Kickstarter project spent $3.5M to finish a prototype and ended in disaster

http://arstechnica.com/gadgets/2014/07/how-one-kickstarter-project-squandered-3-5-million/

by tmflannery • 12 years ago

189 149 12 years ago

$500,000 from Kickstarter, $3,000,000 from "investment rounds."

funkyy2• 12 years ago

So people supported project and paid for a product they were presented, but creator decided on the fly it wasnt good enough so they changed it?

How ridiculous is this. People paid for a product (support) in order to receive what they were presented. The creator could then release version 2.0 after a year with updated features instead of making this decission. It would be like person would buy an Iphone 4 in shop and after he paid the guy behind the counter would say "sorry, I changed my mind, you will get Iphone 5 in 1 year because its better. Your money is ours now, so good bye and see you in a year."

The decisions made behind this seems to be immature - similar unfortunately to pretty large chunk of Kickstarter startups.

The Kickstarter seems to replaced government grants for some, where people would risk it to achieve success, but if they fail cause of issues/bad decision they don't care because it wasn't their money anyway. To many people with no prior life experience starting projects and businesses.

mianos• 12 years ago

Please read the above comment. Kickstarter is not a store.

dm24• 12 years ago

Donating money to a KickStarter project is not the same as buying something.

You're not paying for a product, you are helping fund a company or project who has no legal obligation to give you anything.

If you are donating to a KickStarter just because you want the reward they are offering then you should do sufficient research on the company and their founders to ensure that you trust that they will deliver what they promised.

JeremyBanks• 12 years ago

While I agree with the spirit of the above comment, and am not upset when projects I fund are delayed or cancelled, you're not technically correct:

Is a creator legally obligated to fulfill the promises of their project?

Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.

https://www.kickstarter.com/help/faq/kickstarter+basics

This isn't just hypothetical: http://www.pcworld.com/article/2150780/firstofakind-kickstar...

cyorir2• 12 years ago

I disagree with your conclusion, that there are "to[o] many people with no prior life experience starting projects and businesses."

I think a large number of people starting projects like this is necessary. True, many of them fail. However, it is in the process of failing at a first attempt that many people will gain the experience necessary to help them in later projects. So there is nothing inherently wrong with failure.

My interpretation of the article is that the developers did not handle their failure correctly. They were not clear in communicating and responding to the difficulties they were facing. The failure was left unaddressed, and only compounded over time; this was the fault of the developers. A more adequate solution would have been to recognize that changing the product to quickly was not the right approach; releasing a project without all of the desired features at a sooner date may have been preferable.

tibbon2• 12 years ago

I don't get it; Kickstarter isn't a store. I personally never expect anything to come through and get it in the mail when I back a Kickstarter project. I might get something, but it isn't a promise.

Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail. There's no more due diligence than watching a video and reading over some text frequently in funding a project.

Even projects with competent people in well funded companies fail all the time and get shut down (see Google Buzz, Google Health, etc). There is no such thing as a promise that things will succeed.

I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"

makomk• 12 years ago

Why is it a shock that Kickstarter projects fail? No one is shocked when VC backed companies fail, and these projects are just as likely (if not more likely) to fail.

VCs back huge numbers of companies and expect most of them to fail, hoping that the few which succeed make back enough money to compensate for all the failures. Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid. We can't expect people who back Kickstarter projects to accept VC-level failure rates because Kickstarters simply don't - and can't - give enough back when they succeed to make up for the failures.

pessimizer2• 12 years ago

We can't expect people who back Kickstarter projects to accept VC-level failure rates

The only differences between VC-invested projects and Kickstarter projects is that no one does due diligence on Kickstarter projects. Kickstarter backers should expect VC-level failure rates as a lower bound.

sanderjd4• 12 years ago

Kickstarter backers pay money in exchange for a specific product of value roughly equivalent to the amount they paid.

Then they're doing it wrong. Supporting a project on Kickstarter is a donation. A vote of confidence. That people are using it as a store and a ridiculously high-risk low-return investment vehicle is completely absurd. The blame should probably be put on Kickstarter themselves for what seems to be a major failure to establish the right expectations.

dublinben3• 12 years ago

I might get something, but it isn't a promise.

