The news cycle hasn’t been particularly kind to the hip crowdfunding platform Kickstarter. The company turned heads when it refused to remove a fundraising effort for a tome on how to seduce women. Then, Kickstarter attracted yet more attention when it issued a full-throated apology for not removing the fundraiser.
Users and non-users were predictably outraged by the company’s choice of action, and somewhat mollified by its apology. But, from where I sit, there’s another, deeper reason Kickstarter users — and crowdfunding platform users in general — should be disappointed: the entire value proposition for “funders” seems to carry far more risk than reward. I’ve now purchased four Kickstarters. Three of them are mostly complete, but each has left me with a different takeaway.
I took part in two big Kickstarter campaigns: the Pebble smart watch and the Ouya gaming console. It could easily be argued these were two of the highest profile Kickstarter projects since each raised millions of dollars in pledges and created tremendous buzz.
Let’s pause here for a second. Pledges are an online concept that bears spelling out, since this isn’t a non-profit endeavor. On its surface, a pledge feels like — but is not — a retail pre-order where money is set aside for the purchase of a good that will arrive at a future date. We do this all the time on traditional retail sites such as Amazon and Wal-Mart. A pledge made via Kickstarter, however, is both more and less than a pre-order. To the consumer, the pledge also represents a notion of participating in the project behind the product. The process leaves the consumer feeling as if the project couldn’t be completed without their pledge. They are also left with an expectation that these Kickstarter pledges are honored just like a contract.
That’s where not just Kickstarter projects, but crowdfunding generally, can leave users less than satisfied. Let me explain.
My first pledge was to Pebble, a smart watch project that seems to be months to a year ahead of all but Sony. As an early pledger, I had a choice between a black watch or one of several colors. Pledge amounts, as with most Kickstarters, were tiered — the higher the tier, the juicier the incentive. The tier I chose allowed me to select a color other than black, implying a sense of retail value to my pledge amount.
Once I sent my pledge, I started to receive a series of update emails as Pebble went from dream to reality. Eventually, the promised delivery date drew nigh. I’ll admit it: I was excited to be on the short-list of first-adopters. When you work with a bunch of technologists, as I do, you learn quickly that being first matters.
That’s when I was hit with the first let-down: my colleague who made the same pledge amount as I did, but opted for a black watch, walked in with his Pebble.
A color selection: that’s what stood between me and first-adopter status. Worse yet, it also turned out that individuals who pledged a lower amount, which defaulted their order selection to the black watch, received their watches first. Dutifully, the Pebble updates explained that colors were still being worked on, so black watches would arrive first. And for the next few weeks I got to watch my colleague show off his Pebble watch as I continued to wait … and wait some more. There was, it turned out, a pretty significant delay associated with the manufacturing of colored versions. Eventually, Pebble offered a way to trade from the colored version to a black one, and I got my watch and a refund to cover the difference.
Now, let’s turn to Ouya — the Android-based gaming console that went on sale Tuesday. It’s worth keeping in mind that my good friend, Roy Bahat, is chairman of Ouya’s board. I pledged to Ouya on day one, selecting a base console and an extra controller. And I excitedly read every e-mail update.
Remember how Ouya launched in retail stores last week? Yeah, well, I’m still waiting for mine to arrive. I even have a DHL tracking number given to me on June 17 that currently says, “No result found for your DHL query. Please try again.” Several other Ouya pledgers are also waiting. And — surprise! — they are mad. I would be too, but I had my Pebble watch order as prologue. Consider me chastened — and that’s bad news for Kickstarter, even though, as a platform, it’s not responsible for how creators manage their relationships with pledgers.
The fact is crowdfunding can make you feel like you are part of the dream of the entrepreneur, that you helped realize something that, without your help, would never have come into being. It’s a heady feeling, but most popular projects seem to be the ones that least need your help. This makes for the opposite of a great marketing strategy, since early and ardent supporters are left watching as retail customers jump ahead of them. Some of this is explained by the complexity of building a hardware product — the very reason start-ups get turned away by traditional investors and resort to crowdfunding. But, as new entrepreneurs see platforms like Kickstarter as a funding alternative of convenience, the potential exists for far more abuses of trust.
There are happy stories. Not surprisingly for me, they go back to the original ideal of Kickstarter. As both a fan of Sesame Street and Street Fighter II, I was very happy to see a parody poster of both franchises called Super Sesame Street Fighter. I enthusiastically signed up. Immediately, I received a thank-you note from the entrepreneur. My poster was delivered on time, and I could not be happier with my pledge. In this case, I actually felt I helped make it happen. And I was rewarded for the pledge with a great experience. The artist even gave permission to share this piece from his portfolio.
Vijay Ravindran is is senior vice president and chief digital officer for The Washington Post Company and leads WaPo Labs, which develops experimental news products. Before joining The Post, he was chief technology officer for the start-up political technology firm Catalist and technology director for Amazon.com. Follow him on Twitter at @vijayravindran.