Kickstarter Lays Down New Rules For When a Project Fails 203
An anonymous reader writes "In a blog post, Kickstarter announced several updates to its terms of use for projects. From the article: "Kickstarter has iterated on its policies several times since it launched in 2009, with the most recent wave of revisions surrounding the site's transition from only posting projects cleared by the staff to clearing all projects that meet a basic set of criteria. Even still, some projects lack clear goals, encounter setbacks, or fail to deliver, like the myIDkey project that has burned through $3.5 million without yet to distributing a finished product. The most recent terms revision is timely: on Thursday, science fiction author Neal Stephenson announced that a game he Kickstarted in 2012 with $526,000 in funding was officially canceled."
All this because Clang went Clunk? (Score:4, Insightful)
More transparency will be a good policy for Kickstarter. It's developing what is essentially a new stock exchange, and in the process is finding out what kind of reporting investors will truly find useful.
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But KIckstarter, as a new financial market, has the opportunity to take the same innovative approach to the reporting area as it has to investing itself. Can it come up with a financial reporting system that investors will actually pay attention to, rather than toss in a drawer unread? THAT's what I'm looking for here.
Re:All this because Clang went Clunk? (Score:5, Insightful)
Regular finance account reporting of how the money is being used should be required. If you can't handle it, don't ask for money.
Such production of reporting and auditing of reports has costs and could consume significant amount of project funds.
It should be up to the backers and an agreement with the backers made in advance, regarding what will be required, not up to some random third party to decide what reporting will be imposed on them both.
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Such production of reporting and auditing of reports has costs and could consume significant amount of project funds.
Really? If they are not already tracking costs then they are not managing the development, its an integral aspect that cannot be separated. Reporting financial activities is not hard nor costly. If you can't keep a set of books, don't ask for money (or at least don't ask for a lot of money).
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Nonsense. If it's a serious project, they should already have an accountant or at least some form of accounting software - once you have that, it's pretty simple to produce a basic cash flow report. Regardless of what your business is, tracking the financials is
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Regular finance account reporting of how the money is being used should be required. If you can't handle it, don't ask for money.
Or, the opposite: If you cannot handle the risk of losing the money without getting anything for it, don't pledge the money.
Kickstarter is meant to be risky. If there were no risks, the innovators would have gone to a bank instead.
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stock exchange ... investors
I think you really need to reconsider your idea of what service Kickstarter provides.
Hint: There is no investment going on.
Risk aversion (Score:5, Insightful)
What kickstarter is afraid of, is something that can't be prevented: namely that people will need more money than they think to make something(or worse, that they happen to be scammers). Once the money is gone, no form of contract is going to get it back. And any scammer with their salt will run the money through a limited liability corporation, and pay themselves divdends/salary out of kickstarter funds. Then it can just go bankrupt.
There won't be anything to reclaim legally. So if you're going to back a kickstarter project, you have to do it in a risk-accepting mindset. Which for me, it means I only back projects that create things that I absolutely know wouldn't end up getting made otherwise. For you, that might just mean "no kickstarter ever"
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Wouldn't limiting the transfer of funds, via signed contracts or something, limit the risks of such a thing happening?
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Two problems
1. That creates a lot of overhead. Both for the projects and kickstarter. It makes kickstarter less profitable, and ironically, the honest projects more likely to fail.
2. The projects presumably need the funds to make the things, or else they'd not be on kickstarter.
3. Those that are slowly falling behind on their targets can remain in denial until, poof, the money's all gone. I mean, that's just human nature.
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Those that are slowly falling behind on their targets can remain in denial until, poof, the money's all gone. I mean, that's just human nature.
I'd just like to point out that before KickStarter, this exact thing happened all the time, even though angel investors and VCs were far more involved in monitoring the companies they invested in than kickstarter could ever be. So yes, it will happen with KickStarter, no question.
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I agree, but there is the distinction that those groups were taking calculated risks, usually hedged with other side bets, where a single big payoff is enough to cover the major failures.
Whereas kickstarter falls somewhere inbetween per-purchase and charity.
