Kickstarter's Launch Now
Our portfolio company Kickstarter announced some important changes yesterday. They massively simplified their rules (from over 1000 words to under 300 words). And they introduced “Launch Now”:
At USV, we’ve always been a fan of fully open marketplaces over closed or curated marketplaces. I have written about that a bit here.
That said, you do benefit, particularly early on, by curating the market so that buyers are protected from crap and scams. Kickstarter turned five earlier this year and the company, service, and brand are well understood in the marketplace. I saw a chart on the Internet today that shows just how powerful the Kickstarter brand is right now:
When people think of funding a project on the Internet, they think of Kickstarter first and foremost. So the decision to curate and insure that backers on Kickstarter had a good experience was clearly the right one for Kickstarter.
But crowdfunding is a big business now. There is crowdfunding for seemingly everything now and users’ expectations and understanding has been well set. So it makes sense to be more open and creator friendly. Backers on Kickstarter and the vast number of other crowdfunding sites are now pretty clear about the risks and rewards of backing a project.
I am pleased with these moves. It makes life a lot easier for creators, it will lead to more crowdfunding by more people, it will lead to more projects that backers can back. There will be criticisms that Kickstarter is opening itself up to scammers and crappy projects. That’s always been a criticism of Kickstarter and other crowdfunding sites and will always be. But as this market has matured and gone mainstream, those criticisms need to be seen in the context of the overall success of crowdfunding and Kickstarter’s role as the creator and leader in the market. I think they will be fine.
As do I Fred.I respect this company a lot.They consciously worked to build their brand as the market developed around it. They seemed aware of it from the beginning.A great case and counterpoint to the whacky idea that brand is something that comes later. Great companies are built on belief and ongoing self discovery. The forever process of answering ‘Why you?” each and every day. That’s what branding is all about.The world is a better place with Kickstarter in it.
me too. and great point about its brand
Not entirely true, Fred. You need to also communicate your brand externally to reach non-users who haven’t experienced your product. See my last post & comment in this thread.A concerted brand effort can make a big difference when startups reach a certain size. You can’t just rely on your users and their experiences to carry the brand forward in the market. Yes, your users will tell others about their experiences, and what it did for them, but that’s not enough if you want to be a big brand.
i still think your wrong (reach a certain size), but I”ll let Peter have a go when we cu. His nickname at Blast Radius was Brandolf 🙂
I think you need both approaches. Don’t neglect the brand when you get big. It takes a different approach than what happened via product experiences. You need to reach a larger audience who is NOT using your product. That’s what I’m saying. Brand is a continuum, and its footprint is almost infinite if you are lucky.
Your intent is in the right direction, your criteria for size and brand i don’t agree with. These distinctions are not reality in the market trenches.
That’s the reality I’m seeing from the startup camp.
You are the industry maven my friend.There are many approaches that win, this one just happens to the one that I practice.
I think our thoughts are complementary- one needs to do both: bottoms-up, product related branding and concerted top down when you get bigger, to communicate your brand to a larger audience. That’s the only way to grow market share and get big.
I agree our ideas our complimentary no question. You are a really smart and experienced marketer. I just can’t adopt a strategy that your company size has anything to do with the importance of a brand strategy.What’s pertinent is where you sit in the continuum of building/discovering a market as your prime activity or working to not loose or extend the one you have.Brand is what people buy whether it is the first 100 customers or the next million.Or at least that’s what I practice.
I agree conceptually that size shouldn’t impact brand strat, but don’t you think in reality it frequently does? Start-ups, particularly early stage (post launch), often don’t effectively budget for and understand how to build awareness, efficiently target and drive revenue. Monetization and marketing strat takes way too much of a back seat to build out, which is a shortsighted approach to biz dev and IMO a fundamental reason why a lot of start-ups fail.It’s like a thoroughbred horse coming up lame in the starting gate (hopefully that’s not an omen for California Chrome).
Actually, I’m gonna recant some of my testimony below, if the court will allow.Size does indeed impact brand strat. As a company scales there’s a fundamental shift in strat from acquisition to one that also drives retention, frequency of use, product upsell, CRM, etc. That applies to transactional, subscription, premium, fremium or ad rev biz models. A brand’s positioning can (obviously) also evolve overtime based on attitudinal/usage data, competitive inroads, etc.