It actually is a promise. The Kickstarter terms of service require successfully funded projects to deliver the rewards that backers have paid for. If a project can't guarantee that they can deliver a finished hardware product, they shouldn't offer it as a reward.

pbhjpbhj2• 12 years ago

If a project can't guarantee that they can deliver a finished hardware product, they shouldn't offer it as a reward. //

Shouldn't that be:

If a project can't guarantee that they can deliver a finished hardware product if the project is successful, they shouldn't offer it as a reward.

Otherwise surely no project can offer the product as a reward to backers as success is never guaranteed.

njharman2• 12 years ago

The article isn't about people not getting a product or expecting a "store". It's about how a more than tripple funding KS which got an additional 3 million in VC backing could not actually accomplish their goal.

I bet they would have been more successful with less money. Money gives you freedom(to start over, to feature creep, to bikeshed, to grow faster than you can manage, etc) and security (which makes you less "hungry" and desperate).

cyorir2• 12 years ago

I think the notion that having less money would have been better for them is interesting. It seems like the amount of money they received gave them the idea that they could accomplish more by spending more; what they really needed was extra time in order to accomodate their extra money.

simonh2• 12 years ago

Frankly the whole product concept seems to me to be completely ridiculous. I doubt it was viable however much money they got.

I thought long and hard before posting this, because obviously hindsight is 20/20, but I went back and looked at the product description again and I stand by my opinion. IHMO it was a turkey from the word go.

Mithaldu2• 12 years ago

Important to note here is that Kickstarter sees two separate things in the campaign:

    1. The actual project.
    2. The rewards doled out to supporters of the project.

The Kickstarter rules are very clear about the following things:

    1. The rewards are a contract. If you fail to deliver
       the rewards on whose terms the backers supported 
       you, you're legally liable.
    2. The rewards may be delayed, as long as regular 
       communication about the actual progress happens.

Thus the project itself can fail, as long as you make sure the rewards are given out.

The fact that most project are confident/stupid enough to offer rewards that can only become reality if the project succeeds has muddled this reality in the mind of the average person, but the rules and legal realities are crystal-clear.

NotAtWork2• 12 years ago

Can you give a project option as a reward?

Example: $100 Dollar Level, tshirt + coupon for discount on items that we sell, available for use on target completion date (which just happens to be projected cost of baseline project item)?

Edit:

Found the answer...

Discounts, coupons and gift certificates - Offering a reward at a lower price than what it may cost post Kickstarter is fine, but a future discount or coupon as reward is prohibited. Additionally, vouchers in exchange for a particular item (a meal, a book, etc.) are fine, but monetary gift certificates are prohibited.

A little disappointing, but I can understand why they'd take this stance. (Likely because of money transmitter laws.)

(It's possible you could still phrase it as equivalencies, eg, "one X, OR two Y, subject to availability")

incision• 12 years ago

'I wish Kickstarter would put big lettering near the 'support' button that says in big red letters, "Kickstarter is not a store"'

I can't see that happening. Though, I'm not sure what if anything has changed since I was discussing this [1] on HN over a year ago.

1: https://news.ycombinator.com/item?id=5708427

eropple3• 12 years ago

Why is it a shock that Kickstarter projects fail?

Because regular people aren't equipped to evaluate risk and projects go out of their way (often dishonestly, even if understandably) to minimize the perception of risk.

It's a system that takes advantage of suckers. Some folks find that to be okay, but it bothers me even as I consider using it (because of not having any other real choices for funding a game in 2014).

simonh2• 12 years ago

What were your choices for funding a game in 2008?

markbnj• 12 years ago

Kickstarter may not be a store, but it is not an investment either. VC knowingly take risks in pursuit of significant returns. I've always wondered just what people are getting when they back kickstarters. Basically just the vague hope that they might get a product some day.

sanderjd4• 12 years ago

I track it in the "charitable giving" section of my budget. Thinking of it as anything else just seems silly.