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But, smart VCs can impost their own requirements on the project and its management, can monitor all aspects closely and typically can decide to either continue support or cut off funding.
And yet, what we're talking about happens anyway, which is my point ;-)
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That's how venture capital is distributed to entrepreneurs, in chunks -- series A, series B and so on. So after completing phase 1, they get $X, after phase 2, they get $Y and so on. This is how Kickstarter should distribute funds to the creators. Otherwise, there is a chance the creators will simply take the money, stop working and give bogus status updates.
When the creators create their sa
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That might be a good idea for people to start doing that right now, even if Kickstarter/IndieGogo/etc themselves don't officially require it.
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But then someone has to judge on whether phase X has been completed or not.
Venture capitalists have legal contracts and the all important lawyers for when the two sides disagree on whether the requirements for a phase have been met. Kickstarter is not going to spend that sort of money and effort on each and every project.
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Right now it's completely a black box how backer money is spent. Maybe the creators should list itemized bills in their Kickstarter project page so backers can see if their money is being spent reasonably. Don't VCs also monitor how their money is spent? I'm not sure.
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Wouldn't limiting the transfer of funds, via signed contracts or something, limit the risks of such a thing happening?
Possibly, and it is how most non-kickstarter projects are funded. the problem is not in how funding is done, however; it is in KS desire to assume zero liability for failed projects. If they start deciding if a project deserves more funding then they open themselves up to lawsuits when the project failed. By taking a clear hands off approach they protect themselves while still getting their cut. A start would be for them to refund their 5% cut of the raised funds for failed projects.
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No, they are trying to prevent themselves from gaining a reputation of being a place that's filled with Scammers. Something that's been well under way for a while now. And, to be honest, I'm not sure how they ever thought this wouldn't happened. As soon as I heard of kickstarter I thought it'd end up going down in flames. I'm rather surprised it's lasted as long as it has.
What they need to do is make clear what your money is for. People seem to expect a lot more than they really get, and need to understand
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my point of view has always been "i'm going to throw some money into this future product. I may or may not see any kind of product if I contribute, but i sure as hell won't see a product if i don't." that's when i really want a product to work out. If i'm just "kinda" into it, i'll just wait for them to release and order it then.
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my point of view has always been "i'm going to throw some money into this future product. I may or may not see any kind of product if I contribute, but i sure as hell won't see a product if i don't." that's when i really want a product to work out. If i'm just "kinda" into it, i'll just wait for them to release and order it then.
Right... the problem is a lot of people expect a lot more than that. They think that someone, somewhere is vetting this stuff, when the fact of the matter is you're giving a total stranger money so they maybe can do something you find interesting.
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I've never given to a Kickstarter project and doubt I ever would. For me, the biggest question I would have for such a project is "If your project is so great, why can't you get money from a bank or VC?" If you can't give me a VERY good answer to that question, then you're probably either a scammer or just too lazy to seek out real funding--and either way, I wouldn't give you a dime.
Re:Risk aversion (Score:5, Informative)
Because not everything in the world is done in expectation of cash ROI? A good indie film will end up being shown at local and regional film festivals (and now, distributed as a DVD to Kickstarter backers). A _really_ good indie film will be invited to national and international film festivals - which will cost the producers money to attend (successful project with negative ROI). How does one obtain a bank loan or VC investment for such an endeavor?
People apparently think Kickstarter and the like are mini Sand Hill Roads, whereas they are much closer to you kicking in $50 to your local community art collective.
sPh
Re:Risk aversion (Score:4, Insightful)
Often it's too little money for a loan.
I've backed several book printings. The content already existed. All they needed was to go through the proofing process and have enough cash to do a print run. The former, while time-consuming, is fairly low-risk. With Kickstarter's "no money taken until you meet the threshold" setup, the latter is also pretty guaranteed.
But despite it being a very low-risk proposition, banks don't really help with such a project. It's too little money - one had a minimum of $6000, and even the biggest was only $20K. Likewise, who wants to bring in VCs who will try to take over your business (if not just burn it for profit) for a small project?