I’ll reply to both of your comments in this space.Of course you are correct!Of course how you approach this is different on your evolutionary path from finding, to fear of loosing your market. And hey, dollars as resources matter.My point is that we think of this from before day 1.When we work even in the early stages choosing a name, it becomes clear that the most focused and prophetic of us, have already a layered sense of value, of product directions, or partnerships before we have a prototype. Sure it changes–but my minor beef with William (I plan to arm wrestle him tomorrow over this–and win!) is that we don’t start later, we start yesterday and evolve with it.And we never stop.”Why (your company name here)” is something we ask ourselves everyday forever.I do every day for my consulting and investments, and every day for my clients.
Thanks for clarifying. Agree 100%. All this stuff is pretty obvious and fundamental, but somehow it frequently gets lost in the shuffle.
Marketing is the neverending shuffle from the 20,000 feet view to completely underground.I’ve believed forever that smart execution is the game of the true marketing athlete.
The user experience is tied to the brand of course, and that happens from Day1, but how about your prospects and the market at large? They don’t have experience with your product, and they don’t have a clue. So, you need to make a concerted effort to concisely articulate your brand externally, in order to gain mindshare.You’re forcing me to link to my most recent post on that very topic: http://startupmanagement.or…
For some deals I see now, I am recommending Kickstarter. Prove the product has value-put it on Kickstarter and see. If it sells and continues to sell, they might have something. If I was a buyer for a big corporate, and saw a new item-why not diversify the risk and put it in a small allotment on Kickstarter before putting it in my inventory–“try before you buy”.
I look at Kickstarter from a community and network marketing perspective.If you are not networked, don’t have a community and are building something that doesn’t my nature aggregate, Kickstarter is a bad avenue.If you have these things, it rocks. But KS on its own doesn’t bring a market to your idea.I invariably recommend that is you can raise the seed without it, in most circumstances, I say take it.
what’s the vertical axis metric?
google search query volume
Hi Fred. The fundamental problem of an entirely open market remains Kickstarter brand integrity. I have had a number of decent experiences through KickStarter, but suffered at the hands of an awful scam (Magic Wallet was the project, wasted $35k of backers money). I’m the idiot, and I understand the concept of buyer beware. However, in any other open marketplace I’ve been active in (particularly financial markets), buyer beware applies but investigation/sanction is available as recourse in case of demonstrable abuse. KS’s refusal to pursue blatant scams makes no sense to me, and should remain entirely consistent with KS’s role as gatekeeper of an open market place, irrespective of the very low barriers to entry. It degrades the brand and experience massively, and I suspect that I’m not alone in deciding that my one bad experience on KS has been my last, which is a shame for other potential projects I would look at. May not matter, but it should…
there is no way to insure that there will be no scams. but the number of scams has been tiny. i am terribly sorry that you got caught in one.
I do understand there’s no way to eradicate scams, in most marketplaces actually. It would be a small tweak, but it just seems to me that KS would be so much more powerful if there was an adequate mechanism for real complaints. Anyhow, I do appreciate the sentiment, Fred. Thanks.
Maybe. I think they could use some kind of internal metric to gauge reputation, especially for people trying to raise money who are new to the platform. Something like Klout but native to Kickstarter that they could throw out there as a benchmark for people to say to themselves “OK, this person has accomplished X in his field, probability for this thing being funded is probably Y” etc.The real opportunity though might be from the outside. When the whole Pando/IndieGoGo/Healbe thing went down, I posted a comment there re: an idea for a Consumer Reports type non-profit that could independently research new crowdfunded projects (particularly hardware where it’s easier to make grandiose claims that are largely unverifiable) and assign them some kind of grade. That might be the best solution for all parties if some endeavoring entrepreneur were to start it. :)http://pando.com/2014/05/04…
Not sure that anything new needs to be invented. Airbnb does background checks. So, Kickstarter could as well.
Kickstarter could direct 25 basis points or so from each fully funded project. *though research says that this could actually incentivize bad behavior.
