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Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

nytimes.com

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Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#11

Post by InclinedPlane »

catch23 wrote: post #5
mattewing wrote: post #2

Love this line: “The terms on Kickstarter are more attractive than any bank loan or venture capital amount”

I wonder if this will make angels worry, the same way that angels made VCs worry. And if so, I wonder if we'll be seeing better terms for future founders from the old system investors.

Yes and no.

Yes because Kickstarter has a high profile now, and there is rather significant amounts of money flowing through it. Angels and VCs sometimes only put in a few k or a few mil. for a company, and now it seems as though you can just go to kickstarter for that amount.

No because kickstarter isn't for everything. The closer your project is to the ideal of a semi-artistic one-off project with a timeline of months that produces a tangible product that the backers can receive the more likely it is to be approved and funded. But not all businesses fit in that model. More so, that model of venture isn't necessarily the sort of thing that is most attractive to an investor. Kickstarter projects are the sort that scale up slowly and carefully. But a lot of the most desirable investment targets are software companies which provide a service who can scale up by a factor of thousands or millions in a matter of months.

Now, there is still a sizable niche that straddles both worlds (such as game development) and you can expect a lot of interesting things to happen in that space in the near future.

Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#12

Post by egypturnash »

mattewing wrote: post #4
egypturnash wrote: post #3

I'm trying to decide if Kickstarter is the blossoming of a new way to do business, or a bubble fueled by a few hits that came at the same time. I'm hoping it's the former, as I've got a campaign going to print a comic book that's close to being funded, and I'm hoping to have it around as a viable option to repeat this stunt to fund future books, and ultimately maybe even support myself this way. The limited duration…

It's hard to see kickstarter as the same type of bubble we saw in real estate or web 1.0. That type of bubble is driven by investor group think leading to absurd valuations. Kickstarter is based on purchases (or donations), not investments. In other words, I don't think people are paying irrational amounts for your comic book because Kickstarter is so hot right now. Now, if the pebble watch I just bought turns out to…

Yeah, I'm mostly worrying about what happens if some of these million-dollar projects fail horribly. Especially if some HOT GADGET turns out to be a scam and they just vanish with the funds. Games, I don't think that's a possibility - you have to have a giant reputation to raise the money to make one happen.

I'm also pretty hopeful this is just paranoia talking, and that folks quickly realize they need to do a sanity check. Maybe Kickstarter will end up with a tighter TOS and will send lawyers after a huge scam if one happens, I dunno.

While people are definitely paying for my own personal awesomeness rather than Kickstarter's awesomeness, I think the fact that people know and somewhat trust the model and te middleman is helping. Break the trust and it doesn't work.

And thanks for the well wishes, the comic leapt from 80% to 121% around the time you sent them!

Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#13

Post by mibbitier »

egypturnash wrote: post #3

I'm trying to decide if Kickstarter is the blossoming of a new way to do business, or a bubble fueled by a few hits that came at the same time. I'm hoping it's the former, as I've got a campaign going to print a comic book that's close to being funded, and I'm hoping to have it around as a viable option to repeat this stunt to fund future books, and ultimately maybe even support myself this way. The limited duration…

It'll become a scammers paradise. The people giving money are pretty naive.

Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#15

Post by bostonvaulter2 »

carbocation wrote: post #6

Unless I'm missing something, Kickstarter sure seems like the closest thing I've seen to a tool that enables closer-to-perfect price discrimination.

Could you expand on what you mean by closer-to-perfect price discrimination?

Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#16

Post by jmitcheson »

catch23 wrote: post #5
mattewing wrote: post #2

Love this line: “The terms on Kickstarter are more attractive than any bank loan or venture capital amount”

I wonder if this will make angels worry, the same way that angels made VCs worry. And if so, I wonder if we'll be seeing better terms for future founders from the old system investors.

I think they probably should be. Kickstarter may not fund all types of projects but Kickstarter is only the beginning. The world works on trends right? Put all these things together and look forward 2-3 years:

AngelList

Kickstarter

JOBS Act

Software boom

Open hardware innovations (Arduino, Raspberry Pi, Open 3rd printers, etc.)

