Crowdfunding a successful project

Crowdfunding is increasingly becoming a legitimate way to fund a project

How successful can crowdfunding be for IoT hard? We looked at some of the downsides of campaigns recently and story in Smart Company on some of the IoT gadgets at the recent Internet of Things World exhibition showed how many of projects are being funded by the crowd. 

The notable thing about the projects at the conference was how many had not only been successful crowdfunding projects but had also smashed  their targets.

The lesson from that is a successful campaign has to catch the imagination and excitement of the crowd, not just be a worthy idea.

How many if these products end up being successful remains to be seen, the test will be how accurately the founders have estimated their costs.

If it were just the enthusiasm of the funders, then the projects are almost certain to succeed.

Similar posts:

  • No Related Posts

Apple Watch shows us the limits of 3D printing and crowdfunding

Apple Watch shows us the limits of 3D printing and crowdfunding

Ahead of its launch the Apple watch has been criticised for its price and upmarket focus but the product shows what it costs to manufacture high quality goods along with the limitations of both 3D printing and crowdfunding.

In its Watch Craftsmanship videos Apple shows off some of the workmanship that goes into manufacturing the device and the Atomic Delights blog has a deep look at the processes and the design decisions behind the company’s choice of techniques.

What Apple’s series shows is that making top end devices is capital intensive and very, very hard. It also puts lie to the idea that raising a few thousand, or even million, dollars on Kickstarter will get a luxury item to market.

Greg Koenigin, the author of the Atomic Delights blog, gushes about Apple’s attention to detail and high quality manufacturing.

I see these videos and I see a process that could only have been created by a team looking to execute on a level far beyond what was necessary or what will be noticed. This isn’t a supply chain, it is a ritual Apple is performing to bring themselves up to the standards necessary to compete against companies with centuries of experience.

It’s clear Apple isn’t stepping back or making any compromises in making its mark on the watch industry, even though the entire global market for timepieces is less than one quarter’s income from the iPhone.

At the other end of the market the 3D printing revolution continues with Feetz raising $3 million for its customised shoemaking operation.

While Feetz is an impressive and quirky business with great promise it shows the rough-and-ready face of the makers’ movement and the businesses relying on 3D printing services, it’s a world away from the Apple Watch.

While both crowdfunding and 3D printing are going to have a massive effect on business and manufacturing, the truth is that other manufacturing methods are still going to be used by deep pocketed companies. Nothing is ever as simple as we think.

Similar posts:

  • No Related Posts

Crowdfunding as product testing

Sony’s FES watch shows the future for companies using crowdfunding to develop new products

A story from the Wall Street Journal describes how Sony have crowfunded their FES watch project, a smartwatch with an electronic paper wrist strap.

Sony’s decision to crowdfund new projects is fascinating, not least because it gives researchers and entreprenuerial employees the opportunity to commercialise projects at little cost or risk to the company but also as a powerful way to judge the market demand for an idea.

The FES watch campaign is good example how companies, big and small, can use crowdsourcing and crowdfunding. As we see more creative applications of the two concepts we may well see some radically new management methods and business models arise.

Similar posts:

Solving a global capital crisis

Kiva and crowdfunding challenge the global small business funding crisis.

“We face a global capital crisis,” states Julia Hanna, the chair of crowdfunding platform Kiva.

In a story written with Kiva board member and LinkedIn founder Reid Hoffman, Hanna discusses how crowdfunding platforms are replacing banks as the source for businesses around the world.

Throughout world  banks have effectively stepped out of the small business market, despite the world being flooded with cash to keep the global economy afloat over the last five years. Hanna writes about the US experience;

big banks currently reject more than 8 out of 10 loan applicants, and small banks reject 5 out of 10. Some estimates suggest that investment in small businesses has dropped as much as 44 percent since the Great Recession in 2008.

While the Great Recession had a lot to do with the collapse in small business lending in the US and Europe, the decline in bank support for main street dates back to the first Basel Accords established in 1988.

Basel judged banks’ risks on the classification on their assets – government bonds were the safest and domestic property was the preferred private sector asset with small business lending being a long way down the risk.

Following the cues from regulators, banks favoured mortgages which they could them securitize and onsell to investors; this gave rise to the sub-prime lending markets, Collateral Debt Obligations and eventually the Great Recession itself.

Six years after the great recession started and despite massive amounts of capital being injected into the banking system, the small business sector is still being capital starved.

As Hanna and Hoffmann state in their article, crowdfunding sites like Kiva and community initiatives are changing the banking system and it could well be that today’s trading banks.

Having neglected their core purpose of funding business and industry, are now as vulnerable to disruption as other industries as small businesses, entrepreneurs and communities look elsewhere for their capital needs.

Similar posts:

Kickstarter and ownership

Has Kickstarter funded startup Oculus discredited crowdfunding with its sale to Facebook?

The purchase of virtual reality headset designer Oculus by Facebook has raised some interesting questions about crowdfunding sites.

As the Wall Street Journal reports, many of those who contributed to the Kickstarter campaign that Oculus ran now feel betrayed by the company selling out to the social media giant.

Founder Palmer Luckey explained the companies sale to the WSJ as a quest for more funds; “a lot of people don’t understand how much money it takes to build things — especially to build hardware.”

Crowdfunding is tough

That ties into what founders have told Decoding the New Economy about crowdfunding startups; it’s tough and it easy to underestimate the capital required to launch a project.

Ninja Blocks’ Daniel Friedman told Decoding the New Economy last February that the main thing the company had learned from its successful Kickstarter campaign is that crowdfunding is a good way to raise funds for specific projects but a lousy way to fund a business.

