/ Crowdfunding Tips

How to fail after funding your campaign—and 3 things to prepare for

Go to Kickstarter’s most-funded page. Though there are plenty of genuine success stories, there are also some colossal duds, flameouts and disasters mixed in there. The Coolest Cooler, The Ouya, The Fidget Cube and Mighty No. 9; all these projects are highlighted as success stories, but all have had well-documented issues. Today we’ll look at three different reasons why these (and the other 9% of crowdfunding campaigns that fail to deliver rewards) snatched failure from success, and what you can do to avoid the same fate.

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Reason #1: Too Much Funding

Examples: Mighty No. 9, The Fidget Cube

It’s counterintuitive, but there is such thing as being too successful. An injection of funds can tempt you into adding to your original scope, or catch your fulfilment partners unprepared for exponential growth.

The Fidget cube is a simple, stress-ball style toy for people to, well, fidget with. The creators asked for $15k, but got $6.5 million, riding the same wave of flash-in-the pan popularity that saw fidget spinners flood stores and gas stations across the country. As they ramped up production to make hundreds of thousands of products above their original goal, they noticed quality control issues that they wouldn’t have run into with a smaller production run. Though they did the right thing and delayed to fix the issues, it was clear that their factory wasn’t handling exponentially growing order well.

Mighty No. 9 is the poster child for “scope creep,” where an initial idea gets blown up due to wild success. Originally asking for $900k, the game received close to $4 million, and during the campaign they quickly added new features, new platforms and more rewards. The problem is that video games are incredibly expensive to make, and even $4 million is a very small amount when you have a team of artists and developers drawing a salary over a development cycle. Now that they had promised all these extra things, they were on the hook to deliver. It was delayed from April 2015 to February 2016 (and some platforms were delayed even further). Though they ended up shipping the game, it received pretty middling reviews, with the “stretch goal” features detracting from, rather than adding to the experience.

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How you can avoid this:

  • Keep your minimum viable product in mind. Don’t add features because you can now “afford” it.
  • Make sure your vendors can handle exponential growth, or have other vendors ready if you go from needing to fabricate 1,000 units to 100,000 units.

Reason #2: Complicated Hardware

Examples: Coolest Cooler, Central Standard Timing 01 Watch

Central Standard Timing promised the world’s thinnest watch, and raised more than $1 million. Funded in 2013 it ran into delay after delay as they attempted to fabricate these ultra thin watches. Finally, they parted ways with their manufacturer who simply could not deliver. By then the damage was done and CST was bankrupt. Though their design seemed relatively straightforward, there were reasons why traditional watchmakers had not similarly chased such a thin design.

Similarly, the Coolest Cooler is one of the more famous flameouts. More than a cooler, it has a blender, Bluetooth speaker, USB charger, LED lights and more. Simply put, it is incredibly over-engineered. Even though they raised over $13 million, their deadlines slipped further and further. Turns out, it’s incredibly difficult to find a manufacturer that specializes in coolers, blenders, speakers, lights and batteries and can put all those processes into a single assembly line. The blender motor was such a pain to make the plant workers actually went on strike! After all was said and done, the company asked backers for another $97 to get their cooler, claiming that shipping a cooler was more complicated than sending a letter (no duh, you should have taken that into account before you launched the campaign).

Manufacturing issues are such a common problem that Kickstarter has created its own Hardware Studio to help small hardware manufacturers find resources, plan and execute their ideas (Indiegogo began a similar venture last year)

How you can avoid this:

  • Keep scale in mind. Just because you have a prototype doesn’t mean it can be manufactured efficiently on a large scale.
  • Don’t offer unique, bespoke options for each reward tier. Focus on making 1,000 units of a single configuration perfectly, instead of juggling 100 units for 10 different configurations.

Reason #3: Experimental / Future Tech

Example: Zano Autonomous Drone, Skarp Laser Razor, The Ouya

The Zano Autonomous Drone was such a high-profile boondoggle that Kickstarter hired their own private investigator to find out what went wrong. Unlike some of the more obvious scams that hit crowdfunding sites, it was clear that the folks at Zano genuinely wanted to deliver on their promises, but they were figuring it out as they went, rather than having a scalable proof of concept ready to fabricate. All of their campaign money was gobbled up on salaries for developers to get the software on par with the expectations they set when asking for funding. The investigator wrote a 10,000 word post-mortem, and it’s fascinating.

I could see the Ouya, the stand-alone, Android-based video game console succeeding in today’s market. When it launched, the Android marketplace had nowhere near the same number and quality of games that Apple’s iOS devices had access to. In the years since, Android has more than caught up to its competitor. Though Ouya could (arguably) deliver on the hardware, the library simply wasn’t there. A game console without any game is pretty useless.

Finally, the Skarp Laser Razor was one of the few successful crowdfunding campaigns that Kickstarter stepped in and pulled the plug on. After raising $4 million dollars it came to light that they didn’t even have a working prototype, and the razor they could make could only cut one or two hairs at once. Yeesh.

How you can avoid this:

  • Don’t use crowdfunding funds as seed money for innovation. Promise and deliver a product you know works, not one you hope will work with more time and resources.
  • If your product relies a third-party ecosystem or applications, make sure that ecosystem is healthy.

There are thousands of reasons why your seemingly successful campaign can end up failing miserably. Don’t treat the day your crowdfunding campaign ends as a finish line. If you properly prepare, fulfilling your campaign and getting your product into backer’s hands can be the most rewarding feeling in your life. If you don’t do your homework, your Twitter mentions will be a minefield for years to come.