More Money, More Problems: The Challenge Of Managing Crowdfunding Success

from the it-takes-more-than-just-a-kickstart dept

Tue, Jun 4th 2013 12:00am — Leigh Beadon

Post sponsored by

A lot of the attention given to Kickstarter and other crowdfunding platforms these days has been spurred by the big runaway success stories — the Pebble smartwatch, the Double Fine Adventure, Amanda Palmer's project, and many others that exceeded their fundraising goals in the first few days and kept on climbing. The phenomenon is not limited to these multi-million dollar examples: countless smaller projects have shot past their more modest goals multiple times over.

Whether it's a $500 project that raises $10,000 or a $100,000 project that raises millions, the result for the creator is the same: a stunning success that has the potential to turn into a crisis or an even bigger opportunity, depending on how they handle it.

That's the other side of the double-edged sword that is success on Kickstarter, and it often gets ignored. If you're a creator with a product in the pipeline — whether it's software, hardware, an album, a film or anything else that takes time and work — and your plan is to raise some money while piloting it out to a few hundred people, suddenly having hundreds of thousands of paying customers on your hands can be more daunting than exciting.

Not only does the challenge of order fulfillment become much bigger and more complex (this is where a lot of campaigns fall down), there's also the issue of managing so many expectations. Hundreds of wall comments and private messages (some less polite and more demanding than others) start arriving, all while you're trying to finish the actual work. And that starts the moment the campaign picks up steam — meaning the actual money often won't be arriving for weeks.

Some creators have talked about the problem. Palmer Lucky, who kickstarted the Oculus Rift headset, faced the issue of excited backers drawn in by the popularity of the campaign who hadn't fully read the details, and were anticipating a more complete product than was actually promised. A 2012 study found higher rates of late delivery among overfunded projects.

A big part of the problem is the relatively lackluster backer management tools found on Kickstarter and similar services. Communication is a huge part of running a successful campaign, since things are bound to go wrong, but backers are almost always understanding as long as they aren't left in the dark. Runaway success projects — or at least the ones that still deliver — tend to move beyond Kickstarter for the hard work of customer management: they take the discussion to their own forums, they set up their own mailing lists and customer request systems, and they move more and more communication to more robust platforms (Kickstarter only offers blog-esque updates and an inflexible survey system). Apart from ensuring that a project delivers its goals on time, there's the fact that most crowdfunding campaigns are also about starting a business, which means hopefully converting lots of backers into repeat customers.

Ultimately, the success of crowdfunding campaigns seems to come down to how well the creators build and manage a community — and currently the crowdfunding platforms themselves can only play a small part in that.

This post is sponsored by Insightly. Grow your business and your customers with Insightly, the #1 CRM for small business. Sign up for a free account today »

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Filed Under: crowdfunding, sponsored post
Companies: kickstarter

50 Comments

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Reader Comments

The First Word

“

Really a key indication of how organized projects are...

Having backed a bunch of projects, you really learn quite quickly how organized the project creators are once the project closes. I've had some completely disappear and fail to keep people updated at all, which really makes me skeptical about ever supporting future projects. Others, however are very good about keeping you informed, and as things change or there's an impact, they're able to keep you up to date without it being a shock or anything.

I wonder if one day that will be part of the analysis: how good is a project creator at further communicating with supporters.

—JJ

”

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This comment has been flagged by the community. Click here to show it

Anonymous Coward, 4 Jun 2013 @ 2:46am

How d� i block invasive sponsored posts?
[ link to this | view in thread ]
Tim Griffiths (profile), 4 Jun 2013 @ 3:54am

Re:
close your eyes.
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Anonymous Coward, 4 Jun 2013 @ 4:09am

That's why they should use Insightly, duh!
[ link to this | view in thread ]
That Anonymous Coward (profile), 4 Jun 2013 @ 4:24am

Re:
you look for that spiffy blue bar that says sponsored post and then skip that post.
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Anonymous Anonymous Coward, 4 Jun 2013 @ 7:42am

Execution
I think this post points directly to the fact that it isn't the idea that gets you to the top of the marketplace, it's execution. Kickstarter takes care of funding, but it doesn't necessarily take care of the rest of a business plan.

That business plan consists of (amongst other things) a Marketing Plan, an Operations Plan, and an Administrative Plan. Of course, when one does such planning they include a break-even analysis. Once one has that spreadsheet accomplished, it is easy to test various levels of demand. Then one can build an operations plan, with consideration to various levels of output. This thinking about the future might look like pipe dreaming, but it is also called planning. You might not make your highest expectation, but you have planned for that contingency.

In other words:
Proper
Planning
Prevents
Predictable
Preventable
Poor
Performance

Without the planning, the chances of a high level of execution become nil.

:End message
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Anonymous Coward, 4 Jun 2013 @ 7:48am

Re:
How d� i block invasive sponsored posts?

