[matdwyer]

Good, I'm glad they were rejected - If they weren't, I wouldn't have known about them, nor would I have purchased one.

This way they get their money in the form of guaranteed, up-front orders, and I get a cool new product "before" anyone else. I feel exclusive and I'll have the hot new gadget to show off.

It's a win-win, and I hope more companies opt for this route - it is true market validation.

(On a related topic, September can't come soon enough. I want mine now)

[chmike]

The problem wih upfront selling is the risk to not be delivered. Some buyers are not really aware of the risk. The amount of money in play is quite low but the disapointment will be as big as the initial expectation.

If everything goes well then it's a win win, but amounts in play will start to attract crooks. It looks like too easy money. As long as kickstarter was under the radar, only well intended people where using it.

When the offered rewards are goods or services, then kickstarter is an upfront selling shop and these are high risk deals. The risk could be evaluted, but buyers have only videos and some text to evaluate it by themselves for now.

[ericd]

That's a good point. From my experience in dealing with marketplaces where scammers can earn 10k/scam, they're quite hard to effectively suss out beforehand and block, and they adapt. I can only imagine what the lure of a 100k or or more will draw in terms of creativity. I really hope there's some effective structural or procedural safeguards that we're not aware of, because the obscurity is gone. If they can get past that, I think Kickstarter has a very bright future.

[GFischer]

There are a lot of Kickstarter clones (or re-spins) starting up, as it is often said, imitation is the sincerest form of flattery :)

[randomdata]

I've come to learn that people will copy everything. I once built an iPhone app that seems to have topped out at around $500/year in income; barely enough to secure a developer for a day. Yet, I found two apps that I would consider clones of mine with many similar characteristics, not just someone trying to enter the same market.

I was quite flattered to see them, but I remain curious why they'd go after such small potatoes? It seems like copying something that has a sustainable business model would be the better choice.

[GFischer]

Could they know your income level? Also, U$ 500 buys a lot more in some other places (it's a week's salary for me for instance)

[randomdata]

You can make some estimations by rankings, but I guess that's a fair question. Also, I spent several months on the project, so even a week of work per year isn't going to get you far.

It was a fun project, but a failed business.

[cpeterso]

If those two clones didn't exist, do you think your app would be collecting "their" revenue (i.e. $500/year * 2)? Maybe you three are splitting a small pie into smaller slices.

[randomdata]

Probably not in any meaningful way. The clones never seemed to grab much traction in the rankings, where my app did. Though I guess I'll never know for sure. If anything, I'm losing out to the real competition that took their own approaches to solving the problem and didn't just clone what I did.

Out of curiosity, I just had a look at the ones I do consider clones, and the one that took my name and added "Pro" to the end doesn't even appear to be on sale anymore though their website is still active. I can't find the other, so it may not be either.

[zbuc]

> I really hope there's some effective structural or procedural safeguards that we're not aware of, because the obscurity is gone.

Not yet, their terms of service have a clause that (paraphrased) says "if you don't follow through we might pursue legal action" but nothing concrete.

They really need contractual obligations to complete the project if you get funded, otherwise where's the accountability? The ability to threaten someone with breach of contract is at least some bargaining power.

[cpeterso]

All of these multimillion dollar deals were raised by people or companies with proven track records. But with so much money in play, Kickstarter has little incentive to restrict funding limits. If Kickstarter only got paid after the funded project delivers, then Kickstarter and funders would have the same interests.

[backspace]

I humbly offer a contrary view.

It's the fashionable thing to joke about VC's making wrong investments, investments at bubble prices, not knowing what they are doing, etc. But let's face it, it's their job to make sound investments. Sure, they may not get it 100% right, or even 50% but their job is to continually improve this success metric.

It's great that companies like Kickstarter are giving average consumers the capability to fund these sorts of companies but let's not equate the consumers' endorsement of the startup as the potential for value or ability to succeed. VC's do their due diligence for a reason, they want to back successful companies. Average consumers funding on Kickstarter are not doing their due diligence, they're looking at the marketing pitch and handing over their hard earned dollars. I fear this is bad for both the startup ecosystem as well as for consumers.

There will be companies on Kickstarter that take money and fail. My prediction is that it will be higher than the startup space. So before we get caught up on buying exclusivity with this fundraising, let's do our due diligence.

[snowwrestler]

It's not just "make sound investments," VC's need to make investments that will pay off big enough to meet their promised rate of return over the promised time horizon. (They are investing other people's money.) It's certainly possible for VC's to think that an idea has merit, but is not right for VC-type investment.

