Kickstarter

= Kickstarter Background = toc (History)

The initial idea
In mid-2008, Perry Chen explains his business model for Kickstarter, then referred to as KickStartr.com (McCarthy, 2008). Chen's Website is an online community, designed to help artists, musicians, inventors and filmmakers amongst others to raise money from a large number of donators, referred to as the crowd. To create attention for their project, artists, musicians etc. are encouraged to upload media that will describe the subject towards which the fundings are intended to go.

However, users of Kickstarter are supposed to to set a deadline by which the entire amount should have been raised. If they don't meet the deadline, the funding will not be granted. All projects are finite, which means, ‘there's no long-term return on investment for supporters. There's not even the ability to write off donations for tax purposes (Lagorio, 2010).

Expectations
Co-founded by Perry Chen, Yancey Strickler and Chalres Adler, Kickstarter was expected to run at a loss for the first two years, although the revenue forecast Chen projected for 2008 was US$ 250,000 in 2008 and $5 million in 2009. Surpassing these barriers, Chen expected to raise more capital to expand Kickstarter.

Reality
Hardly one year later and only a few weeks into the business, since its launch in April 2009, Perry Chen gives a speech about the first interesting crowd funding cases, on June 1 2009 at the Ignite NYC IV conference (Forrest, 2009). The event has been recorded and is available from Youtube (see below). Quite openly, Chen gives an overview of the things they realized from the experience of the first five weeks. He derives six principles from the experience:

●Be real

●Have a clear goal

●Offer fun rewards

●Show you can execute

●Involve the audience

●Spread the word

media type="custom" key="23524684" Perry Chen: I Need Money (Ignite NYC, 2009)

Only hardly one year into business, that hasn't stopped close to 100,000 people from pledging to Kickstarter projects by May 2010.

Not for everybody
Crowdfunding through Kickstarter doesn't mean that anyone can come along and expect their idea or project to be supported. There is a rigid approval process in place to verify if the go-ahead can be given to post photos, videos, and a plea for pledges. However, genuinely new ideas for highly inventive projects are usually shoe-ins, while business ventures will certainly not be approved as they are expected to have adequate existing funding. According to Chen, projects succeed more often when they are founded on a creative idea and supported by a strong existing network - a vital reason for the Kickstarter team to encourages users to make use of their online social network.

An Example
Daniel D’Agostino reports that he tried all of the above, but still received a No-Go for his invention (Lagorio, 2010):

‘I've done all that and have a great product (search "Titan" on Kickstarter) but still came up short with Kickstarter. I reached out to several tech bloggers, sent a press release, have a great video, have an interesting story, launched a video adwords campaign through YouTube, and tapped my social network which I am grateful for (i.e. Friends and family). I truly believe that two other components to launching a successful Kickstarter project are luck and how much money you have to hire a great marketing company. A great marketing company will leverage tried and true channels and their existing network of contacts in the industry to spread the word while crafting a press release that resonates well and is distributed with force. I've learned that it is possible to do everything right and still fail, no matter how good the product is. For more information about the Titan project, visit: ttp://www.kickstarter.com/projects/titan/titan-the-best-clear-acrylic-vehicle-smart-phone-h ’

Marty Koenig, being a Kickstarter advocate, evaluated D’Agostini’s project at Kickstarter, responding:

‘Daniel, I spent some time on your Kickstarter campaign. I have some suggestions: http://www.kickstarter.com/projects/titan/titan-the-best-clear-acrylic-vehicle-smart-phoneh Daniel,

I might suggest a couple things:

1. The first 30 seconds of your video is a downer and all about you. I was turned off after 10 seconds. Nobody cares about how downtrodden your life has been. Nobody cares about all the other things you've invented. That's about you, and I don't care. Neither will any backers except friends and families. No evangelists. It needs to be about the safety and the "why" of the product. Did you have anyone review your video? How about your bio - again its a downer.

2. Frankly, I couldn't tell what it was even looking at the pictures. Again, the pictures seem to be all about you, and how mechanically inclined or artistic, or technical you are. It's not about the benefits and features which it should be. I needs to be so crystal clear why it's so important that everyone must have one. You're selling a product here that solves a huge problem. Key in on that.

3. I think its too big and clunky. A sleek/slim version might go over better. does it have to be so big?

4. Check out a couple things that could help you next time - a Kickstarter checklist and a Kickstarter Score: See my post below.

@http://bit.ly/L3JRPL

[]

Best of luck next time! Don't give up. There's a huge need for your product, it just needs messaged better and the question "why does it have to be so big?" has to be answered.’

A Success Story
2012: 1.2 Million Dollar crowdfunding result, using Kickstarter

Amanda Palmer, a musician and artist from New York raised about 1.2 million Dollars from approx. 25,000 people (approx. $50 p.p.) using Kickstarter, paying the bills for a record and release costs of an album and an associated tour (The Economist, 2012). In February 2013 Amanda gave a fantastic speech on crowdfunding music at TED talks. The video has attracted nearly 2.5 million views over the past months. As stated by Kickstarter founder, Chen above, successful crowdfunding projects rely on an established network. Amanda Palmer already had a strong background as a musician, when she asked her fan base to support her in the aim of producing her latest album. Amanda Palmer calls this process the art of asking. In the following video she explains the process of crowdfunding the music project (ca. 14 min.)

media type="custom" key="27666004" The Art of Asking (TED Conferences LLC, 2013)

A Failure
Kickstarter Founders, Chen, Strickler, and Adler had to find out the hard way, that altruistic approaches to bringing great ideas to life can also have a severe repercussion. In the first half of 2013, author Ken Hoinsky applied for a crowdfunding project through Kickstarter to publish his book, 'Above the Game: A Guide to Getting Awesome with Women' (unpublished). The initial target was to raise $2,000.-, which was easily met. At the end of the funding period, on 29 June 2013, Hoinsky had raised over US$ 16,000.- to publish the book. (Kickstarter, 2013 (3))

While it was a financial success, the contents of the book quickly became the source of outrage, in particular among women. Protesters are claiming the book promotes sexual harassment against women, while other voices say that Hoinsky has every right to publish this book under the freedom of speech. So far the book is nowhere available than from Hoinsky himself (Above the Game, 2013).

From mid-June a sequence of events enfolds in the wake of the outrage over the funding of Hoinsky's book:


 * On 20 June 2013, Forbes Journalist Faba Rafi Atal received a comment from Kickstarter via Twitter, justifying their motivation to let the Crowdfunding for Hoinsky's book to go ahead (Matol, 2013).
 * One day later Kickstarter rows back, posting an apology on the Kickstarter Blog (Kickstarter, 2013 (2))
 * On 25 June 2013 Ken Hoinsky continues to promote 'Above The Game' on Youtube, claiming that he has received great response from publishers (see below).

media type="custom" key="23414116" width="1" media type="custom" key="23524918" Above The Game: A Guide to Getting Awesome with Women (K. Hoinsky, 2013)

From a social perspective the Hoinsky experience has made a significant impact on the guidelines for Kickstarter crowdfunding projects. For the future, Kickstarter has decided to ban self help guides of any kind from the list of acceptable crowdfunding projects. (Kickstarter, 2013 (2))

The above examples are two extremes out of 45000 crowdfunding projects 1]. Please read on about further Internet Commerce Models in the next chapter. (More...)