You know when you see something, and everyone who touches it makes a mountain of money, and everytime it happens, the $ values just go upwards, and it seems too good to be true?
It is.
That's called a bubble.
...and it'll burst as soon as there's a high profile kick starter ($million+) that fails and delivers nothing to the people who think they've pre-ordered something.
I like kick starter, and I appreciate what they're doing, but this isn't going to end well.
It's all very well to let people to setup their funding projects go, yeah, I can ship as many t-shirts as people signup for $20! Easy! ...but the reality is, shipping 50k t-shirts for $20 each isn't as easy as people expect.
This is really the problem: People are notoriously bad at making estimates for cost, time, size of projects.
Good luck to Pebble I say, I hope this works out for them. I hope we see this stuff all settle down and turn into a new awesome funding model and not into scammer hell~
4000 dollars in attorneys and CPAs? Ouch. The U.S. sure is expensive that way. It's nice of them to breakdown the costs.
The poster also looks really nice, but I didn't know such art would cost U$ 2.000 (I know some talented guys here in Uruguay that don't make as much in a month. They should try competing for those commisions).
PD: the game looks really awesome :) I didn't know about it, but now I'm looking forward to it.
PD2: That much money would hire me for a year, but I wouldn't be able to make Star Command on my own in a year obviously.
PD3: I'm looking forward to an X-Com remake someday...
I wouldn't call this a bubble. Rather, Kickstarter is exploiting the law of averages. Take a couple of passages from the story as evidence:
> Few investors were interested in betting on a hardware startup, or dealing with the headaches that often come with manufacturing goods.
Let's assume "investors" are people with some knowledge of funding hardware based products. This group of individuals is going to look at the product (the upsides) as well as the challenges (the risks). A project might have tremendous upside on the product side, but an experienced hardware investor is able to identify the risks. I'm not a hardware investor, but anything involving wireless (even Bluetooth) automatically sets off warning buzzers in my head. I'm sure hardware-oriented VCs looked at this product and saw their own set of "uh oh" problems, thus they decided not to fund it.
> Migicovsky said he’s more adept at pitching to consumers than to venture capitalists.
I'm not sure Migicovsky is entirely aware of what he's saying here. This could be restated as "I'm more adept at pitching to laymen than people who are familiar with the challenges." That's scary.
At first glance, this appears to support your hypothesis: that one day, this whole thing is going to come crashing down. However, I believe you underestimate the pool of fools ready to part with their money. I don't really mean that funders of this project are fools, just that by some people's perception, they're fools for taking the risk.
Stated more succinctly, I believe that on the broad scale, there are a sufficient number of non-risk-averse individuals to sustain Kickstarter for quite some time. I believe this will remain true, even after some catastrophic funding failure.
Great point. In addition to exploiting the law of averages, Kickstarter diffuses risk. It's easy to see that 100,000 people risking $20 (a $2M round!) is a lot easier pill to swallow, and thus easier to forget, on an individual basis. Contrast this with a small group of VCs risking $250k - $500k each.
It may have an interesting side-effect though. The salient hypothesis would be that the level of scrutiny applied to a $20-$30 risk is far lower than what would be applied when investing hundreds of thousands of dollars. By consequence, I would expect that Kickstarter would naturally fund more flops than a traditional VC model.
But each person loses maybe $20 (a few other donate more, but the average I see on Kickstarter is $25).
If a scammer takes off with your $25, you are sad but not burned badly.
You probably will review the next 'investment' better, make sure they have a track record. The result is, only folks with some kind of reputation will find support at Kickstarter.
That's not exactly a bubble bursting. More like a market narrowing?
It is.
That's called a bubble.
...and it'll burst as soon as there's a high profile kick starter ($million+) that fails and delivers nothing to the people who think they've pre-ordered something.
I like kick starter, and I appreciate what they're doing, but this isn't going to end well.
It's all very well to let people to setup their funding projects go, yeah, I can ship as many t-shirts as people signup for $20! Easy! ...but the reality is, shipping 50k t-shirts for $20 each isn't as easy as people expect.
This is really the problem: People are notoriously bad at making estimates for cost, time, size of projects.
Good luck to Pebble I say, I hope this works out for them. I hope we see this stuff all settle down and turn into a new awesome funding model and not into scammer hell~