Crowdfunding to learn from

Crowdfunding signDuring the planning and development of a new product, I’ve looked closer into crowdfunding. The most well-known crowdfunding sites are Kickstarter, Indiegogo and here in Sweden possibly FundedByMe. This is a popular way of funding tech projects by startups for mainly three reasons: getting publicity, engaging with prospective customers and of course getting funding. Perhaps surprisingly, the funding aspect may not be the most important factor as there are more obstacles to product development than meets the eye.

Many tech products have been successfully crowdfunded and maybe owe their existence to it. A few that come to mind are immersive 3D glasses Oculus Rift, lifelogging camera Narrative (based here in Linköping, by the way), smartwatch pioneer Pebble and gaming platform Ouya. While Ouya hasn’t been a smash hit for gaming, it did deliver on its promises.

However, after a couple of years of high popularity, a fair amount of failed projects has surfaced with bad publicity and disappointed backers as result. Crowdfunding seems to be in for a backlash as some exclaim how they will never back a crowdfunding campaign again. People are realizing that while many can start a fundraiser, not that many can build a company to develop and deliver a mass-produced technology product.

While it’s nice to hear of projects that reach its funding goal and successfully delivers as promised, the failures reveal more of what it takes. Gizmodo “7 Spectacular Crowdfunding Fails” is a fascinating read and insight into this.

dragonfly_20121103175338-Picture11_copyMy “favorite” failure is the Robot Dragonfly, where the campaign creators not only set out to create a life-like robotic dragonfly, but also cheerfully included aerial photography, surveillance, pet toys and military tasks among the use cases. A radio-controlled device that flies by flapping is certainly possible (ThinkGeek) but that’s a far cry from supporting photography or performing any meaningful tasks that can’t already be done easier in other ways. After two years the project has still not presented a video of a flying protoype and their project plan still doesn’t mention a plan for mass-production for delivering to backers. The project showed many warning signs from the start, such as focus on looks, lack of a strong use case, project schedule or a working prototype.

But identifying high-risk projects is not always as easy. The uniquely thin wristwatch CST-01 seemed to have the product pretty much done at the campaign launch, yet two years after receiving five times the asked funding they are still struggling with manufacturer quality problems. Now some backers are even debating a class-action lawsuit. As with so many projects, the perceived lack of updates is upsetting to many:

“It is not about the project failing but about these two scoundrels not even having the decency to keep their backers informed of whether the project is alive or dead.”

A project can also succeed in delivering, but fail to understand the technological limitations that apply. The electronic ring simply named Ring set out to simplify the control of smartphones, home automation and more by tracking how the wearer waves symbols with his finger. The delivered product was close to unusable partly due to the large size, shoddy firmware and counter-productive integration with smartphones. A thorough pre-study would have uncovered the limitations of battery and electronics size and smartphone functionality that doomed the project from the start.

“Obviously it does not fit my finger even though I spent hours in finding the perfect size. It was clear that they couldn’t put that much technology in such a small space. Actually one of the main reason for me to buy the Ring, it was to understand how they actually solved the space problem…well…they didn’t!”

The portable, wireless storage device MBLOK was stopped early, maybe saved from the same fate of insufficient tech research and experience setting a project on the wrong track from the start. Changes in specification and unanswered questions cast doubts with some backers that revoked their pledges and the project failed to meet the funding goal. Here’s a comment that reflects the suspicions:

“I have received no response to my simple question as the developer bickers with another user leading me to believe the company is run by inexperienced kids with big dreams but no experience. I will be withdrawing my pledge like so many others.”

KreyosThe Gizmodo article The $1.5 Million Indiegogo Smartwatch Horror Story tells yet another tale of a ambitious hardware project where money wasn’t the problem. The Kreyos Meteor smartwatch had a long list of shortcomings. One backer took a poetic stance in midst of the turmoil:

“There are three types of tragedies in life. One is not getting what you want, one is getting it, and one is crowdfunding a watch that doesn’t tell time.”

The honest post-mortem admits how the team was just made up of four marketers without technical expertise who allegedly fell victim to a fraud original design manufacturer. PC World makes a summary and contrasts Kreyos to Pebble:

“Kreyos’ campaign, by comparison, was nothing but a slick marketing smokescreen, built on promises from a single sketchy vendor. It is the epitome of crowdfunding gone wrong, and a shining example of why potential backers should be extremely skeptical of any hardware campaign without working prototypes and a proven track record.”

TechHive lists other examples of wearables projects in danger, such as AGENT, “The World’s Smartest Watch”, which has the usual slew of disappointed backers looking for refunds after seemingly endless problems with design and production, in this case dutifully reported in painful length. I think this fragment from the latest update is telling:

“Since we bought smartwatch components about a year ago in preparations for production, those bags are nearing their expiration dates.  We will be installing a dry cabinet which maintains desert-like low humidity and will be moving the parts into that ultra-dry storage to extend their storage life.”

Many things have become easier in the age of the internet, but the process of sourcing and setting up physical production seems to not be one of them. Even fairly simple projects without electronics can stack up large delays, such as the bicycle storage box Buca Boot. The project creator Kathryn Carlson summarizes her findings very well:

“It’s relatively simple to make 1 or 2 of something. In this modern era it’s surprisingly simple to make 100,000 of something. Unfortunately, if you want to make enough for your loyal Kickstarter Backers, and a few extra for an initial sales – say a run of 500-1,000 – things get very complicated”

EDIT: The site drop-kicker thoroughly examines the technical claims of some crowdfunding campaign with impressive expertise and objectiveness.

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