The Inevitable Crowdfunding Backlash When People Realize Projects Fail & Change

from the early-excitement-can-lead-to-disillusionment dept

We've been unabashed champions of crowdfunding and platforms like Kickstarter for quite some time now, though we've also tried to temper some of the hype. A little over two years ago, for example, we used the story of the open social network Diaspora as a possible warning for some of the initial excitement about projects. Much of that comes from just knowing what entrepreneurs go through: the initial idea is exciting, but things change over time, and expectations change... and some projects fail. When you're dealing with investors, that's one thing -- they're sort of designed to expect such a thing. But crowdfunding had a different vibe. Because people got so excited in the idea and really (quite literally) bought into it, we worried that as some projects failed, it might lead to a serious backlash.

It may be a coincidence that we highlighted this risk with Diaspora (one of the first Kickstarter projects to go really "big") a couple years ago... but it's possible that our worries are coming true. Last week, I saw a report from Liz Gannes at AllThingsD, which suggested that the Diaspora team was focusing on something completely different, a "collaborative web remixing tool" called Makr.io. The team definitely went through some significant hardships so it's not that surprising that they've shifted gears. Given that story, it's hardly a surprise that they're now officially "handing control of the project over to the community." They claim they'll still be playing an important role, but it seems pretty clear this is an effective withdrawal from the project, which never really caught on the way some people hoped.

And, of course, this isn't just limited to Diaspora. Bloomberg recently had a (well-timed) story highlighting how an awful lot of successful Kickstarter projects, at the very least, don't meet their deadlines to actually make or ship a product. This has turned at least some people off to the service, which (again) is unfortunate.

Of course, these kinds of platforms are only a few years old, and of course they're going to go through growing pains. I hope that, as they continue to grow and find success, at least there's some greater recognition -- and public admission -- of the potential risks involved, so that they don't take people by surprise, and that people understand that as much as they love an idea, execution is the truly hard part. Investing in the idea is great, but there's a risk involved that the end result won't match the snazzy video that the team put together for Kickstarter in the first place.
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Filed Under: business models, changes, crowdfunding, failures
Companies: diaspora, kickstarter


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  1. identicon
    Anonymous Coward, 29 Aug 2012 @ 6:56am

    It's a case of buyer beware - as Kickstarter tries to warn you. This is a method of raising capitol for something where other methods are not as good - and that, itself, should say that you need to be aware of what is going on before you invest.

    To specifics - personally, I went for the Reaper Mini Kickstarter, and I put down way more than I probably should have - so Reaper is ahead there; I don't buy many minis normally.

    I rather expect it to take a while for it to all ship with as many as I expect to be needed. Quite possibly they will be a good bit later than Reaper has stated ; stuff happens, and this has to be completely overwhelming.

    However, the risk of them not being shipped in time seems acceptably small. Reaper is a reputable company, this is well within its competence, and the amount given per pledge seems like something they can fulfill. It doesn't hurt that as such a large high profile success, any failure to follow through would also be very visible and lose them customers - but I don't actually think that's necessary in this case. Everything points at this Kickstarter being a good risk.

    That's what everyone who pledges to a Kickstarter needs to consider before pledging : will I get what I expect? Am I okay with the risk involved that it may not succeed? Do I want to maybe just show my support with a very small pledge or are they offering a reward I'm willing to risk?

    It's like any other investment - and if you aren't aware of that, that's when you're really taking a risk.

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