ghshephard• 12 years ago

Couldn't agree with you more. If anything, I'm always shocked when I get something from a kickstarter, and pleased beyond imagining when it works out well/is high quality. I've certainly gotten some stinkers, and some no shows - but also been really happy with others (my CNCd iPhone Dock, for one)

Kickstarter should really emphasize "The risk of failure is high, and you stand a good chance of never receiving anything for your money"

smackfu• 12 years ago

Kickstarters wants the backers to think it's a store, because the reality isn't very attractive. "It's like a store where you preorder, except 10% of the time we just throw your preorder away and you get nothing but we still charge you."

ultimape• 12 years ago

But the other 90% of the time that something does come through, it is something that likely wouldn't have been able to come to market to begin with. Granted some of those are for a good reason...

soneca• 12 years ago

No one is shocked that it failed, people are shocked that it didn't ship! You can't fail if you didn't even ship.

Every VC backed company, or big company project that fails without any shock has shipped. If a kickstarter campaign ships the product and it falls short of expectations, no matter how short it is, it is ok. But if it says it is all set and done to ship, get the money and don't ship, that is a problem.

megablast2• 12 years ago

You don't get that other people see it as a promise of having something delivered? You can't understand that people think about kickstarter differently to you? You don't see that people get excited about a project, because of what it offers, and pay because they want to get what is promised?

I mean, even if you don't agree with that sentiment, you can see that other do, right?

dragonwriter5• 12 years ago

I don't get it; Kickstarter isn't a store.

It basically is, or at least a market -- a place where buyers and sellers meet and form contracts and where the sellers get the money from the buyers in exchange for the promise of some specified future delivery.

Sure, some sellers would like to have store-like inducements to the buyers to hand over money, but not store-like obligations to provide the offered goods to the buyers.

Why is it a shock that Kickstarter projects fail?

Its not a shock when projects fail. Its a breach of contract when people accept money in exchange for a promise of future goods and then fail to deliver the future goods.

Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable.

eden-san• 12 years ago

"Sellers shouldn't be shocked that projects should fail -- and so shouldn't offer rewards that depend on success to be deliverable."

This is actually an excellent point, but...

The reasoning behind this "pre-sale" approach is about the perceived value of the reward. An traditional gift might be acceptable (T-Shirts, etc) but there is something unique about being offered something that's not on the market yet. It makes the customer feel special, something they might be able to brag about if the product is a success.

Something akin to the concept of "Collector Edition" in the game industry.

That will add value to a reward, will attract more customer an in turn increase the chances of a successful campaign (even though successful campaign does not mean successful product).

It is a good way to kickstart a business.

Riskier? Yes. Short sighted? Yes and no (Actually no).

Short term cost is 0 (great), long term cost is your manufacturing cost + distribution cost (ouch).

That doesn't seem right? Actually it is.

You're actually paying for: + User acquisition + Early product validation (Lean Startup) + Momentum + Beta testing for the whole product pipeline and the product itself

I think that as a company it is definitively worth the risk. You have to be able to take risks sometimes in order to be successful.

My 2 cents.

edanm2• 12 years ago

Your view is certainly not the same as the way many people view Kickstarter.

But let's not quibble over what Kickstarter is. There is obviously a lot of value in having some kind of market where people hand over money with the risk of project failure, in order to potentially get a new product that they want to exist built.

How would you create such a marketplace and communicate clearly that that's what it is? I ask because I thought Kickstarter was exactly this, but apparently you don't agree, so I wonder where our difference of opinion stems from..

SoftwareMaven• 12 years ago

That shock is the reason allowing crowd funding for stock is a frightening proposition for the SEC.

tmflannery• 12 years ago

I think the issue is how it happened. They had a product prototyped and ready to go, went back to the drawing board and revised it. Constant feature creep kept causing them to go back and revise revise revise, spend more money, and delay. Hardware doesn't have constant iteration. This is what happens when you try to apply software principles.

jacalata3• 12 years ago

People are shocked because the only reason kickstarter is a big deal is that most of the audience has absolutely no familiarity with VCs and startup failures. They are normal people who see "$75 - receive Thing" and absurdly, strangely, interpret that as "I give you $75 you give me Thing". If Kickstarter wasn't a store then they wouldn't allow projects to list prices next to the products they are selling, all reward levels would be "stickers!" and not the successful project. And I bet all the self-righteous jerks who say "I don't even expect to get anything when I back a project!" would instantly stop backing projects, once they actually couldn't expect to get anything for being a backer.

totally2• 12 years ago

Must one be a "self-righteous jerk" to say "I don't even expect to get anything when I back a project!" ?

