The Story Of Lockitron: Crowdfunding Without Kickstarter | CAMERON ROBERTSON via TechCrunch

Media_httptctechcrunc_jcvmb

After a rejection by Kickstarter, the co-founders of LockitronCameron Robertson and Paul Gerhardt, decided to follow in the footsteps of App.net and take pre-orders for their innovative deadbolt add-on directly. This gamble paid off. Big time. The initial goal of $150,000 pre-orders was hit within 24 hours. Now, just five days after launching, the company has $1,500,000 in pre-orders. This is their story told by Cameron.

I’m still having a hard time believing that only a few short days ago, my co-founder Paul and I refreshed our homepage, anxiously waiting to see if anyone would subscribe to our vision for Lockitron and help us climb towards our lofty $150,000 goal. With reservations now exceeding 1,000% of our original target and most of the time left in our campaign, we are immensely thankful to our 10,000+ backers who have made this possible.

Just four months ago we squeezed in with over a hundred other hardware startup devotees to listen to the creators of some of the most popular and impressive Kickstarter projects impart their wisdom. The folks behind PebbleSkallops and the Brydge answered dozens of questions about their success on Kickstarter; how much effort should you put into the video, did press matter, why did some projects take off and others flop. At one point, our moderator asked the group for a show of hands. “How many of you plan to release your own Kickstarter?” Nearly every hand in the room went up.

Kickstarter meant that for the first time hardware companies could take their ideas straight to the masses, bypassing the gatekeepers of venture capital, and de-risking their business in one fell swoop.

It wasn’t that long ago in Silicon Valley that the very mention of the word “hardware” in the context of fundraising was enough to glaze over the collective eyes of venture capital.

While we are just beginning to witness a renaissance of software wrapped in plastic, the traditionally high costs of making hardware, coupled with the perception of the low margins characteristic of the bygone PC-era, weigh heavily on risk-reward calculation for new investments.

So it was not surprising that Kickstarter gave hardware startups hope.

From its inception, however, Kickstarter was never designed as a store. Kickstarter’s benchmark for success is matching and exceeding the funding provided by the National Endowment for the Arts, not becoming the Apple store for yet-to-be realized products.

Last month, mounting backer frustration over project delays seemed to boil over when a series ofarticles ran detailing what some had been wondering; how many of these projects failed to deliver to their backers?

The question of who exactly assumed underwriting the risks for projects loomed large despite Kickstarter’s reaffirmation that creators were indeed responsible for delivering what they promised.

Consequently, new guidelines and rules were developed to meet these challenges and to protect backers using their site.

We applied to Kickstarter on a Wednesday, “Kickstarter Is Not a Store” landed on Thursday and by Friday we were rejected. We reached out to a co-founder of Kickstarter through our network. A brief e-mail exchange ensued, culminating with a firm “No” – stating that Lockitron fell into the “home improvement” category of prohibited projects. Kickstarter was simply not the right place for it, he said.

By the following Monday we knew what we had to do. We would launch Lockitron on our own, in an attempt to emulate the success that Dalton Caldwell had with App.net.

In running our own ad-hoc crowdfunding campaign, we knew that we needed to solve the same challenges inherent in Kickstarter’s model for running a hardware campaign.

Our solution was to create a customer-focused system. We decided to collect payment information using Amazon Payments, batch Lockitron shipments for customer transparency regarding delivery dates and only charge customers when their unit is ready to ship. This drives us to make the best product possible rather than overpromise what we can deliver on.

This approach also lets us know how many units to make and qualifies our backers as willing to put money down for the product when delivery time comes due, all while removing risk for them.

Since we only earn our keep once a customer’s Lockitron is ready, we are incentivized to use faster, low-volume/custom-quality production methods that may cost more initially, but will ultimately help us to compress our timelines.

Finally, this past Tuesday (October 2nd), just over a week after Kickstarter declined Lockitron, we took the plunge, fixated on our computer screens after a sleepless night filled with last minute video and website tweaks.

What followed over the next 24-hours was nothing short of stunning – thousands of people saw our vision and voted with their wallets to reserve a Lockitron, blowing past our initial goal in a matter of hours.

It’s debatable whether or not we will see another Pebble or Ouya on Kickstarter. But something I can’t emphasize enough is how much the success of our crowdfunding experiment is predicated on the groundwork that Kickstarter put in place. We are indebted to Kickstarter for validating the incredible potential of crowdfunding in bringing products to market.

Our crowdfunding method isn’t perfect. It requires that you have some resources to be able to kick off production of your product and I believe that there is room for a new model of crowdfunding.

Hardware startups need a platform that would add value for customers and producers by acting as an escrow for funds while validating and assisting fledgling hardware companies with their production plans. Consequently, we are planning to open source a skeletal version of our crowdfunding app to help start this discussion.

The power to ultimately go ahead and purchase a Lockitron rests with our backers. The onus is on us to justify and substantiate any delays along the way. Just as popular hardware Kickstarter projects have proven, it will be our willingness to involve excited Lockitron backers in our progress and turn them into happy customers that will drive our success.

