatile products that might make sense individually or in sets. For example, take the Ubi computer (a sort of stationary Siri) which finished its funding just two days before the rule change. It’s a device designed to be useful as a standalone unit or a network of units throughout a large home — so it offered one, two, three, five and ten packs (and got backers at all those tiers). Now, for comparison, look at the still-funding Light by Moore’sCloud, which is similarly designed to be useful as a single unit or a house-wide solution, but is unable to offer multi-unit package tiers. It’s not a perfect comparison because the Light also has an extremely ambitious funding goal and its entry-level price is a bit lower, but it’s interesting to note that despite having 1,398 backers to the Ubi’s 1,190, it has raised only $157k to the Ubi’s $229k. Though both projects are precisely what the Kickstarter rules are supposed to favor — new devices in the advanced prototype stage that needed resources to finalize the development — the Light seems to be held back by the new restrictions.
• Of course, it’s not quite that simple, because there’s a weird loophole in the rules. Though projects aren’t allowed to offer multiple items at specific reward tiers, they are allowed to offer them as add-ons. For those unfamiliar with the Kickstarter add-on process, well, it’s not really a process at all: creators tell backers how much money to add to their pledge for various things, then it’s up to them to survey the backers after the project ends to find out which add-ons they want, and square that up with the pledge amount. If anyone made a mistake like failing to cover shipping, they have to deal with it themselves using something like Paypal, absorb the loss, or piss off the backer. Thus, many products actually are available in bigger quantities, but many Kickstarter users are unaware of this process, or confused by it, and project comment pages are filled with repeated back-and-forths about how to order. Rather than preventing Kickstarter from being a store, the change has just made it a store with a worse customer experience.
• Then there’s a second weird loophole. The rules only apply to the Product Design and Technology categories — projects under Publishing, Graphic Design and Tabletop Games, for example, can still offer multiple copies at various tiers in a very store-like way. In a way this makes sense, since books, posters, board games and decks of cards all have much clearer, simpler supply chains and paths to completion than a new tech gadget or a unique manufactured product. But that’s not universally true: some of the best product innovations are the simplest — easy to create, and destined to become ubiquitous. If they fall under the product design category, though, they are forced to pre-sell them one at a time. And then you get some real anomalies, like the still-funding (and highly successful) Dice Rings. They are a manufactured product design in every sense, but because they were accepted to the Tabletop Games category, they can offer reward tiers with rings in several different quantities — and a huge portion of their backers have pledged for those higher tiers. And, once again, they are exactly what Kickstarter is looking for: a neat idea in a late-prototyping stage that needed a final push to enter production. But they would have faced massive restrictions were it not for some lucky category overlap.

As these loopholes and anomalies show, there are plenty of products that have a perfectly good reason to offer multiple-item tiers without going against Kickstarter principles, and such projects seem to benefit highly from doing so. When you look at this, you realize that the rule change has a built-in negative effect: it optimizes against the best-planned and most reliable projects. It’s basically saying “if you don’t have a significant risk of failure, you shouldn’t be here.” But while it’s important for entrepreneurs to be aware of risks and challenges, they also pretty universally have a lot of faith in their idea — so telling them they aren’t allowed to promise people five widgets, when that may have been a key part of their widget sales strategy, just drives the most confident creators elsewhere.

The other controversial rule change is the ban on product renderings and simulations. This was an attempt to avoid situations like when Felix Salmon pointed out that the prototype of the hugely popular Lifx Lightbulb was a long, long way away from the snazzy mockup plastered all over the Kickstarter page, and made a pretty compelling argument that the whole thing was vaporware. Again, this makes partial sense — but it seems like there are a lot of situations in which product renderings, responsibly used and properly labelled, would be vital to educating potential backers about a project. In a recent submission to Techdirt, Tom McWilliams, creator of the Tiger Cam 3D video microscope, provides an example from his own experience in attempting to launch the project on Kickstarter:

3D imagery is hard to demonstrate when you aren’t physically immersed in the actual experience. Most of the time we see 3D advertised using pictures of objects flying out of the screen at us or funny block letters emerging from a picture. We did some (not all) of the same type of effects in our Kickstarter project video to try to emphasize that the really cool part of our product was the 3D experience it offered.

The week we were set to launch our project on Kickstarter, the press release was issued about Kickstarter’s new guidelines for technology projects. After a bit of concern, and a lot of review, we presumed that we had complied with these new guidelines, including those prohibiting product simulations. After all, we weren’t simulating what our project might do in the future, we were illustrating what our 3D microscope does right now, using the medium we had available to us. After submitting our project, it was declined by Kickstarter because it was deemed that simulations of any kind in our project video were prohibited. We then went back to re-think the video. After removing our 3D-like graphics in the video our project was accepted, but it seems that the message might have been lost in translation.

It’s easy to understand the rationale behind the new technology guidelines from Kickstarter. Kickstarter projects are about concrete projects looking to fund their next steps, not about what someone thinks they might be able to create if given the backing. But when simulated images convey the essence of a project in a way that a thousand words cannot, even if disclaimer were to be boldly displayed, there is room, one hopes, for conversation.

McWilliams also raises an excellent question about what exactly a “simulation” is:

Some technology projects are easy to demonstrate by showing a user’s interaction with them. But often isn’t this simulated? Did that alarm clock really wake up the actor in the video, or was it a simulation? Other projects might be more difficult to demonstrate and ask for a stretch of the imagination in order for the viewer to understand the true user experience. Our 3D microscope product certainly garners this challenge, and we feel that in the end maybe we weren’t able to convey this experience to potential project backers.

It seems like Kickstarter realized that managing backer expectations, and controlling the quality and the honesty of projects, was a complicated challenge, so they decided to make a bold move that they hoped would initiate wide-scale change for the better, even if it did a little collateral damage. Unfortunately, such strict broad strokes seem to be creating more problems than they are solving, and unfairly disadvantaging projects with perfectly legitimate interests that run counter to the rules.

Luckily, Kickstarter is still an evolving platform, and none of this is set in stone. It’s only been a couple of months since the change, and the company can likely be convinced to revisit the rules once it has a little bit more data to see what effect they had. But, ultimately, they have to listen to their users, both creators and backers. They may not want to be a mere store, but they can’t be a haven for creators who hedge every bet while scaring away those with ambitious goals. In striving to manage expectations, Kickstarter can’t forget that the best entrepreneurs have high expectations of themselves.

Filed Under: crowdfunding, rules
Companies: kickstarter