I'm not really certain that things at the VC level would be a whole lot different but I would sure be worried if I was an angel or earlier. Pretty soon, we'll be far less dependent on them than they are used to. If you ask me seed stage may have so many options that they'll have to reverse-pitch ;)

Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#17

Post by zokier »

egypturnash wrote: post #3

I'm trying to decide if Kickstarter is the blossoming of a new way to do business, or a bubble fueled by a few hits that came at the same time. I'm hoping it's the former, as I've got a campaign going to print a comic book that's close to being funded, and I'm hoping to have it around as a viable option to repeat this stunt to fund future books, and ultimately maybe even support myself this way. The limited duration…

imho Kickstarter is best suited for projects that are essentially finished and ready for manufacturing, but need money to actually do a manufacturing run. A comic book seems like a example of a "good" project in that sense.

But basing kickstarter on just a idea seems extremely risky, and that's why I'm not all that interested in game kickstarters. If somebody wanted to kickstart a boxed copy of a finished game, that would be nice. But just kickstarting a concept gives me an uneasy feeling.

Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#18

Post by officemonkey »

mibbitier wrote: post #13
egypturnash wrote: post #3

I'm trying to decide if Kickstarter is the blossoming of a new way to do business, or a bubble fueled by a few hits that came at the same time. I'm hoping it's the former, as I've got a campaign going to print a comic book that's close to being funded, and I'm hoping to have it around as a viable option to repeat this stunt to fund future books, and ultimately maybe even support myself this way. The limited duration…

It'll become a scammers paradise. The people giving money are pretty naive.

I think reputation is going to keep down most of the scam artists.

There are a lot of kickstarter projects that never go anywhere because the creator is unknown to the scene. You're going to need some reputation to get the ball rolling. Even the watch guys have a track record.

Of course, it's the scammer with a reputation (think Bernie Madoff) that scares me. But kickstarter addresses that with the social aspects. If someone feels ripped off, they can post about it and the scammer can't hide.

Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#19

Post by brk »

mattewing wrote: post #2

Love this line: “The terms on Kickstarter are more attractive than any bank loan or venture capital amount”

It's really not comparable to VC money in any normal way though.

When you're raising VC money, especially early rounds, you're trying to prove and build a business model. You're trying to get market awareness and acceptance, develop your product, etc. There is a statistically high probability that you will fail entirely, or will at least fail to achieve the progress intended (meaning you may have to raise more money, affecting valuations and dilutions).

One upside to VC money is that you get to use all of it in almost any way you like.

Kickstarter, especially in this case, is people pre-ordering an already more fully defined and developed product. The money raised is going more or less directly to people purchasing product. It is assumed that there is a profit margin on the product, but it's also reasonable in these early cases to assuming the manufacturing costs may overrun estimates, and that roughly 10-25% of the money raised will actually end up being "profit".

Sure, even 10% of $7M is a nice chunk of money, but $7M of kickstarter money is way less working capital than $7M of VC money.

Re: Kickstarter Sets Off $7 Million Stampede for a Watch Not Yet Made

#20

Post by Negitivefrags »

zokier wrote: post #17
egypturnash wrote: post #3

I'm trying to decide if Kickstarter is the blossoming of a new way to do business, or a bubble fueled by a few hits that came at the same time. I'm hoping it's the former, as I've got a campaign going to print a comic book that's close to being funded, and I'm hoping to have it around as a viable option to repeat this stunt to fund future books, and ultimately maybe even support myself this way. The limited duration…

imho Kickstarter is best suited for projects that are essentially finished and ready for manufacturing, but need money to actually do a manufacturing run. A comic book seems like a example of a "good" project in that sense. But basing kickstarter on just a idea seems extremely risky, and that's why I'm not all that interested in game kickstarters. If somebody wanted to kickstart a boxed copy of a finished game, that…

One issue with Kickstarter for games that are ready to play (at least for us) was that we want to give access to play the game the moment that you decide to give us some money.

You can't really do that with kickstarter because you don't know if you will really get the money from each supporter.

Due to this, and due to the fact that you need to be an American company (which can be gotten around, but is annoying) we decided to go it on our own with something that was very similar to kickstarter, while not actually using their service, which you can see here: https://www.pathofexile.com/purchase/

Using stripe.com for credit card processing, it was fairly easy to get payment processing up and running.

Really the reason to use kickstarter.com is as an advertising platform. I'm not really sure if having their audience as well as our own would have benefited us in this case or not.

As to paying money for just a concept, it's not really unlike the decision investors make on a smaller scale. Bear in mind that copies of a game on kickstarter are typically lower than the final retail price. Your reduce your risk by "investing" in a diversified portfolio of kickstarter games in the hope that one will turn out to be a gem.

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