Im a backer and they offered refunds twice to anyone that wanted it so I don't know why anyone is complaining.
This project was before Kickstarter disallowed renderings (for good reason) and they would probably never have gotten to this shitty position if they had to actually prototype it and find out how insanely expensive it would be to manufacture.
OK so I'll launch a Kickstarter project, 10s of thousands of people will back me and I'll just say that I can refund their money after charging them. I think only several hundreds will request the refund, the rest is mine then?
This seems rather unlikely (hyperbole, to be frank) - those using Kickstarter are surely aware of the nature of the platform, not thinking of it as a checkout.
Unless the refund process is unduly complex, there doesn't seem to be an obvious reason why the vast majority of backers wouldn't ask for a refund.
I think a lot more Kickstarter backers (especially on big projects like this one that attract a lot of first-time backers) think of Kickstarter as a checkout than as a way to contribute to cool projects and get something in return if the project succeeds.
I don't. I actually invest in projects and wait for them to get their product out. Sometimes I just back projects for donation (e.g. remember Aaronsw Documentary project).
The expectations some people have about crowdfunding are unrealistic. It has to be clear from the start that when you donate money to those projects the money will be spent and the project might fail anyway. People have been using Kickstarter as a pre-order site which I think is not ideal in many cases. The option to preorder should be different from supporting a project in general, but Kickstarter sadly doesn't offer that kind of separation.
>People have been using Kickstarter as a pre-order site which I think is not ideal in many cases.
Kickstarter backs this perception.
"In just 24 hours, 20,000 people bought an Ouya console — a product they had never heard of before yesterday." - Yancey Strickler - Cofounder/Head of Communications at Kickstarter [0]
Kickstarter is trying very hard to NOT back that perception. They have and continue to make changes to make it clear that Kickstarter is not a pre-order site.
Kickstarter tries very hard to backpedal on that perception when it's about to blow up in their face. They made that "Kickstarter is Not a Store" blog post and the associated policy change after the press showed interest in the seedy side of Kickstarter; I forget what the exact catalyst was because it was some time ago.
Pretty sure it was the Pebble Watch. Their largest, most publicized project was called in to question after repeated delays.
I think the subsequent changes (i.e. no renderings) made make the platform substantially better. But they still need to get away from that "presale" perception that the general public has.
The first few projects I backed were friends or just because I thought they were cool ideas that would be awesome in real life. Getting something in return was really, in its purest form, a 'perk'.
This is the thing that gives me a bad feeling about Kickstarter. It seems like the site and its project creators are preying on those who are willing to lay down money based on hype without being adequately compensated for the amount of risk they're shouldering.
How do you mean, they don't offer that kind of separation? It's very easy to back a project without ordering the product; simply don't select a backer reward level when confirming your pledge.
I think those should probably be two separate steps for most projects. General funding to get the research going, making the prototype etc, then as a second step, allow the ordering of the actual product. There might be projects where this is unfeasible, but in general it would be good to separate the creation of the product and the manufacturing/distribution process. It would be safer for everyone involved, and for projects that fail during research - it would be clear that the money invested into this research is gone. At the same time, harsher measures should cover failure to follow through on actual orders.
That only makes sense for tech kickstarters. Most kickstarter projects don't have any R&D to speak of, and anyhow many production delays are the result of the manufacturing logistics that a wildly successful kickstarter results in.
Take a look at the OGRE board game project, for example. The game hasn't changed significantly since it was published I'm the 70s, but the kickstarter was successful enough that the manufacturing became much more complicated than planned.
The great success of Kickstarter is that it's a one-size-fits-all crowdfunding platform. You can only get so much oversight that way.
> Most kickstarter projects don't have any R&D to speak of
That's true, but this project sure did. I'm not suggesting more oversight, I was saying that the crowd's expectations should be better managed, and that maybe there could be two levels of commitment for a lot of projects. A first level where the project owners get money to prove they can pull it off, and a second one where actual things are ordered and delivered - if and where applicable of course.
