Kickstarter: thriving on chaos is one thing…

An article in Hackaday on crowdfunding platform Kickstarter highlights a problem that emerged during a recent class discussion of mine: the lack of transparency about the use of “staff pick”, which supposedly applies to those projects that have been inspected and selected by the company’s team and that heavily influences a project’s success (with the tag, the probability of success is 89 percent, and without it, 30 percent), but that seems to be completely arbitrary and under no supervision.

Kickstarter itself says it is not possible to request the tag, and that it is applied spontaneously by a team of people with experience of projects: the idea is to let more people know about outstanding projects. “It’s that simple,” says the company.

Obviously, Kickstarter has a stake in all the projects on its site reaching their objectives: it takes a 5 percent commission on the total amount raised, plus between 3 percent and 5 percent for using its payment system. The company is now turning over close to $2 billion a year, so we’re not talking chicken feed here.

In theory, the only way to get the “staff like” seal of approval is by “creating a very good project”. But in reality, it looks as though the system has been corrupted, and that staff are being pitched by fundraisers. It’s not hard to imagine that some kind of remuneration might be involved. There are several cases of creators giving themselves the seal of approval, even thought Kickstarter advises against doing so.

Kickstarter projects tend to function on the basis of the market. Since it was set up in 2009, it has been continually evolving. The original idea was to create a site to fund creative projects such as movies, short films, books, comics, and other ideas. The film & video, music and publishing categories remain the most popular by far.

Over time, other categories have proved successful as well, particularly in the technology sector, which is hardly surprising, given that many people who visit the site will be familiar with the new technologies. There is a kind of symbiotic relationship at play here: for example I use the site to keep up with new and interesting idea, which I often mention on my site, thus contributing to their popularity. But for many projects, success isn’t about raising money so much as showcasing something and attracting media attention. If your project appears on the main tech site, you’re well on your way to success.

The initial idea that Kickstarter isn’t a store but a platform for entrepreneurs has been questioned a number of times, even by the success of its most successful project so far, the Pebble smartwatch, which raised more than $20 million by launching a watch that could easily have been made available through traditional channels. There is a clear conflict of interest here: should Kickstarter turn down successful projects able to raise several million dollars based on a relative judgment as to the entrepreneurship involved? If success is defined not so much by the amount of money raised, but by how many people see it, then the benefits are clear to all, and what’s more, people visiting the site don’t seem to have any problems either.

There’s nothing wrong with learning how the market works at the same time as you define your activity. Such an approach is a characteristic of successful management teams, and is even more relevant when working in a constantly changing environment. Kickstarter has found itself in the space between creators of projects and the people interested in financing these projects, which is a great place to be, and as a result, chaotic growth is part of the game, a bit like when developers say, “it’s not a bug, it’s a feature.”

The danger here obviously, is Kickstarter losing sight of what it is that it really does. Managing a company in an environment where the rules seem to be changing every five minutes is, to say the least, very hard, and means facing up to some very new challenges. When things move very quickly around you it is more important than ever to have clear reference points about just what it is you’re doing, while at the same time remaining flexible and adaptable to new opportunities.

Kickstarter, which is now active in 18 countries, is breathing life into the entrepreneurial and innovative ecosystem, but urgently needs to address the issue of transparency in its management model if it is to avoid being a victim of its own success.

(En español, aquí)