Hardware is expensive. Plastic injection tooling, PCB fabrication, PCB assembly, component purchases, FCC and EU and UL testing and certifications. Something like Kickstarter makes it possible for an engineer, such as myself, who does not have $200K in the bank, to use the skills I use every day for large companies, and create something new in the world.
For somebody to suggest that the one endeavor that needs Kickstarter type pre-funding the most, be the one endeavor that should never be entitled to it, all because they're mad because their own attempt at funding was rejected, pisses me off.
Promoting some sort of system where I get money only after I'm ready to ship, leaves me scratching my head. If I have a warehouse full of product ready to ship, I can go get traditional purchase orders the old fashioned way. What problem would such a system be addressing?
A pledge to buy something can be converted into money. In traditional industries it's quite common to get bank loans against accounts receivable and/or outstanding purchase orders.
Without a history of delivering product, a bank won't give you a loan against pledges (aka PO's), but there certainly should be lots of people who would give you a loan or buy equity.
If you can say to a VC "I've got a million dollars worth of orders, I need $500K to build them", you've got a much stronger story when talking to VC's than most do.
Hardware needs pre-funding more than anything. The article is opening up a discussion for alternative models that work better than Kickstarter.
The problem with Kickstarter's approach is that oftentimes, the reality of the product is divorced from the perception of the product. There are countless examples of high profile hardware products that failed to deliver on expectations. That hurts the Kickstarter brand.
Kickstarter can't be expected to guarantee projects. It's too costly. And it opens them up to liability.
I'm not suggesting that self-starter is the final version of this model. It's an evolutionary process - and an opportunity for a new startup with a different approach.
One of the problems with the Kickstarter model is that companies were offering product in exchange for funding.
They should have been offering stickers and mentions on a "Thank You" page, or tours of the factories, or some such. That would have created better expectations in the minds of funders.
Or they could have offered vouchers - "Pay $X, we give you a voucher that entitles you to one free widget if we go into production".
The current "challenges" question is not being answered as well as it could by several projects. It feels a bit like the "What are your weaknesses" interview question, where people are dodging the real answer and giving feel good sound bites. I have a lot more trust in the projects who make a solid attempt at answering that question fully.
I would suggest respectfully engaging the Kickstarter folks in a discussion about your project. I had a hardware project rejected in the same manner, except I did not leave it at that. I engaged the KS staff, stated my case, qualifications, and had a general discussion about the project. A few days later they authorized it. In fact, I have more than one approved project in the pipeline. I have found them to be nothing but reasonable.
The project isn't up yet because my approach --having owned a hardware manufacturing business at one time-- is to have a fully engineered, DFM'd, production-ready product prior to launching the KS campaign.
I hate surprises. I've run into plenty of them in my design and manufacturing career. Things like sole-source components discontinued by the manufacturer a month before you go into production after THEY recommended we use that component and we spent eight months developing product using it.
Yes, hardware is different. That does not mean it is impossible.
How did you engage them? Do you know someone? When I got rejected I just got a form with a few characters to explain why I wasn't violating the rules (they did not say which rule I was violating).
> Kickstarter has taken a half-measure when it comes to hardware projects. It should take a full measure—and remove hardware as a category.
Agreed. Hardware projects are too high-risk for a model like Kickstarter's, and it's difficult for crowdfunders to be fully informed about that risk when even the makers are often inexperienced.
Worse, they're all or nothing. If one of the major videogame projects runs out of funds, they can still release a beta version or even open source it. If someone is unable to finish a book, they can still send you the latest draft. When hardware projects fail, they probably can't ship anything.
This is we like the selfstarter model. Backers don't get charged until the product is ready. And project creators are incentivised to use efficient techniques that get their product to market quickly.
There are flaws with this too, which I touched upon in the post. I think this is an opportunity.
I don't think it is a good idea that the backers are only charged when the product is ready to ship. After all, this is all about getting the resources so that you are able to ship. When the backers don't pay upfront, you don't have those resources. So to me it seems you are looking at Kickstarter as a distribution channel, not as a funding opportunity.