Really, I think you're wrong in that you think VCs and banks are a good judge of whether a project will succeed. They really aren't, in many cases, particularly for niche fandoms. And they might also not be good for the business, since they inevitably take a large chunk of the profits for themselves. Some of the projects I've backed could easily have self-funded - but they used Kickstarter to make sure there was enough demand for it to be profitable.
I tend to treat Kickstarter as a sort of preorder system, with the caveat that I need some sort of proof that you actually know what you're doing before I will commit. Many of them have successfully done such things before. I kickstarted Exalted 3rd Edition, since the mere existence of two prior editions is a good indicator that they can make a third. I've kickstarted a few games from new creators that had fully playable prototypes (Superhot and Nothing To Hide). Those were riskier, but still a pretty acceptable risk.
I do, however, shy away from any Kickstarter project that will need additional funding - like Clang, which took all that money just to build something they could show to VCs. That's like paying an entrance fee to a casino - sure, you might still hit the jackpot but those are some pretty long odds.
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So no good idea ever has been ignored by capitalists (banks, VCs, businesses)?
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Could you elaborate on the kickstarter project? What kind of information were you looking for?
Re:Risk aversion (Score:5, Insightful)
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Because of the language of "pre-order" that's used in a lot of cases. It makes it sound like a sure thing, when it's really not. It's not a pre-order, it's a gift for funding their project's success (and is contingent on that success).
The last kickstarter I gave to, was in an amount that was below any reward threshold. I just get to know that I did a tiny part in making something I really wanted happen.
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There won't be anything to reclaim legally.
And this is the kicker. The only way contributers/funders can claim a stake/force a refund, is if the "contribution" is structured as a debt. ie. The funder is loaning the money to the company, in exchange for future delivery of the defined product (or collection of products, whichever the case may be for higher levels of funding). If the company goes bust or fails to deliver the product, contributors then become unsecured creditors, and then have a legal claim to whatever assets the group/company has.
The p
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It's not a purchase. It's not an exchange of money for goods. It's a monetary gift that will hopefully be met with a thank you gift one day. Too many kickstarters are just using the wrong language.
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I have backed well over 30 kick-starters and every single one delivered.
The trick is having a brain when you fund one. Almost every one of the failed kick-starters had a LOT of red flags in the beginning.
Yes this means you need to be educated and smart to be successful in Kick-starter backing.. Just like everything else in the world. The problem is there are a lot of noisy idiots that think that kick-starter is like ebay and they whine loudly.
The stock market is 100% identical to Kick-starter. if you
Here is the text (Score:4, Informative)
It's not in the linked article, but here is the interesting part of the new rules: creators have to refund remaining money, and have to post status updates.
Read it here:
If a creator is unable to complete their project and fulfill rewards, theyâ(TM)ve failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:
they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe thatâ(TM)s communicated to backers;
theyâ(TM)re able to demonstrate that theyâ(TM)ve used funds appropriately and made every reasonable effort to complete the project as promised;
theyâ(TM)ve been honest, and have made no material misrepresentations in their communication to backers; and
they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.
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Which means that nothing has actually changed. They're just codifying the cultural practice that was already in place:
Changes nothing (Score:3)
Kickstarter isn't about financial reward (Score:5, Insightful)
Financial reward isn't the goal of kickstarter backers. Never has been.
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More than that - it *can't* be.
Kickstarter has structured things such that backers are technically giving a donation to the project. The rewards are technically pledge gifts - like PBS tote bags. The reason for doing this is that the SEC has very stringent rules for investors and the companies they are investing in, which would mean that if Kickstarter backers were to be classified as "investors", most of the projects (and backers) on Kickstarter would be disallowed from contributing.
By classifying things a
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For some projects, I'd be interested in getting a slice of the company (i.e. a chance at financial reward) instead of the finished product in exchange for my contribution. But I suppose there might be a lot of extra legal requirements for such a scheme.
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Maybe it's just me, but it seemed like Kickstarter sort of started out as a way to get simple things out of the garage and into real products. The kinds of things too simple to really be considered big-picture tech startups that would attract VC or be easily salable to traditional financing.
Now it seems like there's a lot of things on there that fit more into a conventional tech startup. It's great that Kickstarter can raise the money, but maybe there need to be transparency and reporting when you're talk
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How is that wierd?