Not at all. The Donate option would cause confusion, even for me. Pledge is the perfect word. Not only does donate imply giving money (which you don't do on Kickstarter), but it also implies a non-profit status.
I do however pledge to give money on KickStarter. I can cancel at any time. Heck, I can pledge and not pay when the time comes.
In fact, I'd go so far as to say that changing from Pledge to Donate would have the opposite effect: cause more confusion, cause more problems, and not solve anything you are trying to solve.
The project has reached a $196K funding while the initial goal was "only" $12K. Maybe Kickstarter should limit the amount of money to this initial goal, or at least to twice the amount of this goal.
If a project looks promising, more people are likely to pledge for it. But if Cryptrade thought $12K was enough to develop their project, that's probably all they actually needed. And $12K is both less tempting for Cryptrade to just disappear and less penalizing to everyone who pledged for the project.
They have a huge incentive to keep backers comfortable with using Kickstarter. Too many "scamstarter" projects and it's their brand which takes the hit.
I don't understand the down vote. People actively choose to back projects that are past 100% funding. This means they want to participate. Setting an arbitrary limit in order to protect people seems ridiculous when the information about funding levels is right there, in real time. How is contributing when the project is at 150% funding any more risky than when it is at 50%? You are still in for the same pledge amount.
The only legitimate concern I could see is that by allowing projects to fund well over 100%, you're potentially increasing the risk to all backers as an easier to manage 12k project balloons into a very complex and potentially hard to manage 200k project.
What's interesting about this situation is that if people complain (as some have) to their credit card companies and the charges bounce then kickstarter gets hit with a chargeback fee in addition to the money that was paid in. I've seen chargeback fees of between $25 and $35 per transaction.
Kickstarter doesn't get hit with these fees since Kickstarter isn't processing/receiving the payments. It appears to me that money goes directly to the project owner's Amazon Payments account, so any chargebacks would land there as well.
Even if Amazon lays the blame for the chargebacks on Kickstarter, they're probably safe. Since they're still in business, it's pretty safe to assume their overall chargeback rate is below 1% by transaction volume, as that's the threshold where processors start hassling you because Visa/MC will start hassling them. Given KickStarter keeps 5% of 100% of the volume as revenue, there's a lot of padding there to handle any chargeback fees and still be very profitable.
"It appears to me that money goes directly to the project owner's Amazon Payments account"
Interesting I didn't know that.
"Even if Amazon lays the blame for the chargebacks on Kickstarter, they're probably safe."
Given what you have said though what would be the scenario where they could even do that? If someone is setting up (as you've pointed out) an account with amazon payments then where does amazon have standing to do anything with kickstarter?
First off, I have never run a project on KickStarter so I don't know any of the details first-hand. I'm only guessing -- Amazon has a product called Amazon Flexible Payments Service. One of the things this API allows is marketplaces where you facilitate payments between buyers and sellers and take a cut of the transaction. This is probably how KickStarter works and takes their 5% cut; it's KickStarter's code and API keys that kick off the payment, and while the money ends up in the individual Amazon Payments account of the project starter, the fee gets sliced off and deposited to KS's account. So while they are not a processor or the recipient of the funds, they're still tied to every transaction; plus, they no doubt have a special arrangement with Amazon due to the amount of money they're handling and the fact that Amazon doesn't accept other crowdfunding services as customers of its payment services.
As soon as I saw how much over the minimum it had gone, I too had the same thoughts.
However I am not so sure about a kickstarter imposed maximum, as certain projects (say non physical goods) can grow indefinitely (in terms of the quantity of the product given out) but have a minimum amount before they are able to bring the product to market.
I think it is more useful for the creator of the kickstarter to set a minimum and optional maximum.
I also quite like the idea of holding some amount in escrow until progress has been made (maybe anything over twice the minimum or similar).