Moore’s Cloud wasn’t as successful as Ninja Blocks and in his Decoding the New Economy interview, founder Mark Pesce described how he’d “rather eat bullets” than crowdfund a hardware startup again.

Startups are always hard, but it’s difficult not see how the high moral purpose often citing from Kickstarter project founders clashes with the ruthless moneymaking of Silicon Valley.

Discrediting crowdfunding

The criticism of Oculus also illustrates how crowdfunding lies between traditional investment and sales; those contributing to crowdfunding projects are true believers, not just customers and certainly not investors in a legal sense.

In recent times Kickstarter has been discouraging hardware startups from using their service; mainly because of the high risk of failure and disaffected contributors. The unhappiness with Oculus vindicates that move.

Oculus’ sale to Facebook may make many Kickstarter contributors doubly wary of Silicon Valley style startups trying to raise funds through crowdsourcing campaigns.

Lords of the Digital Manor

Looking at Oculus’ move, it’s hard not to conclude we’re seeing another cynical version of the Lords of the Digital Manor business model where enthusiasts are exploited by entrepreneurs looking for the big Silicon Valley pay off.

For Kickstarter and the other crowdfunding platforms, this is a problem as cynicism about the motives of those posting projects is probably a greater risk than the fear of being ripped off.

It may well be that Oculus marks a big change in the types of projects that get successfully funded, certainly the next hot hardware startup that tries crowdfunding is going to find things much harder.

Similar posts:

  • No Related Posts

Solving intractable problems

How are consumers like terrorists and what does this teach businesses about solving problems?

Developing counter terrorism strategies is an unlikely path to founding a business that deals in organisational change, the latest Decoding The New Economy video covers exactly this in an interview with David Snowden.

Snowden is the Chief Scientific Officer and founder of UK based consulting network Cognitive Edge that assists organisations with change and solving ‘intractable problems’.

A failing Snowden sees with the way most businesses approach organisational change and problem solving is “the case based approach that dominates most of society.”

“The idea is you find what other companies have done and you imitate it.” Snowden explains; “apart from the fact you can’t imitate the context, no company has succeeded other by imitating other people – they succeed by doing things differently.

“We take what we know about how the human brain works and we help people work those problems out.”

Safe to fail experiments

In approaching ‘intractable problems’, Snowden believes there are two ways to approach them; one is to set up ‘safe to fail’ experiments where smaller experiments are run in parallel within the organisation to see what innovative solutions arise.

The other approach involves using Snowden’s software based approach where staff or customers’ views are captured in real time to create a crowdsourced view of problems and their possible solutions.

“You can’t afford, for example, in market research to spend three months commissioning something, two months gathering the data and one month interpreting it.”

“If we create a sensor network of your customer we can give you data in real time.”

Consumers and terrorists

Dealing with real time data in public security are the origins of Cognitive Edge; “we started in counter terrorism where you have to deal with weak signal detection, you need fast real time feedback loops and you need to intervene very quickly.”

“There’s no difference between a terrorist, a customer, a citizen and an employee,” says Snowden. “They all represent the same problem which is how the hell does a large authority make sense of fragmented data.”

Developing human sensor networks

Snowden sees ‘human sensor networks’ where groups contribute their stories to create a narrative around a topic, as being one of the strongest intelligence and communications channels.

“Big data can tell us where you travelled, a narrative approach can tell why you travelled. If something goes wrong, I can also use that network to communicate.”

One project Snowden is looking at brings these concepts together to create new communication channels at airports, an idea that came to him after being stuck for two days at Toronto airport in a snowstorm, “frequent fliers have smartphones, they can be activated by the airlines and used as a communication mechanism.”

The interview with David Snowden is one of the most information and concept dense videos that I’ve done to date. It’s worthwhile listening this a few times to understand some of the fascinating fields he and Cognitive Edge are working in.

Similar posts:

  • No Related Posts

Finding the mythical pot of gold at the end of the crowdfunding rainbow

Raising capital through crowdfunding sites like Kickstarter is only the beginning for most businesses.

Raising capital is tough, while the Silicon Valley legend of a smart group of geeks finding wealth through fairy godfathers – aka VCs – throwing money at them may be true for a small number of outliers it isn’t the reality for most businesses.

For most businesses, even if they are lucky to find a VC or angel investor, raising that money is usually the start of the next phase of building a venture which can be even tougher.

With the recent rise of crowdfunding sites like Kickstarter, Indiegogo and Pozible which are a lot easier to raise capital through than finding VC or angel investors, there’s been a lot more commentary on how these services are a pot of gold for artists and entrepreneurs.

Mark Pesce discussed some the challenges of Kickstarter campaigns in an interview on the Decoding the New Economy YouTube channel about funding Moore’s Cloud.

Backing Mark’s views is a post on Fast Company’s design blog discussing what happens after  a successful campaign.

In Life after Kickstarter, Jon Fawcett describes what happened after raising over $200,000 for his project Une Bobine.

Having more than met his targets, Fawcett found raising the money was only the start of the business challenges with logistics, taxes and fulfilment being hurdles his team had to overcome.

Fawcett actually had an advantage in had tied manufacturers up before launching the funding campaign; for those who haven’t, the process would be even more fraught.

As the Fast Company story concludes, the successful fund raising was only a small, albeit critical, part of getting the products to market.

Fawcett’s story is a reminder that a product’s journey doesn’t end with funding. While Kickstarter has democratized and decentralized the process of raising capital, concerns of manufacturing, shipping, and storage still retain the unglamorous grit of the real world. There’s no flashy website for setting up your supply chain. Perhaps that’s the next part of this grand process prime for disruption.

While raising capital is tough, it’s only part of the story of a successful business. Jon Fawcett story is a reminder of that.

Similar posts: