Kickstarting Up a Notch, by Arthur Tebbel – Pop Art #178 | @MDWorld

May 2, 2012 Arthur Tebbel 4 Comments

Dear Art,

I hate to sound arrogant but I think I represent the new prototype for the American success story.  My company had an idea for a watch that would sync with an Android phone or an iOS device and provide information from the phone conveniently to the wearer’s wrist.  There are countless applications for this but we’re most proud of the watch’s ability to display caller, ID, text messages and distance and pace information to runners and cyclists.  We took our product to venture capitalists for investments and were quickly dismissed.  We put our product up on Kickstarter and have raised more than 7 million dollars.  Is microfinancing the new thing in American industry?

            -Eric Migicovsky, Pebble Technology

 

Eric,

I think this flurry of attention reveals something important about the American populace, but I suspect it’s not what you think, people have no idea what anything costs in the business world.  I have no idea if you’ve raised enough money to run a technology company.  I know Apple has a market cap over $500 billion and that you’re way short of that.

I know that a bunch of high profile video game projects have been funded lately with budgets between one and two million dollars.  If you look at the backer comment sections for projects like this you can see the expectations for these games get to positively pie-in-the sky levels.  It makes you wonder if any of them know that a modern A-list video game costs in the tens of millions of dollars to produce.  If I know people on the Internet, and I think I do, we’re only a few months away from the conventional wisdom being that Kickstarter projects leading to inferior products.  It will be completely exasperating experience for everybody.

 

There’s also the matter, and I feel this is underreported, that the most successful campaigns aren’t really people backing products so much as it is a really elaborate pre-order process.  You set all of your backer rewards to be the actual product you’re going to be selling.  While I’m sure you’ll reap a substantial profit from each “sale” and you didn’t have to give up any of the equity you would have had to give an investor isn’t there the possibility that your 50,000 backers might represent a substantial portion of your total audience?  I don’t know, it would give me pause.

 

All of this bluster is really me hiding one sad fact about myself: I have become helplessly addicted to Kickstarter.  It’s not that I’m spending a lot of money it’s more that I spent a really substantial amount of time browsing projects.  I know more about struggling microbreweries around this country than I ever thought possible.  I’ve read pitches for some really terrible sounding webseries.  The really amazing thing is seeing what gets funding and what doesn’t.  You have an exceptional product (I ordered one) but I’m not sure it’s head and shoulders better than everything else.  The real prize here might be in studying the different marketing efforts and their relative effectiveness.  You’re convincing people to buy into projects that don’t yet exist with a very real risk that it will never happen.  The Pebble might be a big hit but what I’m most interested in reading is the sociology book about all this.  Maybe I should start a Kickstarter to write it.