When Kickstarters Fail [Feature]

kickstarter   When Kickstarters Fail [Feature]Crowd-funding has finally transformed from niche idea to mainstream concept. Credit for this surge in popularity can be thrown at the feet of Kickstarter and its contemporaries. Some highly publicized projects have raised millions of dollars within a few weeks, transforming idea into reality at lightning speed.

These success stories make it easy to forget that projects don’t always go as planned. Many flop badly. But how, and why?

Kickstarter intentionally makes failure a hard thought to stumble on. Its website does not show failed projects unless they’re specifically asked for and the company directs search engine crawlers away from them. Estimating the number of failed projects is difficult because of these tactics, but most independent attempts to pinpoint the figure have landed at 50% or more.

What happens to projects that fail? Who is responsible for the 50% that don’t make it, and what would they do differently if they tried again? And what about Kickstarters that succeed? Do they deliver, or is it just the beginning of a path full of challenges? To answer these questions I spoke with several different people – one who has experienced success, and two who haven’t – to hear the human story behind the facts and figures.

The Worst Case Scenario

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Ethan Mollick’s draft of his study The Dynamics Of Crowdfunding: Determinants of Success and Failure is the first academic statistical analysis to be released of a crowd-funding platform. It provided many of the insights that helped inspire this article. One of the most startling facts was about the funding of projects that fail. The mean funding among unsuccessful projects is 10.3% and only one in ten of these projects raise more than 30% of their goal. In other words, most failed projects fail big.

The mean funding among unsuccessful projects is 10.3% and only one in ten of these projects raise more than 30% of their goal. In other words, most failed projects fail big.

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Tyler Carbone, President of SRRN Games

Tyler Carbone, president of SRRN Games, didn’t suspect it would be among those statistics when the studio posted its new tower defense project Always Outnumbered to Kickstarter – yet the project found itself barely able to reach 1% of the funding asked.

He had reason to think it would be successful. “We’d put out some well-received titles and we’d created a tower defense game before. We were also working with GO Gaming, who were experts in the competitive gaming space.” Seeing this avenue open, SRRN threw itself into developing design documentation and concept art – which may have been a mistake. The Always Outnumbered Kickstarter was posted with plenty of detail but without a solid gameplay video. “That would have been the wrong way around for development,” according to Tyler, “but it would have made for a more impressive Kickstarter.”

Most of Tyler’s peers shared his initial enthusiasm. Putting together the materials had taken weeks of hard work, but the staff finished it with a feeling of optimism. It didn’t take long, however, for the studio to realize that the project wasn’t panning out. A few fans pledged, but this slow trickle was nowhere near enough. The developers began to “seriously consider, if not outright assume” that they’d never reach their goal.

The developers began to seriously consider, if not outright assume, that they’d never reach their goal.

It was not for lack of trying, of course. SRRN games turned towards every connection available. Press contacts, forums, Facebook and more. The developers even crafted a small promotional game called Always Outnumbered: Survival. It took just a bit more than a weekend to finish, boosted morale, and received positive fan feedback. But the dollars stubbornly refused to show.

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A screenshot of Always Outnumbered: Survival

In a way, the severe failure of the project gave the developer time to absorb the blow. “The project looked for a long time like it was going to fail before the end finally came,” said Tyler. “In that sense we were able to take some time to collect our thoughts. By the time the Kickstarter officially failed, we were ready to move on, so that helped dampen the blow to morale.”

The project ended on June 7th, 2012. That was also the day the game died. SRRN’s hope was to crank out a game using a quick development cycle that would only be possible with the unfiltered money crowd-funding allows. “Without crowd funding, any incarnation of tower defense that we might try will be developed on a longer timeline and take into account considerable publisher feedback. It just won’t be the same project, and for that reason, Always Outnumbered as originally envisioned will likely never be made.”

Without crowd funding, any incarnation of tower defense that we might try will be developed on a longer timeline and take into account considerable publisher feedback. It just won’t be the same project.