What? You don't like the hard-hitting, awesome insight from the mediocre Canadian rapper boy? He's over-qualified to write this stuff, what with his years of rapping and all.
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JJ, 4 Jun 2013 @ 9:18am

Really a key indication of how organized projects are...
Having backed a bunch of projects, you really learn quite quickly how organized the project creators are once the project closes. I've had some completely disappear and fail to keep people updated at all, which really makes me skeptical about ever supporting future projects. Others, however are very good about keeping you informed, and as things change or there's an impact, they're able to keep you up to date without it being a shock or anything.

I wonder if one day that will be part of the analysis: how good is a project creator at further communicating with supporters.
[ link to this | view in thread ]
This comment has been flagged by the community. Click here to show it

out_of_the_blue, 4 Jun 2013 @ 9:19am

FOR TEN PERCENT "Kickstarter only offers blog-esque updates"!
You know, reading through I thought maybe was more to Kickstarter than knew, but nope, you answered my question.

SO, management opportunity! Just leverage from Kickstarter to handle the many big successes. You should for ordering / management services, at the rate the chumps are paying Kickstarter off-the-top for little more than a website and money transfers, get at least 80% of the gross.
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Leigh Beadon (profile), 4 Jun 2013 @ 9:35am

Re: FOR TEN PERCENT "Kickstarter only offers blog-esque updates"!
Blue, meet Context. Context, this is Blue. I know you two don't get along, but...
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Anonymous Coward, 4 Jun 2013 @ 11:59am

Why did this post move within the list overnight? It originally came after "Crowdfunded Stenographer Denied Press Pass To Cover Transcriptless Bradley Manning Trial" and before "Eric Holder's 'Off-The-Record' Meeting With Journalists Leads To 'On-The-Record' Quotes, But Not Much Else", but now it's between "June 4th: The Struggle Of Memory Against Forgetting" and "Microsoft's Attack On Used Game Sales Asks Customers To Sacrifice Their Rights To Save An Industry". The current placement seems to be incorrect, as the time stamp indicates that the original placement is correct for a chronological sort order of posts on the front page.

Please fix this bug in the site at once, as I rely on "I've seen this post before" to mark when I've caught up. Having a post not in correct chronological position may result in my missing new posts that an old post is incorrectly sorted after.
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Leigh Beadon (profile), 4 Jun 2013 @ 12:07pm

Re:
It's not a bug, actually -- we've started deploying certain posts in "pinned" positions on the front page, to keep them in the spotlight for longer. It's a feature we've wanted for a while, to use both for important news/announcements and as part of sponsorship packages like this one
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Nina Paley (profile), 4 Jun 2013 @ 1:05pm

Re: Re:
This "feature" drives me crazy, unfortunately. I have only seen it used for sponsored posts, and it makes it harder for me to read the site.
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Andrew F (profile), 4 Jun 2013 @ 1:06pm

Fulfillment
Amazon offers a fulfillment platform Kickstarter could build off of. Given that they already use Amazon to handle payments, it wouldn't surprise me if they made some sort of deal to streamline the fulfillment process.
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Anonymous Coward, 4 Jun 2013 @ 3:31pm

Re: Re:
If you need to make your "sponsored posts" intrusive or annoying, and to relegate all of the other content to second-class status, in order for them to get attention, then you're doing it wrong ... as you really should already have been aware, since you've said essentially the same thing, repeatedly, in response to others' obnoxious advertising practices.
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Leigh Beadon (profile), 4 Jun 2013 @ 4:30pm

Re: Re: Re:
It is by no means our intention to make them annoying. We retain editorial independence on sponsored posts, and it is our goal to make them interesting. The last post we launched in this manner was extremely popular, and got over 3000 votes on Reddit despite being sponsored. As for making them prominent on the page, that's just part of an ongoing evolution of how we present content here -- very few websites of our size still use a pure chronological blogroll, and while we've chosen to retain that style mostly, we also find ourselves badly in need of some flexibility given the amount of content we have and the size of our audience.

We're paying attention to reader feedback on this stuff, and we're certainly sympathetic to the fact that some changes may disrupt certain people's viewing habits -- every change always does. It's an evolving site, and you can expect to see lots of other new stuff appearing over time -- both related to sponsorship packages, and just related to our own content. And so far, the reaction to our new approach sponsored posts (admittedly only an initial reaction, as we haven't done many yet) has been overwhelmingly positive.

So, bear with us. We're listening to people's concerns, and we're working hard to grow the site and to support it by experimenting with some non-traditional sponsorship and advertising packages, rather than just burdening it with banner ads. Nothing is set in stone -- except our commitment to editorial independence and our standards for content.
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Malor (profile), 4 Jun 2013 @ 5:35pm

Re: Re: Re: Re:
Yanno, as someone who just started giving you money recently, this kind of stuff makes it much less likely that I will renew.

I need to trust that you have my best interests at heart, and when people can pay you to run articles, that strongly implies that you do not.
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Anonymous Coward, 4 Jun 2013 @ 5:51pm

Re: Re: Re: Re:
Making sponsored posts pretend to be new to people who've already read them makes them intrusive, and making them intrusive makes them annoying, regardless of your intentions.

