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 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. icon
    PaulT (profile), 29 Aug 2012 @ 4:26am


    "What you don't seem to understand that it isn't just growing pains, it's reality setting in."

    ...and you're basing this on what, except for your own personal opinion, which we've already seen is based on fiction to begin with?

    "It's the point where people who are less than honest come in, and start shearing the sheep"

    a.k.a. what's happening in every business model, and is inevitable with anything popular. Why do you lie and pretend this is restricted to this model?

    "It's like most things in the "free internet" universe."

    What the hell does this have to do with "free", other than it allows people to bypass the corporations?

    "Things like this are why I don't agree with on many "new business models" that you bring up, because you don't seem to be able to see the weaknesses and risks in them.|"

    Why don't you discuss these then, instead of lying and name-calling? If you're such a prophet, maybe you could at least mention these things instead of trying to distort facts.

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