Business and Industry

Kickstarter's (Oculus) Rift: Scam or Test Market?


Former Reason Editor in Chief Virginia Postrel (Reason archive here) has a great piece up at Bloomberg View. It's about how "crowdfunding sites such as Kickstarter and Indiegogo represent a classic entrepreneurial phenomenon: Once you roll out your great idea, customers use it in ways you didn't imagine, and you wind up in a different business than you expected."

Postrel argues that "neither intended their site to act as a test market. But, as the rags-to-riches story of virtual-reality firm Oculus shows, that's what they have become." When Oculus put its virtual reality headset on Kickstarter, it ended up with 9,500 people shelling out well over $2 million to make it happen.

Now that Facebook has bought Oculus for $2 billion, critics (including another Bloomberg View writer) are calling Kickstarter a scam that cuts early investors out of the proceeds that go to venture capitalists.

The backlash is largely Kickstarter's fault. It may not be running a scam, but it definitely sends mixed messages. Unlike Indiegogo, which prides itself on operating a neutral platform giving anybody's idea a market test, Kickstarter hasn't embraced its de facto transformation. It strictly curates the campaigns it hosts and, although it makes its biggest profits on technology products, it still exudes an artistic sensibility that isn't entirely comfortable with disruptive technology or large enterprises. It still talks as though it's PBS. "Kickstarter is not a store," it declares.

Indiegogo, by contrast, proudly touts itself as testing platform. "We allow entrepreneurs to prove themselves in a merit-based way," by discovering whether a venture can in fact attract interest and money from potential customers, said [Indiegogo founder Danae] Ringelmann. The site even allows campaigns to swap in new perks or change the required giving levels. "You can test your pricing. You can test your features," she said. That kind of blunt sales-oriented language would be unheard of on Kickstarter.

Read the whole thing.

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  1. “Talking people out of $2.4 million in exchange for zero percent equity is a perfectly legal scam.”

    Kickstarter is not billed as giving anyone equity in the projects. You have to seriously misunderstand it to think that.

    1. What’s more, the SEC doesn’t allow them to be considered investors. It’s a typical statist problem, caused by government and blamed on people.

  2. VP is getting back to technology and business. That “glamour” stuff was interesting, but not the sort of hard news analysis I’d previously associated with her.

  3. People used to the venture-capital paradigm can’t seem to even imagine a format where investors know they’re not getting equity and send money anyway. So Kickstarter must be a scam instead of a willing transaction, because otherwise they’d have to think.

  4. “It still talks as though it’s PBS.”

    The hipster cred of Kickstarter is the main return you get for your investment.

    1. “Equity? What are you, a fucking capitalist?”

  5. The NYT has finally written a good story, predicts the Orioles win the East.

  6. My kickstarter will be a REIT. Send me money and I’ll invest it in only the finest and trendiest of eco-real estate. You’ll feel great about it, I promise.

    1. Actually… I’m going to do that. But for three and four unit apartment buildings in a few certain zip codes bordering Culver City and Inglewood. I’ll let you know when I get it up and running. Diversify your portfolio. Cash flow is king!

  7. HHS issues a new Obamacare decree to make our lives better:

    “Today [March 14], we are clarifying that, starting next year, if an insurance company offers coverage to opposite-sex spouses, it cannot choose to deny that coverage to same-sex spouses. In other words, insurance companies will not be permitted to discriminate against married same-sex couples when offering coverage. This will further enhance access to health care for all Americans, including those with same-sex spouses.”…..uples.html

    1. One more thing for any candidate who wants to defeat ACA to deal with. “TeaBaggers want gay couples to die of curable diseases in the street!!!”

      Because before Obamacare, it happened all the time, remember guys?

  8. Avowedly liberal instructor at Santa Barbara Community College takes UC Santa Barbara Vice Chancellor Michael Young to task. Young gave a limp response to the incident where the porn professor attacked prolife demonstrators who were in the free speech zone.

    “The vice chancellor’s letter rightly affirms that: “Freedom and rights are not situational ? we cannot pick and choose what views are allowed to be aired.” But that message is muddied if not contradicted by Vice Chancellor Young’s assertion that the campus is under siege by “outside groups” that seek to “create discord” and “peddle hate and intolerance.” In essence, he asserts that outside agitators are trying to stir up trouble. Sound familiar? This argument has been used countless times to discredit liberal groups exercising free speech. In fact it was used in the mid-1960s by UC officials and by Governor Reagan to delegitimize the Free Speech Movement on the Berkeley campus….

    “He says that if students feel they are being exposed to hate speech, a term whose ambiguity, as the ACLU has cautioned, creates a slippery slope for abridging free speech, they should call the UCSB Police. Pointedly, he does not also recommend that they should call the police if they observe the free speech rights of activists being violated, as occurred on March 4.”…..-liberals/

    1. if students feel they are being exposed to hate speech … they should call the UCSB Police.

      Non-students should call 911.

      And because it’s about *how you feel* there’s absolutely no chance of being cited for a “false alarm”!

  9. Young gave a limp response to the incident where the porn professor attacked prolife demonstrators who were in the free speech zone.

    What a surprise. Another link to a story about the UCSB ATROCITY HOLOCAUSTAPALOOOOOZA.

    Considering how much time you spend masturbating over this story, your poor little peepee must be nothing more than a bloody nub.

    Give it a fucking rest, Padre.

    1. *smooches*

    2. Because fuck the First Amendment, for some reason

    3. Give it a fucking rest, Padre.

      I like the updates of this story.

      Not as if i am going to look it up or anything…plus it has fallen off Drudge.

  10. Those guys seem to know whats going on over there for sure.

  11. There’s no reason Kickstarter can’t be PBS if it wants to be. I myself have a large collection of tote bags. (Actually, tote bags went out of style back in the late 20th century.) PBS still produces some damned fine television. I don’t see any reason art can’t be crowd sourced just because it doesn’t make money. If Kickstarter would rather be a patron of the arts than a new media informercial that doesn’t mean their doing it wrong.

    1. Dear Reason Web Monkey,
      Please add an edit comment feature ASAP

      Thank You

  12. Just about time to change your name again, isn’t it, Notorious?

  13. As a result, the most successful crowdfunding projects aren’t charities. They’re ventures that produce something people wish they could buy.

    Is this supposed to be some sort of deep insight?

    1. Yes.

      People Giving other people money so they can run off and make even more money is kind of weird. Especially when right next to the money making charities their is non-profit charities on the same website.

      Note: I am not saying this is wrong or unethical…only that it is a result that i would not have predicted.

  14. I am guessing the Oculas team were sincere.

    But they discovered that making hardware is hard and making it cheap is even harder and they didn’t actually have any new IP that had not expired their 20 year patents. So if they actually did have a product they could make cheap that people wanted to buy they would quickly get their ass kicked by the likes of Sony, logitech and Microsoft…maybe even Nintendo.

    I am also guessing facebook bought it because Sony Microsoft logictech and Nintendo would not buy it for the above listed reasons.

  15. If anyone of the dummies who ‘invested’ in Oculus read the fucking Kickstarter FAQ it would be sufficiently clear that not a single penny that goes through Kickstarter has ever been designed to be an investment. Kickstarter is a simple helping-hand economy. If it was anything else it’d likely be illegal since investment vehicles are quite complex and massively regulated.

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