People throw money at things like "ALS research" with literally zero chance of financial reward.
And I'm sure someone somewhere has managed to ebay something they got on kickstarter for more than they paid for it. So though amazingly small there's probably a non-zero chance of financial reward.
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My Kickstarter edition of Euphoria: Build a Better Dystopia was $49. Since it arrived just after we had a baby, I resold it at a flea market, new in shrink, for $140.
Yes, but: (Score:2)
I've backed a project that's currently been running late. Like 18 months late. Updates are random, and while follow-ups are promised, they don't happen in timing promised ( https://www.kickstarter.com/pr... [kickstarter.com] )
Big question is how do we deal with a zombie (dead, but not admitting it) project? According to the previous project, all backers seem to be entitled to refunds, but there's no mention in this post as to even how to flag this for KS staff.
Time to make a better alternative to Kickstarter (Score:2)
I could be the man to make that alternative! I will make "CollectiveProduction" or CollProd!
If only I had some money to start my project...
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Yeah! We'll make our own Kickstarter! With blackjack and hookers!
Unfulfilled (Score:2)
Nothing new (Score:2)
Nothing is new under the sun.
The same ancient rule still applies: Caveat Emptor.
If you throw money at someone with no contractual guarantee in return, there is simply no protection for your money. It's still your money - throw it at whomever you want. But don't expect sympathy because you "lost" it if the person wastes it, eats it, or somehow fails to execute what they said that that would.
As kickstarter started generating large sums of money the conmen and shills naturally have taken notice.
Contribute for fun; accept the risk (Score:5, Insightful)
People should identify Kickstarter projects out of interest, enjoyment, or just a sense of fun, and contribute no more money than they would be willing to use as kindling to start a campfire. If you contribute $25 in hopes of seeing an indie film completed - great if it does, sad if it doesn't. If you contribute $100 hoping to get a new piece of hardware, don't expect anything other than some p% chance that you will ever receive that hardware or if you do it will work as dreamed. If you don't have the money to lose, don't contribute.
One innovative and clearly risky hardware project I backed has people complaining that the base product shipped 2 months later than planned (hoped) and the premium product will be 5 months late. Um, guys: it was risky. There were commercial alternatives available at 10x the price. You knew that this was an attempt to create a mini-breakthrough, but you're griping because it was 2 months late and the associated app will need some point revisions? Get real.
sPh
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Agreed.
Even if they have a great idea and the best of intentions, the people running the project may not be successful. Running a business is more difficult than most people imagine, and it may be even harder to run a business with discipline after receiving millions of dollars in free money, donated with no strings attached.
When you donate to Kickstarter, you are neither making a purchase nor investing in the business. You're making a donation.
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People should identify Kickstarter projects out of interest, enjoyment, or just a sense of fun, and contribute no more money than they would be willing to use as kindling to start a campfire.
In such a case you have now given the people running the kickstarted campaign free money with no responsibility to deliver anything. That in i itself would be a guiding beacon to all and sundry scammers to use Kickstarter as a huge legal loophole.
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:) if i had mod points sir, you'd be getting them.
Screening process (Score:4, Interesting)
Also, it's important to consider that funding a kickstarter project, is kind of like investing money in the lottery or purchasing one of those scratch lottery tickets. You may or may not win, the likelihood of actually winning is bigger than the lottery, but in reality very small, it's like going to the casino and betting it all on one of 3 rows.
Kickstarter is a gold-mine right now for scammers as well. All you need, is a well thought out plan to CONvince a lot of people out there, and since most people aren't very technical...this isn't hard at all (thus, why we need a better screening process). Many of the funded projects gets WAY more than they asked for, and then GREED grabs them...they lack no skills when it comes to find a reason to use the extra money, and have you noticed how certain products doesn't get cheaper for the public even thought they receive MASSIVE support?
Money baby! It's the shit.
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Refunding my investment (Score:3)
I have an investment that failed a few years ago due to probable corrupt practices (for example: an officer in one company was reporting to an officer in another company - but they happened to be the same person, so all sorts of dastardly things happened.).