This seems like a good idea now that I think about it some more. The Kickstarter goal should be the minimum amount needed to get a viable product to market. Once you've figure out that you can make it, you should shift your product to a store model and direct users from Kickstarter to the store to purchase it.
Too much money in these cases may create a sense of complacency and encourage "take it and run".
We didn't go ahead with production when we realized how expensive making these USB drives would be. If they really thought 12k would be enough they were pretty naive.
I totally agree; it would also allow the creators a more realistic chance of fulfilling the original spec, whilst not getting overwhelmed by more features and possibilities. They could always allow creators to reopen the funding again, but I'm guessing most projects would follow more traditional methods at that point.
It might be a good idea for Kickstarter to only release the goal amount initially until the project lead can prove they meet their initial pledges. The remainder can get held in an escrow account and released once the project is off on the right foot.
When the goal has been hit, users are more likely to back the project than when the goal was not hit. I think Formlabs founders also explained this in their post-Kickstarter interviews- they intentionally set initial goal below what they actually needed, in hopes that it's surpassed quickly.
Wow, this is dishonest and I'd be surprised if it wasn't against Kickstarter's TOS. What happens if they made their goal but no more? Part of the point is supposed to be that if the makers don't get enough money to fully fund the project, then none of the money goes out. By setting your KS goal lower than your actual goal, you're skirting around a part of Kickstarter designed to lower risk for backers AND makers. http://www.kickstarter.com/help/faq/kickstarter%20basics#faq...
There is a simple solution to this problem. Don't allow project creators to offer the project as a reward! It should be ok for people to try and fail with projects on Kickstarter. By preventing creators from offering the product as a reward backers will understand better that it isn't a pre-order system. It's an "I need money for this idea. It might work or it might fail but if you want to help me try, give me money" system.
Unfortunately, this project creator hasn't provided any proof that the money was spent working on the product. If there were photos and records of work and progress being attempted, and at least some communication with the backers along the way, I suspect the tone and deposition of the comments would be different.
It's a lot to read through, but there's pages of people just asking for transparency to see the status and to understand what challenges were coming up. There's just as many comments from the creator that things are going great and we should be ready to ship in no time at all.
Trying out a new project or product and failing is one thing, never attempting it and running off with the cash is a different matter entirely.
I agree that they should be posting updates to prove the money is being put to use. However looking through the comments I see a number of people referring to the backing as a 'loan' and complaining they didn't get the product 'they ordered'. I think it's clear this 'company' has screwed people but backer expectations are also completely wrong and Kickstarter needs to solve that problem. People seem to think if they give you money and you fail they can get a refund. That's not how Kickstarter works/should work.
Then what's the incentive to participate at all? Would backing a project be equivalent to a 12 month high interest loan? Or, equivalent to an IPO where "backers" get a certain percentage of the company (which I'm sure opens a massive legal mess).
I don't think most people have a problem with projects failing. It's when creators take the money and don't appear to even attempt to produce the product that something is wrong.
>> "Then what's the incentive to participate at all?"
Someone believes they can create a product you want. They can only create it if you give them some money to get going. The incentive is a product you want getting built. Do you want this thing enough that you're willing to risk $10 backing it? I think for a lot of people that's enough incentive.
A VC invests large amounts of money (which isn't their own) for financial gain. That's very different to chipping in $10 of your own money for something you want to see built that probably won't be built otherwise.
I disagree. VC's put money in enterprises to get more money out. But their transaction is just money -> time -> more money. Kickstarter isn't the solution (there needs to be a platform that has legally binding contracts that the funded party deliver within some time frame or face fines / reimbursement of funds for fraudulence or negligence, the same way some investors can go after their interests if they abuse the money) but what people want is money -> time -> thing they want.
And I think it is the only way to produce information anyway, so refining the technique and recognizing its value is economics is huge.
The NPR model where they may or may not stay on the air regardless of your donation is a much better long term model for kick-starter than pre-orders. IMO, the best way to keep the idea alive is to make the retail versions of the product cost significantly less than those pre-orders.
