What is Kickstarter?

Kickstarter is several years old at this point, but a lot of people still don't know what it is, what it's done for various industries, and how to best utilize it. Today we're going to take a look at it and go through all of those questions so that hopefully you will understand how to best utilize it to help you reach your goals. Whether that is as a backer, or as a presenter.

What is Kickstarter? - Kickstarter is simply a website designed to allow potential business ideas to be posted online easily where potential backers can give them money. While business deals have been arranged off of this model, it typically functions through individual consumers donating money to the project. Then in return the individuals receive a product or service for their money. They have all kinds of projects with everything from local business start ups, to photography, to art, to games (video and board), and pretty much anything else you can think of. They have "raised" over a billion dollars since they were created in 2009, and currently have no plans of stopping.

How does Kickstarter Work? - Someone with an idea posts it on kickstarter  as a fundraising campaign with a description of their idea. They are required to meet certain minimum standards such as images, videos, and amount of text present, but other than that it's up to the individual content producer to decide what to include. Then they have a list of various backing levels that go anywhere from 1$ to 100,000$ and sometimes more, which a backer can choose to pledge funds at. These funds are collected and held by Kickstarter until the fundraising campaign is over. Then the funds are released to the initial producer where they do with them what they wish. Kickstarter charges fees to post an idea, and they are taken at the end of the fundraising campaign. After Kickstarter hands the money over to the initial producer they are done with it. It is no longer their responsibility, and it is now up to the backer to communicate with the producer if they want a refund or to make changes. So, in a nutshell they present potential products and ideas to backers and consumers, handle getting money from the backers to the producers, and then moving on to the next project.

Pros and Cons to this model:

On the pro side this gives an extremely free environment for both producers and consumers. Producers are able to present ideas that in larger corporate world may get rejected because of how "outside the box" they are. They also have the freedom to adjust a project on the fly based on consumer input and feedback. For Consumers this means that we can choose to support the products we want, and ignore the ones we don't. Leading to a marketplace that has more of the items we desire, rather than panacea substitutes designed to fill a gap in a corporate spreadsheet. We also can choose how much to support said products, by donating however much we wish to see this happen. The inherit creativity of this system is also good for everyone, as it pushes for more creative and diverse markets that lead to greater choice and innovation.

On the con side, producers are taking big risks. If their products don't get funded, they may often lose a lot more than their project. Since these are typically individuals (or small teams) they don't have other larger funding sources, like most companies do. Producers are also subject to the same issues that plague other businesses, and can fail because of legal issues, theft, or environmental factors that are out their control. For consumers there is no accountability after a product ends on Kickstarter. If a producer is actually running a scam, once they have the money then you can never get it back. Plus, if a project fails for any reason, you also will not get your money back.

Overall is it good or bad?- Certainly there are negative aspects and risks on both sides. Lack of accountability, and the fragility of start up companies are probably the biggest concerns I can think of. Overall though this business model is a good thing. The diversity it brings to the expanding global marketplace is good for economies worldwide. The freedom it allows producers is good for everyone. The projects they create are diverse, promote new ideas and ways of doing things, and are often times better quality products because they have the heart and soul of their creator in them. The greater say that consumers have in the market allows goods and services be directed to what the market wants, not just what it can get that's close enough.

So, if after reading all of this you think to yourself "I'm really not all that interested in this model because of X". That's perfectly ok. This model isn't for everyone, and I myself sometimes question it's validity when a big scam or project failure makes the news. However, if you have decided you are interested, your next question is most likely, " How can I best utilize this marketplace?"

For Producers:

• Have  LOTS and LOTS and LOTS of information. - This may seem obvious, but you'd be amazed how often times projects are posted that lack key details. At the very least you need time frames for stages of production, a detailed budget sheet for where the money goes, a list of team members and qualifications, and a detailed description of your project with content, goals, and descriptions. It also helps to have demo's of your product if possible, technical specifications if applicable, and lots of photos and videos. Any additional information you can think of can never hurt you. If people are genuinely interested in your product, then they will go through all of it to make sure you know what you are doing. 

• Update your project. - A lot times a product will be put up on kickstarter and then never touched again until after it ends. This may or may not be ok depending on the product, but generally it's better to keep your backers informed. Let them know of any changes that you are making, funding goal updates, and how much you appreciate the support. These things build loyalty and trust for the product you are selling, and will net you more backers than just leaving your project alone. 

• Have good backer rewards. - Unless you are setting out to use this to find some serious business partners, you need to offer extra incentives to convince ordinary consumers to back your product. Usually, good rewards are early product testing, discounted or free future products, additional "bonus" materials (think movie or game bonuses), or direct input  from the backers. 

• Follow through. - Even after your Kickstarter project has ended, be sure to stay in contact with your backers. Keeping them in the loop can give you valuable feedback for how to improve your project, future Kickstarter efforts, and build loyalty with your customer base. 

For Backers:

• Know the market.- As a backer it is important that you know the market for products you want to back. For example, video games take more than 100,000 dollars to make from start to finish. If a project is asking for that much to start a game design project, then either this is very long term or the producer doesn't understand their development process very well. However, that same amount of money is perfect for final development stages, or producers looking to add a bit of polish to an already completed game. Knowing your market can help you not waste money, or wait for years to get the product you backed. 

• Don't just SPEND SPEND SPEND. - Throwing money at a project usually will not get it here any faster, or fix a product that is heading down a horrible design path. Carefully choose what you want to support, and back it with an appropriate amount of money based on your interest and available spending money. I know this seems obvious, but people have often got excited over a "dream project" and spent way to much money. Once you give them money to Kickstarter, it's almost impossible to get back. Once the money gets to the producer it is impossible to get back. 

• Stay in Communications with the producers. - After a kickstarter campaign ends, there is still much to be done on their end. No matter how much the exceeded or didn't meet their goals. You have invested something in their product, and it's important that you stay up to date. Now, this isn't the same as being a shareholder. You don't need to know everything that goes on, or make demands. It is important however that you stay up to date with basic overall project progress, and perhaps even help contribute a bit. Depending on how particular producers feel, you may be able to do testing, offer a different perspective, or even come on board the official team. It has happened before, and will probably happen again. 

So there you have it. I hope you find this little guide informative and helpful. Thanks for reading! Now go check something out on Kickstarter