Kickstarter Conundrum: Money Changes Everything... But What If It Doesn't Let You Change Enough?

from the things-to-think-about dept

Let me start out by saying that I'm a huge fan of what Kickstarter has put in place. They've more or less built up a simple and easy to use platform to allow all kinds of creative folks a way to "fan fund" a variety of projects (music, books, software, performance art, movies, etc...) by using a "tiered" support model. If you're not familiar with the site, it lets people setup a project with a funding "goal" and a deadline. Then, they can set up a series of tiers for how people can fund the project, with promises to get back certain things in response to those tiers. This is the model we've spoken about a few times in the past -- such as what Jill Sobule did a couple years ago to fund her album.

While I definitely believe this sort of model can make a lot of sense in certain areas, I don't think it's right for everyone, and it certainly can create some potential problems -- especially if the content creator doesn't live up to expectations. Kickstarter got a lot of publicity back in May when one of its projects, called Diaspora, for a "distributed" social network got covered in the NY Times at the same time as there was a lot of fuss about privacy concerns on Facebook. That resulted in the project -- which had only been seeking $10,000 to let four college kids work on this project over the summer -- raising over $100,000.

Now, many have looked at this as showing off the power of Kickstarter (though, others might argue it really showed off the power of the NY Times). However, Clay Shirky pointed us to a critique of the Diaspora/Kickstarter "success" that points out that it could actually end up being bad for both Kickstarter and Diaspora:
It is kinda alarming as this pressure to deliver something by the end of the summer something so complex is not necessarily going to help them. The open source community have been trying to develop peer to peer web solutions for ages. There are many reasons why we have not seen a strong distributed social web yet. Some of these reasons are technical, other are social, it's not impossible, but also not trivial.

It is not unlikely that Diaspora would fail to deliver on it's promised milestone by the end of the summer. This should not be a big deal for an Open Source project with developers scratching their own itch. But in this case, the Facebook users frustration, Diaspora's media attention and the actual $$$,$$$ make this an itch shared by many many more users and only 4 students are given the scratcher.
To some extent, I also wonder if the research Daniel Pink talks about in Drive can also come into play. By adding more money to the mix, it may actually make it more difficult for the developers to build something as good as they might have otherwise. Now they have so many more expectations and so much more attention that it makes it that much more difficult to live up to expectations, even if they actually can achieve what they initially set out to achieve.

The other thing that might make this tricky is the same point I've made a bunch of times about the difference between ideas and execution. One of the things you quickly learn at a startup is that the initial idea is meaningless. Once you get to work on executing, that idea will change daily (if not more often). You may have a general idea, but reality gets in the way, and you adjust and adjust and adjust. Often, what comes out in the end is entirely different than what you set out to do, but that might not be a problem. It's quite rare for a project to set out towards a specific point and end up at that point.

For most startups, there's flexibility there. As the execution happens, they can shift course along the way. But in a situation like this, where thousands of people have donated with specific expectations, changing course is difficult, if not impossible, even if it turns out to be the most important thing for the project itself. If they do change course along the way, for the good of the project, suddenly people may get upset about a sort of "bait-and-switch." This doesn't mean that I don't like the Kickstarter model in general. But I can see where it could cause trouble in certain situations. For things like an album, where the deliverables are clear and understandable, it can work fine. But for a software development project, it could be a lot more complex, and there can be some serious pitfalls. Combine that with having a project massively overfunded, and it could lead to trouble.


Reader Comments (rss)

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    Richard (profile), Jun 24th, 2010 @ 4:43pm

    Ideas vs. Execution- False Dichotomy

    The other thing that might make this tricky is the same point I've made a bunch of times about the difference between ideas and execution.

    I've said this before - but I think you distinction between ideas and execution is a false one. You are right that initial (often vague and general ideas) are of limited value - however the detailed ideas that enable execution to happen are another thing altogether. The real point is that it is rarely a single basic idea on it's own that has the value - it is the chain of little ideas that solve the practical problems that make execution possible. Plus, in the middle of those little ideas there is often one key idea that is needed to make it all work. Take the H bomb for example.

    The initial ideas of using nuclear fusion rather than fission is simple and rather obvious to anyone familiar with nuclear physics.

    Actually making it work turned out to be rather hard - with lots of difficult engineering - and lots of little ideas needed. In the midst of all this was one showstopping problem - and it was solved by one clever idea from Edward Teller.

    Those kind of key "unlocking" ideas - that actually enable the execution of the initial idea are priceless.

     

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    AC, Jun 24th, 2010 @ 4:44pm

    Mike, fact check: Diaspora raised over $200k, not $100k. Not incorrect, but I expect better accuracy from you.

    More substantively, Diaspora's "promised milestone" amounts to essentially a code repository, some stickers, servers, and CDs. They could potentially fail at delivering those things to donors, but I think the failure risk you mention is that they don't live up to the hype supplied by the tech news cycle; hype that they couldn't control. They did not promise to be a Facebook killer. The press and anti-Facebook vitriol deserves credit for that.

    It seems like they just wanted to put their heads down and code for the rest of the summer after the NYTimes article.

    So the question is less about the platform and more about what happened to the press and public: why did so many people vote with their wallets and donate to Diaspora? What, exactly, were they thinking?