Something like: Support Baldur's gate III, donate 100$ and get a retail version of the game when it comes out. (estimated retail value 50$)
The idea being your making it clear your doing something other than shopping when you donate to a kick-starter project.
There are plenty of kickstarter projects that people fund because they want to see it happen, with the 'gifts' being just an extra spur.
But NOT the technology ones. The technology ones are pretty much all pre-sales, with people spending money only to get a product, indeed.
But they're presales on something that doesn't yet exist. With no contractual obligation to actually deliver it.
I suspect the tech projects have a much higher rate of failure (==not getting delivered) than the 'art' projects. But also that the tech projects take in much more $$ than the 'art' projects, meaning more money for kickstarter's 5% cut too.
Literally every Kickstarter project I've backed was for the printing of a finished work. (Mostly board games and books, plus one album and one movie.) Your suggestion defeats the reason those projects were ever kickstarter, and Kickstarter would be shooting themselves in the foot to implement that.
Is the Crypteks USB™ Patented?
Definitely! Patents covering the unique locking mechanisms as well as iterations for future implementations of varying possible internal electronics have been filed with the USPTO with international coverage. Crypteks Inc. reserves all rights with respect to the use of Logos & Slogans as well as the design concepts and iterations covered under our patents
I don't see any relevant applications in the database, but applications are only published ~18 months after filing so there may (barely) be some lurking.
Notwithstanding all the hype and legitimate positives of crowd sourcing, this is the very real negative side. Kickstarter gives unfettered access to funds, which more often than not is required by a given project, and they indemnify themselves and further remove themselves from the funding transactions (a legal requisite for anyone not wanting to be tied up in litigation for the rest of their known life). Perhaps there is some room to hold funds in escrow and release them after projects hit certain mile stones, but I think that would stifle projects more than ensure successful use of funds. This is a real problem facing an emerging industry that if someone figures out they could propel themselves to the forefront of this space.
Maybe even only release 50% of the funds initially and hold the rest in escrow until a given set of circumstances are met. That way the users are exposed to less risk knowing they could get half of their funding back.
On the downside, if this keeps happening, users aren't going to back as many projects, and fewer projects will be successfully funded (which may or may not actually be a bad thing).
If you go down this road, just let project creators decide their milestones and timing, and then release the funds. Different projects have different cash flow problems, so each creator should be able to decide.
Want all money upfront? Fine, but people will know and decide accordingly whether to back your project.
The problem here is what to do if you estimate the milestones wrong. People backed it under those terms and you supposedly can't change the terms after they give you money.
What if your initial expenses are higher than thought but you can't access your next milestone for 4 weeks meaning you miss important deadlines with suppliers/manufacturers and the company goes bust, just because you couldn't access the money people pledged in time.
Starting by only giving them the amount of money they said they needed would be nice. 196 000$ of a 12 000$ goal, that's ridiculous, and very tempting to just disappear away with.
The trouble is that, particularly with physical products, being overfunded often means the project does need more money up-front than originally estimated. For example, they may need to change their production process to one that has higher upfrunt costs but allows for higher volume.
Yes. But with economies of scale each individual unit should cost less than the one before it. That's why you have minimum runs for production. Any less and the manufacturer doesn't make enough money to be worthwhile. Fixed cost vs unit cost, etc.
With things like aircraft, the first one costs billions because of the R&D having gone into it. But by the time you roll out the hundredth F-22, you've learned a lot about the process and refined the techniques. Same thing with processors.
One of the biggest downsides of kickstarter projects is that the creators have some engineering/ design skills but seem to have practically no business skills. (I'm generalizing here for the sake of argument).
> But with economies of scale each individual unit should cost less than the one before it.
Not really. At pretty much every step of the mass-production pyramid (higher volume, lower per-unit cost), there are significant capital costs involved. The tooling for a injection mold can be in the $10-100k+. That means the first unit in subsequent process is going to be huge, because you've got nothing to amortise it over yet.