In retrospect, Tyler suspects the project may have been doomed from the start. While the tower defense genre is massively popular this particular game was a more experimental, hardcore take on the genre. The game simply didn’t have the mass appeal of market superstars like Plants vs. Zombies and Desktop Tower Defense. He also noted that crafting a successful project takes far more work that many observers think. “It represents a serious investment – two to three months of solid prep work – so you have to think critically about whether crowdsourcing is the right strategic move.”

Still, despite the scarring experience, SRRN games might not be done with Kickstarter. They could be back – but only if they feel they have a game that can capture the crowd’s attention.

When Doing It Right Doesn’t Work

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Cadenza Interactive also felt itself in a good place when it put up its latest title, Retrovirus, for funding. The studio’s previous major release, Sol Survivor, was among the most popular indie games of 2009. This strength seemed multiplied by the subject matter the new game, a “six degrees of freedom” 3D shooter reminiscent of the popular Descent series. This old genre had been ignored for years and seemed ready for a new entry.

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Dylan Barker, Cadenza Interactive Game Designer

Unlike Always Outnumbered, which missed on its video, Retrovirus debuted with a detailed, high-quality gameplay trailer featuring different levels and different game modes. Building this – and the rest of the project – took time. “We did a ton of research,” said Dylan Barker, one of the game’s developers. “We lost somewhere around two weeks of development time in direct support of fundraising. There’s a big opportunity cost to creating a good Kickstarter.”

We lost somewhere around two weeks of development time in direct support of fundraising. There’s a big opportunity cost to creating a good Kickstarter.

At first the studio’s efforts seemed to pay off. Retrovirus enjoyed a steady trickle of contributions towards its modest $75,000 goal. Cadenza contacted members of the press and enjoyed good media coverage. Total Halibut (aka Total Biscuit), a gaming personality with over 750,000 YouTube subscribers, featured Retrovirus in a nearly half-hour long segment. Multiple gaming sites mentioned the project either in a Kickstarter round-up or in an individual news item. Cadenza even released the demo of the game’s alpha version to prove the title wasn’t vaporware and entice gamers with a known lure – free stuff.

None of this worked. Gamers responded with enthusiasm in comments across the Internet, but the money slowed and eventually became elusive. The project closed at $29,720, less than half of its $75,000 goal.

Why the Retrovirus project failed is a bit of a mystery. Dylan admitted that he felt the studio was “perhaps not persuasive enough with the footage,” but other projects have managed to conjure more money with less. What wasn’t a mystery was the impact of the project on team morale. Unlike Always Outnumbered, the Retrovirus project had a glimmer of hope. This made the blow hurt even more “It was hard not to take the failure to fund as a referendum against Retrovirus,” said Dylan. “After the close of the Kickstarter, we took a weekend off to regroup and looked at the situation more clearly.”

It was hard not to take the failure to fund as a referendum against Retrovirus

Because it was further along its development cycle the project’s failure did not mean the game would never be released. It has, however, put the game in a more precarious position. The developers, forced to rely on profit from previous titles, had to cut 45 minutes of the single-player campaign. This material may at some point be picked back up after release, but the version of the game that is released will represent a slightly down-scaled version of what its developers had intended.

Not all was lost, however. A fan that had contributed to the Kickstarter and heard about the game through excitement in the Descent community emerged to provide some funding to further polish the game. “That got us in with someone who believed in us and loved the genre,” said Dylan.  “It’s especially encouraging to us that he’s from the Descent community. With his support, and the support of the community, we feel we can carry the torch forward.”

And so the story comes to a happy ending. Retrovirus will be released with a small amount of material cut and the lights will stay on at Cadenza Interactive.  You can now pre-order the game for $17.99 and play the Alpha version ahead of the game’s final release later this year.

It’s arguable that Retrovirus is a crowd-funding success because the investor who helped support the game may never have heard of Retrovirus if not for the Kickstarter. Even so, Dylan made it clear that he won’t be heading back to crowd-funding any time soon. “Really, Kickstarter is presales that allows for your ‘super-fan’ to pay above and beyond and subsidize development,” he said. “For the top 0.1% of projects, it can be game changing. For everyone else, traditional funding is going to spare you the stress and the opportunity loss of working on fundraising instead of development.”

