The second of a 2-article series: opportunities - challenges - for Kickstarter projects
Kickstarter is a crowdfunding platform that was launched in April 2009. The company’s stated mission is to help bring creative projects to life – anything from tech products, film and comics to food-related projects. Its service is now available in the US, UK, Canada, Australia and New Zealand. In this 2-part series, we take a critical look at this platform almost five years on and what it offers project creators and supporters.
In the first article
in this series, we considered the initial success of Kickstarter and showed that, despite its innovative disruption of normal product development, the most successful campaigns often rely on traditional campaign qualities.
This article will focus on some the specifically new challenges that are faced by Kickstarter projects.
Kickstarter makes quick prototyping a necessity; you need to present either the actual creation you want to make, or enough infrastructure and design to make it clear that the actual creation of the thing has a clear path to completion. Because of this, Kickstarter is typically not suited to all of the pre-work, brainstorming and problem-solving that leads up to an almost-finished product. However, the prototype is now the “proof of concept,” and is usually the best way for a project team to explain and sell their product or creation, and to convey their narrative of the project and its creative process.
Kickstarter's funding model is all-or-nothing. If the project fails to achieve its funding level, none of the money is paid out and instead is returned to the donors. This means that Kickstarter operates on a confidence model. Supporters vote with their belief in, and on the strength of, the creator’s story. Overall, contributors give their money for these reasons:
- They think that the project is interesting/compelling/desirable as something they want to see exist.
- They are confident that the project will succeed based on the skills and resources of the project organizers.
- They have been given a nearly-full picture of what the project will look like when it’s complete. (Either a prototype, demo or examples of past projects.)
- There is a shared belief that this is a good idea.
- There is a great story behind the product – may it be through an integrated campaign, the creator’s vision, or even a tale of the proverbial underdog taking on a bigger, better financed competitor.
- Failed projects often fail to satisfy these reasons. They haven't answered the fundamental questions: "Why is this a good idea?" and "Why should you care?" Further, the project team has failed to build a crowd or audience for their creation, relying instead on the Kickstarter platform (and the Internet) to somehow bring people to them.
According to data taken in 2012 (see below), only 50% of crowdfunding projects on Kickstarter were successful. Interestingly, of the money actually pledged on Kickstarter, 92% of it went to successful campaigns, and only 7.9% were pledged to campaigns that ultimately failed.
This shows that the users and crowdfunding backers of Kickstarter’s user base operate along these lines of confidence. A lack of confidence in a project will result in an overall lack of any funding. Full confidence in a project often results in the opposite, with extra funding going to a project, allowing them to expand or scale the project to the level of their success. In fact, sometimes these sorts of expansions have caused new problems – e.g., problems of over-succeeding!
As with any platform that promises new opportunity, there are ways to assess confidence. I am a fan of Kickspy
(http://www.kickspy.com/). It is like a window into the world of the success or failure of campaigns, and offers clues to the factors that contributed to their outcomes.
As researchers are constantly challenged to convey innovative counsel to mostly risk-averse clients, there are many lessons to learn from hanging around the Kickstarter ecosystem. The recent announcement of Kickstarter darling Oculus Rift
’s sale to Facebook for $2 billion demonstrates that this is a place where the fringe of innovation and disruptive platforms are being market-tested in open view, with metrics of confidence readily available.
For more information, visit the following references to Kickstarter failure
and to view Up-to-date Kickstarter data