Crowdfunding Lessons Learned, "Unlocking Value," plus Kristin Bell, Zach Braff, and the Spider-Man Analogy

Is Kickstarter a place "to help bring creative projects to life," or is it nothing more than a convenient payment processing gateway?

In the weeks since my Kickstarter ended short of it's funding goal, I've had some time to reflect on the experience, think about the lessons learned, and mentally process the whole thing.

In the end, the breakdown of funds raised was about 20-30% from friends and family, most of the rest was from traffic that our marketing campaign drove to the site, and the remainder was from pure Kickstarter product design discoveries.

So what do I make of all that? Well that leads me to...

Lesson 1: Kickstarter is a Payment Processor

In short, the lesson is "Don't Kickstart anything you couldn't launch on your own." You have to drive your own traffic to Kickstarter, whether it's from friends, family, regular online marketing, or your personal network. Kickstarter just does the work of securely handling credit card payments, hosting a website that can handle the traffic, and providing an aesthetically pleasing, well designed page. So don't count on Kickstarter to drive traffic to your project, which isn't to say that it won't happen, just don't plan on it. The crowdedness of Kickstarter leads in some ways to a "tent poling" effect, where there are a fewer percentage of projects that make it on to the front page, but the ones that do score big. (Remember, only the really successful projects are the ones you hear about in the news.) But I digress... Anyway, by providing those e-commerce services and also provided the "all or nothing" funding model (which is a whole other topic of discussion, but I actually think is rather important), I actually think Kickstarter becomes a little more...

Lesson 2: Kickstarter is a tool for unlocking value in social networks.

Business types love the words "unlocking value." As in splitting up a company into smaller pieces to make the sum of the pieces worth more than the whole. It suggests that there's extra money locked away somewhere, and by taking some action, you can just free it! It sounds so good! But is it true? My friends and family saw how hard I worked on the Cookie Cup campaign leading up to it and they supported me, and I'm sure that a lot of that support had to do more with caring about me than the product itself. Whatever I'd decided to work on, they probably would have chipped in. Now, if I had just said, "hey guys, give me some money", they probably would have been annoyed, but having a project to work on with a clear cut financial goal, I was able to financially tap into the goodwill of my friends. So now I know that the value of my social network to me is worth at least a few thousand dollars, which is kinda cool. But if I had a larger social network, say... if it was the social network of all the patrons of a coffee shop, or a museum, or a band, that could be quite substantial. If you're, say... Kristin Bell or Zach Braff, and you have a million followers on Twitter, then the size of your social network is very large, and is very valuable. Kickstarter gave them a way to tap into the value of their social networks directly and capitalize on their "personal brands." From an economic point of view, that's pretty awesome. I mean, if someone is willing to give you money in exchange for something you haven't developed yet, essentially paying in advance, well, that's a phenomenal way to defray risk. But it also reminds me that Kickstarter is a for-profit company, here to take it's 5% cut as the payment processor. Is Kickstarter really trying to fund creative projects that wouldn't happen otherwise, or is it just acting as a middleman, providing a service (albeit a useful one), and making a market? When you see A-list celebrities on Kickstarter, you have to wonder. This is the part where Spider-Man comes in.

The Spider-Man Analogy

There been a lot of backlash against well connected celebrities who have gone on Kickstarter and raised funds directly through their fans, rather then from more traditional financial sources. On one hand, I think this is kind of cool. Once a star has made it, and has name recognition, they don't need the studios in the same way that they did before they were discovered. But I'm reminded of the line: "With great power comes great responsibility." Now, take Louis C.K. as an example. He had the financial power, put his own money down, took a risk and bet on himself, produced a show that he sold directly to his fans on his terms, and won. He didn't ask for any handouts, he just made something people wanted and sold it. Zack Braff on the other hand, used the money, fame, and connections that come from starring on a heavily syndicated, long running hit TV show, to..... help an undiscovered creative talent make it in Hollywood? No. He used that power to ask his fans to indulge him by funding a personal project. It's hard to say it's wrong for him to make money selling tickets to his fans for special showings, but what does he tell the kid just out of film school? You can ask people for no strings attached money, too, just become an A-list start first?

What next?

So, what next? Well... that's a bit tougher. A lot of people say that Kickstarter is a way to validate ideas, which is partly true. I'm certainly glad I didn't spend $25,000 of my own money on tooling and production, only to come up well short of what I needed to break even. I've gained a lot of valuable across the board experience, from factory sourcing to distribution to marketing and so on. But I'm also out more than half a years worth of time. I usually have about half a dozen ideas cooking at any one point in time, and although the experience I've gained I'm sure will make the process go faster, I don't particularly relish the though of spending another 4, 5, or 6 months on a project to have it fall short of it's funding goal. So I'm thinking of ways to do even smaller tests, probably thought the new storefront on www.awkwardengineer.com. This leads to the 3rd, and final lesson.

Lesson 3: Fail Fast

I've heard the expression before, "Fail as fast as you can," but now I've lived it. I'm naturally disappointed that the campaign didn't reach it's funding goal, but I realllllly wish I'd gotten through it maybe a few months earlier. The lesson is to learn if something works as quickly as possible, and move to the next stage or the next project.

So maybe you'll hear from me a little sooner than 9 months about what I'll be doing next. :-). I'll let you know soon. -Samaka The Awkward Engineer.