Funding Is Only The Beginning

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Kickstarter has moved the goal-posts for success. Producing and selling a product is no longer necessary to make thousands, perhaps millions of dollars. A well-crafted project can turn an idea into fully funded reality within a month.

This is crowd-funding’s great strength, yet it has a catch– particularly when funding a product rather than a service or artistic endeavor. Ethan Mollick’s statistical analysis of Kickstarter found that only 24.9% of successful projects promising a good managed to deliver on time. The mean delay of projects with a delay was two and a half months.

Ethan Mollick’s statistical analysis of Kickstarter found that only 24.9% of successful projects promising a good managed to deliver on time.

Professor Mollick also discovered that projects earning far more than the amount asked, sometimes known as “over-achievers,” are about 50% less likely to deliver on time compared to projects funded near their goal. This seems counter-intuitive: more money should mean more success – right?

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Georgia Hoyer, President of TrekPak

To find out what might be happening I spoke with Georgia Hoyer. She and co-founder Greg Schroll launched a Kickstarter for TrekPak, a simple but innovative padded divider designed to help travelers and backpackers organize and protect their gear. It was funded at almost 300% of its goal but has only now begun to ship, putting it several months behind its original schedule.

TrekPak’s adventure started when the web designer they hired suggested Kickstarter as a means for promotion. They researched the site and decided that it would be a great way to test the market.

“Kickstarter kind of just gives you a blank profile with a basic template format. We wanted to really figure out how we present this idea” said Georgia. To accomplish that the team spent about a month researching other projects, putting together materials and working on a high-quality video that demoed existing prototypes. Once satisfied with the presentation, the team put up the project and went to sleep.

We launched our Kickstarter on a Sunday, late at night, and we woke the next morning on the front of Popular Photography Magazine’s website.

They awoke to find themselves an overnight sensation. “We launched our Kickstarter on a Sunday, late at night, and we woke the next morning on the front of Popular Photography Magazine’s website,” Georgia recalled. “I had two emails in my inbox, woke up 9 hours later, and I had 65.”

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TrekPak is a sturdy backpack organizer

Popular Photography Magazine’s article was followed shortly by a piece on Gizmodo, prompting a torrent of follow-ups on smaller sites and a flood of money. “We reached our $15,000 goal in 3 days, and once you launch a project you can’t cap it. You can only keep it or cancel it. It became a little overwhelming.”

TrekPak, like many other projects listed on Kickstarter, was exactly that – a project. When the team put it up for funding they did so thinking “This would be a cool project, it would be fun.” The sudden rush of support meant more money, but it also meant more orders – which implies a need for more work space, more product testing and more materials. “We assumed we would make 50. When we had to quadruple the number we’re making, it totally changed out game. So we had to tell our backers that we have a lot more than we thought and push out our timeline.”

We assumed we would make 50. When we had to quadruple the number we’re making, it totally changed out game.

Such a strong surge in demand convinced the team that they needed to transition from a project to a business, but that presented new problems. “We’ve been working to get all our ducks in a row, find advisors, and find additional funding,” said Georgia. “The project was based on the cost to make the product, not what it would cost to start a business.”

Georgia’s statements help explain why so many projects promising a finished product end up with delays. It’s easy to blame incompetence, but that’s a hasty conclusion. Finding huge success on Kickstarter can literally change the lives of a project’s creators. It also can expand the scope of an idea far beyond what was originally intended. The lack of a funding cap means creators have no choice but to post their project and pray for success – but not too much success.

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A batch of Elevation Docks goes through QA

This story is repeating itself as we speak, and in some cases unforeseen circumstances further undermine delivery. This is the case for Elevation Dock, a premium iPhone dock that went live with a $75,000 goal and ended with almost $1.5 millon pledged. The creators, already struggling to craft the product and ship it to over 12,500 backers, were hit with a new issue when Apple announced that it was changing the connector on the new iPhone 5. Other high-profile projects delayed include Pebble, PrintrBot and Pen-Type A. All of them were massively over-funded.