I believe there's an opening for a crowdfunding model focused purely on hardware startups. Perhaps some of you are already working on it.
App.net, Lockitron and most recently Lumawake helped kick this off, with selfstarter. We contributed some changes back to help push it along: https://github.com/lockitron/selfstarter
There are flaws with this approach (no third party payment verification, no established network of donors). Which leaves room for further improvement.
Kickstarter is clearly focused on creative (which they're doing incredibly well with). The 2012 Kickstarter summary didn't mention any of the massive hardware projects.
I'm curious, what made you go with Lockitron's model? We've been working very hard on our cf product - IgnitionDeck, and would love to get into your head about how/why you chose that over other solutions.
I've been following the space pretty closely and I agree that there's a ton of opportunity. I'd love to pick your brain over beers - where are you guys located?
Loved that article, it is an excellently crafted critique of Kickstarter (general interest) which is melded to a call to action for their rejected Kickstarter (Bytelight). So at one level it reads "Kickstarter rejected us, we're bummed we don't have all their eyeballs, we used the Lockitron example to try to fund our product design."
When I saw Kickstarter I had the same feeling I had about Ebay (although initially Ebay weathered its risk storm) which was given the larger audience for the product (Ebay occasional sales, Kickstarter small investment) you could get better results than the customer could on their own. And people abused EBay too (selling stolen or counterfeit goods, ripping off buyers when nothing was shipped).
Perhaps there is a 'Craigslist' model of funding referral service to achieve the wide reach but stay hands off enough to keep out of the lawsuits. Ebay's solution to monetizing that was both a listing fee and a selling fee, something Kickstarter could also do (assuming it isn't patented).
Exactly. There are good points about the problem with kickstarter's hardware section, but when they keep pushing their own bytelight or whatever it sounds more like complaining cause they didn't get accepted. Comes off as, 'we didn't get accepted and we have a plan, so there must be a problem, and thus kickstarter should remove hardware projects entirely', as opposed to, 'based on the failure rates, kickstarter should reconsider if it needs to include hardware projects at all'.
Indoor positioning using LED lights. Our market is in enterprise (not the home).
We're using selfstarter to experiment if there's enough demand for individual developer/hacker kits. It's not economical for us to sell small orders unless they're batched together.
It's not correct to label this "The Problem with Kickstarter".
It's a rant about how complicated it is to finish hardware projects.
Kickstarter does movies (I didn't know that, I learned it here in the Kickstarter 2012 retrospective), lots of software, comics, publishing, etc.
So please rename to: "The problem with Kickstarter hardware projects" or something.
Kickstarter needs praise and applause because it is great and bringing joy to many backers and founders. Not criticism because one type of project have a 75% failure rate.
Kickstarter has been responsible for funding Oscar nominations, museums, and countless creative projects. Their 2012 summary is full of stunning success stories.
The goal of this post is to kickoff a discussion about alternative crowdfunding models that work better for hardware startups. It's clear that Kickstarter is moving away from these and focusing on creative.
pdx|13 years ago
For somebody to suggest that the one endeavor that needs Kickstarter type pre-funding the most, be the one endeavor that should never be entitled to it, all because they're mad because their own attempt at funding was rejected, pisses me off.
Promoting some sort of system where I get money only after I'm ready to ship, leaves me scratching my head. If I have a warehouse full of product ready to ship, I can go get traditional purchase orders the old fashioned way. What problem would such a system be addressing?
bryanlarsen|13 years ago
Without a history of delivering product, a bank won't give you a loan against pledges (aka PO's), but there certainly should be lots of people who would give you a loan or buy equity.
If you can say to a VC "I've got a million dollars worth of orders, I need $500K to build them", you've got a much stronger story when talking to VC's than most do.
dpryan|13 years ago
Hardware needs pre-funding more than anything. The article is opening up a discussion for alternative models that work better than Kickstarter.
