August 4, 2014 at 09:30It's time to grow up: how disappointed I am in crowdfunding
I have a sad anniversary here. No, I do not celebrate the first year in a string or the decade since the first divorce. Everything is much simpler. But in a sense, no less dramatic. I recently funded my 100th project on Kickstarter.
For three years I spent about $ 30,000 on crowdfunding. Perhaps this gives me some right to consider myself a veteran. And like any normal veteran, I want to browse a little. Although, I’m afraid, I’ll rather get a cry of the soul.
When I first got to Kickstarter in 2011, I was inspired by the idea of crowdfunding. While working at Panasonic, I knew firsthand how little multinationals are making efforts to do something truly innovative. And then I saw that thanks to crowdfunding, any talented techie could inspire backers with his idea, raise money, found a company and give the world something truly new.
I started investing in promising projects. He sat on the Kickstarter for hours. I was looking for cool innovations. Discussed various crazy ideas. He spent money and waited for parcels, like a child, to give New Year gifts. Out of all this frenzy, the MadRobots online store was born. The opportunity to give money to the authors of a unique device, which I will soon be able to sell in Russia through my store, seemed to me inspiring.
But gradually, enthusiasm gave way to disappointment. I financed one hundred projects, and in the end I managed to get no more than half of the devices. Having collected a tidy sum, many inventors simply could not cope with production and ingloriously merged their promising ideas.
Kickstarter is not a mecca of innovation, as it seemed at first. It looks more like a fashionable party of self-confident amateurs.
The company Radiate Athletics promised to produce T-shirts that will change color depending on the physical activity of the owner. In April 2013, the project raised 579 thousand dollars, and in August 2013, wonderful T-shirts should have already gone to their owners. Where are you, Radiate Athletics? Why did almost a year pass, and I never saw my T-shirt in my eyes?
The ZoPro project promised to create an iPhone case with a built-in battery and external lenses. The covers were supposed to arrive for the backers in February 2013, but all that came out was an update from the creators of the project, where they write that they will finish it at all costs.
Buccaneer- One of the most anticipated 3D printers of 2014, which I personally waited in April, does not seem to appear until Christmas. When testing the printer for certification, it turned out that his electronics was too weak. As a result, the developers had to redo the printer almost from scratch.
We also associated many hopes with the Lakitron company, which came up with a lock that can be controlled from a smartphone. We corresponded with the innovators for a long time and agreed that in November 2013 we would pay them a batch of one hundred pieces, and in a month they would ship it to us. At that time, the company had already begun distributing its brainchild around the world.
Not expecting a trick, we paid 15 thousand dollars. And what? Lakitron soon stated that a marriage had been discovered in one of the consignments and took a time out for revision. Our money has been with them for a year now. Since then, the dollar has changed several times. And if we ever get our locks, no one still knows.
All of these stories are not unique. Open “Kickstarter”, read the comments and see endless “I’ve been waiting for my award for six months” and “either send me my gadget or return the money.” These complaints are a refrain in the comments on almost any successfully completed project.
No, of course, no one intended to stupidly steal money from backers. Simply thanks to collective financing, it has become easier than ever to raise money for your own business. And this ease led to the fact that money now goes to people who do not know how to find the right application for them.
The fall scenario is repeated once in a while: someone (a designer, programmer or any specialist from the related technical field) comes up with an original gadget and beautifully draws it in a graphical editor, launches a vibrant campaign on a popular crowdfunding site, raises several thousand, and even million dollars, and ... for a long time, if not forever, disappears from the radar.
When it comes to putting the idea into practice, yesterday's Kickstarter stars suddenly realize that in order to build a team around a product, to set up production and distribution, you need serious business skills that, of course, they don’t have.
To understand the new world for them, they spend months, and even years, and often unsuccessfully. Many do not even understand that a stable business cannot be built on direct sales. According to Daniel Cowan, marketing director of 3Doodler , ninety percent of sales should go through distributors - it is impossible to build a successful business model by distributing your device to each consumer. And without a sustainable business model, quality cannot be achieved. (By the way, the authors of 3Doodler are one of those whomanaged to cope with the task and build a successful business .)
But even those devices that eventually reach backers are far from ideal. Oddly enough, developers usually mess with even very simple things, like cases and coasters, where there is no software. Banal carelessness leads to the fact that in this category every second object either looks or works worse than promised.
While the crowdfunding industry is on the rise. The number of backers is multiplying, and the momentum is growing. According to the American crowdsourcing association, in 2011 the amount of funding raised through crowdfunding sites on the Internet amounted to $ 1.5 billion, and in 2013 - already 5.1 billion. And the World Bank even predicts that by 2025 the crowdfunding market will reach the level of 90-96 billion dollars and will almost double the current market of venture investments. If, we add, the bubble does not burst before.
