Yesterday’s column discussing how much Kickstarter sucks certainly drew a lot of reader ire. I don’t agree with it either, but not just because I understand how investments work.
I think it’s pretty clear that most of you get that Kickstarter isn’t a shop; it’s an investment. Investment might not be quite the right word — some have suggested patronage, some prefer to call it “fraud” — but it’s as good a simple précis as we really need. Here’s an example.
Fred the inventor comes up with a brand new way to clean the marbles that collect in the belly button of Dugongs (a frequent problem for Dugong collectors, so the voices in my head tell me) and pitches it via Kickstarter. Dugong collectors like yourself go wild for it, envisaging best in show awards for their shiny, marble free Dugongs, and hand over two million bucks.
Fred tries diligently to produce the Dugong-Demarbeliser XXXL, but runs afoul of industry regulations to do with firearms, and most of the R&D money is spent on legal fees. You don’t, in the end, get the Dugong-Demarbeliser XXXL because the project runs out of funds, at which point you can make the informed choice to invest your money further, or simply continue picking marbles out of your Dugong the traditional way with your teeth.
[credit provider=”Christian Haugen” url=”http://www.flickr.com/photos/34073237@N04/3506496824/in/” creator=”Christian Haugen”]
That’s a failed investment, and a risk, and Kickstarter makes that perfectly obvious upfront; indeed it was the most common response from many of you.
There’s another side to Kickstarter, though, that I think gets overlooked, and that’s the R&D element. When it comes to tech products, Kickstarter is more or less a massive open R&D marketplace. Got an interesting idea that you might just about be able to visualise, or maybe prototype? Take it to Kickstarter and see how you go.
That’s an incredibly valuable thing, even when Kickstarter projects fail, excluding fraud. Fraud’s different, but I’ll get to that in a moment. Big companies spend millions on research and development, and the simple fact is that not a whole lot of what gets produced actually makes it to market. Whatever Samsung actually shows off as the Galaxy Gear and Note 3 at IFA this week won’t have been the first designs; I’d frankly be surprised if they were even the first fifty designs. The same is true for Google, ASUS, Apple… you get the idea. Those are the products we largely don’t know about, but even the publicised ones don’t make it to market.
Microsoft’s Illumiroom concept is a good example of that. It looks seriously cool, but who’s going to stump up several grand to get it running? I’m going to suggest “almost nobody”, that’s who, and that’s clearly why Microsoft isn’t flogging Illumiroom kits at the local Harvey Norman just yet. They don’t quite see a market for it at the prices they’d need to meet to make it profitable. Lots and lots of R&D at large firms is like this, but it leads on to further future products.
I’m not suggesting that somebody do a Kickstarter for an Illumiroom knock-off — although it’s probably already been done — but hidden R&D only benefits the company paying for the R&D. Public R&D is out there, and even in cases like the Ouya where the end product perhaps isn’t quite what people expected it to be, it’s a spur in the market for more devices of the type. Ouya might not have cracked it, but perhaps Ouya 2 will. It’d be a sad day when nobody is willing to invest in radical thinking, even for “small project” ideas like those that usually make up the bulk of Kickstarter’s more tech-centric fare.
Kickstarter isn’t perfect. Yes, there are disappointing business decisions, like selling the Pebble early in US stores before all the backers have theirs. Yes, there’s fraud, and that’s regrettable, but again it’s something of a business risk in any case. In the tech space, though, it also enables all sorts of ideas — or even just exploration of ideas in the case of failed projects — that otherwise might not happen.