Nothing worse than encouraging people to back projects that they question as scams because “no worry — there’s no downside!”Markets work. Some good projects won’t go forward because of skepticism. If there is one thing that 2007 should have taught us, it’s that skepticism is healthy.
is there no escrow process to protect backers from fraudsters?n.b. i’ve yet to back a KS project and therefore i know not a lot about the nuts and bolts of the process on that platform. the comments about MW open up questions about the process. people like that disgust me. ‘identity’ and ‘reputation’ are big themes for the future of digital. i wonder if the bitcoin protocol can do something to address reputation?
Kinda sorta. Funds are withheld from the project organizer until/unless the project goal is reached. So, if your project has a need/goal of $200k, but only $100k is raised, no one gets charged and the project/organizer don’t get funded. But once it hits its goal, it’s funded and the organizer gets the funds. Then…well…they could fail…and poof, there goes your money.
thanks Jim.umm, so there isn’t a process in place that protects against fraud once the target has been reached. perhaps there needs to be a drip feeding of funds to the creator over time, with proof of progress at each stage of a project’s development to market. handing over all the cash at the beginning seems unwise.maybe a project needs to be presented with stages of development mapped out by the creator.
Well, let’s keep in mind that this is a platform for funding dreams. It’s not Amazon. com.
i’ve never been ripped off on amazon.dreams are no reason not to have safeguards in place.
I’m just pointing out that it’s a different proposition on Kickstarter. You are not buying the product described on the project page. You are funding the project…and it may result in the product…and if that’s the reward you chose, you’ll get that product.That’s a wholly different experience than buying a product on Amazon.And I’m not pointing this out as a way of saying there should be no safeguards.
i’m with you Jim.
Great point. I’ve funded about 100 things on KS that I wanted to see exist in the world. Whether they ended up existing is, to me at least, a wholly separate point. My gesture remains intact and valid.
Keep making the world a better place, Andy!
I don’t think you’re alone (I got done for $50 too, different project). On the other hand I don’t think it’s useful to think of ks as a shopping cart. You’re offering a gift.
We are *extremely* focused on system integrity, and always have been. It is our #1 concern. I fully stand behind the track record of Kickstarter and our creators.Still, no matter what systems are put into place, there will never be a 100% success rate when it comes to creating something new. To create is to take risks — things won’t always go as planned.It’s our job to make sure everyone who uses Kickstarter is aware of the nature of the creative process, and to weed out bad actors. We do a tremendous amount on both of those fronts. Again, I fully stand behind our record but no system is fool-proof.For more on our perspective, check out our Trust & Safety page:http://kickstarter.com/trust
There are loads of corporations out there with Mission Statements, all centred on trust and safety, etc, etc. We all know that unless there’s proof, it’s just words and hot air. Can you actually demonstrate what you do and have done to weed out bad actors? Do you have data on that?
I like it when Kickstarter is used by startups not just to test the product with users, but also as a precursor to equity financing.They show demand via Kickstarter, then it makes their financing easier and better.The challenging part becomes how to price the product- to maximize sales or buffer profits in case the financing doesn’t go so well?What are your thoughts on this last question?
well you should at least cover your costs with your pricing
I had a friend who launched a Kickstarter and after the Kickstarter campaign generated lots of interest he decided to cancel it because he received investment offers from some angels that he chose to pursue. It was a $100K project and he was over 50% funded when he pulled it, so I was surprised, but I suppose when you have a week left and haven’t hit the goal and have other offers on the table, taking the angel offer was a “safe” bet. What would you guys have done in that situation?
I’d need to know more about this situation. What’s the benefit of pulling out, unless they felt they couldn’t reach their goal? Why not take the Kickstarter money AND the angels? Typically, you know early if you’re going to be a hit or not. The first 3-7 days are critical.
I’m not sure. I have read stats that suggest about 90% of Kickstarters that hit 50% fully fund, but it did seem like they’d have a tough slog over the last few days to get there. The rationale I was told was that it’d be extra work to fulfill the kickstarter rewards versus just taking the angel money. Personally I felt that completing the thing and the organic excitement from people receiving the fulfilled rewards would have been worth it, but the other issue is that realistically the product was more of a B2B play than a consumer play.
I’ve been involved with 7 campaigns now and in no way was it locked or indicative of success in the first week.What type of projects and what size raise are we talking about?Kickstarter success is all about preexistent networks and just hard smart marketing work.It takes time. This is not to my experience big bang marketing.
