Watchmaker That Raised Money Through Kickstarter - Pebble (YC W11)

http://online.wsj.com/article/SB10001424052702304441404577478732360629906.html

by gleb • 14 years ago

14 7 14 years ago

online.wsj.com

rdl• 14 years ago

Most successful YC hardware company ever, I think.

seiji2• 14 years ago

Unmentioned insanity: the raised amount is reduced by almost a million dollars because of 8% to 9% kickstarter fees ($820k to $925k of the raised amount vanishes right off the top).

Anybody interested in my 4% fee bootstrapping site? It'll go live next month. If you want to have a project featured on it for launch day, let me know.

patio11• 14 years ago

Assuming you're serious about that:

1) Anyone even peripherally involved with transaction processing as a business rather than a hobby will take you aside privately and say "Look, you need to charge more." It is incredibly difficult to make money taking 0.5% to 1% of transactions as your margin and then paying your expenses out of it -- you need flowing rivers of cash to make a living that way, and they (sadly) do not occur spontaneously. One engineer will cost you $400k a month in transactions. (There exist many examples of HN-launched/YC businesses which did not know this on launch day. If you keep an eye on them, they universally accede to reality and bump their fee or they fail catastrophically.)

2) You seem to be of the impression that people choose bootstrapping sites based on fees or that this is their primary value proposition. Bootstrapping sites are like mobile platforms: they charge for access to a built-in audience who demonstrably pay money for things. Kickstarter has this. Apple has this. You don't.

3) The people you successfully lure from Kickstarter will not be the folks who are going to make $X,000 videos to promote their products which go on to sell $10 million. These folks, who are clueful, are going to choose based on network effects. The customers, and I use that term loosely because most won't actually pay you a penny, that you will successfully recruit are going to be pathological customers terrified of someone making an entire $3 off of the $30 they're going to raise. You will not successfully support a business on them. They'll give you lots of headaches when you try.

seiji2• 14 years ago

Thanks for the amusing breakdown. Here's a counter-breakdown:

1) Point taken, but you're assuming I have a cost overhead and I care about income. Perhaps I just want to destroy something beautiful?

2) (fuzzy) I don't feel most people sit around kickstarter.com looking for ways to spend money. They get led in through media, websites, friends, viral virulence, etc. Kickstarter is basically the world's most expensive webhost at this point.

3) The fun projects may drift over if we shift the narrative towards "Would you rather give Kickstarter $10k for having a pretty website or do you want it in your pocket?" (Based on the Light Table raised amount and a kickstarter fee of $25k-$28k versus a $13k fee for my pricing model. I have spreadsheets and everything -- you can't argue with spreadsheets. Up and to the right, baby.)

thetrumanshow• 14 years ago

The day I realized that my transactional business model needed to process $1MM a month in sales to be interesting to me AT ALL was the day I became slightly less enthusiastic about it. Thus, my short-term focus remains solidly on subscription-based businesses.

furyofantares• 14 years ago

I'm baffled, how do I read the entire article? It ends at "Within 28 hours of being ..." in the third paragraph and I see no way to expand it.

edit: AdBlock (Chrome/OSX) was hiding login/subscribe buttons.

Watchmaker That Raised Money Through Kickstarter - Pebble (YC W11)

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