Put it back to strictly chronological sort order.
[ link to this | view in thread ]
Franklin G Ryzzo (profile), 4 Jun 2013 @ 5:52pm

Re: Re: Re: Re:
I'm all about you guys experimenting with new models for revenue generation and all, but I have to agree with some of the others here that I do not like this new format with the pinned post staying up top. Hopefully a less intrusive method will be found, but I'm an adblock, noscript kinda guy, so maybe I'm in the minority...
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Anonymous Anonymous Coward, 4 Jun 2013 @ 6:27pm

Re: Re: Re: Re:
I had a brief issue with this earlier today. I missed a post or two thinking there was nothing new. Then I looked for something older and saw what was going on. Simple change;

If post=sponsored=true, check if read
If read, go to next post, if not read, read

Fairly simple, though I too use the title of the top post to see if there is anything new. Maybe something could happen at the top of the sponsored post to...oh I forgot to look, there is a list of next/previous posts at the top, did they show the new one(s).

Maybe if there were one line links that get marked read after you see the page and then one would know that not marked links have not been seen.
[ link to this | view in thread ]
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Anonymous Coward, 4 Jun 2013 @ 7:25pm

Perfect pyramid scam
so these people who start a project are willing to accept multiple times the amount they stated they needed !!!

What is the go with that, so they estimate the cost to 'kickstart' this project, then are happy to accept multiple times that amount ??

Why don't they close of their project once their goal is met, and let other projects benefit from investor money ?

Why do they just keep the money grab up, seems like a massive scam to me.

It's a wonder people are willing to invest anyway, it also removed competition, if it was cut off once your goal is met, it would give incentive to the investors to invest early to ensure they don't not miss the cut off.

So you get 10 times the amount you need, you KNOW you are not going to meet expectations. You also know you DONT NEED that amount of money, and the extra money is not used, (you said you did not need that amount in the first place).

So you pocket the extra money, close the project and have a nice holiday??

sounds like an internet pyramid scam to me, loosely disguised as 'kickstarter'.
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Tek'a R (profile), 4 Jun 2013 @ 9:27pm

Re: Perfect pyramid scam
Have you actually looked at kickstarter? do you understand what is happening when a popular project beats the expected minimums?
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Pragmatic, 5 Jun 2013 @ 3:07am

Re: Re: Re: Re: Re:
What, so you don't understand "sticky" posts?
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Leigh Beadon (profile), 5 Jun 2013 @ 6:48am

Re: Perfect pyramid scam
That's now how Kickstarter works. Everyone who pledges gets something in return -- if you get 10 times the money, you have to deliver 10 times as many products. It's not free bonus money. Moreover, most projects have "stretch goals" where they promise upgrades/additional features to what they are offering if the project hits set amounts beyond the goal -- e.g. in a board game I recently backed, the additional money allowed them to add a second side to the board, upgrade certain pieces from cardboard to plastic, etc., all of which meant every single backer got MORE for their money

With a digital good, of course, you can deliver more copies of a product without increasing costs -- which is why digital goods tend to focus even more heavily on stretch goals. The Double Fine Adventure project was increased in scope based on the huge amount of money it made, allowing them to add all sorts of new features to the game.

So basically darryl, everything you said is wrong. The extra money IS used, the creators ARE trying to meet expectations (and often do) and nobody is "pocketing" anything (very few Kickstarter creators walk away with money left over -- in fact, in most cases, unforeseen costs mean they still operate the whole thing on a shoestring budget)
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out_of_the_blue, 5 Jun 2013 @ 8:56am

MOVING THIS UP IS NOT GOING TO HELP IN ANY WAY.
Even by your own interests. I'm happy to tell you that this strategy is simply not going to work. It's just annoying. -- Even Nina Paley was annoyed enough to point out that one stops reading the front page when recognize a post. -- So this is actually counter-productive, you're just too affected by money to see the obvious. And you're not getting any positive comments, while negatives accumulate.

"So basically darryl, everything you said is wrong." -- Here's a revolting tactic typical of Techdirt: the minion is "outing" an anonymous commenter. That means has access to the IP numbers, and the willingness to use that info to suppress / disparage comments. -- As indeed, every "reply" from the minion is pretense at answer while simply saying STFU. -- Yeah, you minions are all for free speech, so long as everyone agrees with you.
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Anonymous Coward, 5 Jun 2013 @ 9:57am

Re: Re: Re: Re: Re: Re:
What, so you don't understand "intrusive"?
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Anonymous Coward, 5 Jun 2013 @ 7:41pm

This new pinned position thing really, really sucks. I visit the site, glance at the first page, and see if there are any new articles. The position of this post means I have to scroll down to see if anything beyond the first post is new, which seems trivial but is quite irritating and makes me want to visit the site less often.

I would probably be less irritated if I actually cared about the content of the post and it produced an interesting discussion, but for me, this is as bad as those "random person's favorite moments of the week" posts I dislike and already skip--except it's here every day and prevents me from seeing if something I actually want to read has shown up.
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parsyar (profile), 5 Jun 2013 @ 8:20pm

Nice One
Great Post thanks Insightly
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Anonymous Coward, 6 Jun 2013 @ 7:32pm

Re: Re: Re: Re: Re:
Thank you for your co-operation.
[ link to this | view in thread ]
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