I’m curious to what extent this is in response to upcoming competition from cryptocurrency based crowdfunding sites…
zero. but i do agree that blockchain based crowdfunding is a very interesting idea whose time will come
Thanks! Interesting to know. Agree, it is definitely some ways off before the crypto-based systems will be able to compete with Kickstarter.
I know successful companies aren’t obligated beyond the rewards that they state in their funding but I also think that over time, if many many companies become extremely successful after getting seed funding from Kickstarter, that questions will begin to be asked about the compensation model and look at greater general regulation (not in favour of regulation mind you….)
i don’t agree. you get the reward. that’s the deal. i don’t see any evidence that backers are having issues with this model.
Also I think there is added complexity in an investor relationship that might make participating less appealing to the general populace.
You get what you pay for. Pay for what you get.
Leigh- Kickstarter should not be used as a funding mechanism. Rather, it is to prove the validity of your product and its potential market acceptance. In many cases, it helps to finance your first production run.
Oh I agree about that….is there an upper limit people can raise? I’ve seen some huge amounts but I’m sure that’s not the majority.
prove the validity of your product and its potential market acceptanceI think the name is near perfect “Kick start” for what it does.The pope has an audience, but your product doesn’t. Without a kick start or gimmick which draws initial attention.The hard part of selling any worthy product is putting yourself in front of an audience that could use your product. Doesn’t mean they will buy but means they will consider (of course you have to strip out all the social proof that clouds the picture). This is also what Shark Tank does. Power of network TV. (According to Shark Tank the best company funded in 10 years is only doing $10 million now, Scrub Daddy..)Anyway, the question then becomes can it be duplicated with multiple products and on a larger scale without the benefit of “a kick start”?If you are selling “Scrub Daddy” and get kick started on Shark Tank you then have a distribution network and an audience (buyers at large chains) that will listen to you for your next invention. Otoh is there a similar thing that happens with Kickstarter? What is the data on follow up products? (I don’t know the answer so I am asking.)Hmm, maybe Kickstarter needs to develop inroads in the area of retail or online product placement to help with this. In other words alternative distribution channels (or maybe that’s a job for a spinoff or separate startup.) for successful projects (with products that is).
The biggest thing Kickstarter could do to help everyone out is to limit the number of things a single individual can be part of. Every single individual involved in a Kickstarter should be catalogued and when they are part of ONE kickstarter, they shouldn’t be part of any MORE until they COMPLETE the last one.That way, we avoid tons of kickstarters with little to no completion rate.
how does KS verify the identity of project founders?
They do it during the onboarding process of new project creators. Its tied to the funding mechanism
Not sure I agree at all.Some people are ideas people. KS is great way of validating which ideas have legs.Not sure either that “tons of kickstarters with little or no completion rate” is a negative metric. The measurement of success should be the number that complete irrespective of how many fail.To Fred’s main point however, KS brand is largely based upon the curation and they meddle with this at great risk.
When a CBS sitcom like 2 Broke Girls centers an episode around hipster Kickstarters, you know you’ve attained ubiquity – http://www.cbs.com/shows/2_…
funny–it used to be when you brand made it as a Jeopardy question you had crossed over.Still have a recording somewhere of the first time that happened to one of mind in the 90s.
So according to @ystrickler that’s happened.https://twitter.com/ystrick…
There was even a whole Jeopardy category!https://www.kickstarter.com…
This works well for multiple parties. Brand, audience and creator.My feeling is that shows gain greatly from attaching themselves to real brands even if those brands are particularly widely known.If you are watching a movie and see “Tequila” on a bottle of liquor it’s kind of lame and makes the movie seem phony and made up (which of course it is).Otoh if you are watching and see the Patron bottle your brain thinks “yeah I know that” and it’s a positive (instead of neutral or perhaps negative). And depending on the product (and even how widely known it is) this effect can really be pretty intense. So while shows might extract $$ from brands for this it’s to their benefit normally if it fits with the story line and isn’t overdone.Imagine if we were watching some lame network show and all the sudden someone is shown commenting and using the Disqus commenting system? It would be like visiting some foreign country and finding someone that lives on your street. (Did you ever notice how any similarity in a foreign place seems like a bigger deal than it would be in your usual place? God knows if I ever walked into my local starbucks and saw someone reading AVC.com ..)
