You’ve no doubt heard about Kickstarter. If not, what have you been doing lately?
In case you don’t know: Kickstarter is a platform to fund things. That thing can be a technology project like a gadget, a film, a documentary or initiatives to help local communities.
It’s a very early player in the so called ‘crowd funding’ scene.
A couple of examples of projects that Kickstarter has helped fund: The Oculus Rift, the Pebble smart watch and the Coolest Cooler. All of these projects were highly funded, meaning they were very popular amongst the Kickstarter users. The Coolest Cooler raised over 13 million dollars, in exchange the backers get something in return (e.g. one of those coolers).
How Kickstarter Works
It starts with a project that someone (a team or a company) wants to start. That project has a goal. That goal can include things like:
- Building a new gadget
- Making a song or album
- Making a documentary, video or film
- Making a book
- Putting on a theatre show
- An educational program
Basically, it can be anything as long as it benefits someone in some way.
To make anything happen these days you need money. The Kickstarter project asks the crowd for money in exchange for the goal.
Once the project is on Kickstarter, its users can ‘back’ that project. Users get something in return for backing a project.
In order for a Kickstarter project to be successful, the funding goal which the project owners have set must be met. Only when funding is met, will the project actually be funded.
Once a project is funded the project team must do the work and provide the backers with whatever they were promised. So if the Coolest Cooler team promised every backer with a cooler, they have to go and work hard to do exactly that!
An Example of a Kickstarter Project
Lets look at that Coolest Cooler example in some more detail so you fully understand how Kickstarter works.
Its official name is:
COOLEST COOLER: 21st Century Cooler that’s Actually Cooler
Their official short description:
The COOLEST is a portable party disguised as a cooler, bringing blended drinks, music and fun to any outdoor occasion.
So that’s the production company’s project. They want to make a cooler that cools drinks and more. So they started a Kickstarter project to ask for funding to develop, manufacture and distribute the cooler, because doing that costs money.
So they ask for money via a pledge, and if you pledge something, you get whatever they promised via that pledge.
So one type of pledge can be:
If you pledge, say 200 dollars, you get a Coolest Cooler!
If you pledge, say 400 dollars, you get a gold plated Coolest Cooler!
That way, the Coolest Cooler team gets funding to build something cool, and you get something in return too.
Three Wildly Popular Kickstarter Projects
There have been lots of very successful Kickstarter projects. I’ll describe three of them.
By successful, I mean that they have received lots of funding. It doesn’t necessarily mean that the projects have turned out to be what the project teams promised. More on that later.
The Oculus Rift
Official title: Oculus Rift: Step Into the Game
Official tag line: Developer kit for the Oculus Rift – the first truly immersive virtual reality headset for video games.
The Oculus Rift is a new Virtual Reality (VR) set, that has really re-ignited interest in Virtual Reality. It’s designed to bring you a fully immersive VR experience, with a focus on gaming. It has some high end specs for VR goggles (compared to those of the past):
- Wide view angle
- Low latency head tracking
- High resolution
What the above means for the non-technical people: It will feel truly 3D, it will follow your head movements quickly, so if you look left, the scenery will change to match your new view, and because the screens are very close to your eyes, it’s important that it has a high resolution.
It’s built for gamers, with backing from John Carmack who made Doom and Quake with id software. This could be the next evolutionary step in the world of gaming.
The Oculus Rift Kickstarter project was very successful, it raised 2.4 million dollars, and most of that was for further development of the system, rather than manufacturing large numbers of systems.
Since the Kickstarter project launched, the Oculus Rift was sold to Facebook for roughly 2 billion dollars. When someone is willing to pay 2 billion dollars for something, they see potential!
Bottom line: Because of Kickstarter, Oculus Rift were able to make major headway in developing Virtual Reality.
The Pebble Smart Watch
We’re referring to the original Pebble Smart Watch project, it was so successful that there have been follow ups.
Official title: Pebble: E-Paper Watch for iPhone and Android
Official tag line: Pebble is a customizable watch. Download new watchfaces, use sports and fitness apps, get notifications from your phone.
It seems as if a craze is going on about smart watches, that’s in part due to the Pebble Smart Watch (and in part due to the Apple Smart Watch, and Android Smart Watch).
The Pebble Smart Watch has an e-paper based screen, meaning that the screen is like on those of e-readers, and it has smart device capabilities, much like your iPhone or Android phone, only more basic.
Lets start with the screen: Because it’s e-paper based, it can show graphics, in a black and white format. It doesn’t look amazing, like an iPhone or Android smart phone screen, but it looks good enough. Because it’s based on e-paper, it doesn’t use much batter power. So your Pebble Smart Watch has about a weeks worth of power. Compare this to the Apple Smart Watch, which is one day on a full charge!
