As a way to prevent more high-profile failures like the famous Coolest Cooler ($13.2mm) fiasco, Kickstarter recently announced their Hardware Studio Program. This by-application program for creators is a joint venture between KS, Avenet, and Dragon Innovation designed to help partner campaign creators with experts who that actually know what the hell they’re doing with production. Campaigns in this program will show a badge on their page showing how far along the product is in the development stage (similar to the Product Stages on Indiegogo) as a way to help establish credibility for backers.
Indiegogo, after announcing its intention to send collection agencies after non-delivering campaigns, has finally threatened sending collection agencies after a campaign for the first time (that I'm aware of).
These are absolutely steps forward for crowdfunding’s credibility as a whole.
But let’s be real.
Crowdfunding is a bathtub full of baked beans of failure. More than 63% of campaigns fail, and for each failure, there’s a slew of burned backers on the other side.
Crowdfunding is a badass way to raise funds for launching your new ideas, but let’s rephrase this: Crowdfunding allows people to presell shit they’ve never made before, with almost no repercussions if they don’t deliver.
Most new businesses fail, and selling things you haven’t ever made before is a hell of a recipe for failure. Crowdfunding is the sweaty guy in a Tapout shirt at a party who whips out his handmade tattoo gun and offers up $25 tattoos “to help build his skills”. Sure, there’s gonna be some winners who have serious talent, but then there’s gonna be a whole lot more of these:
To see the sloppy underbelly of what Kickstarters gone wrong look like, take a field trip to one of my favorite subreddits, r/shittykickstarters to see a parade of campaigns that have no idea what the hell their doing before OR after raising funds.
My current favorite comment is on this thread about the recent failure of the Ossic ($2.7mm on Kickstarter, total of $6mm raised), which left over 10,000 backers high and dry. As the Ossic Campaign’s comment section heard the news and went crazy, u/Murphys_Coles_Law had some choice words.
There’s two important points in here:
1. The joke about backer reactions being so predictable they’re a kind of Kickstarter Bingo points out how common it is for backers to misunderstand what Kickstarter is and is not.
In Kickstarter’s own words, “Kickstarter is not a store”.
Backers often don’t get that, and may never get it. Be aware of this.
2. As u/recycled_ideas emphasizes, “If a project runs out of money there will be no product and there will be no refunds. Unless the company or entity has behaved fraudulently no one is going to be punished for this failure” This needs to be tattooed on the back of your eyelids when you’re building your campaign and designing your marketing materials.
While some campaigns, like The Doom That Came To Atlantic City, do get punished, most failed crowdfunding campaigns “get away” with not delivering their product
Wait, so why am I shitting on crowdfunding when I’m also selling the most marvelous book on crowdfunding written to date?
Great question, thanks for asking, me.
You’re welcome, me.
If you’re running a crowdfunding campaign, you need to be aware of all the stigma and bullshit baggage that’s hanging around crowdfunding in order to be able to sell your product.
I believe in crowdfunding, I really do, but you’ve got to build your campaign with full understanding that there are scores of backers for a failed campaign just like yours who are going to be jaded.
To succeed with crowdfunding, especially super crowdfunding, you need to be able to prove to potential backers that you’re worth their month.
Your landing page, graphics, emails, social media, press, and campaign page all need to convey trust, competence, and ability to follow through on your promises.
The assumption for your campaign is that it sucks and will fail.
It’s your job to prove the haters wrong.