“… new kinds of projects, including bath and beauty products and more types of software. And we’re now allowing hardware projects to offer multiple quantities of a reward.”Software…yea!!!Umm…what was wrong with bath and beauty products under the old model? Were clean and pretty not hip?
Pando Daily had a big dustup about a project on Indiegogo that was a scam. When in human history haven’t their been scammers? Best way to kill scammers is transparency and to severely punish them.I like the fact that they are streamlining their UX. That will drive more throughput. It would be interesting to know the stats on how many projects were abandoned during the sign up process. Operations people would call those “balks”.I dislike the new crowdfunding law that passed for similar reasons. We should open it up to everyone. Everyone should be free to choose what they want to do with their own money. Yup, there will be scammers.
Baulks /balksEtymology as in balcony – stops you falling – or German balken – cross beams (holds things up)So for onboarding very correctly named – I baulk at the idea that it is reserved for ops people though !
Here here! The current rules reek of rich getting richer…or only the rich are smart enough (to protect the less rich).
Best way to kill scammers is transparency and to severely punish them.What is your suggestion to “severely punish” them? We should open it up to everyone. Everyone should be free to choose what they want to do with their own money.Ha!. What kind of rarefied world do you live in?People are morons and need to be protected from things you (or I) would never even imagine are a problem or even exist.
I don’t have a suggestion-maybe fines, maybe some community service time?As far as people and their own money, we have a different view.
Look I’m all for having white collar criminals clean toilets on the NJ Turnpike (that is actually my invention by the way..) but I’d hardly say community service and fines are a serious deterrent for a scammer. And of course this assumes there is (what is it called?) nexus to even prosecute things like this.I still get spam and I still get junk faxes (and there have been nice fines attached to faxes). Or for that matter “do not call” calls.The chance of a bad outcome (that actually happens, “the stick”) is far outweighed by the benefit of the scam. (I just roughed it out on the napkin and drew that conclusion).As far as public shaming there are enough people that don’t care about stuff like that (when juxtaposed to making a buck that is) to make that non effective (in case anyone suggests that).Quite frankly I’m really surprised there isn’t more scamming on kickstarter. Unfortunately it is almost impossible for me to believe that there won’t be more of that as it grows and we will have some nice examples of it. It seems almost trivial to do if you study the model of kickstarter and how and what projects get funded. Frank Abignal would have had a field day with this if it was available back in his day.
Do we know how these funded projects turn out down the road? Has there been enough time?
What happened Q2-Q4 2013 and how did Kickstarter respond? That is an amazing illustration of resiliency and one that is to be applauded.
I definitely believe Kickstarter shows exactly why curation is crucial. At least up until a point. And in reality, they will still curate what’s discoverable on kickstarter.com, and folks will likely still only see the best projects — everyone else will be hidden and left to their own devices for generating traffic and funders, just as they were before.Still, “open” can be good. And after reading Gotham Gal’s post yesterday, I had to wonder if CircleUp and other equity crowdfunding platforms would benefit from being more open. AngelList is, and it’s by far first of mind when it comes to crowdfunding a company online. Its also self-selective, in that most people know that listing a company on Angel List prematurely can do more harm than good for the company itself; it has its own built in quality control without actively turning anyone away. Is there something there that CircleUp can learn from?
Interesting points Brandon.Just keep in mind that most things on Kickstarter are projects, not companies. So, they couldn’t necessarily go to the other platforms you mention.
Fred maintains that keeping marketplaces open, no matter the vertical, is the way to go. I’m not saying that’s right or wrong. Which is why I wonder if there are feelings that CircleUp, another heavily curated USV marketplace, would also benefit from being more open.
For sure, they would. Likely held back by regulation.
Don’t fall into Xerox trap and have the name turn into a verb.
Let’s Disqus that after I Google it.
I don’t comment much on the internet but when I do I always use the disqus brand commenting system.
Spoken like a true man of the world.
Love that Kickstsrter’s focus is Film and Arts. Is Kickstarter working with Film and Acting schools and Film Festivals? Collaborating with Hollywood Execs?