Problems with delays have created so much ruckus they’ve forced Kickstarter to change it terms of service. On September 20, 2012 the website announced that all creators must include a section in their project page that addresses risks and challenges. In addition, projects in the Hardware and Product Design sections are now forbidden from showing product simulations and renderings. Creators are also no longer allowed to create reward levels that promise more than a single product or “a sensible set.”

The real issue is not contributor expectations but instead the burden of success. Project creators are beginning to understand that realizing a dream is sometimes more frightening than failure.

These changes seem sensible, yet the title of the blog post (“Kickstarter is not a store”) misses the point. The real issue is not contributor expectations but instead the burden of success. Project creators are beginning to understand that realizing a dream is sometimes more frightening than failure, which may be why there’s been a noticeable upward trend in the funding projects are asking for. Kickstarter could solve this by implementing a funding cap that allowed creators to keep projects manageable, but that would cut in to the company’s profits.

Conclusion

In talking with Tyler, Dylan and Georgia it became clear that Kickstarter, though potentially an incredible platform, is no magic bullet. The effort required to put up a good project is substantial and many projects have no reasonable chance of success without weeks of work by the project’s creators.

Talking with these individuals has also given me a sense that Kickstarter is a force of both creation and destruction. An extremely successful project can be life-changing for its creator, but failure implies the world has found the project worthless. This chaos allows for incredible creativity and success but also can take a toll on the people involved.

As the flood of money into crowd-funding continues both contributors and creators are at risk of forgetting that this movement is about people, not products. The people we fund, the platforms we support and the rewards we demand will shape the future crowd-funding, and perhaps even our economy.

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44 Comments -

Siddhant Chaurasia

Now I know why they fail

Ahmed Khalil

nice replay, same what i said

Lisa Santika Onggrid

‘You can’t cap a project..’
This is important. Like this article depicted, not everyone would like their project to go viral. Some would just do it for summer project, as example, but went overfunded and it went from fun to stress.

On the other hand, what happened when a Kickstarter failed? Would the team refund the pledged money?

I think the takeaway is you should never rely 100% on Kickstarter to fund your projects. Do it if you think you can still do the project even if you only reach 25% of your goal. It should be treated as secondary funding, not primary.

Gina

Kickstarter is an all or nothing funding source. Other sites that are like it allow you to keep what was pledged even if you don’t meet the goal. Kickstarter does not charge any cards unless the goal has been met.

Mustafa A.

^Nice. I was actually just wondering that myself! Thanks for the info! :)

Mustafa A.

Nice article. :)

Ray

While you can’t cap the dollar amount, you can cap the number of people that can get a specific funding/reward level. I’ve seen most use it to have a limited ‘early bird’ pricing and unlimited ‘regular’ pricing. So you can cap the number of units you’d need to ship.

Umair Adil

If so many projects fail then perhaps they should make their project posting more strict and make sure that only people who have done feasibility and other project research can post their ideas.

Matt Smith

But that rather defeats the purpose, doesn’t it? The higher the requirements of crowd-funding the harder it is to distinguish from traditional funding.

Austen Gause

great article thanks i was wondering about kickstarters after hearing about them on youtube and youve answered all of my questions thanks

Bento

We can only get good projects when we have the opportunity to look at many projects, even though many are not worth “investing” or “backing”. The power is in the numbers.

Gina

There is a way to “Cap a project.” It would take some math and it’s possible it could hurt a projects success. You can limit the amount available for pledge level.
You usually see things like “Pledge of $65 or more: copy of the book hand numbered and a sketch book. Limited to 450″ or “Pledge of $500 or more: A starring role in a mini comic. Limited to 1.”
But you can limit lower levels. If you think it could get over-funded and know can do more than 200 units without causing delays. You could make sure the pledge levels that would take you over that amount. Given most Kickstarter projects have multiple levels, it could get complicated. Plus if you have a 30 cap on say the $40 pledge, you could miss out on money. Some people may not be willing to go to a higher pledge amount or may not pledge if they can’t get what they want.