_pmf_• 12 years ago

Even projects with competent people in well funded companies fail all the time

Competent technical people. The non-technical leaders of for example Google Wave did not really show any apparent competency, leading to a project that has been excitedly received to stall just because someone thought it a good idea to do a closed beta (the closed beta worked for Gmail because the early Gmail users could communicate with any E-mail user, but competent people would have anticipated that this would not work with Wave; they effectively created a super-nerd ghetto, which obviously no sane person wanted to be part of after the beta was over).

edanm2• 12 years ago

Have you ever heard of hindsight bias? Many experiments have shown that people overestimate how easy it would've been to guess future outcomes. They did this by actually asking people to guess certain outcomes, then asked them a year later what their guess was - people's self-reported guesses were usually off, in the direction of what actually happened.

One of the problems with this is that our brain tricks us into believing that we're better guessers than other people, because hey, look at all the times we were right in the past! Except we weren't right - it's just our memory deceiving us.

All of this is to say - Google hires extremely smart people. I would really hesitate to call them incompetent, both because what you say was "sure to happen" is a big dose of hindsight, and also because you have no idea what their goals were - for all you know, they took a risk that the project would either stall or become super-successful, so they shot for the moon. That's a legitimate option.

Eduardo3rd• 12 years ago

Sounds like a larger version of the problems that most hardware crowd funding campaigns run into. I think that we've done ourselves a disservice as a hardware community by promising to deliver consumer electronic devices for less than $250k in a few months. It doesn't seem to matter how complete your design is, what manufacturing partner you've lined up, or what pedigree your team has - everyone is spending more than they raise and taking longer than they budgeted.

I think it would be wise for hardware companies to collectively start lowering expectations from campaigns like the one described here.

The team at Spark Devices did a great job with this process. Their first project, the wi-fi bulb socket [0], had a large funding goal and a more realistic timeline. When the campaign failed to materialize they shifted directions to the Spark Core [1], which was much more successful and delivered very close to the projected timeline if I remember correctly. Now they are closing a sizable series A [2] to build an operating system for the internet of things.

If they had originally made the Spark socket goal $100k they would have reached their goal and then likely failed to deliver with the cash they raised, which would have pulled them down into the mess that is described in this article.

Maybe more hardware teams should take a good hard look at how they view failure and decide if they want to be the next Spark or the next myIDkey.

[0] https://www.kickstarter.com/projects/sparkdevices/spark-upgr... [1] - https://www.kickstarter.com/projects/sparkdevices/spark-core... [2] - http://techcrunch.com/2014/07/08/spark-io-raises-4-9-million...

sliverstorm6• 12 years ago

I have no evidence, but it seems like as a community people significantly underestimate the challenges of hardware development.

I'm not sure whether it's because the community thinks "Oh, hardware is so much easier than software! This will be a snap!" or if it is the more subtle "We haven't done this before, so we aren't aware of the pitfalls"

greenyoda• 12 years ago

"Oh, hardware is so much easier than software!"

I'm not sure how people could think this. Hardware is a much less forgiving medium than software:

- If your web application requires three times the resources you thought it would, you can easily add more servers. But a device that needs to fit in a USB key has hard limitations on size, memory, power dissipation, etc. You can't ask people to carry around a briefcase-sized device (or even another phone-sized device) to hold their passwords.

- If your web application has a horrible bug, you can wake up your developers and have them fix it at 3:00 AM. If you find a bug in your embedded software after you ship, it can only be fixed by getting all your users to upgrade their software (assuming your embedded software is in flash memory, not in ROM). If you find a bug in your hardware after you ship, you need to send everyone a new device.

mbesto• 12 years ago

Planning fallacy is planning fallacy. Perhaps it's more exaggerated in hardware, but doesn't negate the fact that it will always exist and planning is hard.

morgante• 12 years ago

Oh, hardware is so much easier than software! This will be a snap!