At the moment the investment is being wound up and all sorts of legal activities are being pursued in order to realize as many assets as possible that actually exist. The people performing the liquidation keep telling me that I will get back between 10 and 50 cents in the dollar of my investment, depending on what legal actions come to fruition and what the value of the reclaimed assets turn out to be, minus of course all the legal costs.
To me this is the only possible way you can get money back from a failure like this, and I can't see how a failed kickstarted project should be any different - if the project fails, then call the owners of the project on it, and take legal means to reclaim as much as possible with the expectation that you will never get 100% back.
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Yes, if illegal. If it's simply down to a business failure...
from the outside looking in you can't tell the difference between illegalities and mismanagement, but legal action in both cases has a certain ability to compel people to perform actions.
Anyway, its normal business practice to liquidate to a failed company - regardless of how that failure occurred.
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If the project fails due to fraud, yes. Realistically some percentage of all speculative projects (40%-90%), whether funded through Kickstarter or not, are going to fail. That doesn't mean they or their principals were committing fraud.
sPh
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If the project fails due to fraud, yes. Realistically some percentage of all speculative projects (40%-90%), whether funded through Kickstarter or not, are going to fail. That doesn't mean they or their principals were committing fraud.
sPh
No it doesn't, but there are standard practices in the business world for winding up failed businesses regardless of how that failure occurred.
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If your investments results in you having a claim on the assets of the company that failed and based on the seniority of your claim on the assets (i.e. some creditors will be paid in full before other creditors see a dime).
Kickstarter isn't an investment vehicle. They're up front that you have no claim on the assets of a failed company\project and as such if it fails you won't get anything (and conversely if they sell for a couple of billion dollars you will get nothing as well).
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But then in the next paragraph, they say "here are the terms of the contract between the creator and the backer". I suspect this would be very problematic to enforce. You can't be both arms length, and dictating terms to two parties of a contract without also being a party. It is a logical contradiction.
Every lawyer does this every day when he or she is writing up a contract signed by other parties. The lawyer isn't involved unless one of the parties can prove that the lawyer performed malpractice in wr
Back in the days... (Score:2)
Remember when people use to believe in their ideas enough that they'd put their own house on the line? With some Kickstarters, you see people with "I believe this needs to be done, and I'll do it if people pay enough so that I have zero liability and all of the financial gain."
"Well, there's travel involved, and if I get an early flight, I'll need a coffee from the airport Starbucks. That's an additional $8...."
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The first link was to top projects, which is of interest.
The second link claimed "most successful", but was listed in descending amount of dollars raised starting around $12,000,000 (million). If that's the author's definition of 'successful', great. The indie projects I back typically have budgets in the 5-10k range and about 80% of them produce a finished work. Who is to say which is more successful?
sPh
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They also said in this update that some TOS changes were intended to allow the legal operation in new countries...
So while this isn't off topic, it's delightfully ironic in its level of not reading TFA.
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"I'll believe it when I see it".
And, no, "other countries" being "The nice part of the EU" is still bullshit.
When I see someone from India, Bangladesh or Cambodia being able to raise money I'll believe it.
But... you know... those people are dark skinned... there is a high chance that they'll be scammers. Better stick to the white part of the world where everyone are good citizens and obey the rules.
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But... you know... those people are dark skinned... /p>
Way to go - Amazing the things people will play the race card about.
I'll bet you are really pissed that there aren't any brown Skittles candy.
Re:think globally (Score:5, Interesting)
I love how the default attitude is spite. Blame America for doing something wrong, instead of the obvious choice - make your own version of kickstarter. With blackjack, and hookers. Then you don't have to listen to what the Americans say at all. Better yet, you can exclude Americans from participating. You can even go so far as to redirect any American IP address to a landing page where you let them know all the problems you have with the US federal government.
Kickstarter doesn't do deals outside the USA for well-known legal reasons. Maybe you can discover what these are when you start your own - but you won't, so the question is moot. Still, I wish someone would. I just don't see it happening, though.
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You could even use Kickstarter to finance the building of Kickstarter's replacement, were you so inclined.