I <3 KickstarterSmart move. Badass company. #YanceyBump
I have a vested interest in this. Can someone clarify the charity clause? Is it a ban on raising funds for charity – or a prohibition of building a charitable organization in its entirety?
We prohibit raising funds for charitable causes in general. Kickstarter is a platform for creative projects. Obviously charitable fundraising is very important, but there are plenty of outlets already for that. We’re guided by a mission to support and encourage creativity.
I have developed and beta tested a creative charitable educational program. Involving technology development. I would very much appreciate the opportunity to at least be vetted.
what is your definition of creativity?
…and no – there are never enough charitable movements.
Off the top it sounds like a way to goose or game the number pre IPO.
“They massively simplified their rules (from over 1000 words to under 300 words).” — This point alone inspires a fresh look at KickStarter for me. Glad I stopped by AVC today.
These changes fit appropriately into a book called “the top ten mistakes marketers make”. Rule #1 is “make sure to have principles.” Kickstarter has instead decided to chase market conditions – which is the death knell.The integrity that made Kickstarter what it is and distinguishes it is headed down the toilet, and the brand along with it. They are committing such a classic blunder it makes my skin crawl.To be more clear……there’s a place for Walmart and a place for Patagonia. Apple became Apple based on their principles, so did Walmart, etc.My argument isn’t whether “they will be fine” as Fred muses, but rather will they be special? Chasing Slava and Indiegogo is my issue. “Let’s be like them and abandon what made us great.” Even Fred admits the curatorial approach was “clearly the right approach” so what is the justification to abandon your principles to chase someone else’s model? That’s my issue.If a management team has that much flexibility in the definition of who they are they are at risk over time diluting their core audience. Kickstarter has some of the most powerful brand equity in the market place today. My contention based on what I know about user behavior is that Kickstarter just chased Indiegogo to be more like Indiegogo at the risk of their own identity which leaves the door open for a new entrant to assume the high end brand and user experience position open for encroachment.Kickstarter by its own admission is no longer going to own that position. So, who wants it It’s anybody’s ball game. Time will demonstrate that position will be usurped by a new entrant just as if they are all playing musical chairs… It’s more likely than not that Kickstarter will be left scrambling to find an empty chair.BTW – the reason ‘the pressure’ is coming for kickstarter on a macro-level is because they reside at the individual execution layer of entrepreneurship, innovation, maker economy, etc. Right now the enterprise and individual layers of entrepreneurship continue to be iterated on through technology without fundamental changes to the systems layer. Instead of mimicking a competitor, educate stakeholders up the value chain on how to ‘grow the game’ of the industry in general. Iterate the systems layer, grow the market size.
Son of a bitch I wish Voomly had this kind of decision to make.Champagne problems… nice work KS!
What exactly constitutes a “scam” on KS? Is it as simple as non-fulfillment of a contribution reward, or as extreme as outright embezzlement of funds? How pervasive is either scenario. If a project creator makes a good faith effort post-funding to launch, as subjective as “good faith” may be, who functions as arbiter? Are contributors protected by credit card companies buyer protection policies? Clearly there’s a lot more Q than A.Bottom Line: If you can’t afford the risk, then don’t invest. KS likely is indemnified against liability, that’s their protection, but they are most def at risk from a goodwill standpoint, even if scammers represent a fraction of a % of funded projects.Even a single scam has the potential to become a huge PR nightmare.
I wish you could donate on kickstarter without having to create an Amazon account.
Dbasz o swojego pupila? Wobec tego zapewnij mu stosowną ochronę lekarską. Tylko weterynarz warszawa może przeprowadzić zabiegi lub badanie i przepisać leki. Jeżeli wobec tego Twój ulubieniec nie czuje się najodpowiedniej- nie czekaj. Odwiedź naszą profesjonalną przychodnię jak najprędzej. Nie zapominaj, liczy się każda chwila. Liczy się także profesjonalizm, który my się charakteryzujemy. Jesteśmy fachowcami, którzy kochają zwierzęta i pragną im pomagać.
In the recent years, crowdfunding has become a viable option for startups to raise funding for their new products. Indiegogo was among the first platforms, having been launched in early 2008, and is still popular. Kickstarter was launched in 2009, and is probably the best known platform of its kind, though dozens of others have been created since. Source :http://www.rocketcompanies….