I've literally never heard anything say or think that. Myself included, nearly every software developer I know is intimidated by how hard hardware seems.

seanflyon• 12 years ago

"Oh, hardware is so much easier than software! This will be a snap!"

I think "Hardware won't be THAT much harder" is more like it

iancarroll2• 12 years ago

The Ubuntu Edge (?) tablet was also a great example. They honestly said, we can't do this without 12 million.

Andrex• 12 years ago

No, they got $12 million, but they said they couldn't do it without $32 million.

fleitz• 12 years ago

Of course it didn't pan out, you can only do a project like this on a budget of 20-50K.

Beyond that budget everyone will focus on engineering it to work with every authentication system ever, rather than creating a simple USB HID device that types a username, the tab key, a password, and presses enter.

Problem: Users cant remember their passwords.

Actual Solution: Device that stores and recalls their passwords.

Engineering Solution: A bunch of crypto stuff, tempest hardening, pen testing, some more crypto, a provably secure RNG, 3 different interfaces and drivers to integrate the device with Linux, OSX, and Windows crypto systems, a bunch more user installable software for 3 platforms, tamper resistant chips, etc.

dublinben3• 12 years ago

That actually sounds like the Marketing Solution, since they had a simple, working prototype at the very beginning.

post_break• 12 years ago

This reminds me of lockitron. It's still not really shipping. Take a look at the lockitron subreddit. http://www.reddit.com/r/lockitron

lhnz2• 12 years ago

It's plainly obvious that Kickstarter is a way of crowdfunding investment in creative projects.

It's in tabloid's interests to stroke controversy by suggesting it's a store whenever projects fail.

Clickbait articles like this will continue to be made as people are gullible and easily manipulated.

astrange• 12 years ago

It's a store for the reward you paid for. The projects have absolutely promised to give it to you.

lhnz2• 12 years ago

Either way it's on the project founders and the consumer-investors not Kickstarter.

VikingCoder2• 12 years ago

...except it's not "investment," and projects do have a legal responsibility to deliver.

From their FAQ:

Is a creator legally obligated to fulfill the promises of their project?

angryasian• 12 years ago

for most consumers, if it looks like a store and acts like a store... they will think its a store.

anjc• 12 years ago

How much value is lost through poor investments which nobody hears/cares about? "Disaster" seems a bit strong. Tough luck to the backers, but that's how it goes.

jokoon5• 12 years ago

well with capitalism the only viable option is to waste money until a project works...

didn't bill gates already say something about it ?

the revenues from IT project investments are so high compared to investment costs, that in the end you never lose money by seeing so many projects crash like that.

Of course if the government would manage those things, it might be a little more efficient and might deliver more results... I guess that's how the silicon valley works... Freedom has the advantage of letting the market decide, but for innovation it's never really obvious...

go and downvote my political comment

macspoofing4• 12 years ago

well with capitalism the only viable option is to waste money until a project works...

What's the alternative?

The economy is an incredibly complicated system. Any top-down model will fail. What we have right now (free-market base and government regulation) kinda works. Or at least, it works better than anything else we tried.

jokoon5• 12 years ago

What's the alternative?

government research, like darpa.

dsugarman2• 12 years ago

I wonder the % of really unhappy funders and % who understand the risk. I assume most funders would know there is not 100% chance of a deliverable and fund projects hoping to contribute to a brighter future.

aikah• 12 years ago

are there any "aborted" projects where backers sued and won? it seems it's up to the justice system to decide what kickstarter terms are because their own TOS are quite vague.

hristov• 12 years ago

It is very curious as to why they failed if they had a working prototype. They are blaming feature creep, but I am not sure about this. If it looks like you are going to fail because of feature creep, why not just go back to the original working prototype?

Personally, I very much doubt they ever had a working prototype.

