What does a documentary about a bearded a-capella male choir that sings Leonard Cohen songs, a Japanese dance piece by a Portland based choreographer and a classic video game that’s looking for a revival have in common? They’re all trying to get the funding necessary on Kickstarter, a website that’s based on crowd funding.
What’s crowd funding you ask? Is it similar to CrowdSourcing? Well, yes and no. Both methods draw their funds from the crowd (i.e regular average Joe’s) but while in CrowdSourcing all the company does is offer a platform for the suppclients (remember?) to work with while they provide the income and supply tangible products, crowd funding is all about investing in an idea. If you think about it, Kickstarter is an updated idea and a real attractive option, of micro-credit for small businesses.
The site Kickstarter was launched in 2008 and preformed nicely during the first two years of its life, raising around fifty million dollars for numerous creative projects, ranging from indie films, music albums, comic books, etc’. But in 2011 the site really took off, raising fifty million dollars in only six months. What makes the success of Kickstarter an odd economic duck is that there is no guarantee that the product you invest in will work or even be finalized and manufactured. Furthermore, the intangible personal property, be it copyrights or a trademark, is kept by the person who thought of the idea. In the end, only about 50% of all the ideas and projects on the site materialized into something tangible.
So why is Kickstarter working? There are two aspects, rational and cultural. On the rational side of things, Kickstarter is doing something that now seems obvious - threatening to undermine the entire investment models of hedge funds, venture capitals and more. It also enables business to raise money in their early stages, as well as altering existing product development processes. It’s about cutting the middle man, going straight to the consumers and saying “If you like my idea, if you like my product – show it by investing in it”. There’s a sense of a community but with more than just trading ideas on paper (or on screen); its is actually about going the extra mile and turning it into reality.
The emotional aspect is based on that sense of community. It’s designed for people that thrive on innovation and originality. The site itself filters the projects to fit that mold. There is also no cynicism involved in the process, only passion, optimism, and almost a naïve view on life. It’s a site for dreamers, it’s the essence of the (new and improved) American dream, of taking one idea all the way to the top (and as such, the site is only open for American entrepreneurs at the moment). Only in America the public will be willing to fund (even more than was asked for) The PowerPot, an innovative new generator that turns heat from cooking into electricity with no moving parts.
On both aspects, Kickstarter is a place where change is a way of life. And in the spirit of CrowdSourcing, the site is shaping itself over the years according to the needs and actions of the clients. Basically it’s about having your own gigantic focus group, but instead of paying them for the participation, they are paying you for your ideas.