Even if the process change is free, there's almost certainly going to be some NRE work updating your designs, optimising DfM, etc.
There's an example mentioned in the excellent 'The Factory Floor'[1] where going from single-colour injection-molding plus hand-painting (with 50% defect rate) to a 'dual shot' injection-mold (with 0% defect rate) ended up costing $0.94/unit (vs $0.70 for the former; 35c each, and throwing away half)
Likewise, for small runs handing it off to Shapeways might
well be the most cost-effective, but after a certain size, it would be madness. Firstcut/Protomold[2] look like they're stepping up to be the medium-scale option, which is nice.
Oddly enough, it looks like bitcoin has an obscure feature (m-of-n transactions) which could be used for a group of arbiters (major backers?) to reach a consensus that a milestone has been reached and release funds for the next milestone. They could also use secret sharing to give the project the private key of a wallet with the funds.
Hmm, once having worked on a USB device that had encryption on it, it required an ARM chip and a circuit board running a custom software stack. Even if the creator thought they were going to create one of these, for their original target of 12k I don't think they had a clue about what they were doing.
This project has been funded for a year and half with no progress to show for it, only thousands of comments from backers wondering when they will receive a refund or at least an update on whats going on.
Unfortunately the project founder has flown the coop and kickstarter doesn't claim a lick of responsibility. Want to get away with stealing 200k? Just make a kickstarter project and never deliver, it's working for these guys.
I was kind of wondering when this would happen. For a very small investment you could mockup a slick iPhone gadget, make 10x your initial request of $100k and then take the money and run. Aside from the morality of it, I don't think there are many legal obstacles to this, especially if you made it seem like you were making a "good faith" effort up until you disappeared with the cash.
Perhaps Kickstarter could insist that projects account for their spending on the project? e.g. if you've raised $100k, you'd better be able to show that you spent that $100k in ways that are related to the project, and not on a shiny new car. This would form part of the contract between project & funders and could open the way to lawsuits if the project couldn't demonstrate reasonable use of the cash.
The mere threat of future legal problems would (hopefully) keep Kickstarters more honest, and would reassure funders, making them more likely to fund more stuff.
But startup founders are accountable to the VCs. They have to provide updates and let the VCs know what it is they've been doing with the money. If the KS project fails, it fails. But to not provide some sort of update to backers is a serious problem.
Yes, this was my main point here. It's difficult to get that across without writing an entire article for context, and now that ycombinator mods have edited the title its even less clear.
The founders of this project did little more than sign on once in a while to say "its not ready yet, but should be ready soon". Now they've disappeared and there's no accountability for all that money. As an investor, I would at least like to learn from this experience and see where it went wrong and what could have done better. Instead the only lesson I can take away from this is don't trust strangers on the internet.
After a few bad projects like this, Kickstarter now has the following disclaimer and new hardware guidelines
"Product simulations are prohibited. Projects cannot simulate events to demonstrate what a product might do in the future. Products can only be shown performing actions that they’re able to perform in their current state of development.
Product renderings are prohibited.
Product images must be photos of the prototype as it currently exists."
This might be a serious problem already, but people are generally unaware of it. Kickstarter does not make it easy to find failed projects. And almost everyone who contributed to a project a year ago is likely enough to have forgotten about it by now. Even if they remember it, they have no way of rounding up all the other backers into an angry mob, except by posting on reddit or Hacker News.
The video features F. Komaya, Product Development Director at Bitwize SARL and Lead Designer for Crypteks Inc.
Bitwize is a web design company in Lebanon.[1] Sorry, but I'm not going to be sending money to someone in Lebanon no matter how good the CAD renders look.
But I was also under the (incorrect) assumption that if the project is in the US that I as a US citizen would be able to file a claim in small claims court across state lines in my own jurisdiction should the Kickstarter project owner fail to deliver on his end of the contract.
A contract is largely useless if you have no practical recourse in the event of fraud.