I don’t know if you can cap a pledge amount when the project in underway. I think you can, but can’t find the info on Kickstarters site. If so then a cap could be put on during the pledge drive (Say you get 145 orders at a pledge level, you could go in and put a cap stopping it at 170.)

Lisa Santika Onggrid

It’s a good idea.
However as stated in the article, many indie creators/ hobbyists seem to think too highly of Kickstarter, getting their hopes too high and putting too many at stake. On the other side of the spectrum, is like shown in the article, those who never think of the possibility their products get so popular.

This is another reason why they should be thinking things through.

Muz RC

I agree with you… Thanks…

Mart Küng

The moral of the story is actually quite simple: think things through. And making good plan A is not good enough. You have to have B, C and D in waiting in case previous plann failes.

I never actually understood why there was limit to some pledges but It’s quite clear now. You should but limits on pledges that can potentially cause more responsibilities than you or your team could handle.

James Bruce

I don’t want to sound too harsh here to unsuccessful project, but generally they fail because they suck; neither of the games you’ve highlighted look particularly innovative, compelling, or add anything to a genre, nor were they particularly well known or trusted designers. It’s not hard to see why they weren’t funded. I think that’s what I like about Kickstarter actually; like Dragons Den, it’s an incredibly harsh proving ground. You really do need to be prepared to get a kick in the face as your baby is looked at with brutally honest eyes.

Also, I think there is actually a way to cap a project; by releasing only “limited number” rewards. Or is there a rule that says you must have at least one reward that isn’t limited? I think in many ways it would be a shame if some projects did this, as I’m sure a lot of projects have rocketed people on to further successes and media fame. If they had limited their projects to just 500 units, it probably wouldn’t have gained as much attention (or would have gained even more attention by nature of being limited, just like Nintendo did with the Wii?).

Lisa Santika Onggrid

I think it’s highly dependant to the nature of the product itself. Generalization will fail.
Actually, one of the games sounded pretty interesting, and they already garnered anough publicity. Their biggest blunder: Using Kickstarter to get all the money they need. You’re right. They should’ve another plan to use if this one fails.

Matt Smith

Gaming Kickstarters are not about innovation – on the contrary, they are mostly regressive. The most successful projects are all re-imagining or re-makes of previous games. Track record is not important, either. Obsidian just had a blow-out Kickstarter and their track record is pretty hit-or-miss actually.

It’s often about celebrity and name recognition (of the franchise) in that arena.

Gina

I’ve seen some good projects fail. I have pledged my money to some of them and was sad that it didn’t make it. If there is a rule that one of the pledge levels has to be unlimited (I don’t think there is, but “if.”) then just put in a $1 pledge level of “Thanks for supporting.” I’ve pledged at $1 when I have liked the project, but to get any reward it’s too much money.

Stephan Huebner

I’m surprised that nobody blames Kickstarter, or better their site. I was really enthusiastic about funding projects when I first heard of Kickstarter. But very quickly actually finding something interesting enough to be funded got tiresome.

I found nearly every project that looked interesting to me via some *other* site, not Kickstarter itself. I more or less stopped browsing the Kickstarter-site for more than a few minutes in one session because of this:

Imho, their site-layout is rather limited (and limiting) with no way of customisation. Ways to narrow searches are nearly non existant or not nearly capable enough. I would like to see tags people can search for, user-defined colours for sub categories, so that one could see at a first glance if something is in a category one is interested in and a lot of things more. And yes, I did write an Email to Kickstarter some months ago but there hasn’t been any changes at all for the better yet on the site.

Lisa Santika Onggrid

Maybe you’re right. Maybe potential donators are not around long enough to find their projects. Kickstarters ought to upgrade their website so it’ll be more compelling.

