Wow, I'm blown away by the negativity in this thread. I know Silicon Valley is conservative but this is killing it. In Europe (of all places), this sort of stuff has been going on for a number of years now. The first startup I worked for had gathered its €150k preseed funding from over 20 people. Not even with a convertible note, they really all went to the lawyer's office together. It was pretty nuts, but it got the…
Kickstarter is definitely a mixed bag, but I don't blame Kickstarter itself for that. Kickstarter is awesome, and many awesome things now exist that wouldn't have existed without it. I love Kickstarter.
The problems with Kickstarter are with some of the people using it. It's all just human nature, I don't think there's anything that Kickstarter (the company) can really do to curtail it.
Problems include people starting projects from scratch via Kickstarter, and making promises about schedules and deliverables when in many cases those things are literally unknowable when they start accepting money from people. Sometimes people get in over their head, and don't realize how deep of a hole they've dug themselves into until it's way too late.
Problems also include people giving money to Kickstarters and assuming that the schedules are real, that the products will turn out as they've been pitched, and that they will receive what's been promised to them. Hopefully everything works out, but realistically you've got to be OK with the worst-case scenario (you get nothing back) when you back a project.
I see Kickstarter as more of an angel investment vehicle, and I think Kickstarter tries to present itself in this way. If something looks promising, I might put some money into it, but beyond that I have no expectation that I will ever get anything out of it. It's a pleasant surprise if I do. However, no matter how many times Kickstarter tells people that Kickstarter is not a store, there's a continuous stream of people who seem surprised when things don't turn out as expected, and will scream for refunds and devote insane amounts of time to ruining the lives of the people who bit off more than they could chew when they started raising money.
Basically, in addition to its merits, Kickstarter can be a brutally productive factory of sadness, for the people with Kickstarters as well as the backers. Given that something like 90-95% of startups fail (I could be wrong, but those are the numbers I usually hear), Republic sounds like it could be an even bigger factory for vastly more sadness, without the success stories that make it all worthwhile. The few people who luck into putting money into a successful startup will surely get very angry and entitled when they see a small business that they gifted money to becoming successful, but they don't see an equivalent return on their investment. The 90-95% of the people who lose their money when the startup folds will surely also be surprised and angry, and demand their money back if they don't think the startup was competently run (not that they have any way to really know this). It just sounds like all downside with very little (if any) upside.