A former acquaintance of mine (and noted scumbag) recently pulled this scam for a movie he made about (and with the backing of) a bunch of chiropractors. Raised over a quarter of a million dollars. He's since absconded with the funds to pay for his mansion/porsche, sent no dvds, and is now funding the sequel via Indiegogo.
I have always admired the man's ability to sniff out a good con, although the second film is having quite a bit of trouble getting a similar level of traction. I'm sure he'll be fine-- it's hard enough to get the government involved in regular fraud, let alone... whatever dubious legal standing funding a Kickstarter has.
All the projects resources went into the pitch video...not a cent went to R&D. Even though crowd sourcing is awesome in my opinion, just like any investment, it comes with a risk.
Every purchase we make in life is an investment of some degree, in regards to kickstarter or indiegogo, a backer/customer/investor (whatever you'd like to call them), needs to weigh out risk/reward ratio, but also factor in the site's history of people delivering on their product.
Kickstarter is a in a tough position. I think it offers a valuable service (though it's certainly not unique). I'm sure that most people looking to get funded won't simply take the money & run as was done in this instance. Unfortunately, Kickstarter is the only one still hanging around, so they're left holding the bag, so to speak.
In the beginning, I thought these kind of incidents would be the end of the service.
A lot of the people using Kickstarter to raise capital for their projects appear out of their depth, if not in the first instance, certainly when their project takes off and they end up raising many times what they anticipated.
It didn't. Off-hand, HanFree and Lockpicks by Open Locksport are both confirmed to have taken the money and run by the project creator, and ZionEyez and a whole bunch of others have simply gone silent.
The Open Locksport guy had a mental breakdown and the project has been taken over by new management and it seems like they're making (slow) progress now.
Kickstarter users should demand that Kickstarter realign their incentives for project success.
As it stands now, Kickstarter has zero incentive to ensure a project succeeds; they make money on funding transactions and that's it. "Who cares if the project is vapor? We got our money."
They could easily make an additional revenue stream out of it. Instead of just taking X% of each transaction, they can add an additional "delivered project" fee in exchange for more exposure on the homepage, social media channels, etc.
I think the tricky situation here is one of positioning. Of course Kickstarter wants something as close to what a payments platform might get in terms of accountability for the transaction, but they're providing a curated marketplace for these projects. Closer to eBay or AirBnB... both of which have ended up with really similar challenges to tackle.
At the very least it seems like it shouldn't be that challenging for them to at least be prepared to aggressively deal with flat-out fraud.
If it's unreasonable people shouldn't back projects. The creator is also taking risk investing time and usually their own money into the project. If it fails they lose that investment and the backers lose their investment. Kickstarter needs to make it more clear to backers the risk involved and that they aren't pre-ordering anything. They are giving someone money and hoping they can successfully create something with it.
And what if instead of disappearing, the company had simply tried (in good faith) and failed to deliver. The users would still be pissed off because they felt like they paid for something and the company didn't deliver.
The big problem I see with Kickstarter is that both users & companies see it like a pre-order service. Too often it's used this way and people end up pissed. In the eyes of the backers, they aren't paying to see something new created. They're pre-ordering a product they think would be cool.
If anything, kickstarter should enforce some sort of limits for perks to curb this sort of abuse.
Kickstarter is not an investment, you get no equity.
An investment is risk, you are risking losing your money, but at the chance of making lots of money. That's what an investment is, in theory anyway, right?
Kickstarter tech projects, you are risking losing your money... for the chance to get a product that's worth about what you paid for it anyway? Where's the possible reward that's worth the risk?
Same thing happened to me with Window Farms, backed for $1k and they "cant afford shipping to canada" ... At this point I dont care though, at least they made the product and got it into the hands of the US backers.
This project was before Kickstarter disallowed renderings (for good reason) and they would probably never have gotten to this shitty position if they had to actually prototype it and find out how insanely expensive it would be to manufacture.