    Finally, I'm curious how you would propose minimizing the risk of the bait-and-switch... if you're going to have an platform like Kickstarter that allows for unconstrained fund raising for creative projects, shouldn't some projects be able to get over funded, some fail, etc? If a Diaspora 2 comes along, supporters of the original project will either learn from their mistakes or support it because they saw it work in the first place ... News travels fast and it seems like it would be difficult to repeatedly defraud hundreds (or thousands of people).

    Why can't the market of ideas influence future projects prospects? Who else could or would?

     

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    Headbhang (profile), Jun 24th, 2010 @ 4:49pm

    Whoa, awesome!

    I hadn't heard of Kickstarter until now, but now I have and I think it's brilliant It's pretty much what I've had in mind that more people should be doing.

    Already found something I want to help fund, actually! Gypsy music by Sanda Weigl. :)

     

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    Nick Dynice (profile), Jun 24th, 2010 @ 5:38pm

    Kickstarter Project

    I have am working on a project that is on Kickstarter. It is a film that is a psychological thriller about discovering who you really are.
    http://www.kickstarter.com/projects/778239790/im-not-adam-a-psychological-thriller-about-disco ve-0

     

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    Anonymous Coward, Jun 24th, 2010 @ 5:49pm

    fan funding is an amusing concept but it is unlikely to be a widespread, long term success, mostly because there arent enough people willing to put money in the game.

    it is a brilliant idea that likely wont scale.

     

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      Richard (profile), Jun 25th, 2010 @ 4:38am

      Re:

      fan funding is an amusing concept but it is unlikely to be a widespread, long term success, mostly because there arent enough people willing to put money in the game.

      it is a brilliant idea that likely wont scale.


      Actually it already has scaled. Shows like ~Insert Country Here~ 's got talent or X factor make enormous amounts from mainstream people via the phone vote.

      Most "Christmas No.1" battles are effectively fan funding - and have been for many years.

      Kickstarter usually raises a few thousand dollars - however off the back of mainstream publicity Diaspora raised 200K - if that doesn't demonstrate scaling I don't know what does....

       

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    Davey, Jun 25th, 2010 @ 9:10am

    Sponsored opinions now?

    Appreciate the disclosure at least, but now Techdirt is running paid-for opinions? This is nothing new, but in honest publications they had another name for them: Advertising. How long before the editors decide that disclosure isn't really that important after all?

    If AmEx has an opinion worth publishing it should be published because its value. If it's being paid for, it should be marked as advertising and kept separate from editorial.

     

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      Mike Masnick (profile), Jun 25th, 2010 @ 11:30am

      Re: Sponsored opinions now?

      Appreciate the disclosure at least, but now Techdirt is running paid-for opinions?

      No. As is explained quite clearly (and we've been doing this for over a year now), we've had companies sponsor "themes." That is if we post on a certain topic, it gets treatment that shows the company is sponsoring that theme. In this case, entrepreneurship.

      The sponsor has no say, no opinion and no knowledge of what we will write about.

      So, no, we are not running "paid-for opinions."

      This is nothing new, but in honest publications they had another name for them: Advertising

      Yes. That's why we make that clear at the top. Not sure what your concern is.

      How long before the editors decide that disclosure isn't really that important after all?

      Um. Never? Because that would be dishonest and illegal.

      If AmEx has an opinion worth publishing it should be published because its value. If it's being paid for, it should be marked as advertising and kept separate from editorial.

      Again, AmEx had no say in the content whatsoever. They did not pay for this opinion. They did not know we were writing about this at all. They paid for one thing: to sponsor a collection of any post we wrote about that is on the theme of entrepreneurship.

       

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    Gene Cavanaugh, Jun 26th, 2010 @ 12:26pm

    Ideas and Execution

    Great article, and I generally agree. However, I personally know of people who had a truly GREAT idea, but decided not to pursue it because they figured someone would steal it, and they would be stuck with the cost of the initial execution and none of the benefits.
    With "conventional" IP (in this case, patents) they may very well be right - "conventional" IP, especially patents, emphasize cost of litigation - so, with or without an idea, the cost of litigation causes the wealthier person to win.
    With IP as the founding fathers intended it, which I do, the cost of litigation is low, and the playing field is level.

     

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    Chris Brand, Jun 28th, 2010 @ 11:16am

    Difference between software and music

    If people are paying paying upfront for an album, their expectations are actually very broad, whereas for software, the expectations are much more specific ("a facebook replacement").
    I think that could certainly lead to more disappointment with software then music following this model.

     

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    Rodrigo Rodriguez, May 6th, 2011 @ 8:44am

    Kickstarter

    I just read a great article about a kickstarter project on Ourstage, check it out: http://www.ourstage.com/blog/2011/5/6/kickstart-ourheart-canto-de-la-monarca

     

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    bob, Aug 29th, 2012 @ 6:39am

    So many problems

    I also like Kickstarter because it's an uberpaywall, but I think there's going to be a backlash. It puts too much power in the hands of the creator and that allows many of them to get lazy. It will also attract all of the dreamers with blue sky ambitions and little ability to focus enough to complete a project.

    This echo chamber needs to accept that regular paywalls are better for consumers. They force the creator to take a risk and do something before asking for money. They let people review the completed product and share their opinion with potential consumers. Kickstarter is a nice idea and it will be useful for some crazy ideas, but I'm afraid that there will be too much frustration with failed attempts.

     

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      Gwiz (profile), Aug 30th, 2012 @ 6:52am

      Re: So many problems

      This echo chamber...

      Dude, you are commenting on a 2 year old article.

      Empty rooms usually do sound like echo chambers.....

       

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