DigitalSea2• 12 years ago

I remember when I first about all of the buzz about this Kickstarter project, I knew it was going to be trouble. Hardware is a notoriously expensive business to get into. As the company learned you can easily burn through a few million in cash just putting out a prototype. Once you have something ready for production, until you're manufacturing at a decent scale, your costs are incredibly high: economies of scale 101.

Call me crazy, but how about Kickstarter clamps down on ambitious hardware products like this? I don't think they are doing enough and it's tarnishing their image as a credible crowdfunding platform (at least to me anyway). It's obvious that there are very few exceptions here that a hardware Kickstarter campaign will not fail (Oculus Rift comes to mind and a few other smaller ones).

famousactress• 12 years ago

Don't forget Pebble :)

Definitely hardware failures are a PR challenge but kickstarter's margins aren't affected by COGs and hardware projects tend to require more money (as you pointed out). They've got lots of motivation to make it work.

DigitalSea2• 12 years ago

Pebble is definitely a success, OUYA is another success, the Neil Young endorsed Pono player and service seems to be well underway and looking like another success and of course, the LIFX wifi enabled multi light-bulb as well. When you run the numbers, the percentage of success for hardware projects is quite small. But as you point out, Kickstarter get their fees regardless of success or failure. I think Kickstarter does care, the problem is just a lot bigger than they currently know how to fairly solve.

bsder2• 12 years ago

Standard startup problem--too many salaries.

This kind of project needs something like 2 engineers max who really know what they're doing. Unfortunately, very few people know what they're doing.

Anything more than that and you are doomed. The hardware is about $100K to develop if you know what you're doing. Probably closer to $250K if you don't.

Everything else is time--software, debugging, user testing, etc.

Andrew "bunnie" Huang's blog is great for understanding all the crap you are going to wade through to do production. http://www.bunniestudios.com/

The discussions about what goes into producing the DEFCON badges each year are also fascinating: http://www.nutsvolts.com/uploads/magazine_downloads/DEFCON-1...

The DEFCON discussion is always especially interesting because it is a VERY constrained problem: low volume overall (for electronics <50,000 is low volume) but high volume in terms of units-per-time, tight cost constraint, generally a tight battery constrain, and a desire for hackability.

Operations is hard. Let's go shopping.

There is a reason why there is a Chief Operations Officer in manufacturing companies ...

jackgavigan• 12 years ago

It's a bit of a cliché at this point that the bottleneck for DEFCON badges is Customs and they always arrive at the very last minute.

The exception was DEFCON 19's non-electronic, titanium badges, which were not just on time but arrived so early that the DEFCON staff hadn't taken over the conference location yet, so they ended up getting stored in someone's hotel room.

GFischer• 12 years ago

Thanks to the link about the DEFCON badges, really cool :)

bsder2• 12 years ago

Read some of the articles about other years, as well. They are ALWAYS a fascinating read.

autodidakto• 12 years ago

Grammar Nazi Time. An excerpt from Oxford's American:

1 (of a person) surprised and confused so much that they are unsure how to react: he would be completely nonplussed and embarrassed at the idea. 2 informal (of a person) not disconcerted; unperturbed.

usage: In standard use, nonplussed means ‘surprised and confused’: the hostility of the new neighbor's refusal left Mrs. Walker nonplussed. In North American English, a new use has developed in recent years, meaning ‘unperturbed’—more or less the opposite of its traditional meaning: hoping to disguise his confusion, he tried to appear nonplussed. This new use probably arose on the assumption that non- was the normal negative prefix and must therefore have a negative meaning. It is not considered part of standard English.

arbuge• 12 years ago

> But when Ars reached Chen by phone, he seemed nonplussed by his own company's failure. "Do you know what the percentage of completion is for Kickstarters in general for technology-based startups?" Chen asked. "Probably 85 percent of all startups fail."

