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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
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.
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.
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
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.
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 canand 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
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?
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.”
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.
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.
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.