 

via techcrunch.com

 

Success of Crowdfunding Puts Pressure on Entrepreneurs | via NYT

Media_httpgraphics8ny_nhwxg

Kickstarter’s booth at the XOXO tech conference. Kickstarter has helped about 30,000 projects raise money. 

By JENNA WORTHAM 

Published: September 17, 2012 

PORTLAND, Ore. — An effort to build a sleek aluminum charging dock for the iPhone generated fervor online when it was announced last December. The project’s creators raised close to $1.5 million through Kickstarter, a crowdfunding Web site, and promised to start shipping their Elevation Dock in April to those who had backed the project.

But last week Apple announced aredesigned iPhone that is not compatible with the dock — and because of manufacturing delays, some of the project’s original backers were still waiting to receive theirs. The designers are now scrambling to make an adapter and update the product.

“I’m just hoping to get mine before the iPhone 6 ships at this point,” one backer wrote on Kickstarter.

Crowdfunding sites like Kickstarter and IndieGogo are letting designers and other creative people connect with audiences who want to finance their dreams, and they are becoming increasingly popular. Nearly three million people have helped a total of 30,000 projects meet their fund-raising goals on Kickstarter, the largest such site, to the tune of $300 million in pledges.

But for the creators of these projects, getting the money is sometimes the easy part. They then have to turn their dreams into reality, with a crowd keeping an eye on their progress.

This new model comes with a host of potential pitfalls that are often difficult for project creators to anticipate, and hard for the armchair philanthropists who back them to grasp. Backers are essentially putting their trust in the project creators, giving them cash in return for the promise of a future reward.

Those who give a few dollars to a moviemaking project may get their names in the credits, while someone who puts up $100 to support development of a smart wristwatch might be promised one of the finished items.

Much of the time this works out. But some projects, including several prominent and in-demand ones, have run into missteps and lengthy delays. The permits for a new food truck might not come through. Or a gadget like the Elevation Dock might be harder than expected to manufacture and ship.

The rise of crowdfunding came up often over the weekend here at the debut of theXOXO Festival, a conference that focused on new models and outlets for creativity on the Internet. The conference was co-founded by an early Kickstarter employee, Andy Baio, who sold $400 tickets on Kickstarter itself to gauge interest in the event and raise money for it.

The relationship between creators and backers on crowdfunding sites is still being worked out. The backers play the role of philanthropists, investors, customers — or all of the above. And when promised rewards are slow to materialize, eager backers can get cranky.

“It’s definitely a lot of pressure,” said Eric Migicovsky, whose Kickstarter project to create a line of “Pebble” wristwatches with innovative displays raised more than $10 million — more than 10 times what he had hoped to get. “There are 65,000 people who have preordered a watch that doesn’t yet exist.”

Mr. Migicovsky hired someone to help manage his in-box — nearly 9,000 people have e-mailed him about the project — and to post updates. He originally hoped to start shipping the watches in September, a date that he has had to push back, although he declined to say by how much.

A study by Ethan Mollick, a professor of management at the Wharton School of the University of Pennsylvania, found that 75 percent of design- and technology-related projects on Kickstarter, most of which involve physical products, failed to meet their promised deadlines. In general, project backers seem to be understanding of hiccups and willing to wait as long as they are kept informed.

“The honeymoon period that we are experiencing around crowdfunding is beginning to come to a close,” said Wil Schroter, co-founder and chief executive of Fundable, a company that is applying crowdfunding to the venture capital process. “People realize there is real risk involved in investing in anything early-stage, whether it’s an idea, a charity or a product, and they’re starting to understand they aren’t buying off of Amazon.”

Kickstarter says it is not responsible for making sure a project is completed on time, or at all. It says project creators are legally obligated to fulfill their promises, but if they do not, Kickstarter has no mechanism for refunding the money that was pledged. The project creators can refund the money if they choose.

Sometimes project creators can be overwhelmed by the success of a crowdfunding campaign.

The four college students behind Diaspora, a project that aimed to build an open alternative to Facebook, began with the modest goal of $10,000. They raised $200,000from around 6,500 people. But after three years, they decided to start on another venture and turned the code over to anyone who might want to keep working on it. (One member of the team committed suicide last year.)

read more via nytimes.com

 

Aussie Crowdfunding Facts @Pozible Blog interesting for #ulab folks

Pozible has been up and going for over a year now and we would like to share some interesting facts from the platform to give you an insight into crowdfunding in Australia. The results are collected from the Pozible database and please note that this is not an official report, just a data visualisation of some interesting statistics.
Some of the statistics surprised us and we think some of the facts are particularly useful for project creators to understand a little about how people are supporting projects in Australia. Although we concentrated on providing some useful Australian statistics, we’d like to recognise that people are supporting Pozible projects from over 20 countries around the world.

via pozible.com