The smart aspect: You can run apps on your Pebble Smart Watch, which is very cool. These apps can do anything from running an alarm clock, stop watch, to getting the latest stock market information. Of course, you don’t want to have too complicated apps on a smart watch, because the screen is small, the battery is small, when compared to a smart phone.
The Pebble Smart Watch Kickstarter project raised more than 10 million dollars. That’s a massive amount of funding!
Not only that, but due to the Kickstarter project, the Pebble Smart Watch got a lot of publicity. So it’s safe to say that the success of funding, but also future sales, is down to Kickstarter for a large part.
Since the original Pebble Smart Watch, the Pebble company have also released newer versions. These were also launched via Kickstarter, showing that Kickstarter is not only a funding platform, but also a product launch and marketing platform.
Bottom line: Without Kickstarter, it’s likely that the Pebble wouldn’t be as successful as its been. In fact no where near as successful. Kickstarter has also shown that it’s a great way to release a product, whether you need funding or not.
Kickstarter has contributed to the development of the smart watch space, because without the funding, the Pebble Smart Watch would not have been as popular as it’s been. As a result of its success, Apple and Android also took notice of the potential of smart watches.
The Coolest Cooler
Official title: COOLEST COOLER: 21st Century Cooler that’s Actually Cooler
Official tag line: The COOLEST is a portable party disguised as a cooler, bringing blended drinks, music and fun to any outdoor occasion.
What do you need when you go for a picnic in the park?
You need: a cooler, food to go in the cooler, drinks to go in the cooler and amazing music.
So the COOLEST actually provides everything you need (except for the actual food and drinks).
Not only that, but it looks good too.
This is a great example of a product line that has not innovated in a long time! Because let’s face it, normal coolers are simple, cheap, and above all NO FUN.
The Coolest Cooler is cool, and can do a bunch of handy thing for your picknick.
The Coolest Cooler Kickstarter project got a massive amount of funding: more than 13 million dollars. So it’s safe to say that it was a huge success.
The Coolest Cooler project has recently had a bit of controversy though. It’s had trouble delivering the product to many of its backers. We’ll update you on this soon, and more on the general risks involved below.
Bottom line: Kickstarter, and the Coolest Cooler project, has given the world a major upgrade to a product line that hasn’t seen much innovation. Without Kickstarter, it’s doubtful that such a product would have existed.
What are the Risks Involved in a Kickstarter Project?
When you do something great, like change the world of funding, and give the world amazing new products and services, it’s not all plain sailing.
What Kickstarter gives us, and this is the case for crowd funding in general, is for innovative people and ideas to get funding much earlier than was possible in the past. Try developing a smart watch or cooler, manufacturing it, distributing it, on little to no budget. It just doesn’t work. A Kickstarter project, if successful in its funding goals, can give a team access to money much earlier on.
But that’s also where the risk lies: a team doesn’t know for sure if they can actually develop, manufacture and distribute a product that doesn’t exist yet, on time or on budget. So its backers are taking a bigger risk than say, buying an existing smart watch or cooler from the shop.
In fact, there are HUGE challenges in building new hardware in all sorts of aspects. There can be challenges developing something new, or maybe developing something new that will be cheap enough given the fiscal requirements of the project, or outsourcing manufacturing to China. Not to mention risks such as the project team having internal issues, or just plain old people making mistakes.
Before pledging to a project, make sure you understand the risks involved.
Kickstarter has made it easier to understand the risk, by including a risk section to each project description. This section is called ‘risks and challenges’, and each project must think and describe them carefully to be accepted as a Kickstarter project.
Kickstarter have become a new type of company, and I mean that literally.
In the US, there’s a new type of company called a ‘public benefit corporation’, this is instead of the usual corporate entity.
A public benefit corporate is different because it means that the company (Kickstarter), is not only interested in making the maximum possible profit to please its shareholders, it is also interested in providing benefit to the public and community. It’s kind of like an in-between of a non-profit and a for-profit company.
That’s cool, because it shows that Kickstarter is interested in being more than your average for-profit company!
The impact of Kickstarter on the world has been huge. It’s increased innovation, it’s increased participation on consumers, citizens, and locals to improve their community.
To date, Kickstarter has raised 2.1 billion dollars, spread over 96,428 projects. That’s a lot of money and a lot of projects! At the moment, they have 42 million dollars in live projects, which means that there are currently people who have pledged 42 million for an ongoing funding drive. That’s also a huge amount.
It will continue to be in the news a lot due to the large amount of new and interesting things coming from Kickstarter projects.
I’ve talked about three very successful projects, and they truly are an improvement on the existing offering.
What do you think about Kickstarter? Have you ever backed a project? Or are you planning to get funding for a project yourself?