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Aug. 1, 2012: When Oculus Asked for Donations

blogs.wsj.com

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Re: Aug. 1, 2012: When Oculus Asked for Donations

#111

Post by AUmrysh »

sc68cal wrote: post #81
modeless wrote: post #2

This is the real shame in the Oculus acquisition. If Oculus had been able to give away just 10% equity, every single Kickstarter backer would be $20,000 richer today. The sentiment would be completely different. The SEC needs to get in gear and start allowing equity crowdfunding pronto. The SEC's classification of millionaires as "accredited investors" who get first crack at all the best investment opportunities is e…

This reminds me of the same arguments that were made about Bitcoin and exchanges and how the mean old SEC wasn't letting the little guy get in on the action. The same thing would happen in the world of Kickstarter - big asset bubbles and rampant speculation, bogus funding campaigns, graft, and exploitation.

Kickstarter already has plenty of exploitative scam campaigns. I knew (I use the term loosely, more like I had to ban from a social group for being offensively rude to women) one of the guys that ran a successful kickstarter. He hasn't updated his project in months, and his last updates were about how he's only spent a small amount of the money, is looking for a new dev team, and wants to hire a web developer on the cheap.

I knew it was a scam from the day I learned of it, just based on this guy's character and inexperience.

I can assure you that equity would be no different, unless the investments could be protected by law in some way. I don't really know how to prevent this sort of thing, investors needs to do their homework, but even that's not always accurate.

Re: Aug. 1, 2012: When Oculus Asked for Donations

#112

Post by GBond »

icambron wrote: post #72

I'll just say it: Kickstarter is for suckers. When you give money to a project, you're doing one of two things: 1. Making a donation to a company. [1] 2. Preordering something that hasn't been built yet. Doing 1 is silly, since you don't really get anything in return. "But it makes it more likely that this thing I want will happen!" In some tiny marginal way, sure, but mostly it's going to happen because other people…

> The fact of the matter is that you're aren't pre-buying the Rift on a rational basis. You've been convinced by clever marketing to shoulder risk for a company because it seems cool and feels good.

This is the point that many commenters are missing.

Many of the comments here are addressing the straw-man argument of the legal aspect of the transaction (yes, technically the backers are not owed anything... but we know that).

What the WSJ post questions is the ethics of a KS Project making a human to human appeal to the heart and ask for donations when in reality it is a Corp asking for debt-free seed funding from regular people.

Re: Aug. 1, 2012: When Oculus Asked for Donations

#113

Post by humanrebar »

jiggy2011 wrote: post #69
gbelote wrote: post #67

Earlier quoted context omitted.

The rules are indeed a little ridiculous, especially when juxtaposition against gambling. The distinction is in the process of being removed with the JOBS Act. It was signed into law in 2012 but the SEC has been slow to enact the regulations. Hopefully it can be used to support the future Oculuses! (Occuli?)

The difference is that gambling firms usually aren't allowed to advertise by promising a positive expected ROI.

So you're saying there's a technical solution to this problem and the $1M threshold isn't necessary.

Re: Aug. 1, 2012: When Oculus Asked for Donations

#114

Post by jessedhillon »

pessimizer wrote: post #106
gojomo wrote: post #26

Earlier quoted context omitted.

Then why aren't there limits on lottery ticket purchases, or casino gambling, or making highly-leveraged real-estate purchases, or buying any number of other investments (including public stocks and options) that can send any initial amount of money to zero, quite rapidly? It's an archaic set of rules, from a dumber era, and totally out-of-sync with what people are capable of, and what real risks to "all of their wea…

>why aren't there limits on lottery ticket purchases, or casino gambling, Because they're profitable to the state. There have historically been blanket bans on both of these things at all wealth levels in the US. I still know of no private lotteries. Both exist to exploit people who don't understand probability, and are essentially voluntary regressive taxes. When it comes to these two, now is the dumber era.

Wow, way to live up to your name. There are many private lotteries, they're called raffles. Several times a year in SF there are billboard advertisements for the opportunity to buy lots in a raffling off of a house in the city or several million in cash.

Beside which, capital gains tax probably earns more for the state than either lottery or gambling income in many states.

Re: Aug. 1, 2012: When Oculus Asked for Donations

#115

Post by seventytwo »

modeless wrote: post #2

This is the real shame in the Oculus acquisition. If Oculus had been able to give away just 10% equity, every single Kickstarter backer would be $20,000 richer today. The sentiment would be completely different. The SEC needs to get in gear and start allowing equity crowdfunding pronto. The SEC's classification of millionaires as "accredited investors" who get first crack at all the best investment opportunities is e…

Not arguing with you here, but I just wanted to say that the point of this rule is to prevent people from getting scammed in large numbers. Allowing equity crowdfunding would also have to come with a bunch of new rules to prevent a company from claiming all sorts of fantastical stuff and then folding after everyone's pitched in.

