The Post-Kickstarter Conundrum: Delivering Companies DOA?
Picture this: two guys in a garage coding The Next Big Thing. It’s an iconic and familiar image. Now imagine their ubiquitous computer keyboards being overtaken by a colony of 3-D foam models or CAD drawings. Now your mind’s eye sees these same guys (or gals) hacking away at something entirely different.
This shift in creative attention is being labeled a “renaissance” by folks like Y-combinator’s Paul Graham. Chris Anderson boldly declares, “Hardware is the new software.” Whatever you choose to label it, the happy result is an overflow of terrific new consumer products.
(And, for the record, no one who really creates consumer products for a living would call them “hardware!”)
Why are innovative products multiplying like rabbits? It’s not complicated: people naturally gravitate to creating physical things. It’s simply human nature. This is not a fringe “techie” or coastal phenomenon: nationally, 2011 was a record year for patent filings, up 10 percent from 2010. Further, as the economy is pushing more people to take matters into their own hands, people are seeing if they can go it alone. In fact, 51 percent of millennials want to start a business in the next five years, according to the Kauffman Foundation. Add available resources such as online access to manufacturing options—and crowdfunding platforms like Kickstarter or Indiegogo—and any ordinary person can potentially get an idea funded. This is huge. But it’s only a tiny part of the road to success.
Tech and design projects on Kickstarter had a total of over $79 million dollars pledged in 2012, with nearly 5,000 projects launched. That’s a lot of demand for cool products. But, the untold story is that these numbers represent a boatload of entrepreneurs being set up for financial loss and heartbreak. Why? Because crowdfunding platforms are really just the kindergarten stage of getting a product scaled and sustainable. People are getting romanced by “massive success” on Kickstarter without realizing that the 5,000 unit volumes of even the very largest Kickstarter products (think Pebble watch) are just chicken scratch in real-world consumer product terms.
The Post-Crowdfunding Stage
There’s a lot more work to be done getting these products to market. The JOBS act has inspired the expansion of crowdfunding, but that will only cloud matters more. So these products get even more funding. So what?
Kickstarter is just that, a “kick-start.” It’s a way to get an initial production run funded. But this narrow echo-chamber proof of demand is not predictive of true mainstream adoption. A project on Kickstarter has a long way to go to succeed. Building (and funding) a better mousetrap is hard. But those activities pale in comparison to the heavy lifting of getting it scaled and in national or international distribution.
For instance, if you want to get your product into Target or Williams-Sonoma, those retailers need to know that you … Next Page »