Kickstarter is finally trusting wisdom of crowds

Kickstarter, the service whose name has become synonymous with crowdfunding, has simplified its rules and will cut down on vetting projects. This controversial move is designed to reinforce a truth the current money-oriented startup community keeps forgetting: If an idea is crazy and unfeasible, that doesn’t mean it shouldn’t be funded.
In the past, a “creator” – artist, developer, inventor, startup chief executive – had to submit the project for approval by Kickstarter’s “community managers.” The vetting procedure caused delays and drove some projects to Kickstarter’s competitors, mainly Indiegogo.com, which has more relaxed rules. Kickstarter now allows creators to begin their funding campaign in minutes, after their presentation is checked by an algorithm, much like on Indiegogo.
Kickstarter gave the world the Oculus Rift, a 3-D visual-reality headset whose producer was recently acquired by Facebook Inc., the Pebble smartwatch and the “Veronica Mars” movie. Its success has been such that Thecrowdfundingcentre.com estimates that the volume of global crowdfunding doubles every 60 days. These same successes, however, have skewed the public’s perception of what this type of funding is really about: promoting naked creativity.
In 2012, Kickstarter’s co-founders wrote a post entitled “Kickstarter Is Not a Store.” With the creators of hardware products offering to ship them to backers, as Pebble did, it is tempting to see the platform as a kind of preorder shopping mall.
In recent months, the “retail” perception has been reinforced by a crusade against crowdfunding “scampaigns” by James Robinson, a journalist with Pando Daily, an influential publication for the startup community. He went after a Russian startup called Healbe, which claims to have invented a device capable of automatically measuring the wearer’s calorie intake. Experts cited by Robinson doubted the science behind the invention, and he wrote at least a dozen articles that suggested Healbe’s campaign was a scam. Healbe raised almost $1.1 million on Indiegogo and shows no sign of disappearing with the money, but it has recently delayed the product launch. Robinson assailed Indiegogo’s permissiveness: Healbe, he wrote, “weren’t the first hardware scam to exploit Indiegogo’s apparently useless fraud-prevention ‘algorithms,’ and nor will they be the last.”
Kickstarter’s rule changes are an asymmetrical response to such attitudes. Crowdfunding platforms are not stores, the possibility of failure is built into all creative projects, and terms such as “scam” and “fraud” may not apply to this funding model. When the crowd is presented with an unworkable idea, its reaction is sometimes more valuable than the product itself. Judging by how much money Healbe’s automatic calorie monitor collected on Indiegogo – despite all the disbelief in the tech blogosphere – it would appear to be a much-needed product that big companies should invest in.
Crowdfunding platforms essentially allow people to vote for ideas, not purchase specific products that must be delivered on deadline.
The relaxation of vetting rules is a welcome development because the crowd is ultimately a smart investor: it will sort the good ideas from the bad ones and get what it wants in the end, though perhaps not on the first attempt. •


Distributed by Bloomberg View.

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