Kickstarter has been one of the most impactful start-ups for entrepreneurs of this generation. It changed how their new businesses and goods were financed forever.
For those of you who might not be aware, Kickstarter is one of a range of public money-gathering crowdfunding sites that circumvent conventional investment avenues. A deadline and a minimum funding target are selected by project developers. No funds are collected if the target is not reached by the deadline (a kind of assurance contract).
The facts speak for themselves. More funding has been distributed through Kickstarter than by the National Endowment for the Arts, an agency of the US government. Hollywood star Zach Braff financed his latest film as a Kickstarter project, and it’s not just up-and-coming creatives who understand the game-changing nature of the site (and recieved some vitriolic criticism for doing so).
Perry Chen came up with the original concept for Kickstarter in 2002 when he tried to bring Kruder & Dorfmeister to New Orleans to play a gig, but was unable to raise the cash required. If only, he thought, there was a way to pledge money in advance to all those who would like the concert to happen. Perry moved back to New York in 2005 with the idea stuck in his head, and made ends meet waiting tables. Music journalist Yancey Strickler was one of the regulars in the Brooklyn restaurant where he worked; the two became friends, then co-consiprators. They later recruited a third member, Charles Adler, to the project, and Kickstarter was born in 2009.
The kickstarter platform is now open to supporters from all over the globe and to developers from many countries, including the United States, the United Kingdom, Canada, Australia, New Zealand, the Netherlands, Denmark, Ireland, Norway, Spain, France, Germany, Austria, Italy, Belgium, Luxembourg, Switzerland and Mexico.
On the total amount of the funds raised, Kickstarter imposes a 5 percent charge. An extra 3–5 percent charge applies to their payments processor. Kickstarter asserts no ownership of the projects and the work they create, unlike many platforms for fundraising or investment. The web pages of projects that have been initiated on the site are indefinitely archived and available to the public. Projects and submitted media cannot be edited or deleted from the site until funding is completed.
There is no guarantee that individuals who post projects on Kickstarter can deliver on their projects, use the money to conduct their projects, or that the projects completed will meet the expectations of supporters. Kickstarter urges supporters to use their judgment to encourage a company. They also alert project leaders that, for failure to meet commitments, they may be responsible for legal damages from supporters. Even after a successful fundraising campaign, projects may still fail when creators underestimate the total costs needed or the technological challenges to be resolved.
Why did Kickstarter succeed? Well, the goods are cool, but I believe it’s because great stories are told by their makers. And stories are the way we human beings establish relationships. For stories, we’re physically programmed. Stories are what bind us, our families, our mates, to our national identities. We share stories all day long; we re-tell the dramas and tragedies and comedies of the day every time we sit down for dinner with friends and acquaintances. And that makes us closer to each other, also encourages us to believe in each other.
Crowdfunding was not developed by the Kickstarter creators. They improved it. And they did a lot of stuff correctly, including all of the above proposed at my dinner by the entrepreneurs. But Kickstarter owes its rapid development to the fact that it allowed all project owners to upload private videos telling their stories, the individuals asking for money. Instead of just asking, Kickstarter inventors and designers and entrepreneurs had to get in front of a camera and explain who their ideas were and why they were passionate about them. Forced to tell fantastic tales, they were. And that’s what has prompted 5.9 million supporters in the last five years to take a billion leaps of confidence in strangers.
Check out my related post: How a company invented a better model for selling shirts?