The problem with Kickstarter's approach is that oftentimes, the reality of the product is divorced from the perception of the product. There are countless examples of high profile hardware products that failed to deliver on expectations. That hurts the Kickstarter brand.
Kickstarter can't be expected to guarantee projects. It's too costly. And it opens them up to liability.
I'm not suggesting that self-starter is the final version of this model. It's an evolutionary process - and an opportunity for a new startup with a different approach.
DanBC2|13 years ago
One of the problems with the Kickstarter model is that companies were offering product in exchange for funding.
They should have been offering stickers and mentions on a "Thank You" page, or tours of the factories, or some such. That would have created better expectations in the minds of funders.
Or they could have offered vouchers - "Pay $X, we give you a voucher that entitles you to one free widget if we go into production".
The current "challenges" question is not being answered as well as it could by several projects. It feels a bit like the "What are your weaknesses" interview question, where people are dodging the real answer and giving feel good sound bites. I have a lot more trust in the projects who make a solid attempt at answering that question fully.
ollysb|13 years ago
robomartin|13 years ago
The project isn't up yet because my approach --having owned a hardware manufacturing business at one time-- is to have a fully engineered, DFM'd, production-ready product prior to launching the KS campaign.
I hate surprises. I've run into plenty of them in my design and manufacturing career. Things like sole-source components discontinued by the manufacturer a month before you go into production after THEY recommended we use that component and we spent eight months developing product using it.
Yes, hardware is different. That does not mean it is impossible.
Bradosaur|13 years ago
DanBC2|13 years ago
TillE|13 years ago
Agreed. Hardware projects are too high-risk for a model like Kickstarter's, and it's difficult for crowdfunders to be fully informed about that risk when even the makers are often inexperienced.
Worse, they're all or nothing. If one of the major videogame projects runs out of funds, they can still release a beta version or even open source it. If someone is unable to finish a book, they can still send you the latest draft. When hardware projects fail, they probably can't ship anything.
dpryan|13 years ago
There are flaws with this too, which I touched upon in the post. I think this is an opportunity.
auggierose|13 years ago
dpryan|13 years ago
App.net, Lockitron and most recently Lumawake helped kick this off, with selfstarter. We contributed some changes back to help push it along: https://github.com/lockitron/selfstarter
There are flaws with this approach (no third party payment verification, no established network of donors). Which leaves room for further improvement.
Kickstarter is clearly focused on creative (which they're doing incredibly well with). The 2012 Kickstarter summary didn't mention any of the massive hardware projects.
nhangen|13 years ago
FelixP|13 years ago
ChuckMcM|13 years ago
When I saw Kickstarter I had the same feeling I had about Ebay (although initially Ebay weathered its risk storm) which was given the larger audience for the product (Ebay occasional sales, Kickstarter small investment) you could get better results than the customer could on their own. And people abused EBay too (selling stolen or counterfeit goods, ripping off buyers when nothing was shipped).
Perhaps there is a 'Craigslist' model of funding referral service to achieve the wide reach but stay hands off enough to keep out of the lawsuits. Ebay's solution to monetizing that was both a listing fee and a selling fee, something Kickstarter could also do (assuming it isn't patented).
brandonsavage|13 years ago
therobot24|13 years ago
rnernento|13 years ago
dpryan|13 years ago
We're using selfstarter to experiment if there's enough demand for individual developer/hacker kits. It's not economical for us to sell small orders unless they're batched together.
martinced|13 years ago
It's a rant about how complicated it is to finish hardware projects.
Kickstarter does movies (I didn't know that, I learned it here in the Kickstarter 2012 retrospective), lots of software, comics, publishing, etc.
So please rename to: "The problem with Kickstarter hardware projects" or something.
Kickstarter needs praise and applause because it is great and bringing joy to many backers and founders. Not criticism because one type of project have a 75% failure rate.
dpryan|13 years ago
The goal of this post is to kickoff a discussion about alternative crowdfunding models that work better for hardware startups. It's clear that Kickstarter is moving away from these and focusing on creative.