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I think the whole concept is plain bullshit.
You're risking your money. Period.
There should be no guarantee that, if the project fails, your money will be returned. What the hell? That's not how real life works. Ask any of the dot-com investors if they got any of their money back.
How is this any different from eBay where you could order an iPhone 6 PLUS, and get a brick in a box instead. And there's nothing you can do about it.
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The concept is sound, depending on the project. Sometimes the person/team already has a working prototype and only needs the funds to be able to manufacture the item in larger quantities at a lower price.
As an example, The Link [kickstarter.com] was a very successful project. And the end product is exactly as described and works as well as any other huge commercial corporation would have been able to produce.
Other Kickstarter projects, however, such as those "We need two million to make a game" where the team only has one gu
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I think the whole concept is plain bullshit.
You're risking your money. Period.
There should be no guarantee that, if the project fails, your money will be returned. What the hell?
This is what happens when people don't understand venture capital. If an investor needs security, they need to invest in other things.
Did these people think that investing in Kickstarter projects was going to be like buying a CD? A whole lot of this stuff is going to fail.
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Romans: I think we should stop using dirt roads and instead dig a few inches and lay flat rocks in the trench to make our roads.
People of that era: Do you have any idea how much work that would involve? How many flat rocks would be required? Are you nuts?
Early 20th century: I think we should stop using roads made from flat rocks and use asphaltum to make our roads.
People of that era: Do you have any idea how much work that would involve? And to remove the rock roads? How much asphaltum would be required? Ar
Re:Good. IndieGoGo should do it too (Score:5, Funny)
Re:Good. IndieGoGo should do it too (Score:5, Funny)
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Not too obscure. They like big imposing logos with hefty roman numerals as the supporting beams in the design. An "L" just doesn't do that. And most people who watch football don't know Roman numerals beyond X anyway.
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A good road should last for tens of centuries. The Romans understood that, and engineered their roads accordingly. To blithely dismiss their roadbuilding expertise as consisting of "flat rocks" ignores the engineering underneath the road, described here [wikispaces.com]. Or if you have kids, David Macauley's City may still hold up after nearly forty years.
American roads rarely last more than a few decades, unless consistently and constantly maintained. But they are comparatively cheap. I hear that European approache
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American roads rarely last more than a few decades, unless consistently and constantly maintained.
They are cheap, but I'd also like to point out that the average amount of traffic on a American road would beat even a Roman one to shit within a decade without constant maintenance. Roman roads typically didn't have to deal with the weight we run across ours every day all day.
Solar roadways are an interesting idea, but they're reaching so far that when one of my forums got into it we found enough problems that would need to be solved, ranging from how fast glass actually wears to the question of how much
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Considering the sun is ~93 lumens per watt and we've got LEDs now pushing 300+ lumens per watt, not very much power, at all. One watt will put any LED brighter than even the glare on the glass.
The problem is that you're not just doing 1 LED when you're making lane markings using LEDs. You're lighting up dozens per hexagon, and the results we got had the power cost of the lane markings drowning out the power gained by the solar panels.
"Lumens per watt" doesn't make much sense when considering whether or not a light will be visible(and not just visible, 'easily visible') because you still have to consider how many watts the sun is putting out. Given solar panels somewhere between 10-15% efficient
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I can't provide links or sources, But I remember reading quite a while ago that Germany places contracts for road-building that includes maintenance for 20 - 40 years. As a result, German/European roads are built to be durable and to require as little maintenance as possible.
In the US, we build cheap sh#t knowing that the taxpayers will be on the hook for the maintenance.
Re:Good. IndieGoGo should do it too (Score:5, Insightful)
Mid 20th century: I think we should build flying cars and make the skies our roadways!
People of that era: That's dangerous and impractical.
Just because an idea is radical and the mainstream rejects it that doesn't make it a *good* idea. Lot's of really bad ideas have been poo-pooed by the mainstream too.
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we have a winner! call me when this "glass" can last 2 winters in northern Michigan, Wisconsin, or Minnesota. The idea is flawed as all hell in regards to durability.