Of course, crowdfunding is not the purchase of gadgets in online stores, and the probability of failure was inherent in every project seeking collective financing. But the more popular this market becomes, the more neophytes appear on it who are not ready to wait for the extra year of the promised device. If even geeks like me start to be disappointed, then what about those who happened to be on Kickstarter by chance?
Crowdfunding hit an important nerve of its time. The belief that technological progress can be accelerated without getting up off the couch has forced thousands of people around the world to voluntarily invest in the development of technical innovations. But the careless crowdfunding adherents saw the branch on which they sit.
The collective financing industry, of course, will in any case develop further - despite the abundance of failed projects, it has already gained an inertial mass of fans. But if events continue to develop according to such a scenario, a turning point will happen in two years and total enthusiasm will replace total despondency.
In order to turn into an instrument for changing the world and creating innovative pieces, as crowdfunding was conceived, the industry should dramatically “grow up”.
It is necessary to filter projects in one way or another. Now on “Kickstarter” there are very easy registration rules: before launching the campaign, it’s enough to show the site’s management a valid prototype of their invention. In this case, no one appreciates the complexity of the production of this prototype - and with production, it is precisely the most problems that arise.
Ideally, a whole consortium of manufacturing factories that will assess their viability should be involved in the preliminary audit of projects. It will also be correct if crowd sites oblige inventors to defend a post-production plan for auditors. Having sent the finished gadget to the backers, many projects simply close - initially they did not have clear plans for the future, and the production routine takes too much time to think about them.
All this will help to cut off to the start inept amateur, squandering money backers. You can not cut anyone off, but give recommendations so that people know that they run the risk of never getting their product - and then let them act at their own peril and risk.
Does the team have people with business management experience? Never set up production? Not sure how to build logistics? Bye Bye. Go try first to learn the business from the inside, and only then ask the people a million for the next technological revolution.
Yes, after the introduction of such filters, the number of projects will noticeably decrease. But those who pass the filter, the chances of a successful implementation will be much higher.
*
You can follow how I build Madrobots live by subscribing to my
Twitter , 
Vkontakte , 
Google+ or 
Facebook accounts .
For three years I spent about $ 30,000 on crowdfunding. Perhaps this gives me some right to consider myself a veteran. And like any normal veteran, I want to browse a little. Although, I’m afraid, I’ll rather get a cry of the soul.
When I first got to Kickstarter in 2011, I was inspired by the idea of crowdfunding. While working at Panasonic, I knew firsthand how little multinationals are making efforts to do something truly innovative. And then I saw that thanks to crowdfunding, any talented techie could inspire backers with his idea, raise money, found a company and give the world something truly new.
I started investing in promising projects. He sat on the Kickstarter for hours. I was looking for cool innovations. Discussed various crazy ideas. He spent money and waited for parcels, like a child, to give New Year gifts. Out of all this frenzy, the MadRobots online store was born. The opportunity to give money to the authors of a unique device, which I will soon be able to sell in Russia through my store, seemed to me inspiring.
But gradually, enthusiasm gave way to disappointment. I financed one hundred projects, and in the end I managed to get no more than half of the devices. Having collected a tidy sum, many inventors simply could not cope with production and ingloriously merged their promising ideas.
AU, WHERE ARE YOU?
Kickstarter is not a mecca of innovation, as it seemed at first. It looks more like a fashionable party of self-confident amateurs.
The company Radiate Athletics promised to produce T-shirts that will change color depending on the physical activity of the owner. In April 2013, the project raised 579 thousand dollars, and in August 2013, wonderful T-shirts should have already gone to their owners. Where are you, Radiate Athletics? Why did almost a year pass, and I never saw my T-shirt in my eyes?
The ZoPro project promised to create an iPhone case with a built-in battery and external lenses. The covers were supposed to arrive for the backers in February 2013, but all that came out was an update from the creators of the project, where they write that they will finish it at all costs.
Buccaneer- One of the most anticipated 3D printers of 2014, which I personally waited in April, does not seem to appear until Christmas. When testing the printer for certification, it turned out that his electronics was too weak. As a result, the developers had to redo the printer almost from scratch.
We also associated many hopes with the Lakitron company, which came up with a lock that can be controlled from a smartphone. We corresponded with the innovators for a long time and agreed that in November 2013 we would pay them a batch of one hundred pieces, and in a month they would ship it to us. At that time, the company had already begun distributing its brainchild around the world.