I wonder if this is actually true and if there's any hard historical data on this. It sounds to me like a statistic he just made up.

dredwerker• 12 years ago

This was created in response to this if I remember rightly: http://hackaday.io/project/86-Mooltipass The mooltipass is an offline password keeper. The concept behind this product is to minimize the number of ways your passwords can be compromised, while generating and storing long and complex random passwords for the different websites you use daily. It is designed to be as small as possible so it can fit in your pocket. Simply visit a website and the device will ask for confirmation to enter your credentials when you need to login.

alexnking• 12 years ago

In my opinion, Kickstarter projects should not be legally obligated to deliver hardware rewards. We already have something just like that called "stores" and "preorders". I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out. And I certainly don't want people to be able to sue those creators if it doesn't work out.

dragonwriter5• 12 years ago

In my opinion, Kickstarter projects should not be legally obligated to deliver hardware rewards.

There's an easy way around that for projects, don't offer the output of the project as a reward for backing it.

I want to fund projects where the creators don't need to be 100% sure their idea will work before having the means to try it out.

Okay, back projects where the creators don't offer the output of the project as the reward for backing it. (Or, projects where the development is already done, and the Kickstarter is just being done for initial production costs, so the product isn't speculative.)

And I certainly don't want people to be able to sue those creators if it doesn't work out.

The only reason people could sue the creators is if the creators offered something in exchange for money, received the money, and didn't deliver as promised.

The creators are in full control of what they offer as rewards. It seems to me that the problem is that some people want creators to be able to use the promise of a product they don't know that they can produce as inducement for people to give money, but not be obligated to actually follow through.

jacalata3• 12 years ago

This project advertised itself as having all the development finished and only needing pre-order cash to kick off the manufacturing, so that's not really a good guide:

The "Designs" are complete, patents filed, component suppliers selected, the manufacturing process is defined, the CM [contract manufacturer] chosen so all we need is your support in this project as we size the first myIDkey production run and ship product in September 2013. Please make a pledge and receive your myIDkey!

saraid216• 12 years ago

Why only hardware rewards?

patio11• 12 years ago

Please remember this article the next time you're inclined to say "Why did Paypal freeze pre-orders of a promising new startup when they clearly look like intelligent, diligent founders and have not a whiff of scam risk about them?"

jay_kyburz• 12 years ago

Who is PayPal to decide whether or not a company can achieve their goals.

kalleboo• 12 years ago

The ones left holding the bag when the credit card chargebacks come flying in.

aristus• 12 years ago

They are deciding whether or not to take on the risk of essentially underwriting the project. PayPal is on the hook for chargebacks; recently I got back $400 we had paid last November to a company that turned out to have been incompetent / scammy. I didn't initiate a chargeback until a couple of months ago.

Whether or not you agree with the outcome of their decisions, you can't simply huff that PayPal has no "right" to decide whether to take on those kinds of risks. They clearly have skin in the game.

pistle• 12 years ago

Wait. I might not get my bite of potato salad?

lily20142• 12 years ago

I do think that Kickstarter is a famly type project. We saw one's idea. And his plan.We back him.And there are many backers so each of backer will not loss much money. We backed a dream together, we share the risk. And we do wish a success fund project can reach their goals, build a great company.

lily20142• 12 years ago

Kickstarter is a platform where normal people can back those people have dream and great idea. As to the creators company can not acheieve their goas, kickstarter can not guarantee it. But it has already list all those rules to protect backers right.

richardw• 12 years ago

This is a story? A well funded tech product didn't materialise? Typical day for a VC. Selected and paid for by the general public? That's insane. Kickstarter sounds almost destined to fail but somehow it's succeeded so well that a failure is a story.

dkersten• 12 years ago

A3 to an A5 ARM processor

That was never going to be an easy switch. A3 is a microcontroller, A5 is a full blown cpu.

volaski• 12 years ago

I think HN is pretty much a biased crowd for this topic. A lot of people seem to think of it as a charity kind of thing here--which is understandable because HN is full of creators who sympathize with them--but I doubt that's what the real majority of the people who backed those projects think.

xorcist• 12 years ago

When an operation that should be "two guys in a garage" starts futzing with C[ETF]O titles, that is my cue to run the other way.

So far it's been a 99% successful guiding principle (with the big exception early in Internet advertising I wouldn't have enjoyed anyway).

gearhart• 12 years ago

From the title, I thought this was an Onion article.

Kickstarter project spent $3.5M to finish a prototype and ended in disaster

Related Stories