Matt Smith

Kickstarter’s site is frankly a train-wreck. It’s probably a train wreck so they can control how people browse the site. They waste huge amounts of screen-space showing already successful projects, and don’t show any that aren’t.

That’s not good for browsing and it’s not good for little projects that aren’t staff picks, but it is good for convincing people that they should post a Kickstarter!

Gina

Agree. Kickstater’s site looks nice, but is not as easy to navigate as it should be. I also don’t like when you are looking at potential projects to give money and you scroll down are looking at Successful projects.

Harshal Warkhede

Nice Article!

Mbel

A successful Kickstarter campaign involves a really good marketing strategy. Not only does your project have to be innovative, creative, overall cool, you have to know how to get people to pledge on your profile. Aside from coming up with the backer gifts, which you have to think about since you might spend more on the item and shipping, you also have to develop a network of people you can target to donate.

My team was successful in a Kickstarter campaign. First thing, we did not set a large sum as our goal.(since it was our first time we did not know what to expect.) Second, we gathered a large database of contacts, friends, family, media, colleagues etc whom we would target to donate. Finally, we had plan B, a private investor who was willing to pledge to fill in the gap, incase we did not meet our goal.

Like any business venture…..its about planning.

Carl LaFong

We launch our project on Kickstarter Nov 9 to fund our comedy film, Gone to Pot. I’m not sure the success rate is any different than what we see in everyday business. People succeed and fail. Concepts take off and others that looked promising fall flat. Let’s hope ours catches on. Gonetopot.com/Kickstarter

jules j arginteanu

The article raises questions for me about the methodology of the “analysis” siince there are no comparative data on development times, market research, other ways of funding for relatively small projects, failure rates for new products, times from funding to shipping a product,the value of advertising your team effort, among other factors that seem relevant.

Boni Oloff

There are many innovative man in this world. We all can make something new.

Anthony Monori

Whoever came up with Kickstarter has all my respect. Still, you have to do it the smart way to succeed.

Perry Maxwell

I was hoping to see the article address the projects that get successfully funded, yet the goods never materialize (i.e. Hanfree iPad Accessory).

Rajaa Chowdhury

There is a awesome project under Kinkstarter from Connectify, known as Connectify Dispatch. Connectify Dispatch is groundbreaking PC software that lets you connect to all available Internet connections simultaneously, for their combined speed, and increased reliability. More details is at http://www.connectify.me/dispatch/

Adam Campbell

bummer

Eric Wilborn

Great info! Loved the TrekPak portion… looks handy.

josemon maliakal

Kick starter is just for people in US..what about people outside US

Jim Spencer

Good article for those out there naive to the world of business! I would say in any endeavor, never put all of your eggs in one basket, it just makes bad business sense to do so!

Edward Bellair

Thanks for the info

Marc Carrion

It’s hard to tell what people will want when you create a product. Sometimes people will want to see footage of a game and sometimes they won’t or it won’t be enough. It also seems annoying that you can’t cap a project. Some groups just don’t have the resources to handle the amount of attention they get. It can get overwhelming

Eric-S Lachance

I have to admit that even though this article is fairly interesting, but your use of the “journalistic quotes” is kind of horrible.

“your use of the ‘journalistic quotes’ is kind of horrible”

No less than 9 times in the article, you re-print either the last sentence of the paragraph you just finished, or a phrase from the last paragraph.

“You re-print either last sentence of the paragraph you just finished…”

I mean, come on. What’s the point?

Matt Smith

I must admit I did not notice this at all until you pointed it out, and now I can’t un-see it.

Harry Barnes

It’s really sad to see that sometimes lots of funding is not welcome :(

Viren Sakariya

good for anyone

Ron Lister

Studio Nasu did a kickstarter this year to fund a video game themed for the Otacon convention. They surpased there goal as well, but not to an extreme. They did cap the amount of people who could contribute at each level and I think that was a wise decision and put some a bit of control in to limiting the funding, flood gates if you will.

Anonymous

poor developers….