Just think how this would work - people can't even be bothered to read their ToS or Privacy Policy for Facebook. You think they're going to pour over an operating agreement to become an equity member for a company? This rule was enacted as a quick and simple way to prevent people from being fucked.

Re: Aug. 1, 2012: When Oculus Asked for Donations

#116

Post by albertop »

WalterSear wrote: post #74
shiftpgdn wrote: post #17

Earlier quoted context omitted.

I know it's a bit of a libertarian viewpoint but it is not the government's job to be my nanny. If I wish to throw all of my money down the toilet on some hopeless start-up I should be allowed to do so.

Do you want to live in a country where other people can do equivalently stupid things and you have to deal with the consequences? No man is an island - some people are better making a burden of themselves than others.

We should have a rule that prevents people quiting thier perfectly sensible jobs to work on startups. They are risky as hell and when fali founders are burden to society.

Re: Aug. 1, 2012: When Oculus Asked for Donations

#117

Post by shittyanalogy »

nemetroid wrote: post #103
shittyanalogy wrote: post #93

1) Kickstarter is not an investment platform. 2) Kickstarter is not a store. Kickstarter is ONLY for giving your money away to ideas you want to see succeed. The perks are a gamble at best and misleading at worst. If you give money to a kickstarter for any other reason, despite what the campaign or your friends or some blog tells you, you're quite unfortunately doing it wrong.

The perks are not a gamble. If the project creator fails to deliver, you are entitled to a refund. Straight from the Kickstarter Terms of Use: > Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill.

Through what enforcement?

Re: Aug. 1, 2012: When Oculus Asked for Donations

#118

Post by anigbrowl »

res0nat0r wrote: post #91
anigbrowl wrote: post #60

Earlier quoted context omitted.

But most people go to Kickstarter to fund the development of a particular product, not to boost the corporate entity that produces it. I mean, it's not that Kickstarter buyers are against people earning a living and making a profit, but something like 9 out of 10 Kickstarter projects are 'labor of love, we want to make it accessible to you as cheaply as possible,' as opposed to 'we want to build up a lot of buzz and…

So why can't it be both? If you are against my product becoming a huge hit after getting off the ground first via kickstarter then moving on to bigger markets with a possible windfall for the creator, and a better product for everyone due to a large IPO, then it sounds more like jealousy than anything else.

People want to feel in close contact with a dev team and part of a special club. If OR had gone on to be a huge company in its own right I don't think that would bother people much, but by getting acquired many of the early backers end up feeling on the outside, the real 'special club' is the one where you need enormous amounts of money to be a member.

Also, while it can be both very often in the real world it becomes one or the other - think of all the not-nice things that corporations o on the basis that their investors' needs come first. You're just going to have a harder time funding stuff if your pitch includes a non-ironic desire to make megabucks because a lot of people will be put off by that.

Re: Aug. 1, 2012: When Oculus Asked for Donations

#119

Post by yeukhon »

semiel wrote: post #88
yeukhon wrote: post #35

Earlier quoted context omitted.

I don't dispute they want the final product in the end. They agree with Oculus' vision so they back them up. But why are people feel upset? Two reasons: 1. Some people feel they are entitled to share the acquisition because without their early support (via KS crowdfunding) Oculus may never get that $2B acquisition, or/and 2. They dislike the acquisition and they feel entitled to have a voice. Like public trading comp…

You are unreasonably conflating the legal situation and people's moral expectations. No one doubts that Oculus had every legal right to do what they did. People just feel it was unethical.

Unethical? Moral expectations?

You choose to use a product. The company can be acquired or shutdown. So making either decision is now unethical? How do people do business now?

You choose to backup Oculus and know from the beginning you are not going to have a say in the business' future, so where is the moral and ethic responsibility? What would be unethical? Take the "seed" money and run away without delivering a product. Oculus delivered a prototype and they didn't run away.

Re: Aug. 1, 2012: When Oculus Asked for Donations

#120

Post by qq66 »

sgk284 wrote: post #73
forrestthewoods wrote: post #64

Earlier quoted context omitted.

$300 doesn't get you a headset AND equity. You might take $300 from person A to manufacture a headset to sell to person B for $300. But person A doesn't get both.

Is there a fundamental reason why Person A can't get both? Equity costs nothing to give out (excluding legal / accounting overhead) and could serve as a great incentive. Effectively, a project would say "Hey! Give us $300 dollars. We might get you this product we're trying to build, but we also might fail at delivering. Here's some equity too, to help compensate for your risk."

> Equity costs nothing to give out

Only if your company isn't worth anything.

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