Not expecting a trick, we paid 15 thousand dollars. And what? Lakitron soon stated that a marriage had been discovered in one of the consignments and took a time out for revision. Our money has been with them for a year now. Since then, the dollar has changed several times. And if we ever get our locks, no one still knows.
All of these stories are not unique. Open “Kickstarter”, read the comments and see endless “I’ve been waiting for my award for six months” and “either send me my gadget or return the money.” These complaints are a refrain in the comments on almost any successfully completed project.
NON-BANAL LITERACY
No, of course, no one intended to stupidly steal money from backers. Simply thanks to collective financing, it has become easier than ever to raise money for your own business. And this ease led to the fact that money now goes to people who do not know how to find the right application for them.
The fall scenario is repeated once in a while: someone (a designer, programmer or any specialist from the related technical field) comes up with an original gadget and beautifully draws it in a graphical editor, launches a vibrant campaign on a popular crowdfunding site, raises several thousand, and even million dollars, and ... for a long time, if not forever, disappears from the radar.
When it comes to putting the idea into practice, yesterday's Kickstarter stars suddenly realize that in order to build a team around a product, to set up production and distribution, you need serious business skills that, of course, they don’t have.
To understand the new world for them, they spend months, and even years, and often unsuccessfully. Many do not even understand that a stable business cannot be built on direct sales. According to Daniel Cowan, marketing director of 3Doodler , ninety percent of sales should go through distributors - it is impossible to build a successful business model by distributing your device to each consumer. And without a sustainable business model, quality cannot be achieved. (By the way, the authors of 3Doodler are one of those whomanaged to cope with the task and build a successful business .)
Compare: according to the Kickstarter analytic report, in 2011 73% of projects from the Internet of Things category delivered back rewards to backers, in 2012 - only 19% of projects.
But even those devices that eventually reach backers are far from ideal. Oddly enough, developers usually mess with even very simple things, like cases and coasters, where there is no software. Banal carelessness leads to the fact that in this category every second object either looks or works worse than promised.
TRUST WHICH LOPNET
While the crowdfunding industry is on the rise. The number of backers is multiplying, and the momentum is growing. According to the American crowdsourcing association, in 2011 the amount of funding raised through crowdfunding sites on the Internet amounted to $ 1.5 billion, and in 2013 - already 5.1 billion. And the World Bank even predicts that by 2025 the crowdfunding market will reach the level of 90-96 billion dollars and will almost double the current market of venture investments. If, we add, the bubble does not burst before.
Of course, crowdfunding is not the purchase of gadgets in online stores, and the probability of failure was inherent in every project seeking collective financing. But the more popular this market becomes, the more neophytes appear on it who are not ready to wait for the extra year of the promised device. If even geeks like me start to be disappointed, then what about those who happened to be on Kickstarter by chance?
Crowdfunding hit an important nerve of its time. The belief that technological progress can be accelerated without getting up off the couch has forced thousands of people around the world to voluntarily invest in the development of technical innovations. But the careless crowdfunding adherents saw the branch on which they sit.
The collective financing industry, of course, will in any case develop further - despite the abundance of failed projects, it has already gained an inertial mass of fans. But if events continue to develop according to such a scenario, a turning point will happen in two years and total enthusiasm will replace total despondency.
DOCTOR, SAVE
In order to turn into an instrument for changing the world and creating innovative pieces, as crowdfunding was conceived, the industry should dramatically “grow up”.
It is necessary to filter projects in one way or another. Now on “Kickstarter” there are very easy registration rules: before launching the campaign, it’s enough to show the site’s management a valid prototype of their invention. In this case, no one appreciates the complexity of the production of this prototype - and with production, it is precisely the most problems that arise.
Ideally, a whole consortium of manufacturing factories that will assess their viability should be involved in the preliminary audit of projects. It will also be correct if crowd sites oblige inventors to defend a post-production plan for auditors. Having sent the finished gadget to the backers, many projects simply close - initially they did not have clear plans for the future, and the production routine takes too much time to think about them.
All this will help to cut off to the start inept amateur, squandering money backers. You can not cut anyone off, but give recommendations so that people know that they run the risk of never getting their product - and then let them act at their own peril and risk.
Does the team have people with business management experience? Never set up production? Not sure how to build logistics? Bye Bye. Go try first to learn the business from the inside, and only then ask the people a million for the next technological revolution.
Yes, after the introduction of such filters, the number of projects will noticeably decrease. But those who pass the filter, the chances of a successful implementation will be much higher.
*
You can follow how I build Madrobots live by subscribing to my
Twitter , Vkontakte , Google+ or Facebook accounts .