Former Reason Editor in
Chief Virginia Postrel (Reason archive here) has
a great piece up at Bloomberg View. It’s about how
“crowdfunding sites such as Kickstarter and Indiegogo represent a
classic entrepreneurial phenomenon: Once you roll out your great
idea, customers use it in ways you didn’t imagine, and you wind up
in a different business than you expected.”
Postrel argues that “neither intended their site to act as a
test market. But, as the rags-to-riches story of virtual-reality
firm Oculus shows, that’s what they have become.” When Oculus put
its virtual reality headset on Kickstarter, it ended up with 9,500
people shelling out well over $2 million to make it happen.
Now that Facebook has bought Oculus for $2
billion, critics (including another Bloomberg
View writer) are calling Kickstarter a scam that cuts early
investors out of the proceeds that go to venture capitalists.
The backlash is largely Kickstarter’s fault. It may
not be running a scam, but it definitely sends mixed messages.
Unlike Indiegogo, which prides itself on operating a neutral
platform giving anybody’s idea a market test, Kickstarter hasn’t
embraced its de facto transformation. It strictly curates the
campaigns it hosts and, although it makes its biggest profits on
technology products, it still exudes an artistic sensibility
that isn’t entirely comfortable with disruptive
technology or large enterprises. It still talks as though it’s
PBS. “Kickstarter is not a store,” it declares.Indiegogo, by contrast, proudly touts itself as testing
platform. “We allow entrepreneurs to prove themselves in a
merit-based way,” by discovering whether a venture can in fact
attract interest and money from potential customers, said
[Indiegogo founder Danae] Ringelmann. The site even allows
campaigns to swap in new perks or change the required giving
levels. “You can test your pricing. You can test your features,”
she said. That kind of blunt sales-oriented language would be
unheard of on Kickstarter.
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