Then you have adhesion, until they prove that this glass has the same adhesion dry and wet as asphalt or cement it's a major fail. even highly textured glass is slippery compared to a smooth cement.
Lastly there are a TON of other factors that make the whole idea a failure that should not be funded.
I wasn't aware that roads only exist (Score:2)
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What I prefer in the Kickstarter model is that the money is not actually taken until the project funding deadline.
It allows to easily adjust the funding if you want to switch pledge levels (which is an absolute headache on IndieGoGo), and rectify impulsive decisions to fund something.
It also gives a sort of "time to comment". If a potentially fraudulent campaign gains traction, there are usually people sweeping in to confront project creators about it. Extreme case of that was even brought up here on Slashd
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I would go even farther than that. I think the money should be held in escrow by Kickstarter until the project actually DELIVERS. The business in question could still borrow from a third-party bank against that money, but it would also give Kickstarter the ability to refund it all if the project failed to actually deliver on its promises (instead of counting on the business to refund it).
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I would go even farther than that. I think the money should be held in escrow by Kickstarter until the project actually DELIVERS. The business in question could still borrow from a third-party bank against that money, but it would also give Kickstarter the ability to refund it all if the project failed to actually deliver on its promises (instead of counting on the business to refund it).
If you're going to refund the escrow in the event of project failure, you can't expect a bank to accept those same funds as collateral.
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Phred & Jorj discuss funding...
"Hey Jorj, we need money to do this project, so I'm going to get money, but lock it away so we can't use until after we've finished."
"Phred, and just how are you going to do it without money in the first place?"
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No bank would loan against money that would be returned to the backers, not the bank, were the project to fail.
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But there's a real risk that kickstarter could end up being ruined by scammers, fakes, and overcommerialization.
In other words, venture capitalism.
The reason I back stuff on KS is because I want to fund the little guys. Indies, small teams making stuff that big studios won't because it's "too niche", or "can't be sufficiently monitized".
You are half way to being scammed. Little guys, indies, whatever they use to help sell you on their trustworthyness, That's part of what they are trying to sell you. Its a noble sentiment. But in investment, nobility has no place. They are there to make money, and that's it.
I don't know how to keep the good bits of KS without the assholes ruining it, which seems to be the problem with a lot of things.
You can't. People run the whole range from saints to assholes, and in the world of money, the assholes are pretty much ruling. If a person is concerned about things like ethics, or not doing harm,
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It is not a well-received topic in Chicago-school microeconomics, but there are other human motivations besides desire to accumulate more personal wealth than anyone else (pure greed), and other rewards besides ca
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Kickstarter contributions are not "investments" in any meaningful sense and do not operate the same way that venture capital placements do. If you can't see the difference you probably shouldn't be contributing to the former or investing in the latter.
sPh
You are saying they are charity? In other words, giving money away?
So why on earth would anyone complain about anything? You gave the money away, you are not going to get anything back. The results of success are the same as the results oif failure. Why would you care then?
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I'm not complaining. You are: you are asking that the standards applicable to investment banking and venture capital be applied to what is intended to be the donation box at the community art collective where you take your kids for pottery lessons.
sPh
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I'm not complaining. You are: you are asking that the standards applicable to investment banking and venture capital be applied to what is intended to be the donation box at the community art collective where you take your kids for pottery lessons.
sPh
And it would appear that the folks at kickstarter are responding to a whole lot of people doing the same.
It's like I said, if it's just a donation, then no complaints allowed.
And yet, they are changing the rules. Apparently you might be the outlier in this. So why don't you write to the Kickstarter folks and tell them they can't do what they are doing.
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After this experience, I will be much more reluctant to back a new project, knowing they can do basically anything they want with my money with minimal risk to them.
Sorry, but what exactly are people expecting out of crowdfunding?
Crowdfunding works because it is fairly informal and nobody (should) "invest" more than they can afford to lose or enough to be worth suing over. Otherwise, the whole thing would suffocate under the red tape, and the projects might as well go to a bank or VC, put their house up as collateral and risk having the funder foreclose at the slightest hiccup.
If you want to buy a product with warranties and legal rights, go to a shop (even in the U