Kickstarter allows time horizons and rates of return of arbitrary size. These guys now already have everything a business needs: capital and customers. Unless they commit outright theft there is no reason they can't succeed with this project. But there is also no requirement that they keep it going after their last investor gets his or her watch. They can just do it to the size needed to hit the natural demand, and then call it quits. You can't do that with VC money.

[backspace]

VC's are working for their investors, and this startup is probably more apt for Kickstarter funding.

But my salient point is that average consumers cannot and usually will not do their due diligence on whether the people who are raising the money have a good chance of succeess.

I hope you're not suggesting all a business needs to be successful is capital and customers. Because that's just plain dangerous.

[wpietri]

I disagree.

An important part of investor due diligence is to try to figure out if there's a market for a product. A sizable Kickstarter campaign proves that in a way no due diligence ever could. Kickstarter campaigns also have an "with enough eyeballs all bugs are shallow" property. So failure rates could be lower.

Even if Kickstarter failure rates are higher than VC failure rates, Kickstarter still may be a good thing. First, Kickstarter can fund projects that are too small for VCs to bother with; there's a lot of value in the long tail. Second, they can fund projects that will be "merely" a 2-3x return. Third, this is making more capital available; if Kickstarter didn't exist it's not like the money would end up at Sequoia. Fourth and most important, Kickstarter campaigns will put less capital at risk. Most VCs can't afford to invest in less than $1m lumps, but Kickstarter campaigns can be 100x smaller.

[backspace]

Never argued that Kickstarter is a bad thing. Like I said originally, it is a very good thing and as you stated, it is great for certain types of projects (too small for VC's, not large enough return, etc.)

VC's have to judge if there's a market and Kickstarter helps with that. But VC's also try to judge whether the founders have the ability to succeed, whether their business plan (costs vs. revenues) are sensible, etc. How does one do that through Kickstarter? I'm sure you'll agree more than 50% of the people who've funded the project on Kickstarter didn't even bother to figure out whether the startup is set up to succeed. (For additional evidence, see "Diaspora")

Btw, when you say Kickstarter campaigns can be 100x smaller, I'm assuming you meant to exclude ones raising upwards of $3.8 million right?

[wpietri]

When I say campaigns can be smaller, I mean that most VCs can't afford to do small deals. Their partners are too expensive. 10k projects are common on Kickstarter, though.

Your 50% number seems meaningless to me. Not everybody has to do the full research. Even with VC investments not everybody does full due diligence; as long as there's a lead investor willing to do the work many are much more casual. The larger a Kickstarter grows, the more likely it is to be scrutinized, both by funders and by outside participants. In this case, there was plenty of info available to evaluate the team.

Also, pointing out one failure like Diaspora is worse than meaningless. For every Kickstarter failure you find, I'm sure we can come up with 20 VC ones. Failure isn't the problem; failure is the point. Reward requires risk. Risk means some failures. As long as they continue to be, like Diaspora, interesting failures, then we're doing fine.

[furyofantares]

Is Kickstarter a platform for funding cool projects or a store?

[bambax]

It should develop the "store" part. It's very frustrating to stumble upon a project that's already funded and for which you don't know where to get the product anymore. It would be a natural extension to let late comers buy products after they were launched.

[xal]

Almost all the funded hardware projects end up on Shopify afterwards. Including pebble.

The "store" part is actually a tremendously complex software to do well, hardly a feature you add to an existing system.

[joshuacc]

I'm curious. Is this due to Shopify's reputation, or do you specifically seek out successful Kickstarter campaigns as potential customers?

[xal]

It just happened. We started contacting them now but it was all word of mouth.

[unavoidable]

Why can't it be both? It acts a bridge between an unmet demand and an unmet supply: there are consumers thinking, "I wonder if X has been invented? I would pay money for that." And there are designers thinking, "I wonder if anyone would buy X if I made it?"

It's conceptually a great match. The hard part was making it credible enough to gain trust. That's Kickstarter's biggest strength.

[furyofantares]

I think it can be and sort of is both right now, yeah. And I'm loving it, but it also makes sense for people to have different expectations from a store than from a project they are backing.

When I give a store money, they owe me a product. When I back a project, they owe me their effort.

So it's a bit weird to me when the language being used is mostly store language rather than funding language. I don't think anybody has purchased a Pebble yet.

[paulrosenzweig]

I love that their brand's credibility enables projects to launch that wouldn't have been able to otherwise. But, once a project far exceeds its launch goal Kickstarter becomes a store that charges 5%.

[baddox]

Is there a difference in this case? I doubt they could have afforded to produce 4 million dollars worth of the watches without a good, semi-guaranteed estimation of consumer interest.