A Few Rules to Avoid Getting Stung with Crowd-Funding

Three years ago I backed this project on Indiegogo that was a clever iPhone battery/cable/locator/camera trigger. At the time it seemed pretty useful and I was still in those heady days of believing that anything listed on Kickstarter or Indiegogo would necessarily ship.

Well it’s been three years and I’d pretty much written off the idea of ever receiving my GOkey. A few days ago I received an email from the project organizer making it official by explaining he was out of money and unable to ship. He concluded the email:

“I feel terribly shameful for letting you down.
I am sorry.”

I actually felt kind of bad for the guy despite the fact that he got my $69 and I never received anything in return. I would have been more upset about this in the past but I’ve become much more realistic about these projects in the last few years. 

The idea behind crowd-funding is a good one. Somebody has a great idea and rather than going to the bank, they get funded by their first customers. Unfortunately, you’ve got to be pretty discriminating if you don’t want to receive any emails like I just did from GOkey. I’ve got a few rules now for backing crowd-funding campaigns:

1. If it has a circuit board, don’t back it. 

It often seems to me that the biggest fails on these types of projects involved finalizing, approving, and sourcing electronics. I know that this was part of the reason the GOkey never shipped. These days I’ll only back something that has a circuit board if it is made by a company with already a proven and reliable track record.

2. Smashing success is often a bad thing.

If I’m watching a Kickstarter or Indiegogo that starts blowing up, I’ll take a step back and look very closely before I get on board. Being required to make millions of a product when you originally only expected to make thousands adds a lot of complexity and opportunities for things to go wrong. You may recall how long it took them to ship the original Pebble watch. People I talked to said a lot of this was due to them having to ramp up for so many units.

3. Simple ideas are also subject to peril.

Another problem showing up is intellectual property theft. A clever designer will come up with a new way to solve a problem and the project will get some momentum. That very same momentum, however will attract rip-off artists to start flooding the market with similar products, sometimes before the campaign even ends.

I still think the idea behind crowd-funding is a good one. If you see something you feel passionate about and you want to play a role in making it a reality, there’s nothing wrong with backing it. Just be warned that no matter how good of an idea a product is, it still may never ship.